Written evidence from Prospect

Introduction

1. Prospect is an independent trade union representing over 142,000 members across the public and private sectors. A significant number of Prospect members are involved in research and development spending including in government departments, research councils and the private sector.
2. Prospect believes that a focus on research and development is key to securing the long term prosperity of the UK by driving innovation, creating high skilled jobs, and powering rises in productivity. However we believe that the UK is currently spending too little on R&D to achieve this aim, that Brexit risks undermining UK R&D and that the government needs to improve its administration of the R&D budget.

Research and Development Spending

3. The government have declared an ambition to become “the world’s most innovative economy” and have committed to bringing the UK up to the OECD average by spending 2.4% of GDP on R&D within ten years.
4. Prospect welcome any rise in R&D spending and we agree that increasing R&D spending is a critical part of tackling the UK’s productivity crisis. But whilst the focus on R&D is welcome, we believe that simply matching the OECD average is not good enough for a country with ambitious to be a global leader in innovation and research. We also note that on current trend the OECD average will be 2.6% of GDP by 2027.
5. Increasing spending to 2.6% of GDP over a shorter five year period would place the UK in the top quartile of the OECD and is a more appropriate goal for a country with the UK’s aspirations. This idea is supported by Sir John Ball in his Life Sciences Industrial Strategy commissioned by the government itself, while the CBI has advocated a more ambitious target of 3% by 2020.

The Public/Private Balance

6. Prospect believes that the government has an essential role stimulating private sector R&D investment, with authoritative studies suggesting this effect could be as much as 30p of private investment for every additional £1 of government spending in this area.
7. However whilst publicly-funded R&D will always involve collaboration with external providers, there are risks in becoming too heavily reliant on businesses and hollowing out public sector expertise and capacity.
8. The very purpose of public funding for R&D is to support activity that the market is not providing for – even where this is being delivered by external providers, the allocation and prioritisation of projects cannot be reactive but must be proactively planned on the basis of a strategic overview that only the government can develop (on the basis, of course, of wide consultation and effective dialogue with potential users and beneficiaries of R&D outcomes in business & civil society, not just providers).
9. On any evidence-based assessment of what works, some R&D is best carried out by public sector scientists and organisations. Examples range from the discovery of the hole in the Ozone layer by British Antarctic Survey in the 1980s,[i] to the hundreds of jobs, and tens of millions of export revenue and GVA directly attributable to R&D conducted at the MoD’s Defence Science and Technology Laboratory or the recent ground-breaking work on the possible effects of neonicotinoids on bee populations carried out at the Centre for Ecology and Hydrology.[ii]
10. Conversely, loss of public sector research capacity can be damaging to wider industry – according to a report commissioned by the Business Department in 2013, the privatisation and subsequent break-up of the Plant Breeding Institute in the 1980s “robbed the UK of a world-class translational research facility in advanced plant science at precisely the moment when molecular biology was set to revolutionise the field”, meaning that today, despite the UK’s scientific leadership, “the major breeders are abroad and our ability to turn UK discoveries into UK benefit is handicapped”. [iii] The winding up of public research institutes has been seen as a key factor behind the declining competitiveness of British farming over recent decades, [iv] a view supported by academic analyses.[v]
11. Despite these experiences, government and public sector R&D capacity continues to decline. ONS data show that the share of publicly funded R&D actually performed by public sector organisations has been in long term decline from over 50% in the mid-1990s to around a third today,[vi] as a result of increased outsourcing and, in some cases, full or partial privatisation of research organisations (as seen recently with the Food and Environment Research Agency, for example). Reports from Prospect members are that in some areas the share of work outsourced has increased from around 20% to more than 90%, compromising the public sector’s ability to exercise effective quality control on work undertaken.
12. The impact on public capacity and expertise of the trend to outsourcing and privatisation has been compounded by the spending cuts, headcount reductions and real terms pay cuts of recent years. Data from the UK Commission for Employment and Skills suggest that the government has lost around 13,000 science, research, engineering and technology professionals and associate professionals since 2010.[vii] Reports from Prospect members are that the effects of general headcount reductions and recruitment freezes are being exacerbated by challenges to recruitment and retention of specialist skills and expertise posed by pay rates that compare poorly with equivalent positions in the private sector, especially as a result of the Treasury-imposed pay freeze and pay cap. These reports are confirmed by departments and employers themselves, for example:

• The business department – which has been tasked with allocating and overseeing much of the new R&D spend promised by the government – reported recently that: “A number of BIS’s Partner Organisations have cited the two-year pay freeze and subsequent 1 per cent pay cap as causing problems to business delivery, particularly in specialist areas, such as science, engineering and IT.”[viii]

• The Science and Technology Facilities Council – which is set to form a component part of UK Research and Innovation – reported last summer that: “We continue to lose staff in Science Engineering and Technology (SET) roles due to lack of competitiveness on pay.”[ix]

• The UK Atomic Energy Authority, which plays a key role not only in nuclear-related research but also wider applications of its expertise such as the development of autonomous vehicles, has warned that “attracting and maintaining specialist skills in the organisation continues to be a significant challenge. Challenges in competing with market pay rates due to government pay constraints… is impacting UKAEA’s ability to attract and retain key specialist skills. These external factors affect UKAEA’s ability to deliver its goals”[x]

13. Prospect believes that this hollowing out of public sector capacity and expertise impacts not only on the UK public sector’s ability to carry out research and development in areas where external providers do not exist, or would be less effective, but also on its ability to be an “expert customer” and strategic planner and commissioner of work done in other sectors.

14. As to private sector capacity, it is our belief that in addition to providing additional funding for R&D, government industrial strategy must include an active plan to support the development of a private sector that can make good use of that funding, and be an effective and efficient partner in government-funded R&D. This includes:

• Most urgently, bringing clarity and certainty to EU nationals working in UK STEM roles who play a key role in supplementing home-grown skills and enabling the sharing of expertise and building of collaborative relationships. Crucially, this must include low paid workers, such as laboratory technicians or other associate professionals, who may fall foul of restrictive visa and immigration systems.

• Investigating and taking action to address the decline in R&D expenditure and consequent weakening of R&D expertise and capacity, seen in many private sector businesses and industries, including energy, telecoms and defence. Evidence suggests that this is linked to the more general problem of short-termism and under-investment in British industry, and the lack of a proactive government strategy to address this. Notably, cross-European evidence suggests that greater investment in long-term R&D may be associated with the strength of firms’ accountability to a wider range of stakeholders such as employees and their representatives, with data showing that higher levels of worker voice and participation correlate with high levels of R&D expenditure.[xi]

Brexit and Science Research and Development Funding

15. Prospect is extremely concerned about the potential effect of Brexit on the funding of science research and development programmes in the UK. The UK has been one of the winners out of EU research funding programmes, such as Horizon 2020, Copernicus and FP7. We received €1.21 billion from Horizon 2020 – the highest sum received by any member state. UK science, as a sector, has been the second biggest recipient of EU funding after agriculture. UK research institutes use public sector grants, including EU funds, to leverage additional, private sector investment. Prospect’s submission to the 2016 inquiry, “Leaving the EU: Implications and opportunities for science and research”, gives specific examples.
16. EU research funding supports the long-term view of research, excellence in diverse fields, and openness to blue-skies research which characterise leading research nations. We hope the UK will continue to pay into and benefit from EU funding programmes such Horizon 2020, Copernicus and FP7. However, associate membership may not confer the leadership and influence we have enjoyed as a member state. Having been net beneficiaries of EU research funding, we want government to commit to match not just the funding we currently put into EU research programmes, but the funding we receive from them, in order to sustain our high performance in science and innovation.
17. Prospect members have reported cases in which UK influence in EU research has already been diminished by the uncertainty of the Brexit process. Former project leads have been asked to take a back seat on new grant applications, giving Principal Investigator roles to EU27 partners, to reduce risk to the application’s success. The effect on funding for UK research may not be immediately problematic, but the loss of steering committee positions will incrementally diminish our voice in the shape of international research.
18. Participation in research programmes is broader than a transfer of money. The future immigration system must enable frictionless collaboration with EU partners, or it risks undermining other efforts to participate in EU research.

Euratom and Research and Development

19. The UK has been a net recipient of Euratom research funding and is home to cutting edge nuclear research projects, in particular the Joint European Torus (JET) fusion project at the Culham Centre for Fusion Energy in Oxfordshire, which is currently the largest fusion reactor in the world. JET receives £50 million annually from Euratom and the work of hundreds of scientists and specialists at Culham depends on this funding. In addition, the UK’s participation, via Euratom, in the International Thermonuclear Experimental Reactor (ITER) project under construction in France, has allowed UK companies to win contracts worth €500 million so far.
20. It is not simply a question of funding however. The UK’s participation in Euratom R&D programmes provides access to international research networks, which facilitates research collaboration between UK-based experts and the international scientific community, and allows the UK to benefit from the fruits of this research through the sharing of new intellectual property. As a full member of Euratom we also have the opportunity to shape the scope and objectives of Euratom’s R&D programme. Even if we continue to pay into Euratom’s R&D budget after leaving the treaty, in order to continue to receive Euratom research funding, we would likely lose the ability to influence the direction of Euratom research activity.
21. If the UK leaves Euratom it is also not clear how that will impact our participation in the ground-breaking ITER project, and what, if any, access we will have to new IP that arises from it. Fusion energy research more broadly has already led to important breakthroughs in areas such as materials science and advanced containment processes, and further such breakthroughs are likely as fusion research progresses. It is essential therefore that the government not only commits to fully replacing Euratom funding, but also assures UK-based researchers of full and equal access to critical international research networks, as well as rights to new intellectual property arising from joint research projects.
22. The government have expressed its desire to remain in JET and ITER and have committed to the UK share of JETs funding until 2020. However, beyond this it is far from clear if they have a concrete plan to deliver on these aspirations and safeguard UK jobs, skills and innovation.