In a world on edge, the UK rewrites its priorities

£45.1 Billion in New Capital Investment. Eight Priority Sectors. A High-Stakes Policy Pivot. 

This spring, the UK Government set out its most defining policy decisions yet—anchored by a high-investment Spending Review, modern Industrial Strategy and a decisive shift toward national security and economic growth. While some may see continuity in some of the headline figures, such as for the research and development budget, in the detail of the Spending Review and Industrial Strategy their significant consequences become clearer. These moves are reshaping the landscape for research, business collaboration, and the role of universities in national growth. 

Against a backdrop of rising global instability—from the ongoing war in Ukraine and escalating conflict in the Middle East to a reoriented US foreign policy—the UK is recalibrating fast. The question is no longer if change is coming, but how it will redefine priorities across innovation, investment, and higher education. 

Here’s what NCUB is watching—and why it matters now.

Growth and defence: the twin pillars of government strategy

Economic growth is the government’s central mission, seen as the key to improving public services, expanding opportunity, and boosting prosperity. But recent global instability has pulled defence to centre stage. 

The 2025 Spending Review allocated an extra £14.1 billion to the Ministry of Defence and set the UK on course to reach 2.6% of GDP defence spending by 2027. This is more than symbolism—new funding is flowing into munitions, submarines, nuclear capabilities, and innovation through a newly launched Defence Innovation Unit. More recently at the NATO summit, plans for UK defence spending to rise even more significantly and speedily to 4.1% of GDP by 2027 were set out. This has implications for the overall spending portfolio and for R&D and innovation in particular.  

 A surge in public investment

The Government has committed an additional £45.1 billion in public capital investment over the next four years. However, this new funding is far from evenly spread. Defence is the greatest beneficiary, but there will also be new investments into housing, transport and energy security. Overall departmental day-to-day spending is also set to rise, but this rise is almost entirely towards the NHS. Most other departments will see flat or falling real-terms budgets. 

Research and innovation: a core priority with tighter focus

There is good news for the research and innovation community: government remains committed to high levels of public R&D investment, pledging £86 billion over the next four years. Innovation also remains central to the UK’s growth ambitions, featuring prominently in an Industrial Strategy that seeks to remove barriers and unlock technological progress. 

However, there are clear signs that funding will be more closely tied to national priorities, including the eight priority sectors outlined in the Industrial Strategy (the IS-8).  

NCUB continues to advocate for a dual approach: targeted innovation aligned with national needs, and ongoing support for blue-sky research. The work of our business-led R&D Taskforce has already helped shape this agenda—and we’re keen to work with government to take it further. 

Place-based growth: from rhetoric to action?

Geographical inequality is a long-standing challenge, but this government appears to be taking real steps towards change. The English Devolution White Paper, guidance for Local Growth Plans, Industrial Strategy and a new £500 million Local Innovation Partnerships Fund could inject momentum into place-based growth. 

Local growth plans, designed and owned by mayoral combined authorities, aim to align economic strategies with local strengths. The guidance, reinforced powerfully by the Industrial Strategy, rightly emphasises collaboration with universities and businesses—recognising universities as anchor institutions in their places. 

Skills and talent: the missing piece

Despite the progress elsewhere, the government’s strategy on skills and talent remains patchy. The focus remains on young people and foundational skills—important, but not enough to support a high-tech, high-growth economy. 

Meanwhile, changes in immigration policy, including stricter settlement rules and new employer obligations, could make it harder to attract and retain highly skilled global talent. Combined with reduced access to Level 7 apprenticeships for adult learners, this could leave a gap in the talent pipeline essential for innovation. 

Universities: national assets under strain

The Chancellor rightly described universities as national assets for innovation. But the Spending Review itself offered little by way of support or financial relief for the sector. 

With mounting financial pressures , many institutions are operating on a knife edge. We expect more clarity in the upcoming post-16 education white paper—but for now, the uncertainty remains. 

 What’s next? 

This is just the beginning. While we pour throught the details of The new Industrial Strategy  and sector plans, more is expected with the NHS Plan and the post-16 education white paper before Parliament breaks for summer. Each will provide further clarity on how government plans to turn its strategic goals into deliverable action. 

NCUB is ready to engage—ensuring that the voice of universities, business, and innovation leaders is heard in shaping the UK’s future. 

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