Research and Development Funding

Amanda Solloway Excerpts

Wednesday 17th March 2021 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Cambridge (Daniel Zeichner) on securing the debate and raising important issues for the future of research development funding. I thank all hon. Members for the quality of their contributions. There have been many enthusiastic observations, indicating the passion felt by many Members. I fully echo that sentiment, and I am pleased to have the opportunity to reiterate that R&D is absolutely central to the Government’s ambitions of unleashing innovation and continuing to cement the UK as a science superpower.

The hon. Member for Cambridge spoke of the importance of research and development, highlighting the benefit that it brings, as well as the issue of Horizon Europe. I am delighted that the United Kingdom has an agreement to take part in the Horizon Europe programme. He also rightly pointed out that R&D is about relationships as well as investments, which is why the association to Horizon has been welcomed by businesses and the research community and will bring huge benefits to the United Kingdom. The decision to associate to Horizon Europe came after the spending review, so we continue to work through where its costs will fall. We will set out our plans for R&D spend in 2021-22, including funding for Horizon Europe, in due course. I reiterate the comments made by the Secretary of State for Business, Energy and Industrial Strategy earlier today that we continue to robustly defend the research budget. We are working hard to confirm R&D budgets as soon as possible.

A number of hon. Members, including the hon. Members for Cambridge, for Newcastle upon Tyne Central (Chi Onwurah) and for Glasgow North West (Carol Monaghan), raised official development assistance. I recognise the depth of feeling across the research sector regarding ongoing funding for international development research. The impact of the pandemic on the UK economy forced the Government take some difficult decisions, including temporarily reducing the overall amount spent on aid. This has inevitably meant less funding for BEIS R&D development programmes, as it has for all areas of ODA spending. My officials are working with our delivery partners to best manage the impact of those reductions and to protect the strongest research programmes. I should add that both the Chancellor and the Foreign Secretary have reiterated the Government’s commitment to international development and our intention to return to the 0.7% GNI target when the fiscal situation allows.

The hon. Member for Cambridge mentioned our commitment to the R&D road map and to developing an R&D people and culture strategy that will set out the direction and actions that Government, funders, employers and individuals can take to ensure that the R&D sector has the people it needs, working in a culture that gets the best out of everyone. I am committed to ensuring that the UK attracts, develops and retains talented individuals and strong teams to support our science superpower ambitions.

The hon. Members for Arfon (Hywel Williams) and for Birmingham, Selly Oak (Steve McCabe) raised the important question of levelling up. The Government are due to publish the UK R&D places strategy in the summer. We will ensure that R&D and innovation benefits the economy and society in nations, regions and local areas across the United Kingdom, contributing to the Government’s wider levelling-up ambitions. This is about not only how much money we spend in each place, but outcomes, so our focus must be on the impact that our R&D system can have in different places across the country.

R&D is incredibly important in so many ways. It advances the boundaries of human knowledge and discovery and is a key driver of economic growth and productivity. It also enables society to solve the challenges of the future in areas of fundamental importance, such as health and climate change. As several hon. Members have noted, the UK gets significant value from its investment in R&D. Each £1 of public investment in R&D ultimately leverages around £2 of additional private sector investment and creates, on average, around £7 of net present social value.

Hon. Members will know that we published our R&D road map last July. It sets out our vision and ambition to ensure that the UK is the very best place in the world for scientists, researchers, innovators and entrepreneurs to live and work. Although we recognise the challenging economic and fiscal climate, the Government committed through the spending review in November to invest £14.6 billion in R&D in 2021-22, with BEIS, as the custodian of the R&D system, being allocated £11 billion for R&D in 2021-22. That commitment re-emphasises the importance of science, research and innovation towards our future prosperity, as well as our ambition to move towards the UK investing 2.4% of GDP in research and development by 2027.

The UK has a world-leading research base and global expertise across a wide range of disciplines. With less than 1% of the world’s population, the UK accounts for 14% of the world’s most highly cited academic publications. Our strong core research system is integral to that success, as recognised by the Chancellor in the spending review. He confirmed an ambitious multi-year settlement for UK Research and Innovation and the national academies core research budget. By 2023-24, the Government will be investing £1.4 billion more per annum in core funding for our world-leading research base compared with 2020-21.

My hon. Friend the Member for South Cambridgeshire (Anthony Browne) spoke about funding for life sciences, and I am grateful to the hon. Member for Strangford (Jim Shannon) for his passionate and constructive contribution. My hon. Friend the Member for St Ives (Derek Thomas) also spoke passionately about the importance of funding for devastating conditions such as brain tumours and cancers, and I recognise the importance of such research. That is why we are committed to supporting the health and life sciences sector, where we are fortunate to boast a vibrant ecosystem that brings together researchers in some of the world’s top universities to work collaboratively with their counterparts in leading pharmaceutical companies, clinical researchers in the NHS and others. This has never been more important than in the response to covid-19, and we recognise that years of blue-sky research, enabled by the strength of the UK’s core research system, was vital to our success in developing effective vaccines so quickly. The Government continue to support that response, with commitments including £128 million to support vaccine research and manufacturing.

The rapid response to covid-19 has also led to a cultural shift around funding and decision making, with a desire to move towards a leaner and more agile system. The new Advanced Research and Invention Agency will be an independent research body that funds high-risk, high-reward scientific research, and it will complement the work of UK Research and Innovation and other research funders. ARIA will be led by a prominent world-leading scientist, who will be given the freedom to identify and fund transformational science and technology at speed. It is based on successful models that are built on giving researchers significant autonomy and freedom from bureaucracy.

Looking forward, we want to go further and build on our truly excellent UK R&D achievements, which is why we are committed to increasing UK investment in R&D to 2.4% of GDP by 2027. My right hon. Friend the Member for Kingswood (Chris Skidmore) spoke about this, and about the importance of public and private investment in reaching that target. Public investment in R&D is increasing, but we must also leverage further private sector investment. UK businesses provided almost £26 billion of R&D in 2019—an increase of 3.3% compared with 2018—as part of a long-term trend of positive annual growth.

Earlier this month we published “Building Back Better: our plan for growth”, in which we announced plans to publish a new innovation strategy in the summer to inspire, facilitate and unleash innovation, supporting and harnessing the tremendous capability of UK innovators to boost future prosperity, both locally and nationwide. The Budget also announced £375 million to introduce Future Fund: Breakthrough, a new and direct co-investment product to support the scaling up of R&D-intensive businesses, and Her Majesty’s Treasury has announced that it will review R&D tax relief to ensure it remains up to date, competitive and well targeted.

In conclusion, research and development are integral to our objective of unleashing innovation. R&D will help us drive the Government’s long-term plan to build on the UK’s world-class credentials in research and development, and deliver economic growth and societal benefits across the UK for decades to come.