Ongoing shortcomings at the UK’s largest public funder of research and innovation (R&I) projects threaten to undermine the UK’s position as a “global leader” in supporting the development of new knowledge, a senior MP has warned.
An assessment by the National Audit Office (NAO) of UK Research and Innovation (UKRI), a non-departmental public body established in 2018, found concerns about fraud protection and its ability to maximise value for money from its funding.
The NAO also identified a lack of a coherent direction from government departments on R&I priorities and inefficient data systems at the UKRI, alongside a lack of “measurable objectives” which have limited effective monitoring of progress at strategic level.
The public spending watchdog also said there is a need to strengthen the management of risk in relation to funding decisions.
The Government has identified research and innovation, also known as research and development, as crucial to achieving its priorities of growing the economy and achieving net zero.
In her Autumn Budget, Chancellor Rachel Reeves committed to invest £20.4 billion in this area in 2025/26, with the Government promising to “promote innovation and harness the full potential of the UK’s science base … (through) protecting record funding for research and development”.
Responding to the NAO report, Sir Geoffrey Clifton-Brown, Conservative chairman of the Commons Public Accounts Committee, said: “With UKRI spending over £9 billion on R&I a year, it is vital that it gets this right.
“UKRI plays a key role in supporting a substantial and successful R&I system, seeking to take a high-risk, high-reward approach to grant funding. However, it lacks any measurable objectives to track progress and does not have the right data to manage grant spending strategically.
“For the nation to remain global leaders in R&I, UKRI must do more to support its decision-makers, foster resilience, and ensure our systems can continue to respond to emerging challenges.”
The NAO said the Government does not currently have clarity on what it is asking the body to do because of a “lack of co-ordination in how Government expects UKRI to support the delivery of a range of objectives”.
It added: “Due to the broad nature of UKRI’s activity, government departments indicate their policy priorities to UKRI through a variety of means, including ad hoc and routine meetings, government strategies and mission statements, and spending review budgets.
“But these are not consolidated or ranked, which means the overall picture of what Government is asking UKRI to do is unclear.”
The NAO also said none of the objectives outlined in UKRI’s first five-year strategy are “specific, measurable or time-bound”, which makes it “difficult to understand what it is seeking to achieve”.
The report highlights that the body has pledged to take “high risks where there is a potential for high rewards”.
But it warned that “data limitations”, caused in part by problems bringing together systems of “multiple” predecessor organisations, are restricting UKRI’s “ability to efficiently manage its investments”.
The NAO also found the body is not currently in full compliance with the Government’s standards for counter-fraud, adding that the dedicated team is under-staffed, dealing with a backlog of cases and has limited capacity for work on prevention.
While UKRI has had deficiencies in funding assurance “for several years running”, its controls on the individual grants audited by the NAO were found to be adequate.
However, the watchdog said the UKRI could not provide “a reliable picture of whether, across the organisation, error and fraud are under control”.
Overall, the body has investigated suspected fraud on £42.6 million of grants, identified £4.6 million of fraud, prevented £13.5 million, and recovered £80,000.
The NAO recommended UKRI clarifies its appetite for risk relating to funding decisions and identifies “barriers and incentives to taking bolder decisions”.
It also called on the body to address deficiencies found in financial audits and data systems, and said it should work with the Department for Science, Innovation and Technology (DSIT) to “map out” the government priorities and objectives it is expected to support in delivering.
Gareth Davies, head of the NAO, said: “Providing effective support for research and innovation that secures value from public sector investment is a complex challenge. New ideas will not have a track record of delivery and innovative projects inevitably carry a higher degree of uncertainty.
“Although UKRI has played a key role in supporting a globally respected R&I system, there is more it could do to maximise value for money.
“Our recommendations are designed to help UKRI ensure its culture supports well-managed risk taking; develop better data to support decision making; and work with DSIT to define more clearly the overarching outcomes sought from its research and innovation spending.”
A UKRI spokesperson said: “UKRI invests over £9.5 billion a year in the UK’s world-class research and innovation ecosystem and this plays a crucial role in driving sustainable economic growth, creating jobs and improving public services for people across the UK.
“We welcome today’s report from the National Audit Office which recognises the vital role that UKRI plays in shaping and supporting a successful UK R&I endeavour, and endorses the work we are doing to drive continuous improvement in how we work.
“UKRI will continue to use its unique position in the research and innovation system to make smart and strategic investment choices, building a portfolio of investments that deliver the best outcomes now and in the future, making the most effective use of public money.”
