On Tuesday, the Chancellor set the scene for the upcoming budget. This provided a timely opportunity for NCUB to publish its own submission to the Treasury on budget priorities.
Our submission draws directly on NCUB’s ongoing engagement with businesses, universities and policymakers. It builds on evidence and recommendations from the NCUB Business-Led R&D Taskforce report, chaired by Sir John Manzoni, Dame Nancy Rothwell and Sir Jon Symonds, which engaged over 2,000 SMEs and several major firms. You can find the full report here.
The submission calls for a coherent, fiscally responsible plan to reverse the UK’s decline in business R&D investment, strengthen skills and talent pipelines, and secure the higher education system needed to turn world-class research into industrial and economic advantage.
Unlocking business investment in R&D
The UK remains a world leader in scientific discovery and university research. Yet business investment in R&D — a critical driver of innovation and productivity — fell by 6% in real terms between 2021 and 2023 (a £3.4 billion decline). That’s why we formed the Business-Led R&D Taskforce – to identify policy solutions towards reversing this decline. The Taskforce recommends three interconnected levers – Focus, Simplify and Reform – to tackle the system’s underlying weaknesses: fragmentation, weak demand-pull, and slow delivery. The UK’s world-class research base gives us a powerful foundation for growth, but its value depends on how effectively businesses turn that strength into new markets, industries and solutions.
Under Focus, the Taskforce recommended the Government and industry identify and drive a focused set of Industrial Innovation Priorities, aligned with the Modern Industrial Strategy and eight Sector Plans. Each Priority would be focused on time-bound opportunities where the UK can lead globally. They would have a clear business case, joint industry-research oversight, and regular review by the Industrial Strategy Council.
When speaking with businesses, the Taskforce also heard that the public R&D system remains fragmented and slow. The multiplicity of programmes and portals discourages engagement and delays investment.
That is why, under Simplify, the Taskforce recommended that Government unify the research and innovation funding landscape into a coherent, priority-aligned portfolio that supports the full journey from research to commercial application. This should be accessible through a single digital front door and backed by active brokerage and account management to help both researchers and businesses navigate and co-create projects.
Finally, through Reform, the Taskforce report suggests Government should make UKRI explicitly accountable – alongside research excellence – for increasing business participation, private investment and commercial outcomes.
The Taskforce report formed the bedrock of our Budget submission, but we recommended several interventions for the Chancellor to unlock private R&D investment, including:
- Freezing corporation tax and avoiding further rises in Employer National Insurance Contributions to maintain cost stability.
- Attracting high-value foreign R&D investment by establishing a Global Collaboration Fund to pool university and business strengths and attract overseas R&D investment.
- Consolidating and stabilising R&D tax relief schemes.
Mobilising finance for innovation
Unlocking growth depends not only on public R&D spending but on mobilising private and institutional finance into productive, innovation-led investment. Despite world-class financial markets, too little domestic capital flows into R&D-intensive sectors. To address this, we recommended the Chancellor accelerate and extend the Mansion House pensions reforms, and mandate the British Business Bank to co-invest with institutional and private funds in sectors aligned with the Modern Industrial Strategy.
We also called for support for an expansion in university-led regional investment funds (such as Midlands Mindforge, Northern Gritstone, and Cambridge Innovation Capital) with matched government funding to de-risk early-stage innovation.
Securing the UK’s future talent
The Government’s ambitions in the Modern Industrial Strategy rightly depend on a workforce equipped with higher-level skills. But ambition must be backed by supportive policy, targeted commitments and incentives to ensure that universities, employers and learners can respond at scale. We called on the Chancellor to:
- Reintroduce targeted grants for high-cost higher education provision.
- Restore and protect Level 7 apprenticeships in levy eligibility.
- Strengthen Skills England’s remit and capability to span higher, technical, and doctoral-level skills.
We also suggested the Government explores a new Skills Investment Credit to stimulate employer spending on skills training.
Fixing the foundations of higher education
Our Budget recommendations went in six days before the Government unveiled its Post-16 Education and Skills White Paper, which has taken some steps to address the financial challenges facing universities. However, we still feel the sector is missing a sustainable higher education funding model that addresses teaching and research deficits. We also called on the Government to abandon its plans for a new levy on international student tuition income.Universities are one of the UK’s greatest strategic assets — educating the workforce, performing world-class research, and acting as regional anchors for innovation and growth. Stabilising university funding is therefore not only a matter of educational continuity, but of protecting the infrastructure of national innovation. We recommended the Government safeguard and uplift the Higher Education Innovation Fund and replace lost European Structural Funds with targeted investment to support collaboration in underrepresented regions.
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