Blog: Budget 2017

22 November 2017

Chief Executive of the Russell Group Dr Tim Bradshaw blogs following the 2017 Budget:

The Chancellor’s speech today will probably be hailed as a ‘Budget for Brexit’ or some such alliterative play on words, while efforts to tackle the housing shortage will rightly grab the headlines. But as we move rapidly on from one headline to the next it is all too easy to overlook the real star of Budget week, which came with the Prime Minister’s announcement on Monday that the Government will…

‘Work with industry to boost spending on R&D to 2.4 per cent of GDP by 2027, which could increase public and private R&D investment by as much as £80 billion over the next 10 years. We will start by making an extra investment of £2.3 billion in 2021/22, raising total public investment in R&D to £12.5 billion that year alone.’

This is a significant boost for the future of the economy and underlines the commitment made in Autumn Statement 2016 that guaranteed a £4.7 billion real increase in R&D investment to 2020/21. With pressure on the Chancellor to deliver immediate growth, this is a balanced investment that looks to the medium and longer-term. It shows the UK is serious about delivering prosperity for an economy that will increasingly need to look to research and innovation to stand out and be competitive.

Our own recent analysis showed research at our 24 universities in 2015/16 alone will generate an economic impact of £34.1 billion for the UK economy– that’s equivalent to all the money government spends on environmental protection, pollution control and flooding over three years.

 Much of this value to the economy comes through new technologies, processes and productivity improvements in the businesses that work with our universities. In fact, we estimate that every £1 of public research funding for our universities delivers a return of £9 to the UK economy. But there are also much wider returns to society, communities and individuals through the knock-on benefits of advances in everything from cancer care to conflict resolution that come from university research.

Even with the new investment, the UK (at 1.7% GDP spent on R&D) has a long way to go to catch up with the likes of Germany (2.93%), the US (2.79%) or countries in Scandinavia (where the average is over 2.7% according to the OECD). The focus with the new industrial strategy is now going to be around encouraging business to invest more – and that definitely needs to be a priority – but what attracts businesses to invest in R&D in one country or another in the first place? For many, that aspect of their business is something that can be highly mobile globally, so the tax, legal and regulatory regimes have to be good, along with essential infrastructure and other services. Increasing the R&D tax credit, as announced today, is helpful; we would also suggest that all research business conducts with universities should be automatically eligible for tax relief.

But those are just the ‘hygiene factors’ that buy you a ticket at the table for investment consideration. The real prize is access to the best research and the minds behind that research. Here the UK has a significant asset base in our world-class universities where much of our research is conducted. The UK continues to produce over 15% of the world’s most highly cited articles, which is well ahead of the US, Japan, Germany and China (according to the most recent update from Elsevier) – and that from just 2.7% of global R&D expenditure.

Our leadership in basic research is at the heart of this and we have strength across a diverse range of research fields too, from clinical and environmental sciences, to engineering and humanities. It means UK universities can bring together a wide range of disciplines to address future challenges from many different angles and turn them into opportunities.

So as we look to ways of stimulating more business investment in R&D, we are asking the Government to look at the big picture too and strengthen investment in basic research through the funding councils in all nations of the UK and what will soon be Research England. Their contribution, so called quality-related or ‘QR’ funding (and REG in Scotland) provides the essential complement to other challenge-based approaches to research funding. A boost here from the additional commitments made this week would ensure there is a sustainable pipeline of new ideas and talent to keep the UK research and innovation ecosystem vibrant and attractive to business.