COVID-19 delays government R&D plans and the Comprehensive Spending Review

A few weeks ago, and in what feels like a different lifetime, Chancellor Rishi Sunak delivered the Government’s first Budget, which included a “timely and targeted” £12bn package to support the UK through the COVID-19 crisis. Less than a week later, Sunak’s tone was very different. He said that “we have never faced an economic fight like this one” and announced that the Government was prepared to support the economy with a commitment of at least £330bn. Since then, the Government has announced several other measures to support businesses and you can find details about these at the BIA’s dedicated COVID-19 website.

At the Budget, the Chancellor announced that public R&D funding will reach £22bn by 2024/25 - £4bn more than pledged in the Conservative manifesto. The commitment shows that the Government is serious about raising R&D investment in the UK from around 1.7% of GDP to 2.4% by 2027. The Chancellor also explained that the exact funding allocations until 2024 would be subject to a Comprehensive Spending Review (CSR), which was due to conclude in July this year.

But two weeks ago, the Government confirmed that the CSR will be delayed to a future date – probably in the autumn – due to the pandemic. Depending on the length of the COVID-19 crisis, the Government may opt to hold a one-year fast-tracked Spending Round instead of a full CSR to enable departments to continue their focus on the pandemic. The Government did the same last year, but the purpose then was to wait to see the impact of the UK leaving the EU on 31 January 2020, which was a deadline much more in their control. 

The delay puts a question mark over the Government’s ambitious R&D plans, and our sector’s place in UK’s industrial strategy. Ahead of the COVID-19 crisis, our sector seemed to be heading towards a positive CSR outcome. The Government was not shy to state that it considered the life sciences sector a top priority – most noticeably in its manifesto commitment to make “UK the global hub for life sciences”. Boris has also frequently mentioned the achievements of our bioscience sector in his speeches and senior ministers have continued to engage with the Life Sciences Council. Given this is a crisis with a biomedical solution, reduced support for the life sciences seems unlikely. But it could fundamentally change the prism through which policy makers view the industry. 

Looking at the longer term, there are many questions worthwhile considering. How is the crisis reframing our sector in the both the eyes of policymakers and the public? How will the economy and our sector look at the end of the pandemic? Will the 2.4% target continue to be a focus? Will austerity return?

We don’t have the answers to these questions yet, but they will be key to informing BIA’s approach to the CSR whenever it is held and to the Government’s R&D plans more broadly. In any case, these issues may be important considerations for a future blog when we’ve all had a bit more time to take a step back and breathe. In the meantime, I’d welcome any thoughts on how you think the pandemic will affect our sector: will we be operating in a brave new world that has fundamentally altered our sector, or will it be business as usual? Drop me a line.