Research and Development funding across government Contents

Conclusions and recommendations

1.BEIS does not know how it will achieve the target of increasing total UK investment in research and development, while at the same time compensating for any potential loss of research funding following EU exit. In 2017, total UK spending on research was 1.68% of GDP, less than some European countries including Germany and an EU average of 2.03%. The Government aims to increase total UK research spending to 2.4% of GDP by 2027 and has announced plans for an additional £7 billion of government funding over the five years to 2021–22. However, half of UK research is currently funded by the private sector over which BEIS has little control. The Government has tried to encourage private sector investment by increasing tax reliefs on research and development from 11% to 12%, but BEIS does not know what impact this incentive will have on industry funding or what the balance between public and private expenditure should be. Furthermore, the UK is currently a net recipient of EU funding for research and development but, depending on the outcome of negotiations, it could face a funding reduction or loss of this source of funding in future following the UK withdrawal from the EU. The Government may need to address a bigger shortfall in research funding in future and BEIS does not appear to have a clear plan for achieving the 2.4% target.

Recommendation: To avoid the Government having to make a disproportionately high contribution to future UK research funding, BEIS should develop a clear strategy for increasing total UK investment to 2.4% of GDP, which addresses issues such as under-funding by business and the potential loss of EU funding.

2.Government research is funded by multiple departments, with no organisation taking overall responsibility for investment. BEIS and its seven research councils are responsible for the majority of publicly-funded research. Other government departments, including the Department of Health and Social Care, the Ministry of Defence, the Department for International Development and the Department for Environment, Food & Rural Affairs, account for around a third of public expenditure on research. The new UKRI, which will be established in April 2018, will bring together the research councils, Innovate UK and the research functions of HEFCE. It will have an important leadership and coordination role and aims to fund research through multi-disciplinary funds rather than solely allocating funding to individual research councils. However, it will not have authority to take decisions on the level of funding that other government departments allocate to research from their own budgets.

Recommendation: The new UKRI should, by July 2018, publish a strategy showing how decision-makers will work both across the new organisation and with other parts of government to ensure that research and development is well-coordinated, priorities are aligned, and information is shared.

3.Government is still not doing enough to safeguard the economic benefits of its research assets. Currently, ownership of intellectual property resides with the body that conducted the research rather than with the government funder, but BEIS acknowledges the need to support effective exploitation of publicly-funded research for the benefit of the UK economy. In our 2016 report, we recommended that the former Department for Business, Innovation and Skills should ensure that there are clear accountabilities in place to safeguard intellectual property rights and the benefits that should accrue to the UK economy as a result of public investment in research. The Government committed to implementing this recommendation by spring 2018. UKRI told us that it would consider intellectual property rights when developing its strategy for UK research, but it did not provide details of what action it would take to protect intellectual property rights. Other countries, for example China, actively ensure that the products of university research are protected. China also invests more in translational research than the UK.

Recommendation: By April 2018, BEIS needs to provide the Committee with a detailed progress update on the action it has taken to ensure that clear accountabilities are in place to safeguard intellectual property in response to the previous Committee’s recommendation.

4.Government does not know which areas of research need stronger leadership. Successful research, including clear priorities and beneficial outcomes, is dependent on strong leadership. Government accepted that there is insufficient leadership in key areas of research, including robotics, climate science and advanced materials. The interim Government Chief Scientific Adviser acknowledged that it is not enough simply to increase funding in sectors that are not performing well, and that people with new ideas are often needed to boost areas of research that are lagging behind. BEIS and the interim Government Chief Scientific Adviser identified areas of research that require attention, such as social and political sciences, public administration and behavioural research. However, we are not convinced that government departments are doing enough to identify and address where stronger leadership is needed to increase UK productivity in key sectors of technology.

Recommendation: Once UKRI is established, it should identify where UK research is lagging behind and develop tailored strategies for investing in and supporting these areas to develop capability and increase productivity.

5.BEIS does not know enough about which areas of science have skills gaps, nor the potential impact on the availability of key skills arising from the UK leaving the EU. In most of the research areas we examined, funders lacked coherent and complete information on the skills needed to conduct research. All the witnesses acknowledged the challenges in identifying and addressing research skills gaps. The interim Government Chief Scientific Adviser told us that it is important to spot gaps in the skills of researchers early and act to resolve issues such as women and other groups leaving the profession prematurely, while BEIS and UKRI emphasised the need to improve digital and quantitative skills. The UK’s exit from the EU could exacerbate skills gaps if it becomes more difficult for the UK to recruit and retain researchers. Although the Home Office has announced that EU nationals who have been resident in the UK for more than 5 years could claim permanent residency, the longer term impact of EU exit on research skills is not clear.

Recommendation: UKRI and BEIS should ensure that data on potential research skills gaps is used to establish whether key capabilities and productivity are at risk, and take appropriate action in response.

6.There is good practice in the coordination of research into human health but it has not been sufficiently replicated elsewhere in the sector. Of the six areas of research examined by the NAO, coordination mechanisms and leadership arrangements were most established in health research. The health research sector is well-established because it benefits from several decades of development and a strong private sector, while the Department for Health and Social Care and the Medical Research Council have clear responsibilities for leading health research. The Office for Strategic Coordination of Health Research plays a key role in leading human health research by providing a forum for bringing key decision makers together. Its running costs are low compared to the overall health research budget. Two other areas of research, research into the energy sector and animal and plant health, have drawn on good practice in human health to establish their own arrangements for aligning priorities and sharing information. While it is not necessarily possible or desirable to directly reproduce arrangements in health research in other research fields, there is an opportunity to share fundamental principles of well-coordinated research more widely, in fields such as robotics and advanced materials.

Recommendation: UKRI should review which elements of the model used to coordinate health research can be replicated in other areas.

7.Government lacks a complete picture of who is funding what, and the results of government-funded research, meaning it risks missing gaps and overlaps in research programmes or a shared understanding of outcomes. UKRI acknowledged that funders need comprehensive information on what research is going on across government and what researchers are finding in order to identify gaps and prioritise investment. While the research councils use some shared systems for capturing information about research projects, there is no single database covering all government-funded research, and funders lack information on research funded by other government departments. Funders face challenges in bringing information together, collecting and analysing data, spotting duplication and evaluating outcomes. Although developing a universal database will be challenging, there is scope to expand the use of existing databases or to work with the Government Digital Service to develop new mechanisms for sharing and analysing data on funding and outcomes.

Recommendation: UKRI should work with other departments to determine options for developing a cross-government database of research projects and write to the Committee with a progress update by September 2018.

20 April 2018