AIRTO welcomes £1.6 billion for innovation announced in the 2018 Budget

AIRTO (the Association for Innovation, Research and Technology Organisations) welcomes the Chancellor’s 2018 Budget announcement of initiatives to build on the UK’s world-leading position in innovation, including £1.6 billion investment earmarked for Artificial Intelligence (AI), quantum computing, future manufacturing, and nuclear fusion.

AIRTO has previously welcomed the government’s Industrial Strategy White PaperOver the past couple of years AIRTO has been joining with the business and academic community to call repeatedly for increased investment in innovation. Our members – which include leaders of some of the UK’s major Innovation, Research and Technology (IRT) sector organisations, have been urging the government to create ‘an innovation eco-system and infrastructure that works for everyone’. Recognising that innovation is the bedrock for the UK’s future prosperity, specifically we have been calling for four key innovation priorities to be given precedence:

  • Placing innovation at the heart of industrial strategy
  • Mitigating aspects of Brexit that could constrain the UK’s capacity to innovate and grow business in global markets
  • Investing in innovation skills development
  • Strengthening the national innovation infrastructure

In particular, AIRTO has welcomed the government’s recently stated goal to grow the UK’s combined public and private R&D investment to 2.4% of gross domestic product (GDP) by 2027.  Aside from increasing public spending in R&D, the government needs to foster a climate for science, innovation and technology that stimulates private investment in long-term research and development by industry. AIRTO is pleased to see that this budget – the last budget before the UK exits the EU – signals a focus on the levers for stimulating private investment, including:

  • PLACE – Extending support for regional clusters of science and innovation excellence via the Strength in Places Fund;
  • PEOPLE – by committing to invest in talent in STEM .e.g. through fellowship schemes for AI;
  • PUBLIC PROCUREMENT – Stimulating the adoption of cutting-edge science and innovation by government, including by outlining additional steps to better understand how the government can itself adopt AI, automation and data to drive public sector productivity;
  • PUBLIC INVESTMENT – specifically via commitments to increase spending in several important areas, including:
  • The Industrial Strategy Challenge Fund – by £1.1 billion, supporting technologies of the future;
  • Quantum technologies – by a further £235 million to support the development and commercialisation of quantum technologies, including up to £70 million from the Industrial Strategy Challenge Fund, and £35 million to support a new national quantum computing centre;
  • Nuclear fusion – by an additional £20 million in 2019-20 for the UK Atomic Energy Agency (an AIRTO member) to accelerate the development and commercialisation of fusion technologies;
  • Catapults – by extending funding for the Digital Catapult and the Medicines Discovery Catapult;
  • Field Labs for Distributed Ledger Technology.

Optimising incentives for private investment in innovation is essential. R&D tax credits are an important incentive for stimulating private investment. Whilst AIRTO supports the need for the government to guard against any abuse of R&D tax credits, it is important that moves to cap the amount of ‘payable credit’ that a company can receive under the SME scheme does not act as a barrier to start ups and early stage companies using universities and other organisations in the IRT sector to help build a sound R&D centred basis for growth. Such a barrier would seriously hamper the ability of IRT centres of expertise to help fledgling companies. AIRTO therefore welcomes the government’s plan to consult on this proposal before it is adopted.

Commenting on the Chancellor’s budget speech, AIRTO’s President, Professor Richard Brook OBE FREng, and AIRTO’s Chairman Dr Paul Howarth FREng, called on the government to go a step further:

“We should like to see the government leverage the Innovation, Research and Technology sector even further to boost our capacity to deliver R&D services for international industry, thereby stimulating private investment and creating jobs for UKplc.”


AIRTO is the Association of Innovation, Research and Technology Organisations. Its membership comprises approximately sixty of the principal organisations operating in the UK’s Innovation, Research and Technology (IRT) sector. The IRT sector has a combined turnover of £6.9Bn, employing over 57,000 scientific and technical staff (equivalent to the academic staffing of the Russell Group of universities) and, for comparison, it is significantly larger than the network of Fraunhofer Institutes in Germany both in size and its scope of activities. The sector contributes £34Bn to UK GDP, but consumes 0.3% of government spend! AIRTO’s members work at the interface between academia and industry, for both private and public sector clients. Members include independent Research and Technology Organisations (RTOs), Catapult Centres, Public Sector Research Establishments, National Laboratories, some university Technology Transfer Offices and some privately held innovation companies.