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Spending Review - UKSPA Summary

Spending Review - UKSPA Summary

A significant number of announcements were made by the Chancellor in the Autumn Statement and Spending Review. Initial details of some of those affecting the Science and Innovation sector are below.

The Spending Review and Autumn Statement reasserts the government’s firm commitment to the UK remaining at the forefront of world science.

 All Treasury documents are available here.

Science and Innovation Announcements

The government will continue to prioritise investment in science to ensure the UK remains a world class centre of research. Already the UK is attracting more research and development (R&D) investment from abroad than China, Japan, Canada and Russia combined.

Long-term investment

Science funding of £4.7 billion will be protected in real terms and total spend will be over £500 million higher by the end of the Parliament compared to 2015-16. This will include a £1.5 billion new Global Challenges Fund.

Research Councils

The government is taking forward the recommendations of Paul Nurse’s independent review and, subject to legislation, will introduce a new body – Research UK – which will work across the seven Research Councils. This will take the lead in shaping and driving a strategic approach to science funding, ensuring a focus on the big challenges and opportunities for UK research.

Innovate UK/Research UK

The government will also look to integrate Innovate UK into Research UK in order to strengthen collaboration between the research base and the commercialisation of discoveries in the business community. Innovate UK will retain its clear business focus and separate funding stream

Research

The government will also take forward a review of the Research Excellence Framework in order to examine how to simplify and strengthen funding on the basis of excellence, and will set out further details shortly.

The Spending Review and Autumn Statement extends the freedoms granted to Research Institutes at Budget 2015 to all Department for Business, Investment and Skills (BIS) Sector Research Establishments which are not public corporations, and will also grant access to accumulated reserves of commercial income, subject to a cap.

Catapults

The Spending Review and Autumn Statement also increases investment in catapult centres and protects and extends funding for the Aerospace Technology Institute (ATI) and the Advanced Propulsion Centre (APC).

Technology Initiatives

The government commits to funding aerospace and automotive technologies for 10 years. This will provide over £1 billion additional funding for innovation in these sectors.

The Chancellor doubles spend on energy innovation and invests £250 million in an ambitious nuclear research and development programme

To maintain the UK’s global influence, freedom of action and operational advantage, the government will broaden the supply base and encourage new and innovative companies by establishing a £165 million Defence and Cyber Innovation Fund.

To further support innovation the government will dedicate 1.2% of its growing defence budget to science and technology over this Parliament

The government will double its domestic energy innovation programme. In line with this, the UK will continue to play a leading role in international research efforts to reduce the costs of low carbon energy, working with other countries to strengthen international collaboration and transparency in clean energy research, development and demonstration

Business and Innovation

Since 2010 the headline rate of corporation tax has been cut from 28% to 20%, and will fall further, to 18% by the end of the Parliament. Overall corporation tax cuts since 2010 will save businesses £13 billion a year by 2020-21 and give the UK the lowest tax rate in the G20

To support investment and innovation, the government introduced the Patent Box and overhauled Research and Development tax credits, and announced at Summer Budget that the Annual Investment Allowance will be set at £200,000 – its highest ever permanent level – for the rest of the Parliament.

The Spending Review and Autumn Statement takes further action to boost business. Over £100 billion will be invested to improve infrastructure, and funding for science is being protected in real terms.

The Spending Review and Autumn Statement increases investment in catapult centres and protects and extends funding for the Aerospace Technology Institute (ATI) and the Advanced Propulsion Centre (APC).

Northern Powerhouse

The Northern Powerhouse is the government’s plan to boost the economy across the North of England. It is built on the solid economic theory that while the individual cities and towns of the North are strong, if they are enabled to pool their strengths, they could be stronger than the sum of their parts.

It means investing in better transport to connect up the North; backing the science and innovation strengths of the North, so that new ideas can be turned into new products and new jobs; investing in culture, housing and the quality of life to make the North a magnet for new businesses and talented people; devolving powers and budgets from London to local areas across the North, and creating powerful new elected mayors who will give people in northern cities and towns a strong voice

To back science-based and innovative companies in the North the government is providing £250 million for small modular reactor development and wider nuclear R&D, creating opportunities for the North’s centres of nuclear excellence in Sheffield City Region, Greater Manchester and Cumbria, as well as the nuclear research base across the UK.

This builds on £25 million of UK funding for a Joint Research and Innovation Centre with China, to be based in the North West. This is on top of a total of more than £375 million over this Parliament for dedicated science and innovation facilities in the North

The Chancellor announced the doubling the size of the Enterprise Zones programme in the Northern Powerhouse, creating 7 new Zones, meaning that over a third of all new Enterprise Zones announced in this Spending Review will be in the North, while extending a further 2 Enterprise Zones.

 He also announced the appointment of Julia King, Professor the Baroness Brown of Cambridge, as Chair of the £235 million Sir Henry Royce Institute, which will build on the North’s strengths in advanced materials research and innovation

The Chancellor announced £50 million for 2 new agricultural technology centres, headquartered in York, which will support innovation and skills in the food and farming supply chain, enabling the UK to grow its share of the £250 billion global agri-tech market 

Midlands engine for growth

Building on the historic settlement with Greater Manchester, this year further devolution agreements have been reached with civic leaders in the Sheffield City Region, the North East, Tees Valley, Liverpool City Region and the West Midlands, giving local areas control over major budgets and responsibilities and creating directly elected mayors.

The government will work towards further devolution deals with other major city regions

The government is building on the success of Britain’s Engine for Growth in the Midlands. Over 250,000 more people were in work in the Midlands by the end of the last Parliament compared to 2010.97

The recent West Midlands Devolution Agreement means:

  • a new, directly elected Mayor for the West Midlands
  • devolution of powers over adult skills, employment and transport
  • a new additional £36.5 million a year funding allocation over 30 years, to be invested to drive growth
  • supporting the Curzon Street Enterprise Zone extension in order to help deliver the ambition of the HS2 Growth Strategy
  • The government is also investing £60 million in the proposal by six universities across the Midlands for a new Energy Research Accelerator, a major project to develop the energy technologies of the future
  • Committing £18 million to the Excellence in Precision Agriculture Innovation Centre, which will be partly headquartered in Shropshire. This will be 1 of 4 agri-tech centres, which will develop new engineering technologies to increase the productivity and sustainability of UK agriculture
  • building on their ongoing collaboration, all 11 LEPs in the Midlands are working with government to maximise the impact of the new round of European financing for smaller businesses across the Midlands
  • the government will create a new Enterprise Zone in Stoke/Staffordshire Ceramics Valley and the extend the existing Enterprise Zone at Infinity Park Derby.

Enterprise Zones

The 2016 Spending Review/Autumn Statement delivered a number of new Enterprise Zones. In total there will be 44 Enterprise Zones in England – 18 new, 24 existing (of which 8 have extensions), plus Blackpool Airport and Plymouth Enterprise Zones which were previously announced in the Budget that took place in March 2015

See more at: http://www.ukspa.org.uk/blog/15/11/new-enterprise-zones-announced

Business Growth Service

As part of the Spending Review settlement the government has decided to wind down the national delivery of the Business Growth Service. 

The Department for Business, Innovation and Skills issued a formal instruction to providers of the Business Growth Service:

not to enter into any further contractual commitments with customers after 23:59 Monday 30 November;

that all contractual commitments should be honoured, as long as all support and related activity is completed by 31 March 2016. 

Implications for BIS

The Department for Business, Innovation and Skills (BIS) budget is reported to have been cut by 17 per cent. The Department says the settlement:

- prioritises key growth and productivity objectives by protecting science resource funding in real terms, and maintaining Innovate UK support for businesses and funding for aerospace an automotive technologies in cash terms

- protects funding for the core adult skills participation budgets in cash terms creating 5 prestigious National Colleges, and providing funding for a real terms protection for the overall budget for STEM subjects in higher education (HE)

- delivers 3 million high quality apprenticeships by 2020, compared to 2.4 million in the last Parliament

In order to prioritise spending on economic growth, BIS will reduce departmental administration spending by a further £100 million by 2019 to 2020. This will contribute to a wider programme of reform, including further reducing the number of Arm’s Length Bodies (ALBs), unlocking efficiencies through increased digitisation and increasing the pace of estates and workforce reform.

More details on the BIS website here.

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