Will £39.8 bn R&D budget be sufficient to make UK a science superpower?

Written by Kunal Sawhney, CEO, Kalkine

The government has announced the highest ever Research & Development (R&D) budget so far for the three years period 2022-25. The record-high budget of £39.8 billion, which also includes £6.8 billion for EU programmes, is basically part of the government’s longer-term target to increase the R&D spending to 2.4 per cent of GDP by 2027. Over the next three years to 2024-25, the spending on R&D is set to increase by £5 billion to £20 billion per annum.

R&D expenditure in the UK has been showing a steady rise, and as per the latest available data of 2019, it was at £38.5 billion (£577 per head), which makes up 1.74 per cent of the GDP. But the irony is that the spending on R&D has not increased at a similar pace to the GDP. When compared to prior years, the percentage growth in 2019 was the lowest since 2013. It was just 0.02 per cent higher than the 2018 figure of 1.72 per cent and is much below the R&D spending of neighbour countries like France, Germany and the US.

What does the R&D funding include?

The R&D funding primarily includes expenditure on research, mostly in science and technology. This expenditure results in new products, processes, and understanding. The expenditure also includes research undertaken by, and funding from, the public and private sectors. The majority of the funding comes from BEIS (Business, Energy, and Industrial Strategy Department), and a major chunk is spent on UKRI (UK Research and Innovation).

The record-high investments in R&D will help the government let the nation shape as a science superpower but reaching that spending level would require considerable investment from both public and private sectors.

What is special in the new funding?

The new funding has got the reference of cleantech and AI (Artificial Intelligence). The government release mentioned that the new thrust would enable investment in new technologies from cleantech to AI. The government had launched National Artificial Intelligence Strategy last year; while there are many who look at cleantech as a big opportunity; hence the government can expect investment in these two segments.

Also, the funding includes £6.8 billion for EU programmes. The government had earlier stretched its funding guarantee for Horizon Europe applicants till the end of 2022. The decision was taken to protect the ongoing research and researchers from getting caught in limbo. UK researchers were unable to get the grant money lacking association to the programme, hence own fund was required. Though the government has expressed its commitment to adhere to the terms agreed in the UK-EU Trade Cooperation agreement, with this new funding of 6.8 billion for Horizon Europe and other EU research programmes, it has firmed up its stand.

Road ahead

The majority of the R&D is performed by the business sector, and most of the funding for this comes from the business sector, followed by the higher education sector and public sector. Accordingly, over 55 per cent of the R&D roles are from the businesses, followed by higher education and other segments. In the new funding, a significant portion will go to UKRI, while the UK Space Agency will also see a considerable rise in its R&D budget. The government has also launched a generous R&D tax credits programme, it will prompt businesses to go for investment in the R&D so that the ambitious target can be achieved, and the nation can become a science superpower.

About Lisa Baker, Editor 2424 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.