Setting priorities for publicly funded research - Science and Technology Committee Contents


CHAPTER 2: united kingdom rEsearch base and the economic context

International comparisons

9.  The UK research base ranks highly on many international performance indicators[2] even though the UK allocates a relatively small proportion of resources to research. Over the past 10 years, public research funding in the UK has experienced sustained and significant growth in cash terms (see Figure below), although in international terms it remains relatively small as a percentage of Gross Domestic Product (GDP).[3]

FIGURE

UK Government spending (in cash terms: £ million) on research and development


Note: Figures for 2008-09 are from the 2007 comprehensive spending review plan and are not final.

Source: BIS SET Statistics: Science, Engineering and Technology Indicators (2009)

10.  In recent years the UK's position has been increasingly challenged, by two developments in particular. First, other nations, especially in Asia, are catching up rapidly as a result of large investment in research. Secondly, other governments are increasingly prioritising research as part of their policies to support the development of the "knowledge-based economy" in enhancing productivity and growth. In recognition of the importance of such policies, under its 2000 Lisbon Strategy, the European Union has set a target of 3 per cent of GDP—including both private and public investment—to be spent, as an average across all Member States, on research and development by 2010.[4]

11.  In 2007, the UK's public and private investment in research and development totalled approximately 1.8 per cent of GDP (pp 452, 460). Public expenditure to support research and development accounted for 0.61 per cent of UK GDP, compared with 0.74 per cent for France, 0.76 per cent for Germany, 0.70 per cent in Japan, 0.65 per cent in USA, 0.54 per cent in Italy (in 2006) and 0.42 per cent in China (p 8). A further element comes from business and other sources such as the charitable sector. Private-sector investment in research in the UK is low compared with that in many countries (pp 272, 459). In 2006, such investment in the UK totalled 1.1 per cent of GDP—below the Organisation for Economic Cooperation and Development average.[5] Studies have shown that there is a broad correlation between levels of public and private investment in research in a particular country: a low level of government funding is commonly associated with a comparatively low level of private investment, and public spending on research encourages private investment (p 457, Q 272).[6] This correlation has significant implications for public research funding decisions.

Global economic downturn

12.  The prospect of exceptional financial stringency in public spending over the coming years has added urgency to the debate about how the UK sets priorities for publicly funded research: as the Wellcome Trust said, "the current economic climate is likely to require some hard choices, making it particularly important to consider how to develop a long-term strategic approach to priority setting" (p 505). Lord Drayson, Minister for Science and Innovation, told us that the UK needs to make some "very important decisions about its future and the prioritisation and allocation of resources to deliver that future" (Q 581).

STIMULUS PACKAGES ABROAD

13.  In response to the economic downturn, several countries have announced "very significant" financial stimulus packages for research and development (pp 148, 195, QQ 482, 458). The federal stimulus package for research and development in the United States, for example, is approximately $21.5 billion; Germany is allocating more than £15 billion of new money for research institutes over the next 10 years; and Japan recently announced a £9 billion stimulus package for science and technology for 2009-10. The research and development budget in India increased by 17 per cent, and in China by 25 per cent, in 2009 (p 148). According to the UK Deans of Science, the justification for such increased investment in research and development is clear: "The countries that bite the bullet and decide to invest in scientific research during a period of economic downturn will prosper most in the inevitable economic upturn" (p 499).

GOVERNMENT RESPONSE AND INVESTMENT IN SCIENCE

14.  Although the UK has not responded to the economic downturn with a stimulus package explicitly intended to support research,[7] the Government have made a commitment to maintain investment in science. In February 2009, the Prime Minister said that "the downturn is no time to slow down our investment in science ... we will not allow science to become a victim of the recession—but rather focus on developing it as a key element of our path to recovery".[8] Similarly, in March 2010, the Secretary of State for Business, Innovation and Skills, Lord Mandelson, reiterated that the Government had "no plans to cut science spending".[9] Lord Drayson has made the same commitment.[10] However, in the light of other countries' significantly increased investment, merely maintaining UK public investment may not be sufficient to protect the UK's international pre-eminence in research: there is, we were told, a risk that other countries may become more attractive to researchers than the UK (p 148, QQ 482-3). As Professor John Beddington, Government Chief Scientific Adviser (GCSA), acknowledged, a differential in the level of public funding between the UK and other countries presents a significant risk to the UK's retention of a skilled work force (Q 491).

15.  Despite the Government's stated commitment to maintain public investment in research, in both the 2009 Budget and December's Pre-Budget report, they announced reductions that will affect research—although the full extent of the effect is not yet clear. The Treasury was, for example, unable to tell us how the £600 million of savings announced in the Pre-Budget report would be made (p 412). Although the Government described some of the reallocations within the "science and research budget" (see Appendix 5), announced in the 2009 Budget, as "efficiency savings", [11] some of those savings "will be met through reprioritisation" (p 173).[12] We were also told that the increased cost of international subscriptions as a result of changes in currency exchange rates (QQ 295, 505-7), along with a reduction of £573 million in the funding available to higher education institutions in 2010-11, will have a significant impact on research. Research infrastructure is especially vulnerable in challenging economic circumstances (pp 473, 505-7).[13] We were pleased therefore to hear that Lord Drayson is working with the Science and Technology Facilities Council to increase predictability and stability and help reduce the uncertainty it faces.[14]

Conclusion

16.  We welcome the Government's commitment to maintain the "science and research budget". However, we invite the Government to explain how that commitment can be reconciled with the reductions recently announced to the funding available for research councils and for higher education.

17.  There is uncertainty about the Government's long-term intentions for public funding to support research. In our view, such funding should be protected: the Government should recommit to the spending plans outlined in their 2004-2014 science investment framework.[15] They need to establish clearly understood, evidence-based policies and procedures for decisions about public research funding. This is especially important given the relationship between public research funding and private-sector investment in research (see paragraph 11).

18.  We recommend that the Government should make a clear and unambiguous statement setting out

  • their current research funding commitments; and
  • the periods of time over which those commitments will apply.



2   The Scientific Century: Securing our Future Prosperity, Royal Society, March 2010, pp 9-10; International comparative performance of the UK research base, Evidence, September 2009. Back

3   OECD Science, Technology and Industry Scoreboard (2009). Back

4   OECD Science, Technology and Industry Outlook (2008). Back

5   Ibid. Back

6   Forward Together: Complementarity of public and charitable research with respect to private research spending, Alzheimer's Research Trust and the Office of Health Economics, September 2009, p 4. Back

7   We note, however, that in 2009, the Government announced the introduction of the Strategic Investment Fund; the UK Innovation Investment Fund; additional funding for the Technology Strategy Board; and funding to encourage the development of low-carbon technologies. Back

8   Romanes Lecture, Oxford University, February 2009. Back

9   Financial Times, 13 March 2010, p 4. Back

10   Lord Drayson in evidence to the House of Commons Science and Technology Committee, 24 February 2010 (Q 247). Back

11   Prime Minister in evidence to the House of Commons Liaison Committee, 2 February 2010 (Q 26). Back

12   For a discussion of the difficulty in establishing the relationship between the research councils and Government in setting priorities, see House of Commons Innovation, Universities, Science and Skills Committee, 8th Report (2008-09): Putting Science and Engineering at the Heart of Government Policy (HC Paper 168), pp 45-6. Back

13   The Scientific Century, Royal Society, March 2010, pp 45-6. Back

14   Statement by the Science and Technology Facilities Council, 4 March 2010. Back

15   Science and innovation investment framework 2004-2014, HM Treasury, July 2004. Back


 
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