The new Government two weeks in

Policy direction across innovation and skills in the early days of a new Government

Since the General Election the new Labour Government has moved at pace. Last week, Prime Minister Keir Starmer rapidly announced new Ministers and confirmed policy priorities, followed by the opening of Parliament with the King’s Speech this week.

This blog looks back at what was promised on research, innovation and higher education in the Labour manifesto, and what, in the party’s first two weeks of governance, has unfolded – from new Ministers to watch, to the legislation promised in the King’s Speech.

A recap of the Labour Manifesto

The Labour Party’s manifesto emphasised economic stability as its principle mission for the nation, and innovation is pitched as a central mechanism to drive growth. The party prioritises five core missions to ‘rebuild’ the economy, four of which are directly linked to science, innovation and the skills and talent that powers it. These are:

1. Kickstart economic growth
2. Make Britain a ‘Clean Energy Superpower’, positioning Great British Energy at the heart of energy independence and net zero ambitions.
3. Breakdown barriers to opportunity, promising a new Skills England and reform of the Apprenticeship Levy to better create skills needed for the future.
4. Build an NHS fit for the future, including delivering new technologies and skills to support healthcare delivery and medical advancements.

To deliver the manifesto commitments, NCUB advocates for innovation to be at the forefront of policy priorities. The UK’s research, innovation and education systems urgently need to be strengthened to keep up with global competition and remain competitive.

In the NCUB manifesto, we call for government to deliver for UK innovation by quickly appointing members of the new Industrial Strategy Council, creating a Foreign Direct Investment in R&D Strategy to become more competitive in the global R&D market, and setting up Skills England to meet the scale of the workforce skills challenge.

Creating a new Cabinet

In the days following the election outcome, Prime Minister Kier Starmer announced his Cabinet and ministerial appointments.

In the Department for Science, Innovation and Technology (DSIT), Peter Kyle MP was appointed Secretary of State. Kyle’s supporting Ministers include Sir Patrick Vallance, who has been appointed a Member of the Lords to take up the role of Science Minister, and Sir Chris Bryant MP. Sir Patrick, a surprise appointment, has vast experience navigating the machinery of government – having served as Chief Science Adviser throughout the Covid-19 pandemic – and is an advocate of long termism in science policy. Having had a career in industry, he will also be a welcome voice for business innovation and investment.

Across the university brief, Bridget Phillipson MP has become Secretary of State for Education. Jacqui Smith has become Higher Education Minister, returning to the Government after serving under Gordon Brown as Home Secretary, as well as Minister of State for Schools and Learners. These roles will have responsibility for university financial resilience, as well as future skills, adult learning, and reform of the Apprenticeship Levy. The figures will play a key role in developing the new Skills England, alongside Angela Rayner, who takes up the role of Secretary of State for Local Government, Housing and Communities, alongside her Deputy Prime Minister brief.

Angela Rayner MP will oversee increasing devolution across England and bolster the powers of combined authorities and metro-mayors. Her Department has re-branded, moving away from the Levelling-Up slogan of Boris Johnson’s Government, and returning to the language of ‘Local Government’. This move is said to remove jargon and simplify policy.

Rachel Reeves MP becomes the first female Chancellor of the Exchequer, whilst Jonathan Reynolds MP becomes the Secretary of State for Business and Trade (DBT). Ed Miliband MP rejoins the front benches as Secretary of State for Energy Security and Net Zero, where he will lead one of Labour’s key missions and will channel large sums of R&D investment and activity in coming years. Similarly, the Secretary of State for Health and Social Care role is taken up by Wes Streeting MP, who will oversee the digital transformation of the NHS, among challenges around workforce and access to talent.

NCUB has written to these incoming Ministers, welcoming them to their role, outlining the key challenges facing our sector, and offering support as a trusted adviser.

What priorities are being taken forward?

After these ministerial appointments were made, departmental priorities have been announced. The King’s Speech then solidified the priorities and Bills which will be taken into the Parliamentary term.

Role and scope of DSIT: The first announcement from DSIT confirmed that the Department will be retained, with its Secretary of State holding a seat within the Cabinet. This retention and status marks the underpinning importance of research and innovation across the Government’s missions. The Department will work to accelerate innovation, investment and productivity through world-class science and research across the economy, as well as ensure technologies are safely developed and deployed across the country, and be a partner to the innovation sector.

The Department is being expanded to include the Government Digital Service, the Central Digital and Data Office, and the AI Incubator. The move will make DSIT the digital centre of government, and it will increase collaboration and delivery of STEM-based technologies across the civil service.

Education and skills: Skills England was confirmed in the King’s Speech and this important new body will be developed and delivered with partnership at its heart – a move critical to development and delivery of relevant and future facing skills. The speech further confirmed reform of the Apprenticeship Levy, a promising move, long advocated for by NCUB that should remove barriers to businesses investing in skills and accessing a greater range of talent.

In her first statement, Education Secretary Bridget Philipson outlined ambitions to meet local skills needs by collaborating with local governments to create higher-quality training and employment paths. Phillipson indicated that there will be no silver bullet for the university funding crisis. Government will focus on international student recruitment as support for university financial sustainability, rather than directly increasing tuition fees or public funding. The approach will maintain the graduate-route visa and reform the English sector regulator to enhance opportunities for higher education.

The Secretary of State acknowledged the significant financial challenges facing universities, stating that Labour is committed to providing good regulation and oversight, exemplified by the changes already initiated in the Office for Students. She emphasised the importance of international students, not only for their economic contributions but also for the global reach and soft power they bring to the UK.

Maintenance of the Graduate Visa, support for international students, and recognition of their value to the UK is welcome, but this direction of travel will not relieve the crisis. The impact of regulatory reform on resourcing is yet to be understood, and we await information on the future of the recently hiked Skilled Worker Visa, and continue to call for visa costs to be reduced to become more competitive internationally.

Unlocking growth: In her first speech as Chancellor, Rachel Reeves emphasised economic growth as the key ‘national mission’, setting out the party’s commitment to growth based on stability, investment and reform. She prioritised new homes and clean energy, with these funding packages intersecting to ensure new builds place opportunity and growth at their heart and are connected to major infrastructure such as road and rail, as well as clean energy projects.

The King’s Speech separately announced the creation of an Industrial Strategy Council, which will consist of business leaders from across sectors. The reintroduction of this important body is something NCUB has long been advocating for, to hold the Industrial Strategy to account and provide expert guidance and direction. There will also be a £7.3bn National Wealth Fund, to be invested over the next five years in low carbon initiatives. Questions have been raised over whether this funding is new or pre-existing, which we will dig into in weeks to come.

The Fund is designed to leverage an additional £20bn in private capital into the UK’s low carbon sector. This initiative will consolidate key institutions, including the UK Infrastructure Bank and British Business Bank, under the National Wealth Fund umbrella. This institutional framework follows the recommendations from a Labour commissioned review on optimising the National Fund’s operations. The Wealth Fund, aligned with a clear long-term industrial strategy and regional development policies, aims to position the UK as a global leader in the future economy.

Increasing devolution: The King’s Speech confirmed devolution will play a greater role in upcoming policy. A new English Devolution Bill will increase the powers of metro mayors and combined authorities, designed to support local growth plans that bring economic benefit to communities. This will be an important part of skills development plans in local economies, industry clusters spanning regions, and for the role of universities within their regions. Details of how power structures, and associated funding, will change is yet to be detailed.

Innovation at the heart of energy transition: As a key policy issue and national priority, the King’s Speech announced a Bill to set up Great British Energy, a publicly owned clean power company which will accelerate investment in renewable energy such as offshore wind. The body and announcement will bring new opportunity and funding across the green and clean energy sectors, as well as within green jobs and skills.

The King’s Speech and initial department announcements outline only headline policy issues which will be brought forth into the Parliamentary term, and details under each of these important areas is yet to be developed or annouced.

Direction of travel

The Government’s actions over the last two weeks reflect a newly elected party seeking to demonstrate change but facing financial challenge.

There has already been an energised approach to proactive policy, and progress on issues with large national interest – such as building reform, housing and clean energy, but much of the details and funding underpinning initiatives remain to be seen. Partnership with business across policy development and delivery has been a welcome feature across announcements, central to Treasury priorities, Skills England, and in the upcoming Industrial Strategy.

However, much of the direction of travel for the university sector and R&D ecosystem is yet to be developed or announced. Within the DBT, appointments to the Industrial Strategy Council are yet to be made, whilst in DSIT, details have not been announced on plans to lengthen funding cycles for ‘key R&D institutions’ to ten-year periods. Support for university spin outs, start ups and SMEs, detailed in the Labour manifesto, is also not yet published. We look forward to co-developing these important areas in coming months.

Across the campaign, and in the early days of the Government, NCUB has been calling for a bold and proactive plan for innovation. Whilst R&D is at the forefront of the Government’s economic plan, challenges harm the ability of the sector to operate and innovate. Foreign direct investment into UK R&D is falling year on year, whilst university financial sustainability has reached a critical state. For the new Government’s Missions to succeed, the UK’s research, innovation and education systems need to be strengthened to keep up with global competition and adapt to rapid change. We look forward to working with the new Ministers to overcome these challenges.