Spending review
On Wednesday 11 June, the Chancellor unveiled her budgetary decisions following the UK Government’s comprehensive spending review. Whilst the news headlines focused on investment in the NHS in England and housing, and also on capital spending in infrastructure projects, the picture for research and development was less clear-cut.
DSIT’s capital R&D budget will grow from £13.9bn in 2025/26 to £15.2bn in 2029/30, with the four-year budget settlement worth £86bn overall. Although a 9% increase in cash terms, it is closer to a real-terms freeze when inflation is considered. Compared to some of the cuts experienced in other areas, this could be read as the UK Government protecting research spending – but that may be of little comfort during already-straitened times. The Royal Society had previously said that a flat cash settlement for R&D would be a “retrograde step” for the nation, whilst Wellcome’s chief executive said that “a flat real-terms science budget, along with continuing barriers such as high visa costs for talented scientists and the university funding crisis, won’t be enough for the UK [to] make the advances it needs to secure its reputation for science in an increasingly competitive world”.
The figure does not contain the precise allocation which DSIT will then make to UKRI, and there is also no detail on quality-related research (QR) funding or the Higher Education Innovation Fund in England. With demands on the R&D budget expected from both health and defence, it is likely that the final UKRI allocation may be squeezed – which, in turn, could have an impact on the extent of funding available for ‘blue sky’ research. In the days prior to the spending review, the science minister Patrick Vallance had also hinted that blue-sky research may come under increasing pressure. All of this is against the backdrop of data from the Office for Students in England which revealed that UK universities lost £6.2bn on research grants in 2023-24 as the gap between grants and costs widened.
Furthermore, it appears unlikely that there will be any further Official Development Assistance funding for global research. The International Science Partnerships Fund was launched in 2022, but received a significant extra top-up in ODS funding in 2023. With the funding expiring later this year, it seems unlikely following the spending review that DSIT will continue funding research partnerships with developing countries.
More positively, the R&D figure does include a £500m Local Innovation Partnerships Fund (delivered under the auspices of UKRI) aimed at devolving research investment through research collaborations between university researchers, local authorities and local businesses. Funding of at least £30m is guaranteed under the scheme for each of the seven Established Mayoral Strategic Authorities (EMSAs) in England, and one region in each of Scotland, Wales and Northern Ireland (to be agreed with devolved governments). The fund also includes a competitive bidding process open to all regions, including non-mayoral areas.
Elsewhere, the Chancellor confirmed that Treasury green book rules will be changed to allow more investment in the UK’s nations and regions, following a review.
A fortnight after the spending review, the UK Government published their long-awaited Industrial Strategy. The main document set out the UK Government’s choice of eight high-potential sectors (which it terms “the IS-8”) to prioritise funding and skills interventions:
- Advanced manufacturing
- Creative industries
- Clean energy
- Digital and technologies
- Professional and business services
- Defence
- Financial services
- Life sciences pending
Overall, the strategy seeks to provide reassurance that there is a long-term, whole-of-government commitment to driving growth through the eight priority sectors, with strong emphasis on regional delivery and innovation.
Over the coming months, the Academy will seek to draw together examples of social science research supporting the eight pillars of the industrial strategy, as well as continuing to work with other organisations to make the case for sustained investment in UKRI research and QR funding.
Other news in brief
- Welsh research funding also squeezed: With the comprehensive spending review offering little positive news on UK Government research spending, it emerged shortly afterwards (£) that research and innovation funding in Welsh universities is also set to remain flat for the next academic year. Medr’s funding plans for the 2025-26 academic year includes research and innovation funding at nearly £5.8 million less than initial allocations for the current academic year, unless institutions decide to take money away from other areas. Elsewhere, Medr also published its five-year strategic plan, including an aspiration “to grow internationally-acclaimed research and inspire innovation throughout the tertiary education sector” in Wales.
- REF portability rules announced: In a new policy on Contributions to Knowledge and Understanding Researchers, it has been explained that researchers in the REF 2029 exercise will be fully split from their outputs. The move comes to prevent universities from boosting their score by recruiting superstar researchers and submitting their pre-existing work – but it could mean that early career staff and those facing redundancy will be hamstrung by rules on portability. Research England argues that the decoupling of staff from their work means universities will be assessed on how well they perform in the various subject areas, and a university “must have been responsible for supporting the research that led to the output”.
- Universities ‘could do less R&D’, according to Research England: In surprising remarks, Research England’s director of research suggested that universities could consider performing less research (£). Steven Hill stressed that the ideas were “not concrete policy proposals” but stated: “Concentrating on unique and high contributions, [and] concentrating on less research, has the potential to bring the amount of activity into balance with research funding”.
- Plans shelved: It is understood that the UK Government’s white paper on post-16 education is likely to be delayed until the autumn, alongside a detailed R&D strategy. Proposals for HE reform are also expected around the same time.
- UKRI expands trial of modified peer review process: A modified version of peer review, whereby applicants assess each other’s proposals, is set to be scaled up at UKRI (£) after a successful trial. The first results from an experimental run of Distributed Peer Review (DPR) found the process more than halved review time for grant applications and boosted participation among reviewers. Unlike traditional peer review methods which tend to rely on external volunteers, grant applicants became peer reviewers of the same funding call.