Optimising UK R&D funding: lessons from global competitors

28 April 2025

By learning from other leading research nations, we can maximise the value and effectiveness of the UK’s world-leading R&D base — crucial to driving growth, improving public services and raising living standards across the country.

Optimising UK R&D funding: lessons from global competitors

.pdf570.49 KB

Researchers stand in front of large wall-to-wall digital screens displaying cloud patterns on global maps

In a time of global uncertainty, economic instability, and rapid technological change, investments in R&D play a key role in tackling the complex challenges the UK faces.

Funded by Wellcome, the Russell Group commissioned PwC to conduct an independent comparative study of four countries with strong R&D performance and distinct approaches to funding: Canada, Germany, the Netherlands and South Korea.

The study provides scores based on qualitative and quantitative analysis for five assessment criteria associated with a strong R&D system (strategic alignment to government priorities, autonomy, stability and sustainability, efficiency, and leveraging external investment) and two measures of output (research excellence and innovation excellence). These have been developed following extensive desk research and interviews with R&D policy experts in the respective countries.

Read the full report by PwC, International Research Funding Systems: A Comparative Analysis.

Using this analysis, the Russell Group has published a new policy briefing examining how policy decisions correlate with R&D outcomes across the countries analysed. The aim of the briefing paper is to consider the different choices that have been made, highlight key themes and explore potential implications for the design of the UK R&D funding system.

Key themes

Driving research excellence through performance-based block grant funding
The analysis suggests that block grant funding plays an important role in research quality and is likely a contributing factor to higher research excellence scores. Specifically, the report notes that the use of competitive or strongly performance based institutional funding (e.g. quality-related funding in the UK) rewards and therefore drives excellence.

Driving innovation excellence by supporting university-industry engagement
The analysis suggests that long-term, stable government incentives are needed to leverage industry investment in R&D, alongside supporting a culture of industry-university collaboration.

Avoid prioritising applied research at the expense of basic research funding
Discovery research delivers a pipeline of new ideas, talent and infrastructure to underpin innovation in areas which have not yet emerged as the global challenges of the future. Whilst applied research can deliver practical solutions with applications across industries and improve people’s lives. The analysis suggests that both are necessary, and it is important not to prioritise short-term economic gains from applied research over long-term investments in basic research.

Streamlining funding mechanisms to improve efficiency and reduce bureaucracy
Although not a direct driver of outcomes, delivering efficiency in the R&D funding system is crucial for maximising the impact of investment. Excessive administrative burdens slow down funding processes, hinder collaboration, and divert time away from activities that drive progress.