What was in today’s Budget for medical research?

Posted on March 20, 2013 by


There was not much specifically targeted to supporting medical research and no new investment in scientific research in today’s budget, but it did contain measures to help small and medium sized businesses grow which could help address the barriers faced by many companies trying to turn  medical discoveries into treatments that can help people.

Key points for medical research:

There was no specific mention of measures to directly help medical research today, but some of George Osborne’s announcements could help companies to develop research into new treatments and technologies to help patients.

  • There will be an increase in capital spending plans by £3 billion a year from 2015-16 funded through reductions in current spending by departments. The Campaign for Science and Engineering (CaSE) yesterday released fresh analysis showing that the £1.7 billion shortfall in research capital resulting from the 2010 Spending Review has been reduced to just over £330 million following a string of additional commitments since 2010.  Today they said that the 2013 Budget leaves this shortfall unchanged.
  • George Osborne said that “how the savings will be achieved will be a matter for the Spending Round, but existing protections apply”, suggesting that the current ring-fence for the science budget is safe, but we’ll have to wait to be sure!
  • In 2013, £1.6 billion of funding will support strategies in 11 key sectors. Some of this could go to the life sciences (as a key growth area) but this will be decided in the  2015-16 Spending Round, which will report on 26 June.
  • The government will shortly publish a strategy for a Business Bank, which will provide £1 billion in capital to help businesses grow. Last week’s report by the Commons Science and Technology Committee on the Valley of Death called for this bank to provide funding to small technology companies to help them grow without having to sell shares in themselves. The first schemes run by the bank will launch this spring offering £300 million in lending and £75 million in venture capital for start-ups.
  • The NHS budget will remain ring-fenced, this includes the research arm – the National Institute for Health Research (NIHR)
  • The Small Business Research Initiative (SBRI) will be expanded from £40 million in 2012-13, to £100 million in 2013-14 and up to £200 million in 2014-15. The SBRI programme links government procurement with innovative companies to meet challenges, including in medicine and healthcare.
  • The government has responded to Lord Heseltine’s growth report, No stone unturned: in pursuit of growthand announced money will be put into Local Growth Funds for regional economic development.
  • The government noted their recent consultation over changes to VAT exemptions, which we responded to. Currently research is exempt from VAT when it is being supplied between ‘eligible’ bodies including charities, universities and government departments but the European Commission has told the UK Government that this exemption is not acceptable, and the UK plans to withdraw it from 1 August 2013. We are less concerned about this change after getting clarification from HMRC that when charities fund one institution, and payment is being made to co-investigators at another institution, these payments will remain exempt from VAT, so not increasing the costs of research grants – but this is quite technical and research is funded across several institutions in a number of different ways so we are calling for further clarification and supporting guidance to ensure this works in practice. Documents accompanying the Budget (see paragraph 1.58) confirms that the government will use secondary legislation to withdraw the exemption on 1 August 2013 and that they are considering the possibility of transitional reliefs. We will continue working with HMRC to ensure this does not have an unintended impact on charity-funded research.

What next?

We are working with our members and partners across the research community to continue to make the case for investing in medical research – there’s still time to send in your case studies to help us! And the APPG on Medical Research is holding a series of events in parliament over the coming year to demonstrate how important government support and investment in medical research is and how the whole medical research sector is working together to deliver health and wealth benefits for the UK.

Posted in: Policy