UK businesses and institutions are facing a range of economic uncertainties following the recent referendum vote to leave the EU, and one particular problem is access to funding for research and development. In recent years a significant proportion of the funds available for R&D projects has come from the EU, and access to this source of cash may now be lost.

UK female scientist
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Three public funding sources for R&D

In general, there are three major sources for public funding to support R&D activities in the UK. These are R&D Tax Credits, grant funding from Innovate UK, and grant funding from the EU through the Horizon 2020 programme.

1. R&D Tax Credits

The R&D Tax Credits scheme is run by HMRC (the UK’s tax authority) and it allows businesses to pay less Corporation Tax because of their R&D project activities. In total, businesses have claimed back nearly £2bn per year under this scheme. Many businesses that do not currently claim this type of tax relief because they don’t know that they are eligible.

2. Innovate UK

Innovate UK is the UK government’s lead agency for providing grants for innovative development projects. Innovate UK has announced a budget of £561m for 2016-2017, to be distributed through specific funding calls in four key areas, as well as two open competition funding calls.

3. Horizon 2020

The largest source of research and development funding in the EU is the Horizon 2020 programme, which has a budget of nearly €80 billion to be awarded in grants over a seven-year period from 2014 to 2020. Many UK businesses, universities, and other research organisations are involved in R&D projects that receive funding from Horizon 2020. In fact, the UK businesses and institutions receive one of the highest amounts of research funding in the EU.

Although the UK has only 0.9% of the world’s population, it has 3.3% of the world’s scientific researchers who in turn produce 6.9% of global scientific output. In the current EU Horizon 2020 research round, the UK secured 15.4% of funds awarded, second only to Germany. British researchers are increasingly taking part in international collaborations. Since 1981, the proportion of UK research papers with international collaborators has risen from 15% to more than 50% today.

Science needs EU
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How Brexit impact UK R&D projects funding

So what does leaving the EU mean for Horizon 2020 funding for UK research and development projects?

In the longer term, whether the UK continues to take part in Horizon 2020 R&D funding will be subject to negotiation. Even now there are countries outside the EU, including Norway, Turkey, Switzerland, and Israel, that are eligible to take part in all or in some Horizon 2020 projects. The UK may eventually join the list of non-EU countries with full or limited access to Horizon 2020, or it may find itself excluded completely. It is far too early to judge.

In the short term, there has been no change to the formal status of the UK as a member of the EU, and therefore as a participant in Horizon 2020 projects. The European Council of Ministers has issued a statement saying that until the UK actually leaves the EU, all the obligations and all the rights of member states continue to apply. This includes eligibility for Horizon 2020 funding.

But the impact of the Referendum vote is already being felt. According to BBC News, the Vice-Chancellor of Sheffield Hallam University, Chris Husbands, has said that researchers at his university have been told by European colleagues that they don’t want to work with UK universities, because of the uncertainty following the Brexit vote.

The research community in the UK, in both academic institutions and in commercial organisations, is clearly worried about the impact the Brexit vote is already having on confidence about the UK’s role as a research partner. A very high proportion of research projects are collaborations between companies and institutions from different countries, so this uncertainty could affect projects and jobs in research even before the UK actually leaves the EU.

If the UK loses access to Horizon 2020 grant funding from the EU, and if alternative funds are not provided, there is a risk that the UK’s position as a leading nation for research and development would be in jeopardy.