CaSE responds to Autumn Budget 2017

CaSE has today responded to the Chancellor’s Autumn Budget, including a full summary of how science and engineering fared.

The budget announces an incremental one year increase to the four year block of R&D investment announced at the last autumn statement through the National Productivity Investment Fund. If they continue on this trajectory, the Government will be on target for R&D investment to rise over the next ten years to reach parity with our international competitors at 2.4% of GDP.

Commenting on the announcement CaSE Executive Director, Dr Sarah Main, said:

It’s great to see the government putting its money on research and innovation as the UK’s competitive edge. Today’s announcement is another step on their way to an ambitious goal – although we should remember that goal will only bring us in line with the average level of R&D investment of other scientific nations.

Such sizeable public investment brings a responsibility to spend it effectively. The new money is to be spent on modes of challenge-led funding that are relatively untested. It will be important to establish mechanisms to ensure these funds are well spent and to grow the UK’s tried and tested research funding mechanisms to meet research priorities as well as political priorities.  After all, the UK needs a thriving research base to generate the stream of ideas to create the products and services of tomorrow.

To reach their target of R&D investment across the economy of 2.4% of GDP, the Government must attract private investment of over £8bn of globally-mobile R&D budgets. To continue to invest here through the uncertainty of Brexit, research-intensive companies are clear that the UK must provide a competitive economy with a healthy research base and immigration and regulation systems that support international R&D.

The government’s announcement of increased R&D investment towards its aim of spending 2.4 per cent of GDP on R&D by 2027 was published earlier this week. You can read our original response to the announcement here.

You can also read our R&D Autumn Budget explainer, giving a top-level digest of the public R&D figures following the budget.

A full summary of science and engineering fared in the Autumn budget is set out below:

Investment

The National Productivity Investment Fund (NPIF) was created at the Autumn Statement 2016. The Budget extends the NPIF into 2022-23 and increases the size of the fund from £23 billion to £31 billion. This money is targeted at areas crucial for productivity: including R&D, emerging technologies, and digital communications, among others.

Research & Development
Supporting the government’s ambition of increasing R&D investment in the economy to 2.4% of GDP by 2027, the Budget confirms that the £4.7 billion NPIF investment in science and innovation announced at Autumn Statement 2016 will grow by a further £2.3 billion of additional spending in 2021-22. You can read CaSE’s original response to this announcement from earlier this week.

Further details on where this funding is spent will be set out in the Industrial Strategy, due to be published next week.

R&D expenditure credit
The government will increase the rate of the R&D expenditure credit from 11% to 12% with effect from 1 January 2018. To provide businesses with the confidence to make R&D investment decisions, the government will also introduce a new Advanced Clearance Service for R&D expenditure credit claims.

Emerging Technologies

5G
£1.7 billion Transforming Cities Fund to improve local transport connections and commits £385 million to projects to develop next generation 5G mobile and full-fibre broadband networks, both funded from the NPIF.

AI
The government will create a new Centre for Data Ethics and Innovation to support AI and data-driven technologies. The government will invest over £75 million to take forward key recommendations of the independent review on AI, including exploratory work to facilitate data access through ‘data trusts’. The government will create new AI fellowships, and initially fund 450 PhD researchers,

Regulators Pioneers Fund
The government will establish a new £10 million Regulators’ Pioneer Fund. This will help regulators to develop innovative approaches aimed at getting new products and services to market.

Tech Nation
The government will invest £21 million over the next 4 years to expand Tech City UK’s reach  in supporting regional tech companies and start-ups. Tech Nation will roll out a dedicated sector programme for leading UK tech specialisms, including AI and FinTech in regional hubs across the country.

UK Games Fund
The government will provide a further £1 million to extend the UK Games Fund until 2020, aiding access to finance and business support for early stage video game developers.

Geospatial data
The government will establish a new Geospatial Commission to provide strategic oversight to various public bodies who hold geospatial data. The government will work with the Ordnance Survey (OS) and the new Commission, by May 2018, to establish how to open up data to UK-based small businesses. The Budget provides £40 million a year over the next two years to support this work.

Ultra-low emission vehicles 
To support the transition to zero emission vehicles, the government will invest £200 million, to be matched by private investment into a new £400 million Charging Investment Infrastructure Fund; and commit to electrify 25% of cars in central government department fleets by 2022. The government will also provide £100 million to guarantee continuation of the Plug-In Car Grant to 2020 to help consumers with the cost of purchasing a new battery electric vehicle.

Connected and Autonomous Vehicles 
The government will make world-leading changes to the regulatory framework, such as setting out how driverless cars can be tested without a human safety operator. The National Infrastructure Commission (NIC) will also launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars.

Supporting Innovation

Patient Capital Investment
Following the conclusion of the Patient Capital Review, the Chancellor has announced plans to unlock over £20 billion of patient capital investment to finance growth in innovative firms over 10 years by:

• Establishing a new £2.5 billion Investment Fund incubated in the British Business Bank.
• Doubling the annual allowance for people investing in knowledge-intensive companies through the Enterprise Investment Scheme (EIS) and the annual investment those companies can receive through EIS and the Venture Capital Trust scheme, and introducing a new test to reduce the scope for and redirect low-risk investment, together unlocking over £7 billion of growth investment
• Investing in a series of private sector fund of funds of scale, the British Business Bank will support a total of up to £4 billion investment
• Backing new and emerging fund managers through the British Business Bank’s established Enterprise Capital Fund programme, unlocking at least £1.5 billion of new investment
• Backing overseas investment in UK venture capital through the Department for International Trade, expected to unlock £1 billion of investment

The government will also support long-term investment by:

• Giving pension funds confidence that they can invest in assets supporting innovative firms as part of a diverse portfolio. The Pensions Regulator will clarify guidance on investments with long-term investment horizons.
• Changing the qualifying rules in Entrepreneurs’ Relief to remove the disincentive to accept external investment and consulting on the detailed implementation of that change
• Launching a National Security Strategic Investment Fund to invest in advanced technologies to contribute to the national security mission.

GovTech Catalyst
The government will create a GovTech Catalyst, a small central unit based in the Government Digital Service that will give businesses and innovators a clear access point to government. The unit will help them navigate government and collaborate to solve public sector challenges, which could include improving the planning process and freeing up teachers time.

The Budget commits up to £20 million over 3 years, starting in 2018-19, of R&D NPIF funding for a GovTech Fund. Public bodies will be able to access this fund to support procurement of innovative products through the Small Business Research Initiative (SBRI), run by Innovate UK.

Infrastructure

Transforming Cities Fund
A £1.7 billion fund from the NPIF to support intra-city transport. Half will be allocated via competition for transport projects in cities and the other half will be allocated on a per capita basis to the 6 combined authorities with elected metro mayors – £74 million for Cambridgeshire and Peterborough, £243 million for Greater Manchester, £134 million for Liverpool City Region, £80 million for West of England, £250 million for West Midlands and £59 million for Tees Valley.

The National Infrastructure Commission (NIC) will launch a new innovation prize to determine how future roadbuilding should adapt to support self-driving cars

The Infrastructure and Projects Authority will publish an update to the National Infrastructure and Construction Pipeline in December 2017. This will set out a 10 year projection of public and private investment in infrastructure of around £600 billion.

Education and Skills

Education
On maths subjects the government have announced a package of measures;

• Providing £27 million to expand the Teaching for Mastery maths programme into a further 3,000 schools
• Offering £600 to schools for every extra pupil who decides to take Maths or Further Maths A levels or Core Maths – with over £80 million available initially, and no cap on numbers.
• Committing £18 million to fund an annual £350,000 for every maths school under the specialist maths school model, which includes outreach work
• Launching a £8.5 million pilot for improving maths resit outcomes, alongside £40 million to establish Further Education Centres of Excellence across the country to train maths teachers and spread best practice.

Computer science – Committing £84 million to upskill 8,000 computer science teachers by the end of this Parliament. Also working with industry to set up a new National Centre for Computing to produce training material and support schools.

T levels – The government will invest up to £20 million to help teachers prepare for the implementation of T levels.

Apprenticeship levy – The government will continue to work with employers on how the apprenticeship levy can be spent.

Gender disparity in STEM –  The government will explore how to improve the accessibility and transparency of data on gender disparity in STEM by institution and subject.

Teacher Development Premium – The government will invest £42 million to pilot a Teacher Development Premium. This will test the impact of a £1,000 budget for high-quality professional development for teachers working in areas that have fallen behind.

Lifelong learning and upskilling
National Retraining Partnership – The government will enter into a formal skills partnership with the Trades Union Congress and the Confederation of British Industry, to develop the National Retraining Scheme. Together they will work with the new Skills Advisory Panels.

As a first step, the National Retraining Partnership will oversee targeted short-term action in sectors with skills shortages, initially focussing on construction and digital skills. The government will invest £30 million to test the use of AI and innovative EdTech in online digital skills

Construction skills – The government will provide £34 million to scale up innovative training models across the country. The government is working with industry to finalise a Construction Sector Deal that will support innovation and skills in the sector, including £170 million of investment through the Industrial Strategy Challenge Fund.

Immigration rule changes
The government will  change immigration rules to enable world-leading scientists and researchers endorsed under the Tier 1 (Exceptional Talent) route to apply for settlement; make it quicker for highly-skilled students to apply to work in the UK after finishing their degrees; and reduce red tape in hiring international researchers and members of established research teams, by relaxing the labour market test and allowing the UK’s research councils and other select organisations to sponsor researchers. This is alongside the expansion of the exceptional talent route.