Out-Law News 2 min. read

Government announces billions in funding for R&D and infrastructure development

The UK government has announced substantial new investment in research & development (R&D) and transport development as part of its industrial strategy.

Prime minister Theresa May said the government would work with industry to hike R&D spending to 2.4% of gross domestic product (GDP) by 2027. The increase, which the government said could increase R&D investment by £80 billion over 10 years, will begin with a £2.3bn investment in 2021/22. That would grow public R&D investment to £12.5bn in that year, it said.

Coupled with the increase in R&D, the government is also launching a £1.7bn 'Transforming Cities Fund' to improve transport links and promote local growth within cities. The fund includes £250 million for better transport in the West Midlands.

The announcement comes ahead of Wednesday's Autumn Budget, when chancellor Philip Hammond will set out the government's spending priorities.

Infrastructure expert Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com, said the announcement was welcome but more detail was required.

“Given the current state of UK infrastructure and the adverse effect that this is having on productivity levels, as well as negative indices for the construction sector, this announcement can only be seen as a good thing,” Hart said.

“The crucial missing element – and one that Budget watchers will be looking for closely on Wednesday – is the link between specific funding commitments and actual projects. An example of this is the proposed allocation of funds to extending the Midlands Metro light rail and tram – and how big numbers are going to be broken down into smaller numbers,” Hart said.

“Even then, allocation of funding is just part of the picture – further challenges will await in seeing how and when these projects are procured and brought to the market,” Hart said.

Pinsent Masons technology expert Simon Colvin agreed more detail was needed on how the R&D funds would be spent. Colvin said the announcement showed the government was committed to putting innovation at the top of its agenda, such as investments in the area of broadband and the development of 'smart cities' with technology and data at their heart.

“It links up well with the big investment that government is making around fibre broadband and 5G and connectivity,” Colvin said. “With the two together there's a really big opportunity for the UK to lead the way in developing new technologies, new platforms and new approaches, not only in transportation but in wider R&D through linking up research bodies, government and stakeholders.

“We need things like this with Brexit looming large to ensure that we maintain our market-leading presence,” Colvin said.   

The government launched the industrial strategy in January, saying it wanted manufacturers to help shape their future. The announcement then confirmed an additional £4.7bn in R&D funding by 2020-21.

Earlier this month the Industrial Strategy Commission, a partnership launched earlier this year by units within the University of Manchester and the University of Sheffield, called for a commitment to a higher level of infrastructure spending and access to high quality soft and hard infrastructure.

The Commission called on the UK to "commit to a higher level of infrastructure spending", and for some powers within central government such as those related to infrastructure, skills, business finance, planning and procurement, and some tax powers, to be devolved to cities and regions.

Pinsent Masons is hosting a BBC Question Time-style event, ‘Examining the Budget - what next for UK infrastructure', shortly after the Autumn Budget on Tuesday 28 November at Pinsent Masons' Crown Place office in London. The event is being organised in partnership with the Royal Institution of Chartered Surveyors, the International Project Finance Association and Turner & Townsend. To confirm your place, simply register

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