The Chancellor’s recent Spending Review reaffirmed the Government’s commitment to supporting UK research and innovation, with £86 billion in public R&D funding allocated across this Parliament and annual funding set to reach £22.6 billion by 2029/30.
R&D Funding: Protected, but not expanded
On paper, this sounds promising. In reality, though, it represents a real-terms freeze in public investment. As inflation bites and the cost of doing business rises, many in the science and tech sectors have rightly questioned whether the Government’s ambitions for the UK to become a “science superpower” are being properly funded.
Still, for innovative businesses, there are positive signals.
A focus on strategic investment
Despite the lack of broad uplift, several targeted initiatives show purpose and direction. These include:
- A £500 million Missions Accelerator, aimed at mission-driven innovation
- A £410 million Local Innovation Partnerships Fund, promoting regional R&D ecosystems
- Continued commitment to ARIA with at least £1 billion, along with investment in AI infrastructure – a £750 million supercomputer in Edinburgh
These investments signal that while public spending is tight, targeted support for R&D remains a strategic priority.
What does this mean for your business?
If you’re involved in innovation, whether in manufacturing, life sciences, clean tech, digital services or advanced AI, there are still valuable opportunities to tap into.
Now is a good time to:
- Review your R&D pipeline: Ensure you’re capturing all qualifying activity, especially if you’re planning to apply for funding or claim tax relief.
- Explore targeted grants: Schemes like the Missions Accelerator are designed to support businesses aligned with national priorities.
- Maximise R&D tax relief: With grant funding tightening, tax incentives remain vital. Make sure you’re making full use of the merged R&D Expenditure Credit or SME scheme.
- Stay proactive: Grant competitions and funding calls are likely to become more focused and competitive. Your timing and positioning will be key.
How can we help?
While the R&D budget hasn’t increased in real terms, its preservation in a fiscally constrained environment is still a signal of intent. Now more than ever, businesses should be smart and strategic to ensure they get the most from the support that’s available.
If you would like to discuss your company’s research and development tax relief eligibility, contact your usual relationship principal, complete our contact form or call 0161 905 1616.