R&D at the heart of domestic and foreign policy

R&D at the heart of domestic and foreign policy

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

Rolls Royce blog website

This week, the Government set out its vision for a global Britain. Central to this vision is an ambition for the UK to become a science and technology superpower.

This comes just two weeks after the Government’s Plan for Growth also placed boosting research and innovation as a central pillar of its domestic economic plan.

So how well is the UK positioned to realise these ambitions and what steps are being taken to get there?

How committed is the Government really to 2.4%?

The UK has long underinvested in research and innovation. Had we invested at the OECD average for the last 10 years, research, development and innovation would have received an additional £44 billion.

To start to rectify this, the Government has set out an ambitious but critical target to double the UK’s R&D spending to 2.4% of GDP by 2027 and 3% in the longer term. Announcements this week show that the Government remains committed to this target.

However, although the Government has promised to increase public funding for research, the devil lies in the detail.   

The Government’s decision to slash Official Development Assistance (ODA) spending has had an immediate impact on many research funding programmes and there is still no clarity on whether the £1 billion cost of associating to the EU’s Horizon programme will be taken from existing research budgets.

The very welcome £400 million a year uplift for research promised in the 2020 Spending Review, pales in comparison to what in effect would be deep real-terms cuts in overall research funding.

Achieving 2.4% does not only require more public funding for R&D, but it will require greater private investment too. We estimate that the private sector would need to invest £17.4 billion more in 2027 than in 2017 to achieve this goal.

Announcements in the 2021 Budget of a range of measures to encourage business investment were incredibly welcome. However, we have already pointed out the contradictions of tax relief for investment on the one hand, coupled with an unexpectedly steep rise in corporation taxes on the other.

What does the Integrated Review mean for research and global collaboration?

The Integrated Review does not resolve these issues, but it does reiterate that the Government remains committed to the 2.4% target. Some of the wording used is important.

The Government promises to use “all levers at its disposal to develop the infrastructure, business and regulatory environment to support innovation and adoption across the UK economy” and “build a strong and varied network of international science and technology partnerships”.

This signals three important things. First, that the Government recognises the importance of both innovation and innovation adoption. Second, that the Government sees that it has a range of levers available to support innovation and that it has a willingness to use them.

Finally, it shows an understanding of the interconnected network that forms the UK’s strengths and opportunities in research and innovation.

The Integrated Review starts to grapple with some of the challenges between competition and collaboration, but does not necessarily resolve them.

What does the Integrated Review mean for R&D investment?

More than half of private research funding in the UK comes from overseas sources and becoming a science superpower will almost certainly require the UK to attract even more overseas investment, particularly from large, R&D intensive firms.

Commitments to boost global trade and to take up a clear position on the global stage will certainly help. However, there are concerns that cautious approaches to some of the UK’s most important research partners could deter investment. 

The UK’s commitments to invest in green technologies, cybersecurity and defense should all help to boost public investment and procurement of research and innovation, which will bring wider benefits too.

How can systemic, holistic R&D policy be enabled?

Transforming the UK’s economy and becoming a global superpower requires recognising the web of factors that impact private R&D and innovation investment decisions. As we argue in Research to Recovery, the changes required to build an innovative economy will reach beyond the authority of UKRI and any individual government department, spanning all the major facets of fiscal, trade, education and regulatory policy.

The debate must now move from ambition to delivery.

The Integrated Review is interesting in that it starts to unite thinking on a wide range of issues, from foreign policy through to defence, global competitiveness and trade. It does not always resolve, but certainly grapples with, the tensions between different policy goals.

On the flipside, ambitions for R&D and innovation are being explored across a range of different plans and strategies, including the Innovation Strategy, R&D Places Strategy, and R&D People and Culture Strategy.

Does this signal fragmentation, or does the Government recognise a need to bring all these strategies together to supporting more holistic R&D and innovation policymaking?

There are signs of change in Whitehall that could provide an opportunity to strengthen delivery mechanisms.

The move away from Industrial Strategy and towards a new Plan for Growth will almost certainly require at least a name change for the “Department for Business Energy and Industrial Strategy”.

In his parting remarks at an evidence session at the Commons Science and Technology Committee this week, Dominic Cummings suggested that plans to move research and innovation into the Cabinet Office had been signed off by the Prime Minister.

Successfully delivering the domestic and global aspirations for R&D will require more holistic, systemic policy making that coordinates the decisions that need to be taken across different levels of government and parts of the UK, as well as across the remits of departments and budgets.

The various strategies and plans in the R&D and innovation space must be accompanied with serious thought on the collective ambition, and how to deliver.

Date published: 17th March 2021

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