UK government to give R&D a £4.745B post-Brexit boost

The UK government has abandoned its target of balancing the books by the end of the current parliament in favour of a stimulus package that will see an extra £4.745 billion flowing into science and innovation over the next four years.

The moves comes on the back of lower expected growth in the lead-up to Brexit and beyond, with the independent Office for Budget Responsibility cutting forecasts sharply from its sunnier outlook before the referendum vote to leave the EU five months ago.

The money for research and innovation will come from a new National Productivity Investment Fund, which will invest £23 billion from 2017-22, mostly on housing and transport and telecoms infrastructure.

Some of the extra funding for R&D will be channelled through a new Industrial Strategy Challenge Fund, to be overseen by Innovate UK. The fund, modelled on the US Defense Advanced Research Projects Agency, will target priority technologies such as robotics, artificial intelligence, industrial biotechnology and advanced materials manufacturing.

The remainder will be devoted to innovation, applied science and research. All of the extra money will be distributed through UK Research and Innovation, a new centralised public grant funding agency that brings together seven formerly independent research councils with Innovate UK, the country’s technology transfer and commercialisation body.

The boost for R&D will see spending increase by £425 million in 2017-18; £820 million in 2018-19; £1.5 billion in 2019-20; and £2 billion in 2020-21. This is in addition to the current £6.3 billion annual research budget.

The government also pledged to invest £400 million into venture capital funds via the British Business Bank, to unlock £1 billion of new investment for young technology companies that are looking to scale-up and ward off foreign purchases of promising companies.

”I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale,” said Philip Hammond, UK chancellor.

The government also plans further investment into the development of autonomous vehicles, a £1 billion to catalyse private investment in 5G wireless broadband  and a £400 million Digital Infrastructure Investment Fund for emerging fibre broadband providers.

A new direct rail link will be built between Oxford and Cambridge to create a technology corridor drawing on the strengths of the cities’ universities.

The government will study the financial barriers preventing many UK start-ups from scaling-up, with an expert panel headed by Damon Buffini, governor of the Wellcome Trust charity, called in to assist with the review.

Hammond confirmed previously announced plans to cut the rate of corporation tax from 20 per cent currently, to 17 per cent, the lowest rate of the world’s 20 biggest economies. There will also be a review of R&D tax credits.

The extra spending was broadly welcomed by scientists and industry.

Sarah Main, director the Campaign for Science and Engineering, said that the R&D boost sent a strong signal to the rest of the world. “Where previous industrial strategies have floundered by failing to fully engage industry or provide necessary resource, it seems that this time industry and government are ready to work hand-in-hand," she said.

Scientists for Britain, a lobby group which campaigned for the UK to leave the EU, said the funding boost was, “A welcome vote of confidence in UK science [and] recognition that research [and] development will be integral to our success once we leave the EU”.

David Lane, founder and director of the Edinburgh Alliance in Robotics and Autonomous Systems, said the Industrial Strategy Challenge Fund is “excellent news” for UK research and innovation. “We first proposed challenge-led innovation for robotics and artificial intelligence in 2014 based on our experiences starting successful new businesses in the marine and transport sectors. Today's announcement will enable this successful model to be applied more broadly.”

“We will work to ensure that the whole country reaps the benefits of these investments,” said Alice Gast, president of Imperial College London. “The chancellor has recognised that investing in research and innovation is the best way to raise productivity. We welcome the recognition of the potential impact of long-term investment in science and innovation.”

The government says that it currently invests around £6.3 billion directly in R&D – not including separate funding for higher-education institutions – and more than £2 billion in R&D tax credits.