Healey predicted to support ‘pro-growth research’ in first Budget

Chancellor John Healey may increase research spending in his first Budget with any additional money tightly focused on defence, devolution and growth, experts have predicted, but appeals to help universities in distress will be firmly ignored.

With the new Labour chancellor facing a £35 billion funding gap in his upcoming Budget on 28 October, according to the Institute for Fiscal Studies, Healey has indicated departmental spending will be tightly constrained up to 2029-30, including at the Department for Education, which provides about £4.6 billion in direct funding annually to higher education and a further £12 billion in student loans.

With strained national finances and significant changes to student loans and bursaries already announced in last year’s Autumn Budget, major changes to university or student funding are unlikely, despite calls to address the deteriorating finances of institutions.

“For teaching and education there will be warm words but not much substantive – there is no love for the sector on that front,” said Diana Beech, a special adviser to three universities ministers who is now assistant vice-president of policy and government affairs at City St George’s, University of London.

Higher tuition fees to address a £3,000 annual loss for every undergraduate are urgently needed, two vice-chancellors also warned. In a letter to Healey on behalf of 10 research-led universities in the ResearchPlus group, the University of Sussex’s Sasha Roseneil and Andrew Jones of Brunel University London urged him to consult the recent Department for Education’s modelling that revealed the annual shortfall and “honour the government’s pledge to raise fee levels in line with rising costs by putting this commitment on a statutory footing”.

But Healey’s desire to increase spending on defence to 3 per cent of GDP by 2030, a point of principle on which he resigned from Keir Starmer’s government earlier this year, could open the door for higher defence research spending, a move that might overlap with Andy Burnham’s efforts to increase research spending in the north-west and other regions beyond London and the south-east, said Beech.

“Universities in the right research field and geographical areas might see some more money to help catalyse growth in key sectors such as those industries identified in the industrial strategy, particularly defence,” she predicted.

“We have a prime minister who is proud of coming from the north-west so we may see more money for the regions,” said Beech, referring to plans to commit £1 billion from UK Research and Innovation funds to regional innovation clusters over the next four years.

Healey may seek to build on this commitment given earlier this month as the Budget is the “first time that the Burnham government has made a substantive statement on policy”, said Graeme Reid, chair of science and research policy at UCL.

“At the very least we’ll see a recommitment to that devolution package – half of which will go to research and half to as-yet-specified ends. Healey will, however, want to put that package in a wider narrative of defence, devolution and growth,” he said.

That shift towards more defence-related R&D spending may benefit universities with strength in defence, continued Reid. “Defence spending used to mean buying tanks and battleships but now it’s much broader. It might mean spending on research related to national security or national resilience, cyberwarfare or countering misinformation,” he said.

“That might mean work to protect critical national infrastructure such as power, water and some parts of transport, so many universities can play a role here,” he said.

While additional research funding will be focused on key areas, the broader health of UK research had to be addressed, in particular research-excellent institutions, said Paul Nightingale, professor of strategy at the University of Sussex’s Science Policy Research Unit.

“Excellent research groups and teams in universities are undergoing severe financial distress. Their loss would be a significant impact to the UK’s research standing,” he said, noting how that diminished research base would have a knock-on effect for economic growth.

A wider package to help save financially distressed universities or at-risk research groups was “very unlikely”, said Beech.

“Universities UK will inevitably call for a transformation package to help institutions in trouble but this government has showed no signs of softening up on the sector. It wants institutions to sort out their problems themselves. If there are any funds to help universities in distress, civil servants in Whitehall will keep the details to themselves,” she said.

jack.grove@timeshighereducation.com