The consequences of “No Deal” for UK business Contents

6Research and higher education

121.The UK is renowned for its innovation and research and highly respected tertiary education. Dr Beth Thompson MBE, Head of Policy (UK and EU) Wellcome Trust, said “We have world-leading science and research in this country, and that should be celebrated.”174 However, in an open letter to MPs of 4 January 2019, Universities UK, the Russell Group, Guild HE, MillionPlus and University Alliance wrote that they were “united in the view that the UK leaving the EU without a deal is one of the biggest threats our universities have ever faced.” They went on to state that the impact of no deal “would be an academic, cultural and scientific setback from which it would take decades to recover.”175 Beth Thompson told us:

Even with the best preparation, no deal will leave a vacuum in the UK’s relationship with our biggest research partner. That is untenable and cannot be allowed to happen.176


122.The UK is currently highly successful at winning EU research funding, accounting for 13.5% of the funding from EU framework programme Horizon 2020 to date.177 This amounts to around €1 billion a year in funding according to Professor Tim Wheeler, International Director of UK Research and Innovation.178 To mitigate the risks of a no deal exit to bodies in receipt of this funding, the Government has committed to underwrite successful bids to Erasmus+ and Horizon2020 to the end of those programmes.

123.While this is a considerable step towards preventing an immediate funding crisis, it does not address the risk of exclusion of UK institutes from consortia which are already forming to apply for the next funding cycle. UK based researchers would require either an additional underwrite guarantee for Horizon Europe, the successor to Horizon 2020, or for the UK to achieve association status as a third country. It also does not address the loss of other substantial funding streams. The loss to the UK of funding from the European Research Council and Marie Skłowdowska-Curie Actions, two programmes which the Government has not guaranteed to underwrite, was estimated to amount to €1.3 billion from March 2019—the previously anticipated no deal date—through to the end of the programmes.179

124.Vivienne Stern, Director of Universities UK International, explained that many UK universities are setting up a physical presence in Europe, or working to deepen existing strategic partnerships with European universities, as a route to continued collaboration on EU projects. She explained that these partnerships could not replace intra-EU collaboration:

Take for example the King’s partnership with the TU Dresden. It is focused on clinical medicine. If you think about the breadth of research that King’s would undertake with European partners, it seems to me that that initiative is pretty narrow. It might help in one discipline, but what will it do for the broader relationship? I think that is replicated in other fields. Lots of the strategic partnerships have quite a narrow focus. An exception to that might be the Oxford-Berlin partnership, which does seem to be quite broad-based, but if you look at what is actually going on, those institutions are contributing to a common pot so they can run workshops together and so they can pump-prime new research relationships. It is not an alternative to being able to draw on big European research funds. I suspect it is going to be helpful, whatever kind of Brexit we get, but it won’t be a solution.180

125.All the witnesses raised concerns that an acrimonious departure could taint the possibility of joining funding programmes as a third country. Moreover, the success of associated third countries at drawing on EU funding is far below the level required simply to replicate current funding levels. The Economist noted that while Britain won over 18% of the EU’s research money between 2007 and 2013, the funding for all associated countries combined amounted to only 7%.181 The evidence we heard stressed that mitigating reputational damage and protecting current collaborations was more important in the long term than replacing the funding like-for-like. Beth Thompson pointed to the prestige of European projects:

it is not simply a case of substituting cash from one place to another. The EU programmes are very successful. They are world-leading and provide the UK with a great opportunity to network with other researchers.182

Mobility of students, staff and researchers

126.For a highly mobile international community of researchers and academics in which “one in six individuals in the academic community in the UK are from other parts of Europe”, losing free movement rights would have a profound impact.183 Recourse to either visa schemes or temporary leave to remain are, we were told, insufficient mitigation for this population. The Government’s current proposed cap for a Tier 2 visa is £30,000. Vivienne Stern explained that Universities UK was pressing the Government for a reduction to a £21,000 cap, that would allow the visa to encompass academic and career researchers and technicians most likely to be caught out by the higher salary requirement.184 Tim Wheeler and Beth Thompson agreed that the lower cap would help to retain those staff on whom the talent pipeline depended.185

127.The cost of visas was also seen as detrimental to the UK’s offer to EU nationals as costs were substantially higher than in other parts of Europe.186 The offer was also described as “uncompetitive” when compared with that of the most common alternative choices, the US, Canada and Australia.187 Beth Thompson cited a decline over the past two years in early career researchers applying for Wellcome Trust funding schemes, including a 20% drop in the past year, and a 50% drop in applications from EU nationals for Wellcome Sanger Institute PhD studentships in 2017.188

128.Anticipation of no deal is having a more marked effect on numbers of EU nationals applying to work and study than on those currently based in the UK. Our witnesses shared anecdotal evidence of individuals leaving because of Brexit related uncertainties, however, overall universities were still able to retain and recruit staff. Vivienne Stern reported few complaints about the settled status scheme from those for whom it is applicable.189 However, when it comes to more junior staff and researchers, Beth Thompson said:

We have heard from some of our centres and institutes that they are struggling, particularly at more junior levels, to recruit as many EU nationals as they once did.190

She attributed this to uncertainty about future access to funding but also to a perception of the UK as somewhere increasingly unreceptive to immigrants.

129.Vivienne Stern told us that the Government’s no deal preparations proposed that students not eligible for Settled Status apply for temporary leave to remain and added:

We are deeply unhappy with the suggestion that European temporary leave to remain would be restricted to three years, because people arriving under that arrangement would not necessarily have confidence that at the end of that period they would be able to secure a visa. This scheme would only allow for a three year period of residency, leaving students uncertain of whether they would be able to complete the course to which they were applying.191

[ … ] the British Government are well aware that the standard undergraduate programme in Scotland is four years, so it is quite surprising that they have not managed to create a system that accommodates that.192

130.The Government’s no deal sectoral analysis of Higher Education states that “In 2015, 25 per cent of internationally mobile EU students studying tertiary level courses in Europe chose to study in the UK, representing the greatest proportion to any EU country.”193 These students are drawn to the UK’s strong academic offer but we were told that an Oxford Economics analysis suggests that moving to an international fee structure could deter up to 57% of them.194 Government policy on what fees will apply to students starting courses in 2021 has not yet been announced. The impact of declining numbers of EU students would not be felt evenly but could favour higher profile universities, leading to “catastrophic decreases in EU enrolment of up to 80%” and consequent course closures in others.195 The Government’s explicit commitment to counter this by actively recruiting more international students was seen as positive, but insufficiently ambitious.196

Networks and Collaboration

131.Witnesses repeatedly stressed the value of UK-EU networks. They emphasised the need to maintain a positive working relationship with the EU27 in order to facilitate future collaborations and association to future framework programmes but also to preserve the ability to work across borders with ease. The focus on the short-term shock from no deal was distracting from consideration of what was described to us as the more critical issue of long-term damage to the relationship between the UK and the EU.197

132.Although there was universal praise for the work of Chris Skidmore MP, Minister for Universities, Science, Research and Innovation, Department for Business, Energy and Industrial Strategy, and his officials, for the effort they have put into no deal planning, we were told that too much uncertainty remains on the strategy for a future relationship. Beth Thompson warned that “no deal will fracture our relationship with the EU in a way that is going to be very difficult to come back from.”198 Vivienne Stern said:

my view is still that there is now a short-term focus where there really needs to be a long-term focus. In leaving the EU, we need to be as mindful of the relationship we want in the long-term as we are about the short-term mechanics of the departure itself.199

Pointing to the strength of the UK’s academic reputation, Vivienne Stern also told us:

we have had such influence based on people’s respect for our system. We have to really think about how we can preserve the fundamental strength of our university and research system so that we don’t end up being an object of pity as we lose ground from a previous position of prestige. That has to be the challenge both for domestic policy and our future UK-EU relationship.200

Data across borders

133.Cross border data flows are fundamental to much of the research and innovation at which the UK excels such as clinical trials.201 In the event of a no deal, the UK would have no data adequacy decision from the EU. As a third country there are a number of means to legitimise the flow of data, however, the Committee heard that these are bureaucratic and expensive. With limited regulatory support for academics and researchers, they are hesitant to devote resources to a process that, in the event of a deal, would not be necessary. Giving the example of the 1958 Birth Cohort data, Beth Thomson said:

We see about 2,500 data transfers from the UK to the EU each year. The data then comes back once the EU researchers have done their work on it to enrich that resource, so it gets better for everyone. That is the kind of thing, where personal data is flowing, on which researchers are going to have to do much more paperwork to get through. That is going to be more costly and bureaucratic.202

An important element of that is that it is not just something that the UK can do unilaterally. There has to be a negotiation with the EU partner. Part of the problem is that when UK researchers want to get their hands on personal data from the EU, the burden is on the EU researcher. That is a real challenge.203

134.Vivienne Stern added that mitigating the impact by renegotiating individual contracts involved considerable effort and:

My sense from many universities is that they don’t really know whether they should go at this or not. [ … ] We don’t yet know whether we should be saying to universities, “Guys, invoke your no-deal plans. Do the stuff that we said you might have to do.” That I’m sure, is true of lots of other parts of the sector.204

135.The UK is widely recognised as a world leader in science and research. A number of UK universities consistently rank in the top 50 worldwide. The UK’s economic wellbeing and industrial success is enhanced by its cutting–edge scientific and technological innovation.

136.The Government has made positive strides towards supporting Higher Education and research through an immediate post-exit funding crisis through the Horizon 2020 underwrite. The Settled Status Scheme is also providing some certainty for long-term researchers and academics. However, the overwhelming message we received from this sector was that leaving the EU without a deal would cause a short-term shock and longer term reputational damage from which the UK Higher Education sector would struggle to recover.

137.Anticipation of no deal has already precipitated a decline in applicants to research and technician roles and for UK based grants. EU students, who form a vital part of the highly skilled diverse student population in the UK, are turning down places because of continued uncertainty and modelling has suggested this could have severe consequences, including course closures, for some academic institutions. The UK is losing out on high profile research projects as funding uncertainty is leading to more projects being EU based.

138.Although the scope exists to negotiate association to many EU projects, this is unlikely to be straightforward in the event of an acrimonious no deal.

175 Universities UK, Letter to MPs, 4 January 2019

177 Horizon 2020 runs from January 2014 to December 2020. UK Government, Horizon 2020 funding if there’s no deal, 28 June 2019

183 Q4411 [Wheeler]

186 Q4411 [Thompson]

187 Q4418 [Stern]

193 Higher education sector report, published 21 December 2017;Data from International student mobility – tertiary mobile environment, OECD, 2015

194 Q4428 [Stern]

195 Q4429 [Stern]

196 Q4418 [Stern]

197 Q4405 [Stern; Thompson]

Published: 19 July 2019