UK Government ‘unable to prove it will meet green R&D targets’

By January 2021 over 1

The call to action comes from the latest report from the Public Accounts Committee (PAC), assessing the current state of the Industrial Strategy Challenge Fund (ISCF). The fund is overseen by UKRI and Innovate UK, allocating funding from Government coffers, as well as contributions from the private sector, to projects addressing four themes: clean growth, ageing society, the future of mobility and AI and data. Notably, the topics covered and funding processes have not been formally updated since the new version of the Industrial Strategy was unveiled earlier this year.

In a series of interviews and a string of written evidence received as part of its inquiry on the matter, the PAC received evidence that the funding process is deterring some potential applicants, and that projects are too focussed on inputs and with too little weight given to end results.

On the former, MPs heard evidence that delays to funding processing is putting off some business applicants.  It took UKRI, BEIS and HM Treasury 72 weeks to select and approve the challenges that were given funding in 2019-20, MPs heard. It then took UKRI on average a further 31 weeks to assess applications for project funding and approve individual projects. Potential applicants were also deterred by what MPs have called a failure to engage smaller businesses and those based in the North of England. These failures, the PAC states, risk the Government’s commitment to ‘levelling up’ within and between regions.

To the latter, the PAC heard from UKRI representatives directly that inputs should be “second-order” measures, considered to a lesser extent than the real-world outputs of funded projects. Nonetheless, processes continue to focus on inputs. This, the PAC argues, makes it hard for stakeholders like investors to track the difference made by the funding, and for the Government to quantify its contribution to the legally binding net-zero target.

“The message on the ISCF is a recurring one for too many programmes across Government – they are too focussed on inputs, on ticking boxes and distributing funds, rather than on outcomes,” PAC chair Meg Hillier MP said.

“Throwing more taxpayers’ money at the UK’s notorious, long-term productivity and opportunity problems, yet again without a clear, integrated plan or measures of proof that it’s working, reinforces the strong and unfortunate impression of ‘government by announcement’. Show us, the Government,  by results.”

edie has reached out to UKRI for comment.

Underlying issues

Beyond the ISCF itself, MPs are concerned that the UK Government has not properly planned how it will deliver on a commitment to spend 2.4% of GDP on R&D by 2027, with a focus on the net-zero transition.

The PAC looked at 2018, the latest year for which data are available, and found that the UK spent the equivalent of 1.7% of GDP on R&D. This is below the OECD’s 2.4% average for 2018.

This year’s Budget saw Chancellor Rishi Sunak confirming plans to up public investment in R&D to £22bn annually, on average, between 2021 and 2025. UKRI representatives told the PAC that this is a “challenging but feasible” target. Now, MPs want clarity on delivery, in a plan it is requesting to be published by this October, ahead of COP26.

The new report comes after a separate paper from the PAC this week accused the Treasury and HMRC of failing to plan for tax changes on the road to net-zero.

Sarah George