R&I: A recap of the year 2020 and what to expect next year

R&I: A recap of the year 2020 and what to expect next year

Fariba looking backBy Fariba Soetan, Policy Lead, Research and Innovation at NCUB, first published as part of the State of the Relationship Report 2020.

No one will argue 2020 has been un-eventful in research and innovation, full of soaring highs and turbulent lows. 

Many contributors to this report have rightly highlighted the important spotlight that has been shone on university-business collaborations in the search for a Covid vaccine but also the speed at which businesses and universities, working together have been able to galvanise and turnaround projects and manufacturing processes within days when faced with a common goal.

Still, the potential long lasting effects of Covid19 are played out in this report over and over. From the almost 60% of universities identifying a decrease in the levels of innovation-focused activities with SMEs to the 42% of businesses projecting they will prioritise investment in internal R&D over external collaborations[1]. All of this, with the long term financial impacts on the nation’s R&D ecosystem likely still to come. But despite the challenging economic projections over the next few years, there have also been many positives to applaud and anticipate in the coming years.

What to expect in R&I policy and spend over the next year

The first and perhaps most significant development this year was the Government’s consultative R&D Roadmap, published in July, setting out the current administration’s ambitions for the UK to become a ‘scientific superpower’. The Roadmap[2] is, in many respects, a rallying cry to all parts of the R&D ecosystem to work together to drive research and innovation forward. Next year, we expect to see this evolve further with the publication of an R&D plan, which will see a firming up of the Government’s plans for R&D. 

The latest announcements in the November Spending Review suggested that the Government remains committed to increasing funding for research, moving towards its target for the UK to spend 2.4% of GDP on R&D by 2027 and 3% in the longer term. Public R&D spending is set to rise from just under £13 billion in 2020/21 to just under £15 billion in 2021/22. In a positive move, the Chancellor also recognised the importance of long-term planning for research, providing the certainty of a three year multi-settlement UK Research and Innovation (UKRI), the UK’s primary research funder, and the UK’s National Academies core research budgets. These will grow by more than £400 million on average per year for the next three years. £50 million will also be spent on setting up a new high risk breakthrough research agency (UK ARPA) next year, an initiative generally supported by universities and businesses.

Although the signals for research are extremely positive and must be welcomed, some uncertainty does remain. A significant amount of R&D funding is not captured by UKRI and the Academies core research budgets, and it is not clear what will be ringfenced in the current commitments. Perhaps most notably, whilst the Spending Review places a clear focus on the importance of R&D, it is unclear what the announcements will mean for innovation. There were few specific announcements related to innovation in the Spending Review. This is worrying and it is why, in our recent Research to Recovery report[3], we called on the Government to play a bigger role in the innovation system than it has traditionally held by refreshing its Industrial Strategy and putting R&D and innovation at its core. The UK needs national coordination around commercial opportunities, focusing on achieving a leading global market position and uniting its twin aims of developing a productive and resilient economy with its aspirations to grow research intensity and innovation

Research and innovation plays an important part in driving local economic growth, and there were welcome signs in the Spending Review that the Government remains committed to its levelling up agenda[4]. NCUB’s call for the establishment of innovation collaboration zones pushes this agenda even further, enabling Government to leverage all R&D drivers, including tax incentives and deregulation of land use, and support end-to-end research, while attracting talent, academia and business to local areas. As these zones would be positioned all around the UK where there is already research activity, it would spread economic impacts beyond London and the southeast.

Call to remain focused on global competition

As we focus on welcome developments for research and innovation in the UK, we must also keep one eye on global movements. The UK faces stiff competition from its European and US neighbours all vying for a piece of the R&D global market that will help put them one step ahead in their economic recovery. In March this year, France announced an ambitious plan to plug £4.5bn into its startups[5]. This, coupled with its significantly generous R&D tax credit system and a plan to increase R&D spend to 3% by 2030[6], France’s plan to take advantage of the UK’s withdrawal from the EU is to attract businesses to move next door. The UK faces competition from the US as well after the White House committed to double R&D spending in nondefense artificial intelligence (AI) and quantum information science (QIS) by 2022[7]. Finally, China has been steadily increasing its funding into research, with more researchers cited in quality journals every year, significant investment in its universities and numbers of researchers on the increase[8].

How the UK positions itself globally as an attractive place to invest post-Covid will be key to understanding how far research and innovation can drive recovery. The Collaboration Monitor early on in this report showed that the UK was in an exceptionally strong place when it comes to research and development, showing year on year increases in the levels of investment in R&D in universities, including from foreign businesses. However, despite the strength in investment, there are some challenges to note, particularly that the growth in foreign funds into higher education appears to be decelerating. With the known challenges post-Covid, NCUB in November 2020 called on the Government to be proactive about boosting its offer to foreign companies to come and invest in the UK[9]. A combined offer integrating skills, regulation, tax and funding incentives from Government would appeal to business and motivate them to invest.

Many have argued the UK is at a critical juncture as it seeks to navigate its way out of a year’s worth of economic turbulence. In this rapidly changing world, research and innovation will be critical to help businesses meet new global demands and remain on the cutting edge. Looking forward, the year 2021 may bring with it some expected challenges but hopefully less surprises and some substantial positives from which the R&D community can expect significant potential growth.

Date published: 14th December 2020

[1] https://www.ncub.co.uk/reports/r-d-taskforce-report-research-to-recovery

[2] https://www.gov.uk/government/publications/uk-research-and-development-roadmap

[3] https://www.ncub.co.uk/reports/r-d-taskforce-report-research-to-recovery

[4] https://www.gov.uk/government/publications/spending-review-2020-documents

[5] https://techcrunch.com/2020/03/25/france-announces-4-3-billion-plan-to-support-startups/

[6] https://www.sciencemag.org/news/2020/07/french-science-bill-promises-boost-public-rd

[7] https://www.whitehouse.gov/briefings-statements/president-trumps-fy-2021-budget-commits-double-investments-key-industries-future/

[8] http://www.xinhuanet.com/english/2020-08/27/c_139322217.htm

[9] https://www.ncub.co.uk/reports/r-d-taskforce-report-research-to-recovery

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