UK builds on Industrial Strategy with record £39.8bn R&D budget

Image: UKRI

The funding package was announced today (14 March) by the Department for Business, Energy and Industrial Strategy (BEIS). It builds on the Innovation Strategy, which was updated last March with new measures on net-zero, and the more recent Levelling Up White Paper, which included a commitment to boost public R&D investment outside of South East England by 40% this decade.

BEIS’s plans for allocating the funding is framed as appropriate for delivering on these ambitions and the other headline commitments of the Strategy and the White Paper.

More than £11.5bn will be allocated to BEIS’s own programmes between now and the end of 2025. The UK will also allocate some £6.7bn of funding to EU programmes within this timeframe, including Horizon Europe and its supporting scheme for nuclear power, Euratom Research and Training.

UK Research and Innovation (UKRI) is taking the lion’s share of the funding, with an allocation of more than £25.1bn through to 2025 planned. UKRI provides investment and support within a range of areas relating to environmental sustainability, including bioenergy, low-carbon construction, recycling, advanced materials, offshore wind and carbon removals and storage.

Additionally pledged is £797m for the Met Office and £708m for the UK Atomic Energy Authority. This is the organisation responsible for the UK’s ‘Fusion Foundations’ programme, which has received much media coverage in recent months for its work to scale nuclear fusion technologies.

Overall, the plans will see more than £5bn of additional funding allocated in the 2024-25 financial year, compared with the 2021-22 financial year. This should put the UK on track to deliver on a commitment to ensure that R&D investment reaches 2.4% of GDP by 2027.

BEIS has stated that it will provide a more detailed breakdown of its funding allocation plans “in due course”, including more information on how, exactly, funding is consistent with the UK’s 2050 net-zero goal.  It has promised that its approach will “provide a clear path to growing the economy as we recover from the impact of the pandemic, whilst also supporting our commitment to achieve net-zero by 2050 and deliver a green industrial revolution”.

The UK Government continues to face calls to apply a net-zero stress test to all funding packages but is yet to commit to this approach. 

When the Industrial Strategy was updated last year, for the first time since the UK set its net-zero ambition in law, it was generally well-received across the green economy. It includes measures to cut emissions from heavy industry by two-thirds by 2035.

BEIS Secretary Kwasi Kwarteng said: “For too long, R&D spending in the UK has trailed behind our neighbours – and in this country, science and business have existed in separate spheres. I am adamant that this must change. Now is the moment to unleash British science, technology and innovation to rise to the challenges of the 21st century.”

Accelerating emissions reductions and building in climate resilience is doubtless one of these major challenges. A new report from the Intergovernmental Panel on Climate Change (IPCC) this month warned that global heating and historic inaction on adaptation will create a future that is not “liveable” for at least three billion people by 2050, without rapid and joined-up action in the near term future. The report warned that all geographies will experience more extreme weather due to the climate crisis in the coming decades. 

Sarah George