Chancellor Rishi Sunak has presented his Autumn Budget in the House of Commons, setting out a range of new spending measures for the year ahead. From an increase in Innovate UK’s budget to new regional funding opportunities, there are several key takeaways for businesses involved in research and innovation:

Public investment in R&D

The government will maintain its target of increasing R&D investment to £22bn. However, the government has pushed this target back by two years; they will instead aim to reach £20bn by 2024/25 and £22bn by 2026/27. The Chancellor confirmed that this £20bn investment is in addition to the cost of R&D tax reliefs. Overall, total public investment in R&D will increase from 0.7% of GDP in 2018 to 1.1% of GDP by the end of this parliament.

There are further notable spending measures for research and innovation, including:

  • Fully funding the UK’s association to Horizon Europe
  • Increasing Innovate UK’s annual core budget to £1bn (up from £907m in 2021-22)
  • Establishing the new Advanced Research and Invention Agency with £800m by 2025-26
Regional funding

There will be more funding for the British Business Bank’s regional financing programmes. They will receive £1.6bn to deliver an expanded programme of activity, therefore enabling more innovative businesses to secure the funding they need to grow.

Significantly, this investment will pave the way for a £130 million fund to support SMEs in Wales. A £150m fund will be available for Scottish businesses, while £70m will expand the funding available for businesses in Northern Ireland.

R&D Tax Credits

The Chancellor announced two key areas of reform for R&D tax relief:

  • Firstly, the scheme will be modernised; its scope will expand to include cloud computing and data costs.
  • In addition, the government will introduce changes to refocus R&D tax relief on domestic activity from April 2023.

RedKnight’s Co-Director, Dayne Hodgson, has summarised his view on the Autumn Budget:

“While disappointing that public investment in R&D will not reach £22bn until 2026/27, the Autumn Budget contains plenty of good news for UK innovators. It is great to see that Innovate UK’s budget will increase to £1bn, and we welcome the announcement of a new fund to support SMEs in Wales. Now, we hope that the UK will quickly finalise its Association to Horizon Europe to avoid further delay and disruption for UK applicants.”

You can access all Autumn Budget documents here.