Blog: Life sciences and the Industrial Strategy

17 October 2017

Our Senior Policy Analyst Stephanie Smith looks at the importance of continuing research funding to support the Government's Industrial Strategy.

The House of Lords Science and Technology Committee is currently considering how the Government can best support the UK’s world-leading life sciences industry, which is now such an important part of the economy.

Our universities are leading the way with medical breakthroughs that will bring huge returns for the economy and society. Take genomics for instance:

This year, researchers at the Universities of Oxford and Birmingham were able to isolate different strains of Tuberculosis (TB) using genome sequencing. At the University of Southampton, they have found new ways to cure cancer through immunotherapy, while at the University of Glasgow genome sequencing is being used to cure the Zika virus.

Universities will be crucially important in making a success of the Life Sciences Industrial Strategy and can maximise the impact of that strategy with a few key areas of support. Reforms to the research and development (R&D) tax environment, such as removing the VAT applied to new university buildings used for collaboration with business and simplifying the eligibility criteria for Research and Development Expenditure Credits (RDEC) would improve our ability to work with business and help draw in new investment.

Funding for research is also important. The Government has already committed a very welcome £4.7 billion to science and research over the next few years and set a target for 2.4%, and eventually 3%, of GDP to be spent on R&D.

But within research, it’s not just the quantum of funding that matters, but how investments are made. The UK is a world leader in R&D, but that world-leading status has been hard won. While we spend just 1.7% of our GDP on R&D (China spends 2.05%, the US 2.7%), the UK produces more research outputs per unit of this expenditure than China, Japan, the US or Germany.[1] Our universities are central to this success because of the degree of autonomy they have in being able to make strategic investments in research; just over a fifth of research funding won by our universities can be deployed to wherever it is most needed.

This has given UK universities an advantage few countries have, allowing us to invest in new areas of research as soon as they emerge. Researchers can, therefore, take on higher risk (but potentially higher return) projects and ensure we have a well-trained pool of experts across multiple disciplines. Universities also use this funding to attract investment from industry and charities. By committing their own money to a research project, universities can leverage much larger amounts of support from business and others to deliver programmes with significant impact.

The funding mechanism that supports this work is ‘QR’ or Quality Related funding, determined by outcomes of the Research Excellence Framework (REF). This is now enshrined as the ‘balanced funding’ principle in the new HE and Research Act (providing a counterbalance to Research Council funding). QR has evolved over time and a few years ago a new element was introduced to support the research work universities do with charities – in particular, the big funding charities including The Wellcome Trust, Cancer Research UK and the Lloyds Register Foundation.

Since 2010, this part of QR, called the Charity Research Support Fund (CRSF), has remained flat. This means the CRSF has around 80% of the buying power it had in 2010. The Life Sciences Industrial Strategy recommends that Government enhance CRSF to maintain the competitiveness of the UK research base and we strongly support this recommendation.

The Russell Group has already made a submission to the committee along these lines, calling for a proportion of the £4.7 billion already committed by the Government to be directed towards QR. This would help universities to increase the number of innovative projects they engage in, and help encourage business and others to invest further in R&D too.

The life sciences have the potential to save millions of lives, and the discoveries they bring have the potential to power the UK’s economy too. In fact, they already do, contributing an estimated £30.7bn to the UK in 2015. But we should see that as just the start as our universities, along with our business and charity partners, have ambitions to grow this sector and realise even wider benefits to the economy and society for the long-term.

[1] Research outputs include articles, citations, downloads and patent citations. International Comparative Performance of the UK Research Base – 2013, Elsevier

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