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With the UK government significantly reducing the ODA financed R&D funds, the UK’s research partnerships have been severely impacted, including many developing countries. The Research Professional News can reveal that more than £2 billion up to 2021 from the UK’s three major funds for international development research are being discontinued and ended their spending periods in 2021.

The implications of reduced ODA financed R&D funds

However, resulted in a significant decrease in research projects and fuelling fears about future R&D funds. Professor John Womersley, former chief executive of the Science and Technology Facilities Council (STFC) stated that there is a “growing concern that these increases will be eaten up by rapidly rising inflation”. However, although the R&D funding may be decreasing, the UK Research & Innovation (UKRI) funding is steadily increasing by 6% and will direct this investment in a sustainable way, and will most likely outpace inflation. Jon Richardson, tax leader for policy, argued that the R&D regime urgently needs a reformation.

The UK innovation strategy supports the R&D system

Consequently, the UK innovation strategy will support most of the UK’s innovation research, and development system. Where UKRI will see outstanding funding over the next three years of over £8.8bn in 2024-2025, reaching its highest peak. Including the government funding for core UK Innovative programmes, by 66% to £1.1bn in 2024-2025.

Therefore, this will require strategic choices for UKRI to supply an agenda through 9 councils and support a vibrant innovation and research system which generates productivity across the UK, Chancellor Rishi Sunak announced and attracts private investments, excluding UKRI funding delivered on behalf of managed programmes through BEIS.

How R&D funding will further the superpower nation

As a result, this will help connect companies on skills, connections and capital needed to grow and innovate, ensuring the UK become “the new culture enterprise” Rishi Sunak said – the superpower nation they aim to become. The counsellor also stated that as part of the Autumn Budget later this year, a “more generous” R&D expenditure credit scheme would be considered.

This means a brighter future might be on the rise, as the government is willing to fund more innovative businesses, making the UK more competitive globally – strengthening the R&D innovation in the UK as the year progress.

Womersley states that even though the headline figures in the R&D budget are good, scientists are waiting to see whether the council budgets within the UKRI will proceed. 

The Department for Business, Energy & Industrial Strategy has revealed that they will allocate a budget of £39.8bn R&D budget for 2022-2025 across their partner organisations. The government’s ambition is to set the UK as an innovation and science superpower nation through utilising R&D funding to support levelling up across the UK and strengthening the R&D system and ensuring that the spending reaches 2.4% of GDP by 2027.

How will the reduced ODA budget affect my R&D funds?

How the governments approach R&D investment

Furthermore, the cross-government approach to research and development will contribute to investments. BEIS stated that they are aiming for a strategic advantage in science and technology to be delivered as well as leverage private investments for resilience and security. This includes the EU programme funding, where Horizon Europe, Fusion for Energy, Euratom Research & Training has been granted £6.5bn. Should the UK not associate with Horizon Europe, the funding will go to UK government R&D programmes, this includes the new international partnerships. 

Moreover, James Wilsdon, director of the Research on Research Institute (RoRI) and Digital Science Professor of Research Policy at Sheffield University commented on the Horizon Europe allocation and said “If association proves impossible, or is interminably delayed, then UKRI will presumably need to step in as the delivery vehicle for any ‘Plan B’ — bringing with it the double-edged sword of a big budget boost, plus the complex task of reassembling the broken jigsaw of UK-EU collaboration”.

How can FI Group help?

The Research and Development tax credit scheme is the main source of government support in the UK for innovative companies. For almost twenty years, FI Group has been helping companies to finance their innovative projects through the management of R&D tax incentives and other financial sources. With R&D funding set to increase despite the reduction in funding for the GCRF, now could be the perfect time to start planning your quarterly tax claim. 

Click here to find out how FI Group can help with your R&D tax incentives.


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