According to the U.K. Office of National Statistics (ONS), there has been a shift in terms of U.K. government spending in relation to research and development (R&D).
Given the U.K. Chancellor’s (Rishi Sunak) recent reforms to the tax credit scheme in his Spring Statement, the numbers provide some useful context to the Johnson government’s plans for innovation and R&D.
Looking into the latest trends for Digital Journal is Benjamin Craig, Senior Manager R&D Tax Incentives at international innovation consultancy, Ayming. Craig thinks the new statistics show about the government’s intentions and what they suggest about the direction of travel for this government when it comes to UK-led innovation.
As Craig observes, based on the newly released data: “Government R&D spending in 2020 shot up. These figures represent a 17 percent increase on 2019.” R&D spending set to increase by £5 billion to £20 billion per annum by 2024-2025.
He then poses the question: “So what’s behind this?” In answering his own question, Craig says: “The rise is likely to have been influenced by COVID-19 research funding, which was a big priority as soon as the pandemic hit.”
Yet there are other factors beyond the pandemic that have led to the investment increase: “However, this is part of a trend whereby the Government is investing more in innovation. Next year, we can expect another big jump. We know that the Johnson Government has placed a lot of emphasis on innovation, epitomised in its pet project ARIA, a blue-sky innovation agency modelled on the US’s DARPA.”
ARIA is the Advanced Research & Invention Agency. The ARIA is modelled on America’s long-running Defence Advanced Research Projects Agency (DARPA), which aims to make pivotal investments in breakthrough technologies for national security.
While Johnson has championed ARIA, several years have gone past and there is little sign of activity in this space. It may be that the R&D drive is coming from other quarters within the government.
Other areas of government have also made declarations about R&D, including the embattled Sunak who has also “expressed intention to raise public investment in R&D to their highest levels ever.”
However, more needs to be done to give the British economy a kick-start, Craig argues: “While it’s great to see the Government investing heavily in R&D, what we really need to boost is new ways to incentivise business investment.”
Craig makes a key recommendation: “Further down the line, spending is likely to continue rising because today’s figures will not yet have been influenced by Brexit. The negotiations about the UK’s involvement is the EU’s Horizon research funding programme are still ongoing but the UK will probably have to supplement UK research in replacement of that at some stage.”
