11 Sep 2018   |   Viewpoint

Viewpoint: What are the true budget gains in Horizon Europe?

A closer look reveals the increase is relatively modest and does not convincingly reflect the claimed ambitions

Ever since the European Commission presented its proposal for the next EU research programme, Horizon Europe, for the 2021 to 2027 period, the proposed budget has been a very controversial issue.

I want to attempt to put the debate on a more solid ground by trying to calculate truly comparable budget figures – I’ll look at the 2011 budget proposal for the current EU research programme, Horizon 2020, the resulting Horizon 2020 regulation from 2013 and the new Horizon Europe proposal.

The results reveal a somewhat different overall picture compared to the media coverage and public debate around Horizon Europe so far.

When the Commission presented Horizon Europe, on June 7, one of the headline messages from the press material was a total budget for €100 billion and a massive increase in funding for research and innovation over the years to come, making Horizon Europe “the most ambitious programme ever”.

Journalists and observers had some difficulties in understanding all the figures presented, so EU Research Commissioner Carlos Moedas took the opportunity to express his view on the issue in an interview with the DG RTD magazine “Horizon EU”.

“The numbers are quite simple,” he said. “Horizon 2020 was around €77 billion. If you subtract the United Kingdom, because the United Kingdom was a big part of the programme, that would be €67 billion. And today the programme we are putting forward is €100 billion. €100 billion for 27 countries compared with €67 billion for 27 countries. You are talking about the biggest increase in absolute amounts ever.”

Simplification is a top priority of the Commission, but here it might have been pushed a bit far, as comparing the funding streams from Horizon 2020 with the future Horizon Europe programme is not as straightforward as suggested. 

Factors shaping the comparison

Three factors influence – and alter – the calculations.

Firstly, inflation. Horizon 2020 was proposed in 2011, and Horizon Europe will run until 2027. Even with comparatively low inflation rates, a comparison based on “current prices” over a time span of 18 years would be misleading. A re-calculation, using “constant prices”, is essential.

Then there’s Brexit. All current EU member states pay into Horizon 2020, whereas the budget for Horizon Europe will be based on the contribution of 27 member states, excluding the UK.

It might be appropriate, for some purposes, to re-calculate Horizon 2020 figures to exclude the contributions from the UK and to allow a comparison with Horizon Europe. However, it might also be useful in some contexts to just compare the absolute amount of EU funding, not considering the actual number of member states.

The final factor to consider is what the money is actually covering. Both Framework Programmes are presented as covering research and innovation. Although the official rhetoric implies that both activities are very much inter-connected, one might also take the view that funding mechanisms in both areas are profoundly different and that money going to finance the growth of innovative companies is not (directly) supporting research.

It might therefore be useful to analyse the “research” and “innovation” parts of both programmes separately.

Constant prices 2018

Using constant prices for the year 2018 allows us to understand that the proposal for Horizon Europe is ‘in total real terms’ smaller than the Commission proposal for Horizon 2020, presented back in 2011.

Compared to the final Horizon 2020 budget after negotiations with Council and the European Parliament, the proposed budget for Horizon Europe represents an increase of 8 per cent in real absolute terms.

Not surprisingly, the calibration of budgetary figures on the common 2018 price basis leads to considerably less impressive increases in the budget numbers, or even to the somewhat disappointing conclusion that in total volume the Horizon Europe proposal is even lower than the initial proposal for Horizon 2020.

Taking out the UK

While looking at the total budgetary figures for both programmes is meaningful when analysing the total size of the endeavour, an adjustment might be useful to compare Horizon 2020, which runs with the full participation of the UK, with Horizon Europe, which for the time being leaves out the UK.

Since for the moment predicting possible future UK funding for Horizon Europe is impossible, the only way out is to calculate budgetary figures for Horizon 2020 that do not include the financial contribution from the UK (some 13.5 per cent of the total EU 28 funding).

When we do this, we can see that the budget for the Horizon Europe proposal is roughly €10 billion (in constant 2018 prices) or some 14 per cent higher than the hypothetical Horizon 2020 proposal without the UK.

When comparing with a final Horizon 2020 budget ex-UK, the increase corresponds to some €16 billion or 23 per cent.

These are impressive figures, yet remarkably lower than the figures quoted by the Commission, which claims an increase of 50 per cent in relative terms and €33 billion in absolute terms.

So what is there for research?

Horizon 2020 was the first Framework Programme for research and Innovation, whereas all previous programmes had an almost exclusive focus on research. The plans for Horizon Europe indicate a substantial increase in the funding of innovation related activities, notably the creation of a European Innovation Council with a budget of almost €9 billion (in 2018 prices; €10 billion in current prices).

Again, if we measure the amount for research in 2018 constant prices, with no UK contribution, we see the research funding envisaged in Horizon Europe (€74.1 billion) is just 6 per cent higher than the research funding initially proposed for Horizon 2020 (€70 billion).

Compared to the finally agreed Horizon 2020 research budget (€61.9 billion), the real increase in research funding proposed for Horizon Europe is just 20 per cent.

Some conclusions

Let’s start with the good news: there is a real funding increase in the Horizon Europe proposal over the current Horizon 2020 budget. In times of fiscal austerity and growing tasks for the European Union, this is remarkable and positive.

However, if you strip away the public presentations and the accompanying political spin, the increase is relatively modest and does not convincingly reflect the claimed ambitions.

While innovation funding will increase substantially with Horizon Europe, the situation regarding “classical” research funding is far less positive.

Considering the high-flying ambitions for research – notably several “missions” to achieve specific societal objectives – one is inclined to assume that these new tasks will not be funded exclusively from additional funding, but will have to tap into the financial reservoirs of the existing research schemes.

Considering this, the hope of seeing “better” success rates in Horizon Europe – odds of winning Horizon 2020 grants are now as low as one in eight – may evaporate quickly. The situation might aggravate collaborative research projects or training networks, where future funding will be flat – at best. 

Finally, it is very revealing to compare the original Commission proposal for Horizon 2020 with the current proposal for Horizon Europe – as they present surprisingly similar absolute figures in real terms. 

In other words: Most of what is presented today in the Horizon Europe proposal as a “gain” compared to the current Horizon 2020 budget corresponds in reality to “losses” suffered in negotiations for the final Horizon 2020 budget.

This is an alarming signal, and better strategies are needed to avoid a repetition of the poor outcome of the Horizon 2020 negotiations – and to make sure that, in the end, Horizon Europe will really bring a substantial increase in real funding for European research.

Peter Fisch managed EU research programmes for 20 years at the European Commission and headed programme evaluation in DG Research. For more on his calculations for this piece, and general thoughts on EU research policy, visit www.peter-fisch.eu

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