Incentives from government would boost research and development

The government needs to create better incentives for businesses to invest or the UK risks falling behind other countries and losing out on the benefits from investment in research and development.

AdobeStock/Leonid Andronov

Investment in R&D could boost the UK economy, improve the quality of the NHS and unleash potential cutting-edge technologies according to a new report, ‘Backing Business R&D’, released today by the Campaign for Science and Engineering (CaSE).

In a statement Project Lead, Dr Camilla d’Angelo, policy manger, Campaign for Science and Engineering, said: “Over the last year we have engaged with experts and professionals from across the business R&D landscape. Our evidence shows that the UK is not as attractive as it could be for business R&D.”

In the UK, businesses are the main funders and performers of R&D; in 2021 they performed 71 per cent of all UK R&D worth £46.9bn. Recently released data from the ONS on Business Enterprise Research and Development (BERD) shows that high inflation has contributed to a stagnation in business R&D investment in the UK since 2018.


The report, sponsored by LifeArc, sets out some of the most challenging barriers UK businesses face when investing in R&D, and actions the government should take to overcome them.

Recommendations from the report include ensuring the policy landscape is predictable and fit for purpose by clarifying tax credits and incentives, and improving regulation.

For the former, a stable policy environment is vital to enable effective long-term planning and investment by businesses in R&D; recent policy changes to R&D tax credits, including the level at which they are set, has led to a lack of clarity and certainty for businesses. The report calls for a statement of intent from the government on the purpose and focus of R&D tax credits to stop this happening in future.

On improving regulation, the report reinforces existing calls for system-level changes to support innovation and address regulatory uncertainty for new and emerging technologies. It calls for developing standards to drive and guide new technology development and encourages using cross-sector external experts to support regulatory resourcing.

Furthermore, evidence shows that financial support for scale-up businesses is a particular issue. The report recommends using the Mansion House reforms in close collaboration with R&D-led businesses to unlock pension funds for investment in R&D industries, increasing and promoting the number of funding opportunities for SME-university collaborations, and setting long-term budgets for funding bodies.

Similarly, R&D infrastructure must be part of wider discussions about regional infrastructure and other policy considerations such as planning processes, housing, transport, and utility supply.

The report adds that regions should be given the freedom to make decisions about local innovation programmes with evidence showing that there is scope to further strengthen local innovation ecosystems to improve R&D investment opportunities, creating opportunities for new jobs and industries across all parts of the UK.

If acted on, CaSE believes the findings and recommendations in this report will strengthen the UK’s R&D community and attract further investment over the coming years.

Dr Alicia Greated, executive director, Campaign for Science and Engineering, said: “The UK government has made repeated and welcome commitments to invest more public money in R&D. However, now is the time to compliment that intent by building an attractive environment for private investment that allows business R&D to flourish in the UK.”