The Public Accounts Committee has released a report which states that the Industrial Strategy Challenge Fund will need an overhaul if it is to contribute to achieving Government Research and Development (R&D) expenditure targets.
The report, which was published on 30 April 2021, analyses the success of the Industrial Strategy Challenge Fund (ISCF). The ISCF was set up to address some of the complex issues that the UK economy faces, including long-term low productivity. The ISCF is a key element in achieving the government’s ambitious target for the UK to spend 2.4% of GDP on R&D by 2027.
The fund, which is managed by UK Research and Innovation (UKRI) under the Department for Business, Energy and Industrial Strategy (BEIS), is designed around four ‘grand challenges’: future mobility; clean growth; artificial intelligence and data; and the ageing society.
According to the recent report, “BEIS has not yet made clear how it will meet the (R&D) target,” and the Fund is “insufficiently focused on what it is expected to deliver in terms of benefit to the UK”.
The Public Accounts Committee has voiced concerns about the Fund’s clarity of purpose. By January 2021 over 1,600 projects had benefited from funding of £1.2 billion to support innovation. However, the Committee found that this funding was concentrated in certain areas of the UK.
The Committee also noted that UKRI’s objectives for the Fund overall are input focused. According to the report, the Government must “track the number of jobs delivered over time against job creation ambitions if it is to properly demonstrate its economic impact.”
The Committee has further highlighted structural issues in the Fund’s design. These include lengthy approval processes and issues with industry co-investment requirements.
In 2018, the UK spent the equivalent of 1.7% of its GDP on R&D. This is significantly lower than the OECD average of 2.4%. UKRI has asserted that meeting the Government target of increasing public investment in R&D to £22 billion by 2021-25 is challenging but “plausible”.
You can find the full report here.
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