The CBI has warned the Chancellor not slash the Business Department’s science and innovation budget in the crunch Spending Review later this month.
After the general election all Whitehall departments, including Sajid Javid’s Business Department, were ordered by the Treasury to offer up potential cuts of between 25 per cent and 40 per cent of their budgets by 2020. The Government needs the cuts to achieve its goal of running an absolute budget surplus by the end of the decade.
George Osborne is expected to announce today that four departments – Transport, Environment, Food and Rural Affairs (Defra), Communities and Local Government and the Treasury – have accepted cuts of 8 per cent a year for the next four years, but full details of where the axe will fall will be unveiled by the Chancellor on 25 November.
The business lobby today warns that it would be a serious mistake for the Government to cut any deeper into state funding for science and innovation as it seeks to achieve this consolidation.
“The thing I’m most concerned about is support for science and innovation,” said the CBI’s outgoing director general, John Cridland. “That is absolutely vital to Britain’s global ambition. It’s an area we need to do more on, not less on.”
Mr Cridland said he was relatively confident that science funding would be protected, but he is worried that the Government would seek to make big savings by slashing innovation spending. “You need the innovation support to exploit commercially what’s going on in research councils in universities,” he said.
The Coalition established a network of seven “Catapult Centres”, modelled on Germany’s Fraunhoer Institutes, to help universities commercialise and test new products in partnership with private firms. The centres specialise in fields such as cell therapy, transport systems, and high-value manufacturing.
In the last parliament the £4.6bn-a-year science budget was protected in cash terms, although after accounting for inflation it took a cut. In 2014-15 Innovate UK, the government body that funds the Catapult centres, had a net spend of £597.5m. The Business Department’s total budget this financial year is £16.8bn, down from £19bn in 2010-11. In real terms it has suffered an 18 per cent cut over the past five years.
Herman Hauser, the architect of the UK’s Catapult system and a technology entrepreneur, warned last year that spending cuts could jeopardise the programme. He said the budget for the centres ought to be doubled to £1bn by 2020.
A report by the Commons Science and Technology Committee also warns today that the UK is spending significantly less on science than key competitors such as Germany and the US.
The CBI today is holding its annual conference in London at which the Irish prime minister, Enda Kenny, and Tesco’s chief executive, Dave Lewis, will speak.
The lobby group expects GDP growth of 2.6 per cent in 2016, falling back to 2.4 per cent in 2017. This is a downgrade on its previous forecast, reflecting the global growth slowdown.
It expects UK business investment to increase by 5.8 per cent next year, up from 4.8 per cent in 2015.
