What the new R&D announcements mean for science funding

This week [March 2022] the Government announced the allocations for research and development (R&D) investment by the Department for Business Energy and Industrial Strategy (BEIS) for the next three years alongside extending the Government guarantee for Horizon Europe applicants. Here, our President reacts, and our policy team examines what these announcements mean.

In response to the announcements, Professor Dame Anne Johnson PMedSci, President of the Academy of Medical Sciences said:

“It is good to see details of how BEIS will allocate its share of the Government’s R&D investment. I am pleased to see rising budgets overall, reconfirmation of the £6.8bn for association to Horizon Europe and the extension of the guarantee that successful UK applicants to Horizon Europe will have their funding underwritten by the UK Government. This should provide reassurance to those applicants that have applied for and won prestigious EU awards.

“Challenges remain, including establishing how we reinvest in our international partnerships and how we respond to the pressures of inflation. However, these announcements do provide further demonstration of the central role of R&D investment in the Government’s strategy for the UK. Increased funding for our incredible biomedical and health researchers and our innovative life sciences sector is vital to support the nation’s health and wellbeing.

“Finally, I am pleased to see UKRI’s first five-year strategy, launched this week. I look forward to seeing how this investment will help UKRI to grasp the ‘opportunity to capture the full benefits of our research and innovation prowess’ and take on current and future health challenges.”

What’s new in these announcements?

The Government had already announced its overall budget for R&D will rise to £20 billion per year by 2024/25 – see our President’s response to this, and our explainer. This week’s Statement sets out how Government, specifically BEIS, will spend its part of R&D budget. The policy team at the Academy have analysed this new Statement to tells us what it means for medical science, how it compares to previous years and what we don’t yet know.

If we start with the overall R&D budget for BEIS, we must first consider the change in the way EU R&D programmes are now accounted for. Participation in Horizon 2020 was not paid through BEIS whilst the UK was part of the EU, so to compare to previous years we must subtract the figure for participation in EU programmes. If we do this, we can see that the overall BEIS R&D investment (excluding EU programmes) will rise from £10.1 billion in 2020/21 to £12.1 billion in 2024/25.

UKRI spending to increase, but inflation challenge remains

Over half of this investment goes to UK Research and Innovation (UKRI), which in turn will go to the Research Councils, Innovate UK and Research England. To allow comparison with 2021/22, we must exclude the figures for Official Development Assistance (ODA) investment in R&D (more on this below). We can see that the first multiyear settlement for whole of UKRI delivers year-on-year increase in budgets, but the real effect won’t be felt immediately, particularly when you consider inflationary pressures and existing UKRI commitments.

Funds available for Horizon Europe association and guarantee extended

The next largest sum set aside is for the costs of associating to Horizon Europe. Despite the delays in finalising association, we continue to view this as the best outcome for UK science.

Importantly, this week’s announcement rolls over more than £1 billion from the 2021/22 budget to account for the delay in association. In addition, the Government has extended the guarantee of funding for successful applicants to Horizon Europe. This extends the safety net first announced in November last year and ensures that successful UK applicants to upcoming EU awards, including European Research Council grants and collaborative awards will have their funding guaranteed (details on all the schemes covered are here).

The Academy hopes that these will be interim measures before association is ultimately finalised. However, if association can’t be achieved, the Government has reiterated that funding allocated to Horizon Europe association will go to UK Government R&D programmes. The Academy is working with the Government and others to ensure that our research community continues to have access to competitive and prestigious awards and a framework for international collaboration in any future scenario.

Unknown territory

There are outstanding questions, significantly about how the BEIS ODA R&D budget - set at £301 million per year - will be spent in order to deliver the Government’s goals for foreign aid, whilst strengthening our international research partnerships.

Additionally, we await further detail on how allocations will be spent to achieve the BEIS commitment from the Levelling Up White paper to invest “at least 55% of their domestic R&D funding outside the Greater South East by 2024/5”.

Of course, these announcements reflect only one Department’s investment in R&D. As the Campaign for Science and Engineering have explored, the Government will use the increasing R&D budget to increase investment across Whitehall departments. Significant investment in health research will be delivered by Department of Health and Social Care,  through NIHR and devolved counterparts in Scotland, Wales and Northern Ireland. This week’s announcements don’t included details on this funding.

Finally, challenges will remain; just like the rest of the economy, inflationary pressures are also mounting and the real terms impact of rising costs will be felt on all R&D budget lines.

Funding for the Academy

These announcements also provide details on increases to overall National Academy investment, which will rise from £207 million in 2022/23 to £215 million in 2024/25. This figure will include the Academy of Medical Sciences’ own allocation and we look forward to working with BEIS to finalise the details on this.

Our funding from BEIS will support us to deliver the ambitions in our new 10 year strategy launching later in the spring. See our strategy development pages for more information. 

* £1.2 billion of the 2021-2022 budget has deferred into 2022-2023 to cover delayed costs of association to Horizon Europe.

Visit our page on funding and regulation to read more about the Academy’s work in this sphere.