PM to announce £2 billion per year for British R&D

Prime Minister Theresa May will use her speech to business leaders at the CBI Conference today to announce a new focus on research and development to make the UK more competitive – to overcome 'long-standing challenges' that have held the UK back. She will pledge an increase in spending on R&D of £2 billion per year by 2020, with a new Industrial Strategy Challenge Fund for backing new high-priority technologies, plus a review of current R&D tax incentives to ensure the UK can compete as a home for the best scientists, innovators and tech investors.

The government's new intended boost for R&D is being delivered ahead of a new Industrial Strategy expected to be published in the coming months.

Theresa May will say: "Our modern Industrial Strategy will be ambitious for business and ambitious for Britain. It is a new way of thinking for government – a new approach. It is about government stepping up, not stepping back, building on our strengths, and helping Britain overcome the long-standing challenges in our economy that have held us back for too long.

"It is not about propping up failing industries or picking winners, but creating the conditions where winners can emerge and grow. It is about backing those winners all the way, to encourage them to invest in the long-term future of Britain. And about delivering jobs and economic growth to every community and corner of the country. That is the ambition – and we need your help to put it into practice."

There is a trade off. Government wants industry to do its bit to improve the reputation of business among the public. A government Green Paper on Corporate Governance is expected next month, to outline new expectations on businesses, such as reasonable levels of executive pay.

Industrial Strategy Challenge Fund

The new Industrial Strategy Challenge Fund, overseen by UK Research and Innovation, will back projects covering a number of priority technologies and help Britain build on existing strengths in research and development.

Despite its strengths in science, Britain has until now been relatively weak on commercialisation, meaning that all too often ideas developed in this country end up being commercialised elsewhere.

Government will consult on how the fund can best support emerging fields such as robotics and artificial intelligence, industrial biotechnology and medical technology, satellites, advanced materials manufacturing and other areas where the UK has a proven scientific strength and there is a significant economic opportunity for commercialisation.

Creating a competitive environment for UK research

To realise the full economic potential of these new technologies, the Prime Minister will also announce a review of the support for organisations undertaking research through the tax system, looking at the global competitiveness of the UK offer.

The government’s business and tax reforms are claimed to have delivered one of the most competitive corporate tax regimes in the world by cutting corporation tax and increasing R&D tax credits – from £1 billion to almost £2.5 billion a year.

Government research shows each £1 spent on R&D tax credits stimulates between £1.53 and £2.35 of additional investment in the UK.

The Prime Minister will announce that HM Treasury will look at whether this support can be made more effective, to ensure the UK continues to actively encourage innovation.