The way the UK government funds science is currently in the midst of a major transition, with the creation of a much more direct link between the priorities of the government of the day and the kind of research that it funds. A few months ago I wrote about the likely prospect of a breakdown of a long period of consensus in UK science policy – UK Science in a post-liberal world. I’m not sure whether the current changes are best thought of as the first manifestation of this breakdown of consensus, or as an attempt to make those changes in the system that are necessary to preserve it. Here I make a first attempt to set these changes in context.
Some history
UK governments have recognised the need for the State to fund scientific research since the late 19th century, and some of the principles underpinning that were articulated early in the 20th century. One innovation of that period was the Research Council – conceived as a body standing slightly apart from government, largely managed by expert scientists. The first of these was the Medical Research Council, established in 1920 as a body incorporated by a Royal Charter. Subsequently, other research councils, covering other fields of science – and social science and the humanities – were established on the same principles, and various reorganisations have taken place, but the basic model remained in place until 2017.
It is important, however, to understand that for most of this period the research supported by Research Councils amounted to only a small fraction of total government R&D. Most of this took place with the direct support of government departments, such as those responsible for agriculture, for defence and military procurement, and for atomic energy, often in government research laboratories. Going into the 1980’s, when the UK was one of the most R&D intensive countries in the world, less than 15% of government funded R&D was supported by the research councils.
Fraction of total government R&D spending in the control of research councils. Data: ONS Research and Development expenditure by the UK government (2009 – 2023), BIS Science Engineering and Technology Indicators (before 2009).
As my graph shows, this fraction has substantially increased since then. In the late 1980’s and 1990’s, the governments of Margaret Thatcher and John Major systematically withdrew government support from applied and near-market science, while the importance of “curiosity-driven” research was emphasised. The New Labour governments of the 2000s halted the decline in overall government spending, with increases in research council budgets, but continuing decreases in department R&D. By 2015, research councils collectively accounted for about a third of government R&D spending.
The 2015 Conservative government introduced a major overhaul of the funding system, merging the seven research councils, together with the research arm of the Higher Education Funding Council of England, and the industrially focused Innovate UK, into a single non-departmental public body, UK Research and Innovation (UKRI). This was associated with a further real increase in funding – notably through the Industrial Strategy Challenge Fund. This created funding pots explicitly linked to the May government’s priorities as set out in the 2017 Industrial Strategy White Paper (as it happened, the ICSF projects lasted longer than the Industrial Strategy, which was scrapped in 2021).
The quid pro quo for more funding was the potential for more direct government control – the Higher Education and Research Act 2017, which established UKRI, specified that “The Secretary of State may give UKRI directions about the allocation or expenditure by UKRI of grants received under section 101”, and that (as the lawyers say), for the avoidance of doubt, “UKRI must comply with any directions given under this section.”
Thus the UK government went into the 2020s with a plurality of government R&D funding under the control of a single organisation, UKRI, and with clarity about the absolute right of ministers to intervene directly in the overall direction of that funding.
Lord Vallance’s buckets
After the 2024 election, the Labour government appointed Patrick Vallance as Science Minister (and elevated him to the House of Lords). Vallance was the widely respected Government Chief Scientific Advisor in the previous government; with an outstanding track record as an academic scientist, an industry research leader and government advisor, there has probably never been a better qualified science minister. Vallance brought to the role a very well developed view about how the government should support research.
Vallance has articulated this view in many public appearances, describing three “buckets” in which support should fall:
1. Curiosity-driven, foundational research
2. Research in support of strategic government and societal priorities
3. Support for innovative companies to grow
Previously, money has been split between the seven research councils, which essentially represent groups of academic disciplines – EPSRC for Engineering and Physical Sciences, BBSRC for Biology and Biotechnology, MRC for Medical Sciences, ESRC for Economic and Social Sciences, and so on. Each research council has made its own decision about how to spend money in ways that support those different goals, without necessarily being explicit about fitting it into these classifications. Where research to support a particular societal priority would involve contributions from different disciplines, programmes might involve collaboration between the different research councils.
For the current four year Spending Review period (i.e. FYs 2026/27 to 2029/30), money has been directly allocated to the three “buckets”, together with a fourth category of cross-cutting investments, for example around skills and talent, and multidisciplinary facilities. This represents quite a dramatic change, which, arguably, gets closer to realising the intention underlying the formation of UKRI. Like any major change, it will result in losers as well as winners, some changes will be unpopular, and there are likely to be some unintended consequences.
Aligning UKRI allocations to the buckets
The allocations announced in December [1] explicitly tie allocations to the buckets. Both for bucket 2, strategic government and societal priorities, and bucket 3, supporting innovative companies, the key organising principle is the government’s Industrial Strategy [2], which identifies eight priority sectors. For the purpose of the UKRI allocations, these are grouped into ten cross-UKRI programmes as follows (in order of size of allocations):
- Digital and Technologies (subdivided into AI, semiconductors & cyber, quantum tech and engineering biology)
- Life Sciences
- Advanced Manufacturing
- Clean growth and energy
- Defence and national security
- Creative industries
- Professional, business services, combined here with financial services
In addition there is some room for other emerging priorities, for example space, animal health, and climate adaptation.
Bucket 3 comprises most of Innovate UK, as was, plus KE activities in the past supported by Research Councils. The key change here is a much more direct pre-allocation of spending to the industrial strategy priorities.
Bucket 2 will consist of targeted research grants in each of the cross-UKRI priorities, together with supporting activities in institutes and infrastructures.
“Curiosity-driven” research – in bucket 1 – is delivered through the research councils: this is where standard research proposals are to be found [3]. Overall, 38% of UKRI’s budget is assigned to “curiosity-driven” research, but much of this comes from the money given directly to (English) universities to underpin their research activities – the so called “QR” funding (in Wales and Scotland university funding is devolved). More on this below. In addition, some funding for institutes and infrastructures will fall into this category too.
The withering away of the Research Councils
UKRI was formed from the merger of 7 research councils, which still retain some of their identities. Before UKRI was formed, each research council had a CEO who was formally responsible for the public expenditure (as Accounting Officer), and a Council that provided high level governance for the allocation of funding to different programmes. Within UKRI, each is led by an Executive Chair, and has a council of academics and industry experts whose role is more advisory. The new approach to funding allocations in UKRI does seem to further reduce the role of the Research Councils.
In rough numbers, from an average overall annual UKRI budget of £9.6 billion, a bit more than £800 million a year is assigned directly to the Research Councils for “applicant-led” proposals based on their disciplinary boundaries.
The cross-UKRI programmes are of a similar scale to the direct funding to research councils. Each of these programmes will have an Exec Chair as Senior Responsible Owner, supported by a Programme board with representatives from government departments, industry and academia. It isn’t obvious what role the councils have in supporting these. The programmes are to be “delivered” by research councils, but given the increasing operational uniformity across UKRI it’s not clear what this means.
UKRI is not the only source of public R&D funding
Notwithstanding the scale of UKRI, there are other sources of UK government funding for R&D, and it’s worth seeing how they fit into the overall picture. The new innovation agency ARIA, with £1 billion over four years, doesn’t quite fit into the Vallance bucket system, and is probably none the worse for that.
The largest single mechanism by which the UK government funds R&D is the R&D tax credit system, which cost about £7.6 billion in FY 2023/24. This is money that goes to subsidise R&D carried out in business, so it should be thought of as part of bucket 3, “supporting innovative companies”. In contrast with the industrial strategy focus of the UKRI spend in this area, this expenditure is entirely unfocused and untargeted.
Significant departmental R&D is planned, which by definition falls in bucket 2, in support of government priorities. The largest area here is defence, rising from £1.7bn to £2.4bn a year. Translational health research is funded by DHSC, flat at around £2bn a year, largely through the National Institute of Health Research. In the Department of Energy Security and Net Zero, R&D rises to £0.8bn a year, much of it in support of the fusion project STEP, with the goal of putting fusion energy on the grid by 2035, as I discussed here.
There are other sources of funding for “Curiosity-driven” research too. For many scientists, the most desirable funding of all comes from the European Research Council, accessible to UK scientists again following the UK’s rejoining the European Union’s funding programme Horizon Europe. ERC funding provides personal, long term funding for individual scientists, awarded entirely on the basis of excellence as judged by peer-review. In 2025, €116m was awarded by ERC to UK-based scientists, across all career stages and all disciplines. On a smaller scale, the Royal Society oversees programmes of research fellowships for individual scientists funded by UK government.
The other quasi-public source of funding for research in the UK is the support in effect provided by universities to account for the fact that UKRI research grants don’t meet the full economic cost of doing the research, together with research directly supported from universities’ own resources. In the latest ONS figures for Gross Expenditure on R&D this is estimated as amounting to £7bn in 2023. I think this precise figure is uncertain, to say the least, though the overall scale of the contribution is clearly highly significant. The funding of research in universities deserves a discussion of its own.
The Triple funding system for universities
The UK’s research system is dependent on universities to a degree which is an outlier by international standards, so the way it is funded is very important. Traditionally, we have had what is called a “dual funding” system; the baseline costs of maintaining a research infrastructure and personnel base was met by a block grant (“QR”) allocated on the basis of an assessment of the research quality and volume carried out at each institution (the “Research Excellence Framework“). Then, on top of this, individual researchers employed by the university could win project grants from the research councils competitively.
However, for various reasons, a gap has opened up between the actual cost of doing research and the money that comes into universities from the dual support system, and this gap has been filled between surpluses from other activities that the university does. The most important part of this has been the surplus generated by taking overseas students paying unregulated fees. A crude way of understanding the business model of most UK research intensive universities is to appreciate the importance of international league tables of universities, which are dominated by measures of research quality [4]. A high place in the league tables attracts overseas students, whose surplus fees support the research that in turn drives the league table performance.
In effect, research in UK universities is supported by a “triple funding system”, with project funding and the block grant supplemented by the surplus from overseas fees. But in recent years, this model has been breaking down as part of wider strains on UK university finances. According to the Office for Students [5] (all figures 2023/4), university research overall makes a loss of £5 billion, which is only partly covered by other income, such as investment income from endowments and donations, amounting to £2 billion. In previous years the gap would be covered by a surplus from teaching overseas students, of £3.2 billion. However, this surplus also now needs to cover a growing shortfall in funding for home students, now amounting to £1.7 billion.
This situation is obviously unstable and unsustainable, with the sector as a whole showing an aggregate deficit of £2 billion, and even as it is depending on the politically and geopolitically risky contributions of overseas students. It isn’t obvious that institutions will be in a position to support research to the current extent after the restructurings that now seem inevitable.
Concluding comments
I think these changes amount to the biggest upheaval in UK government research funding since the 1980s. My own view is that some change is inevitable, given the situation the country finds itself in – our second decade of economic stagnation, a new focus on national security in an increasingly hostile geopolitical environment, and the return of energy as a driver of geopolitics, while the consequences of climate change are increasingly obvious. It will be a bumpy road [6], but I believe that the research community needs to rise to the challenges facing the country.
Notes
[1] The budget allocations to UKRI are here: Budget allocations for UKRI, 2025
An open letter from UKRI CEO Sir Ian Chapman explains the background.
Sir Ian’s appearance before the Commons Select Committee is also very helpful (video here).
[2]. The UK’s Modern Industrial Strategy . See also my commentary “Another Modern Industrial Strategy”.
[3] There’s a lot that could be said about the shifting and uncertain definitions of “curiosity-driven research”, “blue skies research”, and the distinction between “pure” and “applied” research. Historical context can be found in Jon Agar’s article The Curious History of Curiosity-Driven Research . Some reflections of my own are here: On pure science, applied science, and technology.
[4] I don’t endorse the league tables as being in any sense an objective measure of institutions’ research excellence, but I recognise their practical importance in this fallen world.
[5] These numbers rely on the so-called Transparent Approach to Costing, about whose robustness I have some reservations.
[6] An early manifestation of this bumpiness, surely not the last, is to be seen in current controversies about funding cuts and programme cancellations in high energy physics.