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Three important things to remember about the Spending Review

  • 13 October 2021
  • By Nick Hillman

The Spending Review is just a few days away. There’s not much more than can be said about it … except perhaps three things.

1. The question I am most commonly asked at the moment is: ‘What will be in the Spending Review?’ It is interesting to speculate but it is unlikely that even the Chancellor can give a precisely accurate answer to that question just yet.

Despite lots of good intentions, Spending Reviews – like many decisions in Whitehall – are not typically nailed down until the very last moment.

In 2010, the agreement to protect science and research spending was finalised on 10 October, a Sunday, while the Spending Review itself occurred just two days later on Tuesday, 12 October. This may sound unusual but Greg Clark MP, who was in the Cabinet at the time of the 2015 Spending Review (and is now the Chair of the Science and Technology Select Committee), similarly warned about how the details are unlikely to be settled until the last minute this time too, when he spoke at a Conservative Party Conference event organised by the National Academies.

The official deadline for submitting a bid may have come and gone but, if you have a killer argument or some new urgent problem has arisen, it is going to cut through whether (artificial) deadlines have been kept to or not.

Close up, politics and policymaking are messy. That’s why they are so addictive; you can speculate all you like but you never know for certain what will happen until it happens.

2. Spending Reviews, whether good or bad, are not the final word.

It is clearly right to fear a delay in the journey towards the target of spending 2.4% of the country’s gross domestic product (GDP) on research and development (R&D). If and when the plan veers further off track, we should complain loudly and clearly because of the impact this will have on our research base and future economic development. But we should still not regard it as the final ‘make or break moment’ for British science that some will want to paint it as. Big fiscal events are never as final as they are portrayed.

For example, despite the relatively positive (in the circumstances) flat-cash settlement for science and research at the 2010 Spending Review, in the years afterwards more money was found at pretty much every other significant fiscal event (budget or autumn statement) that the Chancellor of the day, George Osborne, presided over.

I hope science and research secure a good settlement this time – if the case for a more conducive research environment has not been proven by the Oxford vaccine, how else can it be proven? As the Prime Minister pointed out in his party conference speech, the vaccine was a triumph of public spending and the private sector working together, which is what the 2.4% target is all about too. Yet, regrettably, like almost everyone else who has considered the issue in any detail, I think the Spending Review may impose some new obstacles on the route to 2.4% relative to previous plans (which, sadly, is not uncommon for such targets around the developed world).

But if a week is a long time in politics, the life of multi-year Spending Review is very long indeed. Tomorrow is another day. So we should continue to develop future bids that we might wish in addition to those already submitted. Given that the new Minister for Science, Research and Innovation, George Freeman, will only have been in post for a few weeks when the Spending Review happens, he will surely also want to make further submissions to the Treasury over the next year or two.

Ad hoc slugs of money directed at specific priorities once or twice a year are no match for a generous overall settlement of course: careful long-term planning is essential for big research projects. But it would nonetheless be wrong and defeatist to assume the Spending Review must be the be-all-and-end-all even for the three or so years that it covers.

The fact that the Spending Review is unlikely to be the final word goes for other issues too. For example, if a tough spending settlement for teaching (such as cut to home student fees) were to push some universities to respond by underfunding research or if it were to nudge institutions to fall within the Higher Education Restructuring Regime (the closure of which has just been announced) or if it were followed by a bout of high inflation, it seems unlikely any new financial settlement would last for long.

3. The crucial point, in public policy terms, about the current dispute of the Universities Superannuation Scheme (USS) is generally missed in the fog of detail about pension deficits, actuarial modelling and covenant arrangements.

The minutiae matter of course – sometimes a huge deal, especially to those directly affected. But at a macro level, the importance of the USS dispute is different.

It is this: higher education is regarded as a sector in those parts of Whitehall with responsibility for fiscal rectitude as having been unable or possibly unwilling to resolve a mess in its own back yard.

This is probably unfair, given how many reforms to the USS have taken place of the years and all the continuing discussions, but it matters nonetheless because it makes the powers-that-be less likely to give higher education the sort of Spending Review settlement that we need.

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Just a few days before the Spending Review, HEPI will be hosting a free webinar on R&D spending and regional policy, ‘The Road to 2.4%: Research spending and levelling up’, with speakers from University College London, the University of Lincoln and the Campaign for Science and Engineering (CaSE).

Further details are available here: https://www.hepi.ac.uk/2021/10/02/hepi-webinar-the-road-to-2-4-research-spending-and-levelling-up-21-october-2021/.

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