Rishi Sunak ignored pleas from leading scientists - and a recent Tory business secretary - to delay a government target of increasing annual investment into UK research and development to £22 billion by two years.
Sunak made hitting the spending target by the end of the parliamentary term in May 2024 a centrepiece of his first Budget in March 2020, billing it as the “fastest, largest increase in R&D spend ever.”
Today he told the Commons: “We will maintain our target to increase R&D investment to £22billion... but in order to get there, and deliver on our other priorities, we'll reach the target in 2026-27 spending.”
Spending on research is now expected to reach £20 billion a year by the end of this term - a significant, albeit smaller, sum.
The delay had been predicted but still comes as a blow to the UK’s research community: dozens of leading science and tech bodies this month called on the chancellor not to renege on the ambition.
More than 30 organisations including the Academy of Medical Sciences, the Francis Crick Institute, Cancer Research UK, the Royal Society and Universities UK, said it was “crucial that government invests strategically now”.
Last week, former business secretary Greg Clark who chairs the Science & Technology select committee, wrote to the Chancellor and Number 10 warning that “a sudden downgrade or deferral” of the commitment would be “immensely damaging” to private sector investment.
Sunak insisted the increase was 50% above existing levels and comes in addition to uncosted tax relief on research.
• Just under £6 billion has been earmarked for core science funding by 2024-25; with £800million to establish the new Advanced Research and Invention Agency by 2025-26.
• Innovate UK's annual core budget will be raised to £1billion.
Today’s back-peddling will take total public investment from 0.7% to 1.1% of GDP in this term: the previous goal of reaching 2.4% by 2027 went unmentioned.
Sunak tried to soften the blow telling the House: “There's more to becoming a science superpower than just what the Government spends on R&D. Innovation comes from the imagination, drive and risk-taking of business.”
He also announced the launch of a consultation on changes to the regulatory charge cap for pensions schemes.
Relaxing rules governing how much contributory pension schemes are able to pour into higher risk, lower liquidity equities could unlock access to more of the £2.2 trillion currently out of reach to much of the innovation sector.
Sunak also offered a peace offering in the form of a new Scale-Up visa, which he said would make it “quicker and easier for fast-growing businesses to bring in highly skilled individuals.”
He said: “A third of our science Nobel Laureates have been immigrants. Half of our fastest growing companies have a foreign-born founder. So, an economy built on innovation must be open and attractive to the best and brightest minds.”
Lobby group The Campaign for Science and Engineering (CASE) said: “The effect of dropping the date of 2024/25 from the £22bn investment target will have a hugely significant impact on the amount of private investment the UK could receive over the coming years.
“Not only is the target important for the potential for growth it gives to the UK’s research base and in facilitating inward investment, but also in the confidence it will give to the sector that the Government is intent on keeping its promises.
“Rowing back on pledges will do nothing to make people believe the UK has serious intentions of becoming a ‘science superpower’. Britain’s science has long been super, now it’s time to turn the power on.”
Darktrace CEO Poppy Gustafsson said: “The UK’s science and research base is second to none, but continued investment in this area will be critical to power the next generation of technology companies and drive economic growth.”
Sir Adrian Smith, president of the Royal Society, was sanguine about the delay.
He said: “Recognising the unprecedented circumstances faced by the country, today’s announcement of sustained increases for science funding is a welcome recognition of the importance of science and innovation to the nation’s resilience and growth.
“It is also a strong signal of the Government’s ambition to grow the full potential of the UK as a global leader in science and innovation.
“Over the past few weeks this argument has been repeatedly made by the science and business communities and we are pleased that the Government has listened. This long-term commitment to research sends a positive message to businesses, at home and abroad, that the UK is and will remain a global science leader.”
Moray Wright, CEO of tech investor Parkwalk, was also upbeat despite the setback, saying: "The relaxing of the regulatory charge cap for larger pensions schemes could unlock some of the £2.2 trillion currently off-limits to higher-risk, less liquid start-ups.
“It's also great to see the continued commitment to R&D spending, which will help the UK maintain its position as a world leading innovator and university powerhouse, and the investment is attempting to translate more of this innovation into value back to UK plc, rather than taken overseas.
“With the combined force of opening up pension fund investment into the innovative UK businesses of the future and a continued commitment to R&D spending, the UK is in a strong position to ‘level up’ and retain its crown as a ‘science superpower’.
“Both these initiatives compliment each other as greater support for R&D investment combined with a larger investment pool from pensions funds, greater support when they are ready to scale."