We will resign ourselves to geopolitical irrelevancy unless we re-invest in science
As the Conservative leadership contest ploughs on through the summer and the final two candidates talk tax cuts and public spending neither are addressing the full extent of the UK’s economic woes.
Many of the long-term problems the economy faces have been caused by successive governments’ underinvestment in science and innovation. For the last three decades the amount of money that the UK has spent on R&D has been slipping behind our global rivals. This has driven down productivity and living standards.
Up to the early 1980s the UK was a global leader in research, spending more than 2 per cent of GDP on R&D – more than Japan and only slightly less than the US. But since then UK R&D spending has fallen, flatlining at 1.6 per cent since the early 1990s.
And while our investment in science has fallen, other countries such as South Korea and Israel have overtaken us.
Our current research shortfall is huge. Even if we had simply matched the OECD average, we would have spent an additional £212bn on R&D in the last twenty years. Given R&D is a key driver of productivity it’s no surprise the UK economy is struggling.
This shortfall is driven largely by a lack of private sector investment in science. Businesses have been discouraged by the last few years of political disruption.
Obviously Brexit has caused a great deal of uncertainty for firms, but Whitehall churn has been just as much to blame. While the government was busy press releasing four different growth strategies between 2015 and 2021, China has implemented one coherent five-year plan and started to deliver another. This lack of focus is evident in the UK’s tax policy as well, with new tax incentives for R&D being introduced every couple of years.
This combined absence of strategy and lack of funding risks damaging areas of strategic strength, such as pharmaceuticals. Since 2010 the UK’s net pharmaceutical exports have fallen from 4th highest in the world to 98th and our $9.7bn trade surplus has turned into a $1bn trade deficit. Equally concerning is the impact that it will have on our competitiveness in future technologies such as AI, quantum computing and nuclear fusion. In an increasingly geopolitically uncertain world, these technologies are likely to be vital for national security.
If the UK is to maintain its position as a geopolitical and economic leader then the two leadership candidates need to focus on science. Onwards’ new research, endorsed by former Foreign Secretary William Hague and four former science ministers, displays how desperately we need someone willing to turn the UK back into a science superpower.
The next prime minister will be tempted to focus on short-term answers to our most pressing problems. But kicking the can down the road will only make the problem worse. To catch up with global rivals, we need to boost our spending and make sure this is backed up by policy certainty to make the UK more attractive for business R&D investments.
Science is a strategic asset. If we fail to see that, we will resign ourselves to a future of geopolitical irrelevancy and economic malaise.