UK Government announces plans for largest ever research and development budget

The £39.8 billion research and development budget for 2022-2025 will help deliver the UK Government’s Innovation Strategy and drive forward scientific ambitions.

The largest ever research and development budget (R&D), worth £39.8 billion, has been allocated across the Department for Business, Energy, and Industrial Strategy’s partner organisations, the UK Government has confirmed today. 

Driving forward the government’s ambitions as a science superpower, the Spending Review committed record levels of investment in the UK’s world-leading research base over the next three years, with R&D spending set to increase by £5bn to £20bn per annum by 2024-2025, which is a 33% increase in spending over the current parliament by 2024-2025. 

The Innovation Strategy

These budget allocations will allow the government to deliver on the ambitions set out in the Innovation Strategy with these investments supporting our commitment to ensure total R&D spending reaches 2.4% of GDP by 2027. 

Additionally, these investments will contribute to the new cross-government approach on research and development, helping to deliver a strategic advantage in science and technology, work alongside industry to leverage private investment, and deliver prosperity, security, and resilience this century. 

In turn, the investment will support priorities that are key to the UK’s prosperity. This includes tackling climate change, to levelling up opportunities across the country. This will enable investment in new technologies from clean tech to AI, where the UK has a strong competitive advantage globally, and industrial strength at home. 

The importance of the research and development budget

“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,” commented Business Secretary, Kwasi Kwarteng. “Now is the moment to unleash British science, technology and innovation to rise to the challenges of the 21st century. 

“My department’s £39.8bn R&D budget – the largest ever R&D budget committed so far – will be deployed and specifically targeted to strengthen Britain’s comparative advantages, supporting the best ideas to become the best commercial innovations, and securing the UK’s position as a science superpower.” 

This includes full funding for EU programmes, for which £6.8bn has been allocated to support the UK’s association with Horizon Europe, Euratom Research & Training, and Fusion for Energy.  

If the UK is unable to associate to Horizon Europe, the funding allocated to Horizon association will go to UK government R&D programmes, including those to support new international partnerships. 

A significant proportion of the budget has been allocated to UK Research & Innovation (UKRI), which will receive over £25bn across the next three years, reaching over £8.8bn in 2024-2025, its highest ever level and over £1bn more than in 2021-2022. This will include an increase in funding for core Innovate UK programmes by 66% to £1.1bn in 2024-2025, helping connect companies to the capital, skills and connections they need to innovate and grow. 

The UK Space Agency’s budget will also grow to over £600m million by 2024-2025, recognising the fact that our world-leading space sector adds nearly £16bn to UK GDP, while underpinning complementary parts of the economy including finance, logistics, and agriculture. 

Increasing public investment in R&D outside the South-East

These allocations follow the government’s recent commitments made in the Levelling Up White Paper, to increase public investment in R&D outside the greater SouthEast by at least a third over the Spending Review period, and for these regions to receive at least 55% of BEIS domestic R&D budget by 2024-2025. 

The government’s ambitious R&D investment plans, combined with our generous R&D tax credits programme, will give businesses the confidence to invest in the field following the pandemic, with research finding that every £1 of public expenditure in R&D eventually leverages an average of £2 of additional private investment. 

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