British business and universities demand R&D be spared cuts

UK universities and business leaders have written to the government urging it make a fresh commitment to invest £20bn annually in research and development to safeguard Britain’s economic growth, after prime minister Rishi Sunak warned of “difficult decisions” ahead of next month’s Autumn Statement.

Universities UK, which represents the sector, along with technology group Siemens and Gatwick airport were among more than 100 business organisations, education leaders and individual researchers that have written to chancellor Jeremy Hunt urging him to protect R&D funding.

The letter, seen by the Financial Times, warned that a failure to invest in innovation would result in poorer productivity across the UK in the long run.

The intervention comes as the government prepares to make its autumn fiscal statement on November 17. Hunt is expected to announce funding cuts to plug a £30-40bn hole in the public finances and has warned of “eye-wateringly difficult” choices to come.

In the letter, which was co-ordinated by University Alliance, a group for technical universities, sector leaders said they recognised “difficult decisions” were needed to “protect the economy” but added that investment for researchers and business via the UK Research and Innovation public body, would yield economic returns in the long term.

“Avoiding disaster today is not enough. We must seek to thrive tomorrow and into the future,” the letter said. “As business leaders, universities and scientists, we urge you to protect R&D funding now to help grow the UK economy and support the commitment to achieve net zero by 2050.”

According to research by the CBI, boosting R&D would lead to the greater technological innovation and higher-skilled workforce that are needed to tackle difficult problems like climate change.

University and business leaders asked Hunt to recommit to the 2021 Conservative government spending review pledge to increase funding for R&D by £5bn to £20bn a year by 2024-5.

The funding pledge was intended to raise investment in research and innovation to 2.4 per cent of gross domestic product a year for both the public and private sector, in line with the OECD average, by 2027.

Total spending on R&D has stagnated in the past two decades and in 2019 grew at its slowest rate since 2013, reaching approximately 1.74 per cent of GDP, according to the Office for National Statistics.

Last month’s “mini”-Budget, which has been in large part abandoned by the Sunak administration, made little mention of R&D, hoping to attract more private investment into business through lighter regulation and reduced taxation.

Matt Griffith, director of policy at Business West, an organisation offering business support in the west of England, said uncertainty about future government funding for research had made businesses more cautious about investing in their own operations.

“It was penny-wise pound-foolish. We’ve had subpar growth performance for some time now,” he said. “We’re worried they [the government] will cut the stuff that will actually improve long-term economic performance.”

The Treasury said it would set out plans to bring down debt in the Autumn Statement and that its top priority was restoring economic stability. “The prime minister and chancellor have been clear that this will require some difficult decisions, but protecting public services and the most vulnerable will be prioritised,” it said.