Spending review 2020 offers some reassurance to biotech sector but the Biomedical Catalyst remains unsecured
Amid gloomy economic predictions and rising public borrowing fuelled by the pandemic, the Chancellor delivered a one-year government spending settlement with investment in jobs and infrastructure to reassure a nervous nation. £18bn allocated to testing, PPE and vaccines next year, including R&D. The central importance of our sector delivering vaccines quickly for the UK was laid bare by the Office for Budget Responsibility’s analysis that unemployment could be six million higher if the vaccines are ineffective and public health restrictions need to continue.
We are pleased to see the Government’s ambition to increase R&D investment continue to be delivered with £15bn overall committed for 2021-22 and increases for UKRI core budgets over the next three years. However, much is yet to be decided as government departments determine exactly how to spend their allocations.
- Total Government R&D investment to rise from approximately £13bn to £15bn in 2021-22
- Business department receives R&D increased, including core UKRI research council budget 3-year settlement rising by £400m on average per year
- Innovate UK appears to only have a 1-year settlement and budget of at least £490m in 2021-22. No mention of the Biomedical Catalyst at this stage
- Health department given 1-year R&D settlement of £1.3bn for NIHR and Genomics England
- A new high-risk, high-reward research investment programme will be established within UKRI, as will a new unit and fund to support the translation of publicly funded research
- Business and health department settlements both important for projects championed by the Life Sciences Council and discussions are now underway to determine which might be able to proceed next year
This all comes against the backdrop of an unprecedented economic emergency and the ongoing pandemic. The Chancellor announced borrowing at a peacetime record of almost £400bn this year as it seeks to combat the worst recession in more than 300 years.
With the pandemic still ravaging the globe, a further £38 billion will be put to use to tackle the virus in 2020-21 and £55 billion to support the response next year. The government has now made available £6 billion in total to research and procure Covid-19 vaccines.
£733 million in 2021-22 will be available to the UK Vaccines Taskforce to purchase successful vaccines and £128 million for research and development (R&D) and vaccines manufacturing. Further funding will be allocated from the Covid-19 reserve as needed, the Treasury said. It also noted that the UK is the world’s largest donor to the COVAX Advance Market Commitment, an international mechanism to support equitable access for developing countries to Covid-19 vaccines
Test and Trace will get £15 billion in 2021-22 to support enhanced testing capacity, including regular testing of NHS staff and social care workers. The government will keep this under review, taking into account the possibility of a vaccine and the path of the virus. There will also be a further £163 million to increase supplies of key medicines for treating Covid-19 patients.
The Government’s commitment to increase R&D investment to 2.4% of GDP by 2027 will be tested by the current economic climate but they continue to push forward today. Almost £15 billion will be made available for R&D next year (2021-22). This appears to be a significant uplift compared to the 2020-21 budget, estimated by the Campaign for Science and Engineering (CaSE) to be just under £13bn.
In recognition of the importance of long-term planning for research, the Government has provided a multi-year settlement for UK Research and Innovation’s core research budget (the Research Councils), providing an average £400m uplift for each of the next three years. The current core budget was £5,747 million, meaning this would be a 7% uplift each year on average. The spending review has also allocated “at least” £490 million for Innovate UK’s core budgets next year.
£450 million will also be given to in 2021-22 to support government R&D priorities, drive the development of innovative ways to build new science capability and support the whole research and innovation ecosystem. The Government allocates £350 million of this investment to UKRI, which is likely to be the Industrial Strategy Challenge Fund or similar. This includes the first £50 million towards an £800 million investment by 2024- 25 in high-risk, high-payoff research. This is a reference to the British Advanced Research Projects Agency (ARPA), modelled on the US DARPA, and suggests that it will sit within UKRI, or perhaps is just being incubated within it at the moment. It's creation is said to be delayed due to the departure of its leading proponent, Dominic Cummings, from Downing Street.
An interesting announcement was £17 million in 2021-22 to establish a new unit and fund that will focus on “the last mile of innovation” to help ensure that public sector knowledge assets (R&D, intellectual property and other intangible assets) translate into new high-tech jobs, businesses and economic growth. This national tech transfer office (TTO) sounds a lot like the CBI’s “Accelerate UK”.
The government is providing an R&D budget within the health department of £1.3 billion, which covers the National Institute for Health Research (NIHR) and Genomics England. We have been unable to unearth figures to determine if this is an uplift or not.
Britain’s health services have met unprecedented challenges in the face of COVID-19. The Government reconfirmed its long-term settlement for the NHS. This provides a cash increase of £33.9 billion a year by 2023-24, taking the core NHS England budget to £148.5 billion in 2023-24. This includes an increase in core funding of £6.3 billion in 2021-22.
The spending review commits a further £325 million for the NHS to invest in new diagnostics equipment and £559 million to support the modernisation of technology across the health and care system.
The Chancellor also announced a “levelling up” fund worth £4 billion, for which local areas will be able to bid directly to finance local projects that have “real impact” and can be delivered in this parliament. He said that it could be used for new bypasses, libraries or museums, with applications backed by local MPs.
He also announced plans to establish a UK infrastructure bank, which will be based in the north of England and work with the private sector to finance new projects.
The BIA’s take
With the concerning economic outlook and extreme pressure on public finances, this was never going to be a big give-away spending review. It was reassuring at least, to see continued rhetoric on the UK’s ambition to be a “science superpower” in the Chancellor’s speech and the commitment to Innovate UK’s budget, which will allow the agency to start planning to launch competitions from April onward, rather than wait for the business department to confirm their allocation. However, it remains unclear whether this is a meaningful budget increase compared to previous years or whether it can enjoy the three-year certainty given to the rest of UKRI’s councils.
There was no mention of the Biomedical Catalyst, which the BIA has called for. We hope Innovate UK will have the headroom in it’s budget to fund the BMC, as it did in the current financial year. The BIA will be working to make sure that happens.
Today’s spending review in general only covers the 2021-22 financial year, having been downgraded from a full four-year comprehensive spending review a couple of months ago. This means many of the projects developed by the Government’s Office for Life sciences (OLS) and championed by the Life Sciences Council, some of which the BIA promoted in our September submission, will not have been fully considered by the Treasury because they require multi-year settlements. We now hope that internal discussions within the business and health departments, which the OLS straddles, could provide some seed funding to get those projects off the ground in the short-term.