The target of lifting spending on R&D to £22bn per annum by 2024/25 was promised in the 2020 Budget, and represented a significant increase from the current public spending on £14.9bn per annum, but the government has now signalled that it will effectively ‘take its foot off the accelerator’ in implementing the new Innovation Strategy by readjusting its pledge £20 bn per annum by 2024/25. Whilst AIRTO recognises that this is remains a serious spending commitment to science and innovation, we are concerned that this move will curtail the opportunities to gear in private investment for R&D, and as a consequence the likelihood of R&D activity equating to 2.4% of GDP by 2027 is diminishing. This target is critical to driving the innovation activities in the UK which create high-value jobs and prosperity and will underpin levelling up and the Net Zero missions – all central components of the Build Back Better and Build Back Greener plans. The back-end loading of the increase to Innovate UK’s budget is particularly troubling in this regard. Innovate UK’s investments are most likely to produce near term returns and to stimulate increased private investment in uptake of research outcomes. By slowing the pace of planned public investment in science and innovation, the government risks undermining its recently published Innovation Strategy, and so we are urging HM Treasury to take every opportunity to review its commitments for science and innovation considering the national economic conditions in the year ahead, to ensure that the UK remains globally competitive to fulfil its ambition for Science and Technology Superpower status.

This summer saw the publication of the new Innovation Strategy, which was a progressive move by government to deliver on its stated goal for the UK to become a ‘global hub for innovation by 2035. The new Innovation Strategy will be an integral part of the plan for recovery and recognises that the societal challenges and global market opportunities identified in 2017 Industrial Strategy remain. In setting out this strategy, the government signalled its intention to place science and technology at the heart of the UK’s recovery from the pandemic by supporting the UK’s innovation capabilities.

The climate crisis and demographic crisis – arguably the world’s most pressing concerns – offer global trade opportunities for the UK, with its world-class expertise and international reputation for innovation and entrepreneurship. The level of innovation required to tackle these big missions is colossal and needs nurturing if it is going to be successful. The fresh commitment and investment signalled in the Innovation Strategy, shaped by lessons from the Covid-19 pandemic to recognise the power that science and technology can play in tackling societal challenges and transforming lives, helping realise the ambition to ‘Build Back Better’, was very much welcomed. With the announcement in the 2021 Budget of scaling back on investment ambitions for R&D, we are urging the government to keep science and technology at the heart of the UK’s recovery from the pandemic by supporting the UK’s innovation capabilities.

Positive announcements in the Budget and Spending Review 20021

Some of the commitments to public investment in science and innovation and related areas are welcome. In particular:

• the restated commitment for ARIA;
• confirmation of commitments for the Net Zero Strategy since the Ten Point Plan was published, with allocation of £620 m of new investment over the next three years to support the transition to electric vehicles, £3.9 bn to decarbonise buildings, including £1.8 bn to support low-income households to make the transition to net zero;
• extension of the long-term commitment to the aerospace sector, guaranteeing funding for the Aerospace Technology Institute (ATI) to 2031;
• commitment to support priorities agreed by the Prime Minister’s new National Science and Technology Council, such as Quantum Computing, Artificial Intelligence, Bioinformatics and Space technologies;
• the independent review led by Sir Paul Nurse into the UK research landscape
• Support for the UK to become the first country to launch a rocket into orbit from Europe in 2022, with the aim of becoming a leader in commercial small-satellite launch, as set out in the National Space Strategy;
• launch of the long-awaited UK Shared Prosperity Fund (UKSPF) – £2.6 bn in total, to help people access new opportunities in places of need, rising to £1.5 bn a year by 2024-25, some of which will be deployed to boost adult functional numeracy;
• £1.4 bn Global Britain Investment Fund to support some of the UK’s leading manufacturing sectors and stimulate regional growth;
• scale-up, High Potential Individual and Global Business Mobility visas to attract highly skilled people and support inward investment, and a Talent Network is being created – launching in the Bay Area and Boston in the US, and Bengaluru in India – to find and bring talented people to the UK to work in key science and technology sectors.

Repeated call to build on our world-class existing capabilities

In addition to calling on government to commit to reinstate the annual commitment of £22 bn for R&D by 2024/25, we are calling again on the government to go further in strengthening two particular areas of the Innovation Strategy by deploying pledged funds to:

• Create more support mechanisms for boosting international collaborations – and in particular, taking steps to ensure that established and renowned UK entities continue to play their pivotal part in programmes like Horizon Europe. The UK’s international standing as a ‘Science and Technology Superpower’ will be hampered if we lose ground in our relationships with key collaborators in EU member states.
• Boost investment in the innovation ecosystem, recognising that some of the UK’s non-profit distributing organisations that lie at the innovation ecosystem’s foundations and have a critical role to play in the levelling up agenda, offering living labs, test-beds and demonstrators, remain undercapitalised. For the UK’s innovation ecosystem to be truly world-leading by 2035, this under investment must be addressed.

About AIRTO

AIRTO is the Association of Innovation, Research and Technology Organisations. It’s 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 per annum, 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 annually. 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, Catapult Centres, Public Sector Research Establishments, National Laboratories and some privately held innovation companies.

For further information: contact enquiries@airto.co.uk