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What’s in the Autumn Statement for R&D?

The new Chancellor’s first Autumn Statement looks like more of the same recycling of old policies. By David Hughes

· Funding,Government,Policy
The Rt Hon Philip Hammond MP, Chancellor of the Exchequer

The headlines from the Autumn Statement promised an additional £4.7 billion for R&D by 2020-21. This will be allocated through the so-called National Productivity Investment Fund. This money ramps up from £425 million in 2017-18 to an additional £1.5 billion in 2019-20 (the last year of this Parliament and first year outside the EU). The details of this allocation are not yet published but it appears that the funding will be administered by the new organisation UK Research and Innovation (UKRI) which is the integration of the old Research Councils and Innovate UK and will have two key elements:

  • An Industrial Strategy Challenge Fund modelled on the US Defense Advanced Research Projects Agency (DARPA), supporting collaborations between business and the UK science base.

  • Applied science and Research: additional funding to increase research funding and business innovation.

This looks painfully like more of the same with civil servants recycling old policies like an episode of Yes, Minister. In 2004 the Government published its Science & Innovation Investment Framework 2004-2014 which promised ‘increased business investment in R&D’ and ‘greater responsiveness of the publicly funded research base to the needs of the economy’ and ‘a strong supply of scientists, engineers and technologists’. This has demonstrably failed. In addition, in the last 12 years we have had five reviews into university-business collaboration – none of which appears to have made any difference to economic growth.

So isn’t it about time we took a step back and understood more precisely how economic growth is stimulated by Business R&D? To do that, it is important to understand the whole commercialisation process to the end user, as terms such as ‘research’, ‘R&D’ and ‘innovation’ have become conflated and can lead to an inappropriate policy focus. Much innovation and commercial success does not come directly from academic research (for example, container freight transport, the block chain algorithm) and within companies the precise boundary between where R&D finishes and commercialisation begins is not well-defined.

This can have major implications for development of Government supported R&D. In particular, published data on R&D expenditure can be hard to interpret if some countries or industries define R&D expenditure more broadly than others. This can in turn affect rules on investment and tax treatment based on the role of the state versus the private sector, potentially impacting support for innovation. In this context, the details of how this funding will be allocated will become very important.

While the headline grabbing figure has been welcomed by some university commentators, they will soon realise that the additional funding is very small in relation to the research income that will be lost from the EU after the UK leaves. As far a business is concerned, the R&D Society will continue to argue for greater understanding of the role of industrial R&D in helping businesses grow faster and hence get real UK economic growth.

David Hughes is on the board of the Society, and is Managing Director of the Business Innovation Group