George Osborne, Chancellor of the Exchequer

Today, George Osborne announced the results of the 2015 Spending Review, laying out the Government’s spending plans for the rest of this Parliament. The £4.7 billion science budget is set to rise in line with inflation up to 2020.

Osborne also committed the Government to implement the recommendations of Sir Paul Nurse’s Review of the Research Councils. When it comes to innovation the UK’s innovation agency, Innovate UK, was given a flat cash settlement, with £165 million of its grants funding set to be converted to loans.

The science budget is protected in real terms…

In 2010, the science budget—the main pot of public money that funds research infrastructure and projects in the UK—was protected, but only in cash terms, meaning that it effectively declined over the course of the last Parliament. Today’s announcement that it will now be pegged to inflation is therefore an improvement on the last settlement.

Osborne also today reiterated the Government’s commitment to inflation-protect the £1.1 billion annual budget for science capital to 2021. Capital spending on science fluctuated over the course of the last Parliament, but with both capital and resource now set to rise with inflation for the rest of this Parliament, these interdependent budgets are now back in line and should be able to work together over the coming years. As Jo Johnson tweeted today, “batteries will now be included”.

…but what’s inside it?

Absent from today’s announcements was any mention of a ring fence around the science budget, which has for the past five years protected it from being redirected to other areas. There was also no detailed breakdown given of what will be counted within it, ring fenced or not. However it has since been reported that the ring fence will remain, and that there will be no ‘tucking in’ to the science budget of other things, which would otherwise have meant the budget being spread more thinly.

While overall Government spending is set to decline, particular areas are protected. The Government is committed to spending 0.7% of Gross National Income (GNI) on Official Development Assistance (ODA), or foreign aid, and some of this will be made up by the inclusion of a £1.5 billion ‘Global Challenges Fund’ in the science budget over the next five years. That means that roughly £300 million of the £4.7 billion science budget each year will need to be spent in a way that “ensures UK science takes a leading role in addressing the problems faced by developing countries”. This restriction may limit the way that some of the science budget can be spent.

Taking Nurse’s prescription

Last week, Sir Paul Nurse’s Review of the UK Research Councils, Ensuring a Successful UK Research Endeavour set out his vision for the future of the UK research system. I summarised the key points of that report in a previous blog, and today George Osborne announced that the Government intends to implement its recommendations.

This announcement means that although the overall budget looks stable, changes to the structures through which it is spent could be substantial. In the first instance, a new body, Research UK, will be introduced to work across the seven research councils to shape a strategic approach to science funding in the UK. The Government has also recently laid out its plans for changes to teaching in higher education in a green paper, on which they are now consulting.

Beyond the science budget in BIS

Several other bits of public funding for science and innovation are outside the science budget. Within BIS (the Department for Business, Innovation and Skills), Innovate UK, which funds innovation in businesses, received a flat cash settlement. Funding for its network of Catapult centres, which support collaboration between businesses and academics, is set to increase. However some of its grants funding for businesses will be turned into a loans-based model, to the tune of £165 million by 2019-20. Innovate UK’s budget had increased steadily over the course of the last Parliament.

BIS also commits to funding aerospace and automotive sectors for ten years, and to doubling spending on apprenticeships since they came into office in 2010-11 by the end of the Parliament.

One document that didn’t appear today is the Government’s response to the Dowling Review, which made a number of recommendations for how the Government could better support collaborations between universities and businesses. That should be published soon, and will give a clearer picture of how Government plans to support innovation more broadly.

In higher education, there are several changes to make tuition and maintenance loans more generous, with STEM (science, technology, engineering and mathematics) subjects particularly favoured. Loans will be available for a second degree as long as it’s in a STEM subject. Students in higher-level further education programmes will be eligible for loans, as will Masters students, and part-time students will get access to maintenance loans for the first time. On the other hand, maintenance grants are being replaced with loans (as announced in July). And the teaching grant allocated by HEFCE will be cut by £120 million – high cost subject funding (including STEM) will be protected, but responsibility for widening access will be pushed back onto universities.

Research in other departments

Departments across Government invest in R&D to inform their work but, as budgets declined across Government during the last Parliament, some departmental R&D budgets declined particularly steeply and disproportionately to other funding lines. In its Science and Innovation Strategy, published this time last year, the Government said that it would “examine how to ensure that R&D spending by departments is properly prioritised against other capital investment spending, for example by considering controls that can be placed on this spending to ensure that valuable R&D is not unduly deprioritised in favour of short-term pressures”, by the Spending Review.

There was no sign of a cross-Government approach to this today, but there was some commitment to invest in research in other departments. 1.2% of the defence budget will be dedicated to science and technology over this Parliament, and a total of £5 billion will be invested in health research, including on antimicrobial resistance and the 100,000 genomes project, through the Department of Health. The Department for Energy and Climate Change will be doubling its innovation programme to £500 million over five years.

What happens now?

Today’s announcements set the overall budget for UK research in this Parliament. Over the coming weeks, the details will become clearer about exactly how this funding will be divvied up between budgets within BIS and other departments. These specific allocations are the next piece of the puzzle.

With the spending settlement now in place, the research community and the Government will start to look at whether, how and when changes to the structures and governance of the UK research system will be implemented, particularly those recommended by the Nurse Review.

With the research base’s attention now set to turn inwards it is worth remembering that, in the international context, the UK’s research funding still pales in comparison to that of our competitor nations. Before the Spending Review, the Royal Society had called on Government to commit to increase public investment in research to match the OECD average of 0.67% of GDP; the UK currently invests 0.49%. For the UK to keep its place as a world leader in research, a long-term commitment to increase investment further will be required for the UK to keep pace with other knowledge economies.