By Professor Sir Anton Muscatelli, Vice Chancellor of the University of Glasgow
How should we recover from the COVID pandemic, the biggest economic shock in living memory, during which time we are accumulating more debt as a proportion of GDP since the Second World War?
The only answer is investment and productivity growth. Without that engine of growth, it is widely recognised that, in only a few years, we would face some difficult choices between higher taxes and cuts to public services. In addition, the economy needs to regain resilience if it is to withstand future economic shocks and address major generational challenges, such as climate change.
The UK Government has to its credit recognised this economic imperative. In its document Build Back Better: our plan for growth, published at the time of the budget, it sets out a plan to grow the economy based around the three pillars of infrastructure, skills and innovation.
But deeply worrying cracks are now starting to appear in the innovation pillar. It has long been recognised that a necessary condition to drive economic growth is to lift the UK’s lagging rate of R&D spending in the economy. This has now become one of the few points of economic policy consensus across the political spectrum – indeed across OECD countries. The government’s commitments to increase R&D spending to £22bn and grow investment in R&D to reach 2.4% of GDP by 2027, making the UK a ‘science superpower’ have been widely welcomed across higher education and industry.
But a country cannot become a superpower by assertion alone, and two significant concerns have emerged which threaten to undermine this worthy ambition.
First, a reduction in the overseas aid budget has been passed on from Government to UKRI, the body which directs research and innovation funding across the UK. This decision may well be based on a belief that this type of funding is only of value to our international partners – a belief as dangerous as it is inaccurate.
A big cut to UKRI’s budget not only threatens a host of important projects already underway across the world, damaging the UK’s international reputation and wasting large sums of public funding which have already been invested. But importantly, it jeopardises many highly-skilled research jobs here in the UK, as well as with research partners overseas – there are over 800 live projects which would be impacted by these cuts, which would put thousands of UK researchers facing an uncertain future. Simply, the UK will not prove its science superpower credentials by leaving some of its most promising researchers without a job.
Of course, the global challenge of COVID has taught us that science and research is genuinely an international public good – even if the projects affected were only of value to low and middle-income countries they would be worthwhile in their own right. But these types of projects often involve research which is just as crucial to communities here in Scotland and the UK – as much in the national interest as in the international interest.
Take for instance, an initiative in my own University which established a clinical research facility in Malawi, which benefits disease detection and builds capacity in our partner country, but also provides key insights into chronic diseases such as diabetes, cancer and cardiovascular diseases, benefiting communities here as well as internationally. This is partially funded by the Scottish Government, which to its credit is not taking the same approach and appears to value the national and international importance of this type of work.
Projects in Glasgow which could be directly impacted by the UKRI cuts involve subjects as varied as genomic surveillance of COVID, water management and pathogen detection – with implications and learnings far beyond the countries they are based in.
The second issue of concern relates to the UK’s continuing association to Horizon Europe, the EU’s flagship research and innovation framework which supports thousands of research projects across the continent. Securing association to Horizon Europe was a welcome outcome from the Brexit negotiations and a key ask of the higher education sector. In order to be a global science superpower, our Universities need to be able to attract the best talent and collaborate with leading researchers across the globe, many of which come together under the Horizon umbrella.
However, it was always understood that continued association required an additional investment of £1bn in the coming financial year. If that investment is not forthcoming from UK Government funds it will simply draw financing away from existing R&D budgets within UKRI. This would be self-defeating and have serious consequences for UKRI’s investment in our research and innovation base, and many key programmes on which the future Innovation Strategy will rely.
These effects are also cumulative. In its plan for growth, the Department for Business, Energy & Industrial Strategy estimates that each pound spent on public R&D ‘crowds in’ around two pounds of private sector R&D. This also works in reverse of course: a reduction in £1bn spend in public R&D funding could further reduce private R&D spend by up to £2bn.
The cumulative effects are particularly concerning if we consider the gap that we still need to bridge to fulfil the UK government’s objectives. In the last few years, the US has increased its R&D spending as a proportion of GDP (2019 figures) to 3.07%; Germany to 3.18%; France to 2.19%; the UK is still below other major economies at 1.76%, a figure little changed in the last 20 years.
Of course, a high rate of R&D intensity is not the only ingredient for economic growth: but if we agree that we want an economy based on high-quality jobs, building back better, then you need faster productivity growth, and it’s difficult to see that happening without significant investment in the research and innovation base.
We are at the beginning of the post-COVID recovery, and this is the time to make key decisions to ensure what comes next exceeds that which came before. Just as the success of the vaccine programme is the bedrock of that economic recovery, so the investment in our research base is crucial to ensuring that it is financially sustainable.
If the UK truly aims to be a science superpower, it cannot begin that journey by shirking investment in the research arms race.
This article was first published in The Times on 26 March 2021
Blog content reflects the views of the author(s) and not the position of Policy Scotland or the University of Glasgow.