NCUB response to Budget 2020

NCUB response to Budget 2020

By Rosalind Lowe, Head of Policy and Engagement, the National Centre for Universities and Business (NCUB)


Budget 2018“Some people are more certain of everything than I am of anything,” said former US Treasury Secretary, Robert Rubin.

With less than a month in post, our new Chancellor delivered a Budget at a time of significant global uncertainty. There is a tendency to bill all Budgets as critical, but this one may well live up to the expectation. The outbreak of Covid-19 is expected to have short-term, but wide ranging consequences for how we live our lives, how we work, how we interact and how we learn. At a time marked by uncertainty, the Government also wants to set a clear, determined and long-term vision for life outside of the European Union.

The Budget marks a clear statement. It sets out the difficult decisions the Government has taken and the priorities it is setting. Perhaps most significantly, a Budget that was broadly expected to focus on ushering a “decade of renewal” has had to adjust to respond to a significant and sudden emergency facing the world today. It was therefore noticeable how the development of the detail of many policies has been deferred to the Comprehensive Spending Review (CSR) later in the year.

Covid-19 is not just a test of our healthcare and social security system, but it is also a test of our ability to work together to address a global challenge.

So what does the Budget mean for university and business collaboration?

The big picture

Figures from the Office for Budget Responsibility (OBR) confirmed that universities and businesses will continue to operate in a challenging environment. GDP growth is forecast to slow as the impact of Covid-19 increases. Public borrowing will rise as the Government increases spending on public services and as tax receipts decline. This Budget was always expected to mark the end of austerity, with significant spending rises planned. Indeed, the Budget will lead to 2.8% per annum real growth in public service spending. Part of this increase is in immediate response to Covid-19, with Rishi Sunak offering the NHS “whatever it costs” to respond to the pandemic. This announcement comes on the same day that the Bank of England moved to slash the bank interest rate from 0.75% to 0.25% in response to the economic shock the outbreak is causing.

Research and innovation

The Government regards research and innovation as central to the future of the UK. The Budget commits to increasing R&D spend to £22 billion a year by 2024-25, taking direct public support for R&D to 0.8% of GDP. The methods for allocating this additional funding will be announced as part of the Comprehensive Spending Review (CSR), which is expected to conclude by the end of July. The Budget makes clear that the Government wants to review how R&D funding as a whole can best be distributed across the country to level up every region and nation. The specific objectives of increasing public funding in R&D are described as:

  • supporting world-leading research in all regions and nations of the UK, including by cutting bureaucracy, experimenting with new funding models, and establishing a new funding agency to focus on high-risk, high-reward research
  • meeting the great challenges facing society, including climate change and an ageing population, and providing funding to pursue ‘moonshot’ scientific missions
  • investing in the government’s own strategic science capability and improving public services
  • backing businesses to invest and innovate so that they can compete in the global technology-driven economy

The government is providing an immediate funding boost of up to £400 million in 2020-21 for world-leading research, infrastructure and equipment, with a specific focus on basic research and physical sciences. Funding for a number of specific research programmes and initiatives have also been announced1. Most notably, the Government has committed “at least” £800 million in the Budget to establish a new “blue skies” funding agency in the UK modelled on ARPA in the US.

In addition to increasing public R&D investment, the Government wants to encourage private investment. The Budget therefore confirmed a Conservative manifesto pledge to increase R&D tax credits from 12% to 13%, and to consult on whether qualifying R&D tax credit costs should include investments in data and cloud computing.

Entrepreneurship and business support

The Budget commits to extending the funding of the British Business Bank’s Start-Up Loans programme to the end of 2021-22, with an ambition to support up to 10,000 further entrepreneurs across the UK to access finance to start a business. The Government has also announced the development of a BEIS-led digital service to provide businesses with tailored information about appropriate sources of support. This is a first step towards further announcements in the CSR.


The Budget confirms the £3 billion National Skills Fund announced in the Queen’s speech. This fund will be focused on improving the technical skills of adults across the country, with a consultation expected to launch in the Spring ahead of the CSR. The Budget also suggests that the Government wants to “look to improve” the Apprenticeship Levy, but has committed to ensuring that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- and medium-sized businesses. The Government will also invest in up to eight new Institutes of Technology and 11 maths schools.

There were noticeable absences in the Budget. There was no reference to the major review of post-18 education and funding led by Sir Philip Augar, or to tuition fees and value for money. In fact, universities were only mentioned four times in the document. Given that tuition fees cannot rise in line with TEF results next year as was originally suggested, and there is a small reference in the budget to not selling off any more books, there is going to have to be a hard conversation about financial sustainability. There is also limited reflection on the skills needs of an advanced knowledge economy, with far greater investment in R&D likely requiring more people with PhDs.

Whilst the investment the Budget is offering to research, innovation, entrepreneurship and skills is positive for university and business collaboration, it is clear that a lot of detail still needs to be worked through in preparation for the CSR. NCUB, which represents a shared, collective voice for universities and business, has a hugely valuable role to play in this process.


Published: 11 March 2020

1. Specific announcements related to R&D funding are:
• £300 million for experimental mathematical research to attract the very best global talent over the next five years to double funding for new PhDs and boost the number of maths fellowships and research projects
• £80 million to support specialist institutions over the next five years. This will support world-leading organisations such as the London School of Hygiene and Tropical Medicine, the Royal College of Art and the Institute of Cancer Research among others.
• Doubling the size of the Energy Innovation Programme.
• £12 million for the National Institute for Health Research in 2020-21
• £2 million in 2020-21 to expand the cross-cutting strategic science and resilience capabilities provided by the Government Chief Scientific Adviser and the Government Office for Science
• £1.4 billion over 10 years in the animal health science facility at Weybridge, the
• £180 million over 6 years for a new state-of-the-art storage and research facility for the Natural History Museum at Harwell Science and Innovation Campus.
Over £900 million to ensure UK businesses are leading the way in high-potential technologies (including commercialising nuclear fusion technology, clean energy, and supporting the National Space Strategy and space innovation fund)
• £1 billion to develop UK supply chains for the large-scale production of electric vehicles, as announced in September.
• The government will also provide the British Business Bank with the resources to make up to £200 million of additional investment in UK venture capital and growth finance in 2020-21.?

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