Welcome to the Public Accounts Committee on Thursday 5 June 2025. UKRI is the UK’s largest public funder of research and innovation, spending over £9.5 billion a year to support substantial and successful innovation systems. However, it faces a number of ongoing challenges that are impacting its ability to manage grant spending strategically. This morning, we are fortunate to have with us two expert witnesses with extensive knowledge and experience in supporting and evaluating the UK’s research and innovation system, ahead of questioning Government officials in the second panel this morning. We hope to hear from our witnesses on the importance and performance of UKRI and its grant funding in research and innovation, and whether it is striking the right balance between ambition and managing risks. To help us with all that, we are very pleased to have Sir David Grant, who carried out the independent review of UK Research and Innovation in 2022. His review of UKRI made recommendations on effectiveness, efficiency, accountability and governance. Prior to the review, he was the vice chancellor of Cardiff University from 2011-12 and has played a number of roles as vice president of the Royal Academy of Engineering, council member of EPSRC and governing board member of Innovate UK. We have also met previously, Sir David, as you are associated with Renishaw plc, which used to be in my old constituency. Your boss, Sir David McMurtry, who we greatly respect, sadly died recently. It is great to see you again and to have you here. [Interruption.] We are having problems with the audio, so we will suspend briefly. Sitting suspended. On resuming—

To continue, we are also pleased to welcome Professor Paul Boyle, Universities UK board member and vice chancellor of Swansea University. Universities UK, who are the collective voice of 141 universities, work with the Government and the higher education sector to focus on creating opportunities, growing the economy and making discoveries. We also welcome our guest member from the Science, Innovation and Technology Committee, George Freeman. You are very welcome, and you will be able to help us particularly given your previous experience as a Minister. Without any further ado, let us move to the questions. How important is UKRI and its grant funding to research and innovation in the UK, and why? It is a very broad opening question to both of you, just to get you warmed up.

Let me start by saying it is absolutely vital to the UK in every sense—in the sense of underpinning science and in the sense of underpinning the social and cultural side of the UK. It influences absolutely everything. The research base in the UK is one of the best in the world, and I think it leads to huge economic benefits through its application in industry, and huge social benefits through its application in our health systems in many ways. To summarise, it is vital.

I entirely agree; it is absolutely vital to the UK for a range of reasons. Clearly, UKRI’s work addresses a whole series of global problems, not just UK problems, but the excellence of science and research that it supports is vital to the UK as well. It drives economic growth, and the evidence is pretty clear that UKRI’s work will drive future economic growth. I see that as being in three batches: it provides a huge amount of funding and support, through grant giving and so on; it not only provides huge infrastructure for the scientific endeavour but drives commercialisation and does a lot of work on impact and innovation, which again is very helpful to economic growth; and it also provides strategic leadership, policy development and behaviour change in our research culture, which is important alongside all the other excellent things that it does.

One of our bits of evidence tells us what we probably all already know: we are very good at innovating and coming up with ideas in this country, but we are not so good at commercialising those, compared with somebody like MITI, for example. Do you have any ideas for how we might improve on that?

It is certainly true that the investment that UKRI makes, and indeed other funding agencies in the UK, drives an awful lot of innovative ideas. We have a very good record of spinning out companies and so on. There is evidence, though, that we are perhaps a little bit less successful at scaling those up, and there clearly are examples where we have not been able to capture some of the ideas and they have been lost. I think there is a big job to be done, although not just for UKRI, to be honest—this is a Government job alongside UKRI and other funding agencies. There is more work to be done on how we attract inward investment and get venture capitalists engaged. There is quite a lot of work that could be done across the UK to think about that type of commercialisation and how we do a better job of it in more regions in the UK.

Who should be responsible for that? Should it be academia or the Government?

It is very much a partnership. I think that academia has a role in that, of course, but so do Government and funding agencies, particularly UKRI.

Good morning. I should probably declare that I sat as an adviser on the UKRI healthy ageing challenge fund, which completed in 2024 and oversaw £98 million of grants, mainly through the Innovate UK-type of work. You have both outlined a number of areas for which UKRI is responsible. If you were to do a SWOT analysis, what would you put in the strengths, or what UKRI does well, and what would you put in the weaknesses, or what it does less well?

What it does well is engage with a huge number of people in academia and industry throughout the UK to look towards the priorities for its funding, and increasingly to look for interdisciplinary opportunities. One of the driving reasons for creating UKRI was to look towards more interdisciplinary research and join up the different historic disciplines, and it does that extraordinarily well. Each of the councils works with known communities and engages with them, and that shapes the research that takes place. I think we do that particularly well in the UK, compared with many other nations that I have been involved in. The UK is particularly good in its outreach and drawing in what is really needed to satisfy UK requirements. If you look at the flipside of that, there are some organisations in other nations that are perhaps more focused, but I am not sure that would be the right answer in the UK. What has really benefited the UK is having the breadth of activities, rather than putting all our eggs in one basket.

We have received some evidence that highlights the issue of a narrowing of focus, in this case on to the Government’s missions, as opposed to having responsive or open calls that would allow more researcher-led applications. Is that what you meant by “focused”?

Yes, you have a balance; indeed, there is balance in the UK. There are huge opportunities for individuals to come up with quite innovative ideas, and the system accepts broad, innovative ideas. Look at the base of ideas that is looked at and reviewed. One of the good things that lies behind this is the peer review system in the UK. We have good people who are able to look, often beyond the current activities, towards very novel areas of research, science and innovation.

Professor Boyle, do you agree that UKRI strikes that balance? Are there other areas of weakness? We have evidence that it might be a bit bureaucratic, and slow to make decisions.

Again, I completely agree with what David said. If we did not have UKRI, we would have to invent it. I spent a good number of years as president of Science Europe, which brings all the funding agencies across Europe together. UKRI takes a leading role and has developed an awful lot of things. For example, the impact agenda was dreamt up by UKRI and is now adopted in many research councils across the world. In many activities that UKRI does, I see it at the forefront of research funding agencies globally. It genuinely plays a leading role and does a range of things very well. It is vital that we maintain that balance between what you might describe as discovery versus more applied research. That is an important part of UKRI’s role. It is one of the reasons why organisations like UKRI, in the UK and other countries, are usually arm’s length bodies. It is important that they address Government missions to a reasonable degree, but it is also essential that they maintain that real focus on discovery-led, bottom-up ideas. Without those, we will not have the innovations to come in the years ahead.

Is there anything else you want to raise on strengths and weaknesses?

UKRI has a whole series of real strengths. I think that it does drive behavioural change in the academic community, working alongside universities and academics. We have seen that system change over the years, so it is very much a partnership and I think that should be celebrated. Its policy work is important, alongside simply providing grants for academics to get on with their research. There are areas that UKRI itself is looking at. You mentioned bureaucracy. UKRI has done a lot of work on that recently, and again it is working very much in partnership with universities. To be fair, on both sides, we should all be looking at bureaucracy. It is not just UKRI; it is the universities as well.

The total budget is a significant amount of money—£9 billion—so you will appreciate that the output is really important from a value-for-money perspective, for the taxpayer. You helpfully set out areas of focus. I want to probe a bit more on the work that the organisation does. It has an excellent reputation, as you have just set out, Professor, for its contribution to the overall research and innovation system of this country, and for its global impact. Is it fair to say that it is seen less favourably in terms of business sophistication and institutions? Are there lessons that the organisation can learn from other research and innovation funders, and perhaps from your previous experience of being involved in those organisations?

Are you asking specifically about business, or business engagement?

Specifically about business, because in some of the evidence that we have received, it is an area that has been identified as perhaps a weakness. If you have other thoughts, the Committee would welcome them.

It is fair to say that in the UK, for some long periods—and I can go back decades, unfortunately—there was not good engagement. What is now Innovate UK—an integral part of UKRI—came about to resolve that issue. It was created in 2007, initially as an independent body. If you look through the lifecycle of what is now called Innovate UK—it was originally the Technology Strategy Board—and its engagement with a whole variety of businesses, particularly with small and medium-sized enterprises, you will see that it created substantial engagement with industry, which had not happened to that degree. Some of the research councils did a lot, and I can think of specific examples. I was on the board of EPSRC, which did and still does quite a lot of such engagement. But I would suggest that the creation of what is now Innovate UK was a big step forward in engagement with industry. One of the benefits of getting together the nine bodies that are now part of UKRI is that you have all these connections. The evidence I saw suggests that quite a lot of engagement through Innovate UK’s connections into industry is being used by other councils, which hitherto had not had the same degree of engagement. I think it has changed, but I am talking about within a decade or 15 years, not long term.

Going forward, are there other examples of what UK Research and Innovation needs to do better, when we compare ourselves with elsewhere?

I can comment on some of the other examples. I wholly agree that the creation of Innovate UK was clearly done for a reason: to address the issue of engaging with business, in the sense that it was felt that RCUK, the predecessor to UKRI, did not engage with business enough. There is a slight risk of assuming that Innovate UK is the only part of UKRI that engages with businesses. As David said, that is not true. I think you will find that the other research councils have grown their relationships with business over time. Certainly, when I worked at ESRC, we had already started opening centres with funding from banks and various other organisations. There is quite a complex arrangement between the work that UKRI as a whole does to engage with business—a very specific part of that, Innovate UK, is very focused on business engagement—and the business and innovation work that other research councils are engaged in. Getting that balance right will continue to be worked on.

Can I add a rider here? We have not really spoken about skills and skills development yet. We must acknowledge that one of the great benefits of UKRI is skills training. A lot of people get into industry, and you can’t easily map from their background how that influences industry—perhaps through them having become a more able researcher—but I have seen countless examples. Let us really look at the skills side of UKRI as well as the basic and applied research through Innovate UK. I think there is a huge skills agenda, and UKRI probably plays a bigger role than many people realise.

I want to follow up on one very small point. I would say that UKRI is the leading global institution for engaging with business, compared with many other broader funding agencies. In other countries there are of course funding agencies specifically set up to engage with business in a different way, but the way that UKRI has done that in a holistic way across its organisation is quite different from what has been done in many other countries.

Do either of you have any concerns about the possibility that some of our universities will come under funding difficulties? Obviously, UKRI works very closely with academia. If there was to be a problem in some of our universities, could that seriously impair research and innovation?

I was vice chancellor of a university that nearly went bust—if you look back at the history of Cardiff, we probably got closer than anyone. That was in ’88, I think—a long time ago. I cannot speak for it today; Paul can. It is a difficult environment now.

It is an incredibly difficult financial environment at the moment in the university sector. Universities UK has just carried out a quick survey of universities, and there is some very clear evidence. Something like 20% of universities have already started cutting back on their research and development work. About 80% are considering cutting back within the next three or four years, and 20% have already started cutting back on early career research investment. We know that the system is complex, but I am afraid the way the university system has been funded for some time now has relied very heavily on international student fees, not only to cross-subsidise research and innovation but to cross-subsidise the teaching of home students. The problem with the cross-subsidy, of course, is that as that has been reduced very significantly and very rapidly, many universities are having to cost-cut at extreme pace. I think there are risks to research and development as a result. We have had a long conversation, of course, with UKRI about the full economic costs—the additional costs on top of the grant that pay for the infrastructure and so on. That has been set at 80% by UKRI. There has always been an expectation that universities have to find part of the costs. It is not 100%; it has been set at 80%. I am afraid at the moment the amount that comes through to universities is around about 70% or 69%—something of that order. We used international fees to cross-subsidise that and that system worked well, but now that international students have been cut away, it is difficult to find those resources. UKRI are already in conversation with universities. A lot of discussion is going on about how to resolve these issues. I would say that UKRI has stepped up very quickly to talk to us to try to think about ways through, but I am afraid I agree with you that there is a serious issue. We hope that there will not be situations where universities come under very undue pressure. We know of one in Scotland that has reached a very difficult position, and it has an exceptionally strong life science department. There are risks to UK plc if universities individually are having to take tough decisions around their research without a strategic, co-ordinated view about it.

That is the whole purpose of this pre-panel. Thank you for that advice. We will certainly pursue that with our witnesses at the next hearing. I will call George Freeman to ask the next question.

Not at all; you are very welcome.

First, let me agree with you that we have an opportunity now to sustain the position that we have built up and perhaps, given the global pressures—commercial, if nothing else—continue to grow. My advice is to continue to maintain the UK at the leading edge, but to recognise the competition globally, which is severe. Reference was made earlier to the fact that I am taking over as chair of a large UK plc. We do a quarter of our business in China. If you look at the pace at which science, technology and innovation is moving globally—I use China as one specific example—you see it is absolutely massive. We need to look more towards the competitive pressures at every level. The competition is absolutely massive. I have lived in international industries for most of my career. I have never seen the level at which we are now operating, and the pace at which other countries have the science that underpins future development. For many years, we looked at competitive industries in countries that just did not have the science base. Other countries are now developing extraordinary science bases, and they are doing so at a huge pace. My first piece of advice, then, is to look at the competition—and the opportunity—that we face globally. It is huge.

Do you want to give us any examples? Are we thinking about the usual ones—some of the south-east Asian countries, such as South Korea? Which particular countries had you in mind when you said that?

I have worked quite a bit over the years with China, as an example, and the pace with which science is developing in-country is massive. Let me take, for example, an industry that I did not know very well at one time: semiconductors. Look at the pace at which semiconductor technology is developing there—and in other countries; it is not just in in China. You can also look towards Vietnam, for example. I belong to a company that does 95% of its sales globally, yet it is based in the UK. We do all our engineering and manufacturing in the UK, but we look at the pace of competition, particularly in south-east Asia, and not just in China. The growth is massive and we must continue to compete, but we do so on the basis of skills in the UK, and on the basis of the science and innovation that is going to underpin our growth for the future. Unless we keep up the pressure and look towards future growth—which has happened in the last decade or so—and unless we maintain and, I would suggest, accelerate that, we are not going to have companies that can compete internationally.

One of the outcomes of the review that I carried out was that data was an issue within UKRI—indeed, it is a wider issue, of course. We need knowledge of what research we have carried out and to use that information in a wise fashion. I suppose I should talk about AI in this context. You need a database of what we have done, where it has been done and how we can best use that information. When I looked at UKRI three years ago, one of my observations was that that information was not easily accessible. It existed, but you could not draw it together in a way that would allow you to get the best value out of it. In my opinion, the UK has not exploited as well as it might have done a lot of the knowledge that exists here.

You are touching on the complexity of science and innovation in the UK—there are many bodies involved in it. Indeed, the recent NAO Report highlights just how complex the system is. I recall some wonderful discussions with people, at the time I carried out the work for you, about how we know what is going on in other parts of Government. We have DSIT now, which is great, but of course DSIT does not cover the totality of the research that is carried out. When we did the review, I looked particularly at health-related research. That is one of the most challenging areas in which to get a simple picture of what is going on and where. There are still opportunities. One thing that I am aware of in the development of UKRI is partnering and being able to get together different parts of the infrastructure in the UK, if I can call it that—for example, using science adviser networks and other networks. There are networks, but much more can be done by UKRI.

I will give you a more detailed answer, but I think those three areas are very good areas to focus on. They are also areas where we are already doing an awful lot of work, not just in UKRI but across the university sector. Let me follow up on a couple of David’s points. It is vital that we compare ourselves globally and look at what is happening elsewhere. One of the challenges we have as a sector is that while our public funding for research is good—we have all celebrated the recent funding—our business funding for R&D is not as strong in the UK as the funding is in some other nations. I do not think that should be left entirely to business; there is an interesting discussion about how Government, business and the funding agencies can come together and help to champion some of that. There is something to be done around that, which relates very much to inward investment as well.

Yes. We can get those figures.

I do not know the figures off the top of my head.

It is probably £15 billion or so from industry directly.

Something like that.

Yes. It is known.

We can gather that data for you.

Could one of you give us a note? If that figure is known, it would be very helpful if we could have it.

Yes, we can certainly pass that on. There are a couple of other areas that it is important to think about. I mentioned earlier the place agenda—how we think about research and innovation across the UK and how we make sure that we identify where there could be really important clusters of work. David’s example earlier about semiconductors in south Wales is a very good example of a cluster that we have to make sure we invest in to become globally competitive. The place agenda is very complicated. There is an awful lot of innovation funding—it is all worthy and good funding; we have freeports, investment zones and UKRI funding—but I am not convinced that it is all as joined up as it could be. There is an awful lot of activity that we could get a lot more added value from. UKRI is one organisation that should play a role in that, but clearly that would need to involve other organisations as well.

That is helpful, George; thank you very much. We must keep pressing on because time is moving.

Following on from George’s questions, I am keen to hear from your experience about the extent to which UKRI is a modern, joined-up organisation that functions as well as we would expect it to.

Well, it is not yet, but it is nearly there. The picture really was that when it was created out of nine hitherto separate organisations, the process of getting it to work in a coherent and cohesive way was very challenging. We have to remember that it was set up in the covid period, so that added to the complexity of getting it set up. What I discovered in the review—a lot of the data was three years ago—was that systems internally were not joined up. They could not communicate with each other. It was desperately difficult to do interdisciplinary research across the organisation, which is something that the NAO looked at in 2021. The NAO did a review of some funding that showed how slow it was to react—how inefficient it was at that time. That is certainly what we found. One of the strong recommendations from the review that I led was to look at data, in every sense, across the organisation. I know, because folks in UKRI have kindly briefed me on it, that that has become a point of focus and that actions have been taken, including some new senior people, in order to ensure that best practice is spread across the whole of UKRI. When I looked in 2022, there were patches that were really very good, but that was because the individual research council had done a good job before. But it was not uniform; I think they are now getting to that point. Even the basic enterprise resource planning system—the acronym for this wonderful thing is SHARP—has taken a long time to come into being.

Apart from those legacy systems that are still on that journey, are there any other areas apart from the data side of things? You said they are not there yet; what other areas would you identify?

Bureaucracy was one of the issues. To try to be fair, some of the bureaucracy grew up because they did not have confidence in the data systems. As I looked at what I described in the review as inefficiencies, I tried to understand why there were people doing all these tasks. It was because they did not have the systems. I was really surprised—this is three years ago—that so much relied on people making spreadsheets or doing things with paper, not using IT. What has been happening in the last three years is a revolution in changing the IT infrastructure—and the processes, because it is not just about the system; it is about having the processes and having people trained. A whole raft of things has had to be done in order to become more efficient. I cannot give you a simple answer—you can ask some folks who are sitting behind me, and I am sure you will—but from my perspective what has happened since the review three years ago has enabled the organisation to focus on becoming much more modern in its use of IT and systems and its organisational skills.

Again, I agree with everything. There is a really good direction of travel here. We are seeing that direction on the university side and there have been good conservations with the university side about that direction of travel, so the signs are good. There are also other elements. Of course, the systems and the way the organisation works is one part of it, but it is also about whether they have the right portfolio and whether they have developed that portfolio of support in a wise way. I think they have. We can all debate particular funding streams, but in general I think they really do cover the breadth of science and engineering, and arts, humanities and social sciences that we need—the disciplinary spread. They are doing more work now on interdisciplinary work. It is challenging to do that: it is not just down to how you manage it; it is also about the sector and how we adapt to it. There are some really good signs but, exactly as David said, I am sure that when you talk to our colleagues from UKRI they will accept that it is a journey and there is still some more work to be done in that area.

Let me say immediately that you do need to think of risk in some ways. I read with great interest the comments on risk in the NAO Report. It is by no means the first time it has been discussed. In just about every context you have to ask: what is risk, and who is perceiving risk? I am sure there is a lot of academic work—I am sitting next to an expert who can tell you about it—but the fact is that the perception of risk will depend on who you ask the question. It is not clear to me from the NAO Report precisely who was answering those questions—it was a very small sample size, which my research background tells me is a question in its own right—but I do think we want to drive towards a greater risk-taking environment, to use the broad term.

No, I don’t think it is. You have to take risks and you also have to back the winners, because the winners will come up with new ideas as well. I absolutely agree with David. We need high-risk, high-reward research. We also need low-risk, high-reward research. We should not focus on just the riskiest work, but there is definitely a place for it. Of course, it always leads to challenge. The more risk you take, the more things are likely to fail. Although it is very easy for committees and groups of people to say that is what we want, when we are judging in the end we have to hold to that and not criticise UKRI if we find that it funded some things that did not turn out very well. We need to think about risk in quite a complex way. There is risk around the research topic that you are funding. There is risk around the timeliness of the funding that you give out. When I was at ESRC, we set up a very rapid response stream of funding. That was designed, for example, for social scientists who might have to go into the field because there has just been an earthquake, and if they cannot get funding within a week or two there is no point in doing the research. You have to take a risk on that, because you won’t have behind you the level of peer review and other activities that you might put in place for a process that takes a bit longer. So there is the timeliness. There is obviously the whole issue around abuse and fraud. I think that UKRI and universities spend an appropriate amount of time trying to address that. It is relatively low risk, but we need to make sure that we spend the right time on it. So there are different elements of risk. One particular area that we should acknowledge is trusted research, and the issues that we now have about partnering with different parts of the world. We really have to get that right. We must make sure that we continue to collaborate with many of the vibrant research environments in the world, but we have to do that carefully in certain parts of the world. That is an agenda that we have to tread through very carefully.

Can I just test one small bit of this very interesting discussion? We surely should not fear failure, should we? Because if we do not have failure on some occasions, we stifle innovation, don’t we?

I completely agree. We definitely need failure. My point, I suppose, was that we all agree with that at the beginning of the process. It is sometimes at the end, when we have NAO Reports and so on, that if there are a number of failures, we have to make sure that we celebrate the willingness to have those failures. I absolutely agree.

Good morning. You touched on peer review, so I just want to look into that further. How do you think that UKRI could make better use of the peer review community in its decision-making processes?

You are the expert, Paul.

The first thing I would say is that our system is based on the Haldane principle. It is based on a principle that basically says we should allow the experts to decide what is the best and most excellent science and research that we can fund. That is a principle that I think is very important to adhere to. The whole concept of peer review is vital to the system. I do think, though, that there are elements that we could think carefully about. Going back to one of the biggest challenges we are facing at the moment—the financial challenges—there might be elements of peer review that could be pared back. I think we should be giving more autonomy to some of our portfolio managers, and some of the directors in UKRI, to make decisions on funding and really have the peer reviewers focus less on that element. We have a risk that some of our academics might be tempted, as part of the peer review process, to look to institutions that can provide match funding, for example, and see that as a positive part of the process. Well, of course, match funding may be regarded as a good thing to have, but I would much prefer that UKRI made the decisions on the funding element of the grants and left the excellence and science to the peer reviewers who are expert in that. I think that would be a way of helping to solve some of the problems that we have at the moment. I think an element of the full-economic-costing problems is partly to do with peer review and partly to do with behaviours in universities. So, there are things that could be done to make it more efficient.

Do you want to add anything, David?

No, I think not.

We talked about other countries and how they are storming ahead with research and whatnot. In terms of peer review, are we on a par? Do we use it in the same way? Is there anything we could do differently?

There are lots of experiments and ideas that are being tried, because, of course, peer review is a time-consuming endeavour, and the more research we fund, the more difficult it becomes. Again, I would say that UKRI has been leading in some of those. It has set up a Metascience Unit, which is exploring different ways of funding research. That is a really exciting initiative, and is very sensible. Again, let’s not forget that peer review is a global endeavour; we use peer reviewers from all over the world and other nations use our academic community as well, so it is complex. As I say, I think the research UKRI is doing in these areas is really first class, and I think some of that work will, again, lead changes that we will see in other funding agencies across the world.

Professor Boyle, I think you touched on this earlier in response to the Chair’s questions when discussing Innovate UK and scaling and growing commercially. Do you think that UKRI is strategic enough in how it is using its funding to achieve that? From what you were saying before, you have talked about the business links being there, but my sense was that this was more about UKRI’s funding, to the points really about where we are getting external and private investment versus where we need public investment. I am particularly thinking about the problem of getting start-ups through the so-called Valley of Death, where people just never quite make it. So, what more could UKRI be doing?

It is a really challenging area. If I can just step back for a moment, and then come more precisely on to your question, I think there is an interesting discussion to be had around some of the things that UKRI provide support for. Some of the things that are provided through support are, in my view, foundational. For example, we need a certain level of infrastructure in our universities. You might take supercomputing as a good example: pretty much all universities need access to some form of supercomputing. They do not all need access to the very top supercomputing—that is for the astrophysicists and so on—but we pretty much need access to that. That sort of foundational support should really be funded not through competition but in a sensible way to make sure that everyone has access to it. I am also starting to think that, actually, work could be done around that in the commercial area as well. We have seen some really good examples that UKRI has led, such as putting funding behind things like Northern Gritstone and Midlands Mind Forge—putting investment into organisations that bring together clusters of universities to try to make their work more commercial. The reason they are successful is that they are bringing universities together. One university does not have the scale to attract some of the big venture capitalists, but a group of universities has a much better opportunity to achieve that. If that is a model that works in some parts of the UK, I would see that as a sort of foundational approach. If we believe there are ways to do this more effectively, we should therefore bring groups of universities together regionally, across the UK, to do that more consistently. I think there is work that could be done that treats these sorts of decisions as, “We have decided that we have made progress and we have a better way of working; let’s make sure we roll that out.” But other parts of UKRI funding should absolutely be just based on grant capture excellence and people competing for those grants.

So in a sense, once there is clarity, rather than making them compete, it is more about making an investment decision.

It is about deciding what sort of basic infrastructure and what we would regard as basic infrastructure. On top of that, as I alluded to earlier, I think there is interesting work to be done where UKRI can play a role, though certainly not the only role, in thinking about how to make those regional innovation decisions that will really drive the excellence we have in those regions and champion the things that should be put at the top of the list. As I said before, at the moment there is a lot of really good endeavour, but I am not yet convinced that it is as joined up as it could be. There is a slight risk if we go purely down the route of aligning that, for example, to mayors and their jurisdictions. Obviously, you have parts of the UK without mayors, and you have devolved Administrations. There needs to be some sort of regional structuring—which must happen through national oversight—that would bring together the relevant players and help us commercialise and bring business together with universities and others in a better way.

That is true about skills and capacity, because at the moment there are bits in every university, and we have loads of catapults scattered around. There is quite a lot of that in-support infrastructure to make commercialisation possible, which again seems a bit fragmented—would you agree?

There are some really excellent things being done. Rather than seeing it as a negative, I would think of it as the beginning of the journey. If we have seen excellent examples of how this can be done, let us make sure we replicate them across the piece.

Would you like to add anything, Sir David?

You mentioned catapults. I was very much involved in the early days of catapults and creating the networks. They have done superb work on outreach. Probably the best example—and the one I have worked with most and still actively work with—is the High Value Manufacturing Catapult, which has a number of centres. Those centres have grown their engagement with industry, academia, schools, kids and so on. They are tremendous models that have developed far beyond our original aspirations, which were rather technology-related. They have developed their connections with skills and the regions in every way possible. So the Catapult Network, just to pick up on that one example, is a great story. More can be done, and I am sure more will be with that network.

We are already over time, but I have one very last question for you, Professor Boyle, because you said that pharmaceutical and health sectors are some of the most difficult. We had evidence from the Association of the British Pharmaceutical Industry, which provides more private sector finance for R&D than anybody else. They obviously have concerns, but they put forward a proposal to the Office for Life Sciences to establish a new large-scale research collaboration between Government, UK funders, academia and industry to accelerate the development of pre-clinical models in the UK. Is there anything in that?

I obviously have not seen the proposals and would like to look at them in more detail, but what I would absolutely agree with is the list you just gave. We have to make sure those big investments are partnerships, and that means bringing business, Government and the university sector alongside the funding agencies together. If you can bring those together and chart out a strategic vision—not just in pharmaceuticals but across a number of areas we will be thinking about in innovation strategy and some of the industrial challenge areas—I think that is a good approach.

You have both given us amazing advice and help this morning, so I cannot thank you enough. You are both very knowledgeable and busy people, and we are very grateful for your coming this morning—we really are. Do stay for the next session if you wish to, but you are very busy, so I am not expecting that you will. We will now take a short break. Witnesses: Professor Leyser, Siobhan Peters, Sarah Munby and Alexandra Jones.

Welcome to the Public Accounts Committee on Thursday 5 June 2025. We have just heard from our excellent witnesses about the importance of UKRI’s grant funding for research and innovation, which is essential to ensuring that our systems can continue to respond to emerging challenges. In the autumn 2024 Budget, the Government committed to invest £20 billion in research and innovation for ’25-26. DSIT is the sponsoring Department for UKRI, which invests in research and innovation on behalf of the Government. With a budget of more than £9.5 billion, UKRI is the largest public funder of research and innovation. Management of grants for research and innovation should be consistent with the principles of good funding support. Funding research and innovation also requires well-managed risk-taking, as new ideas will not have a track record of achievement and may carry higher levels of uncertainty. Given the importance of investment in research and innovation, we will explore UKRI’s performance and whether it is being optimally used to support Government and to share best practice. We will also examine whether there is a right culture of risk management to support genuinely pioneering research and innovation. This afternoon, we are very pleased to have with us Professor Dame Ottoline Leyser, the chief executive. Before her appointment as chief executive of UKRI in 2020, Dame Ottoline was director of Sainsbury Laboratory Cambridge University, combining computational modelling with molecular genetics and cell biology. Dame Ottoline has announced her intention to stand down as UKRI’s CEO in June 2025, so this is a good opportunity to say thank you very much for what you have done for research and innovation in this country.

Thank you.

Siobhan Peters, the chief finance officer, has been CFO for UKRI since 2020. Before that role, she had senior leadership roles across Government and public sector organisations. We are also very pleased to have with us a regular attender, Sarah Munby, the permanent secretary of DSIT. Sarah has been in that role since 2023 and was previously permanent secretary for BEIS, DSIT’s predecessor. Sarah has previous experience in the private sector as a partner in McKinsey & Co. In March 2025, she announced that she would be leaving the civil service this summer. Again, I thank you for all the work you have done leading your Department, and for all the very useful evidence and help that you have given this Committee. It has been exemplary, so we are sorry to see you go.

Thank you.

Alexandra Jones is director general of science, innovation and growth at DSIT. Before that role, Alexandra was the director of science, research and innovation at BEIS, DSIT’s predecessor Department, from April ’19 to May 2023. Alexandra, I don’t think you have been before this Committee before, have you?

I have not in my role in the civil service.

Well, you are very welcome. I think all the rest of you have been before this Committee before. Siobhan, you are not quite sure.

I am not quite sure.

Well, anyway, a very warm welcome. We are always pleased to see people for the first time. Also, a particularly warm welcome to our guest member, George Freeman, who is a member of the Science, Innovation and Technology Committee and was a Minister, so has great experience in this field. You are very welcome, George. The first question, to get us warmed up, is to both Dame Ottoline and Sarah Munby. Reflecting on your time in UKRI and DSIT, what have you learned about how best to support research and innovation?

Thank you. That is a great question. It has been a huge privilege to serve as CEO of UKRI for the past five years. It is an amazing organisation, as we heard from the previous witnesses, and a critical national asset. The main benefit emerging from the creation of UKRI is connectivity. That is something on which we really need to push ahead as a country because of those global challenges that we were hearing about and the global competition. We will never have the scale of some of those competitor nations, such as China or the US, but we can continue to lead through really smart connectivity shortening the pathway between the amazing discovery work that we do and public good in innovative companies or our public services. That is what UKRI can deliver, because it brings together all sectors and disciplines. We have two parts that are sector focused. Research England is focused on English universities, working very closely with the equivalent in the devolved nation, and Innovate UK is focused on business. We also have several parts that are focused on discipline right across those sectors, delivering medical, economic and social research and everything else. That connectivity is key. The things that I am most excited about as I leave, and the things that I am proudest of that we have achieved, are very much to do with that join-up—for example, our ability to join the investor community with our peer review activities and SMEs in the investor partnership programme at Innovate UK. We are effectively using our peer review expertise to do some of the due diligence that puts investors off investing in those high-innovation companies—that is a great example. We have driven some community-led research, where communities in the UK can say what their research priorities are and have budgets to drive forward research programmes that find the solutions that they want. We have policy fellowships that put researchers into Government to join up the research base with policy. We then have lots of work to drive forward interdisciplinary research, as we have heard, both to solve key challenges and for those blue sky ideas that do not fit anywhere in the current landscape that are truly groundbreaking and innovative. I would highlight those join-up activities as something that we have been able to do because of the creation of UKRI. It is very exciting to see it all come together, and to see the outcomes for the nation that result from it.

Thank you very much. Permanent secretary, do you have any reflections? I will let you wander a little wider: is there any advice that you want to give this Committee on your Department, or on research and innovation in particular?

That is a very dangerous question; we could take the whole hearing.

I agree, but it is a bit of a tribute to you.

I will try to keep it reasonably brief. I really agree with everything that Ottoline said. I will start by saying that, nationally, we are incredibly good at this, and this is a huge and vital asset for the country. Looking forward, if you think about where the UK is going in the world, where the rest of the world is going and the challenges that we face, our strengths in science, technology and innovation are, in my view, the heart of our future economic strategy—one might even go further and say our future national strategy on who we are and where we are going. We are building from a place of huge strength. In these conversations, we rightly always spend time talking about all the things that we could and should do better, and the scale of the opportunity is there, so we should go after it. But let’s start by saying, “This is an enormous national strength and one to be hugely celebrated.” The second thing I would say—this is a classic mandarin answer; I probably have been in the civil service too long—is that it is complex. It is very much not like other really difficult things that I have been involved in, such as working out how we are going to get a nuclear power station built—that is really hard, by the way, as you know, but you know what you are trying to get to, you will be able to see when you got there or not, and you can quite clearly identify some of the critical milestones on the way. This is not really like that, because we do not always know what the outcomes are going to be. We are constantly surprised by the amazing work done by our researchers. We do not always know what the pathways are, whether that is the links between different disciplines or the links between different areas of work. We have talked a lot—George Freeman will recognise this—about thinking about this as a system on which many different things are acting. A lot of what UKRI does is centred around the public funding of R&D, and of course seeking to get private funding as part of its leverage work, but that is only a tiny part of the picture of what you need to do to make a make a great science and technology economy. We can all list the many things that go into it. Getting something from brain to lab and into use in a company is a many-stage process with many different levers. It is not always easy to see which levers will have the most impact. There is no model; it is an area of work where professional judgment really makes a difference. I think we will come back to this later in the hearing, but if I have one reflection—this relates to R&D policy but it could of course be taken much more widely—it is that we sometimes just need to stick with it. We need to keep on going at the UKRI change programme, on the work we are doing to build and enhance ARIA, for example and on our investments in AI, which will be multi-generational. It is a long game, and I would say, “Don’t be afraid to make a plan and stick with it over multiple years or, for some of the areas of work we are talking about, multiple decades.”

Thank you for that. It is very good that this Committee is sometimes able to celebrate our successes. Too often, we examine things that have gone wrong, but on this—on the direction of travel—it is very good to see that we are so successful around the world, so thank you both for those optimistic replies.

I want to ask about the relationship between the organisation and the Government; Professor Leyser and Sarah, you might be able to comment on this. It is fair to say that UKRI was set up with the intention that it would shape RDI policy and increase policy interest. How has the organisation improved clarity regarding the division of responsibilities between UKRI and the Department? Are there still challenges?

There are of course challenges, but I don’t think we have a challenge of not understanding who does what. We are here to set the strategic priorities, and UKRI is here both to deliver and to advise—indeed, that is set in statute—on the best way to make those things happen. I will give you a very simplified sketch. We say, “Right, we have some really clear priority technologies. One is quantum. We want to do more on quantum.” So we say, “Hi, UKRI. What does that look like? What is sensible to do? What would work? Where are the real opportunities? Where does it best link into our existing leading institutes across the country? What is the right approach to achieve that strategic goal? Right, let’s agree. Yes, that makes sense. We are on the same page. Okay, please now go away and deliver.” I don’t think there is a lack of clarity—I don’t think that is the primary bit that is difficult. You asked about the Government role more broadly, and I think the creation of UKRI has really helped not just in joining up DSIT with UKRI, which is a really critical relationship, but in UKRI’s relationship with other Departments. We rightly ask UKRI to work closely with the Department of Health and Social Care or the Department for Energy Security and Net Zero—my old stomping ground—to make sure the work is joined up. For the rest of Government, a clear front door and a place to interact with really does make that much more effective and much clearer.

Obviously, there will always be areas that can be improved but, generally speaking, are you confident that there are clear lines of sight from the development of Government policy to funding activity and through to UKRI?

As the NAO Report points out, there is more to do in that space. I would say that we have at the moment a landscape with lots of join-up points. It is definitely not the case that UKRI is off over here not talking to Government; we have lots and lots of linkages, which we can talk about in detail. What the Report brings to the front of mind is that we have not put that all together into a single thing that says, “We’ve asked you this here, and we’ve have put out these research interests by Department”—we do that very systematically now, and that is an excellent thing, because you can see those. We have key mechanisms around net zero, health and other big areas of research work; we have given you clarity around priority technologies and what we want to see there, but at the moment we do not have a single place. That probably matters less for UKRI, which is close enough in to understand the issues and trade-offs—we have very strong interactions between UKRI and the Department—but it does matter for people outside, because it is not easy for you and our stakeholders in the broader community to see the clear things, how the signals get transmitted, and how that is translated into UKRI’s work. But I should let Ottoline correct me on how it feels from her end.

I absolutely agree. One of the things that we have been able to do is to drive a step change in cross-Government engagement. We have members of our executive committee as contact points for the most relevant cognate Departments. There are regular meetings. We engage very deeply with the chief scientific advisers from across Government. They sit ex officio on the councils for our councils. We have good join-up. The important thing to point out is that we have a substantial amount of taxpayers’ money to invest, and we take our responsibility very seriously, but it is less than half of total Government R&D investment. The other half is coming from across all those Departments. Our role is to understand that full landscape. We are funding the science space—that core platform of people, infrastructure and new ideas, and that deep engagement from across our councils. We understand that base. We are also funding what I think of as docking stations into the key Government priorities, which are led from the various relevant Departments. We do a lot of co-investing with Departments to drive their priorities, as well as a lot of delivering the managed programmes of Government Departments, because we are experts at delivering research and innovation activities. That point of join-up—I always come back to the power of UKRI as a joiner-upper—is key for getting the best value for money out of the full £20 billion, not just the £9 billion that we have. It has made a huge difference.

May I probe a bit more? There must be an innate tension between an organisation that wants to drive innovation in scientific research and the need to make those decisions within a policy framework set by a Department or Government. Professor, might you be able comment on that? How do you ensure that the funding is allocated through the organisation with Government missions or policies in mind, while at the same time not stifling the innovation that will be necessary to see future development and research?

That is an excellent question, which highlights our role in not only delivering for Government now, but being stewards of the system such that we are confident we can deliver for Government in 10, 20 or 30 years’ time. A lot of this is very long-term work. I know that the Committee has already heard about Patrick Vallance’s three key priorities. They capture very well the balance that we have to strike. He has an absolute commitment to curiosity-driven research, developing the ideas and skills for the future. In a world where data and digital are so crucial, that future is rapidly coming towards us. We can go from those discovery moments to impact and application quite quickly in some domains now. That is a sacrosanct bucket; without it, the rest of the system does not work, and certainly will not work in the future, when we badly need it for the latest challenge—we do not even know what that is yet. On top of that, there is a key driver for growth. We need to drive up and scale up those companies—that is Patrick Vallance’s second priority. His third priority is absolutely about delivering for Government on current Government priorities. To me, that maps very closely on to my mental map of the ecosystem that we support—the platform on which all of this is built, now and in the future, and the clear ways to dock into that and really understand what the opportunities are from the rapidly growing research and innovation base, and drive them towards key Government priorities like the missions. It is really quite exciting how that is coming together, with some of the new programmes that we are now putting in place to shorten that gap even further, such as the R&D missions accelerator programme, which will allow us to ensure that the amazingly creative research and innovation base is tapped rapidly and quickly by mission boards to deliver their missions.

Permanent secretary, Dame Ottoline has reinforced the point that this is a long-term business. Can I ask you about funding? Funding tends to be given by the Treasury in annual dollops. Are we moving to a longer-term funding system, particularly given that the Government want to come up with a 10-year strategy for UKRI?

It is worth highlighting a recent and specific change on that: we have announced a set of criteria for thinking about what parts of the system should be explicitly and concretely funded on a 10-year basis. It is never going to be the whole R&D system—that would not make sense, for a whole series of reasons that we can explore, but that is very much an active programme. Post-spending review, we will be coming out with more specifics about the areas where we see most value for long-term commitments. It is important to say that loads of R&D is already funded on a very long-term basis. Although the Treasury does not say, “Okay, DSIT, here is your 10-year R&D budget outlook,” within our portfolio, we and UKRI are in our own right very substantial spenders. Within our own budget we pre-commit—not just within the spending review, but into the next spending review—to infrastructure, where we are literally building things, and, at a much smaller scale, to PhD programmes that run for multiple years. We do not say, “Oh, there is a spending review coming up, so we are only going to give you one year of you PhD programme.” Within that top-level budget there is an enormous amount of long-term funding going on. My responsibility as accounting officer for the Department, and Ottoline’s as accounting officer for UKRI, is to ensure that we are getting the balance right. That is a matter of judgment. What are the prospects for where we are going to be in a few years’ time? We need to be careful that we are not overcommitting into the next spending review, but it would be wrong to suggest that we do not have the ability to fund long-term work, despite the chunking of a spending review structure. Indeed, in some ways it is easier in UKRI than in some other Departments, because we manage a large portfolio. There are big chunks within it, but a lot of the chunks are quite small, so you can do a lot of adjustment as you go. I am looking at Ottoline because that adjustment function is a key part of how UKRI operates.

We have got a lot to get through, so we must move on, but maybe we will come back to funding.

As was highlighted in the NAO Report, UKRI has an appetite to share learning and good practice. Professor Dame Ottoline, what could the rest of Government learn from UKRI about how to support research and innovation effectively?

That is another wonderful question—thank you. I would say that it is quite a lot of the things that we have heard about already. These are long-term programmes. They are fundamentally also about portfolio management. There are different elements that you need to put in place and think about. Although they are long term, that does not mean that you start them, go away, and then come back; you are constantly looking at what is going on, what the new opportunities are and how one can then take them forward. In terms of R&I across Government, my strong recommendation would be, “Come and ask us, because we are the experts.” That is happening more and more and it is very valuable, not only in delivering really high-quality programmes across Government, but because we learn from Departments, Departments learn from us and Departments think and learn from each other via us. Having those points of connectivity is really crucial and we can get much better value from the whole portfolio—the whole £20 billion—from working together in that way.

May I add one thing? Often in Government, not just in R&D but in all sorts of spaces, there is a temptation when you have a problem to think that what you need is a new thing to solve that problem—“We need more of x, so we need an x institute or an x thing.” One of the reasons why it is so important to have that central co-ordination point is that if you want more impact on a particular area of research, there are lots of ways of doing it that build off the strength of what we have and tune the activity of our existing system, rather than always just layering further institutional complexity into our environment.

To me, it is all about outcomes. It is particularly powerful when someone from somewhere in Government comes along and says, “This is the outcome that I want to achieve.” Then we can work with them to find the most efficient and effective way to deliver that outcome. If people come and say, “We would like you to do this input,” that is always slightly less valuable, I think. Also, they come and say, “We would like you to set up this institute,” which is another input-type question. Why? What is the purpose of that institute, and is an institute the best way to do it? So I am very excited about the much greater focus on outcomes that seems to be emerging from the way this Government are talking.

Sarah Munby, what is DSIT doing to be an exemplar of innovation in the civil service?

That is a big question. I will pick on AI as a topic—what we are doing inside the Department. Of course, we are leading this work on behalf of Government as well. We have just completed and published the results—you can all read them—of a cross-Government trial of Microsoft Copilot. It showed, at scale, people saving 26 minutes a day on average, and we are about to roll out that programme across the Department. At the same time we are piloting a series of specialist tools built by AI inside the civil service for what you might call civil service-specific applications like consultations—we have already demonstrated that that can be done much more effectively with the support of technology. The use of technology is only one aspect of innovation, but from a personal view, what is the thing that we right now need to work on most quickly? It is how we use modern technologies to make our work higher quality but also considerably lower cost. Every single part of Government will be facing that challenge, particularly after the spending review.

I am raring to go. There is, of course, a long answer to that, but I will first come back to where I began the hearing. As you say, we have had a pretty full-scale review of UKRI. There is a long series of big, challenging operational programmes to make UKRI a stronger and better organisation. Do not take your eye off that ball. We are going in the right direction. There is more to do, such as getting the data in the right place, getting the systems in the right place, and actually delivering on all of that. The moment where we can say, “UKRI is a fully mature, modern organisation,” is not yet here, but it can be. Point No. 1 would be: keep going. Secondly—and I risk soap-boxiness on this point—we are in a period of real fiscal challenge. We talked earlier about curiosity research versus things that drive towards a particular goal. Successive Governments, on both sides of the House, have sought to protect curiosity-driven research, successfully, while growing the work that we do, for example through Innovate, to drive economic growth and particular goals. We need to continue to do that. We are not yet where we ultimately would like to be in terms of the amount of work that we are able to do. R&D spending has one of the best returns of any form of Government spending, but one of the least comprehensible and powerful short-term stories for a voter. It is really important that all of us are telling the story of how the work that we do on R&D is changing the country and the world for the better.

That is, “What does it do for me?” The third thing I would say, which is more for Government than UKRI is that it is right to join together what Government are looking for in a more organised and systematic way. We have done a lot of work over the last few years to do quite basic things, such as being able to look at the whole stack of R&D spending across Government. Alex can talk about that in some depth, but I still think it is really shocking that we did not just have that. We have done a lot more work to bring together different pieces of the system that are working on R&D from across Government, and to be able to talk about it as a whole system. That work is not done. The Report highlights that, but there is more for us to do to be clear, as I said earlier, not just with UKRI but with the system as a whole, on what Government want. If I may, that is always made easier when it is clear what the Government actually want at a high level. The question is not, “What do you want from R&D?” What you want from R&D follows from what you are trying to make happen. Things like the missions really help because with clarity on what Government want to achieve, we can get the UK R&D system to row in behind. Clarity of purpose is important.

This is an interesting moment in time, because we are in a blackout period between the shut-off of our very old and clunky ERP and the start of our new one—

Enterprise resource planning—our finance, HR and all those data systems. It has been a long time, for a whole variety of reasons, some of which are to do with the process of a big IT project in Government—the procurement process and all that—and some to do with the challenges of delivery in UKRI, but it really will make an enormous difference. At the moment, we are on nine different ledgers, and the amount of work that goes into just producing our accounts is not helpful. We are very excited about that. At the same time, we are replacing our main grant delivery platform. Again, that is an in-house, bespoke system that will be adaptable as we move forward. It will allow us to do all that we need to do and will capture the data that we need. One of the other very exciting things, which Sarah alluded to, is the new technologies coming online. For example, we absolutely are really excited about the recommendation in the NAO Report to be able to run far more analyses at our portfolio level—at thematic level—right across the organisation. A new thing emerges—there is a new, modern industrial strategy, with a whole load of sectors. What are we actually doing on those sectors already? Now, we have the possibility of using AI to work that out, rather than having to have boxes on our forms that say, “Are you in this sector?” or, “Are you in that sector?” That not only makes us much more agile in how we can use our data, but reduces bureaucracy, because we are not asking that of all our applicants. When I was applying for grants many years ago, there were three pages in most of the grant application forms for us to tick boxes of which grouping we were part of. Because the system is so woven, we could be several—I am a developmental geneticist, so yes, genetics, molecular genetics and genomics, but also plant developmental biology and agriculture. We were going down this long list of things so that the grant was classifiable in the old world. In the new world, we should be able to turn that around way more quickly. That is very exciting and empowering.

Yes, is the short answer. There is a longer answer, because the brilliant work you did on clusters is continuing, and obviously a cluster is more than just where the R&D is and who is doing it. It has to have the infrastructure, the skills and all those things. It needs multiple layers. Certainly, our data will make it way easier to produce the reports—which we produce already—of where we put our investment and so on, but at the moment it takes a long time, and in the new world it will be much easier to do that. That is exciting.

It is someone else’s problem.

We have a target by January 2026, so within a year, to have 90% of our data available through the databank tool, which enables us then to manipulate it much more easily. As Ottoline said, we are in a crucial blackout period. We very much hope that we will be going live, but these systems are not trivial, and I have no wish to say anything today that jinxes the success of any programmes.

I will mention again my conflict of interest, I suppose, but also the insights that I gained by being on the advisory board of one of the challenge funds on healthy ageing, which is linked to the last Government’s original industrial strategy. There was an evaluation, and part of the advisory group’s role was to help UKRI reflect on what it could learn from both the process, which was at times challenging as we wanted to do things differently and develop a portfolio of investment, and the impact it has. There was a very narrow focus on some of those tight economic business impacts. I am not sure that particular fund did that well, because not enough of them were at the mature stage for scaling up, and the funding stopped after five years. A lot of the investment that had been made was effectively lost because many of those businesses and entities did not have the funding to continue. You have obviously made many investments, but what have you learnt from the investments you made specifically relating to the last industrial strategy about how you need to change to get the most out of your research and innovation grant portfolios?

That is an interesting and broad question, in that the industrial strategy challenge fund that you are referring to—now called the UKRI challenge fund—was only part of what we do in terms of industrial promotion, commercialisation and business growth. It was a different way of working, as you say, and it was set up to work with industries that were the focus of the strategy to understand what they wanted and what they thought was the best way to invest and then to support a portfolio of investments that drove that forward in a managed and curated way. There were absolutely some huge successes from that, and with regard to co-investment from the private sector, the fund has exceeded its targets several-fold. We have learned a lot about how you run those programmes, and you are absolutely right: the last time I was in front of this Committee was in the context of that overall programme, and one of the main frustrations was the amount of time it took to get those investments flowing. That was a combination of the consultation that we did with industry, which took a long time, and the business case approval process, which also took a long time. We have learned quite a lot from that about how we would set up those kinds of challenge-led activities going forward. I could point again to the R&D missions accelerator programme, which will run on a similar programme manager-type basis, but on a much quicker turnaround time, aided by the fact that the outcomes that we are seeking to deliver on that are to solve very specific challenges that have been identified by the mission boards. You do not have to spend time figuring out what the challenges are; they are given to you on a plate, and you can go and solve the challenge, using the extraordinary breadth and depth of the research and innovation system that we have. We have definitely learned how to run those kinds of challenge-type programmes—what to do and what not to do—in a variety of contexts. There are multiple different domains, and differences in those different domains about what the best way to work is. Really importantly, on things like private investment, a key goal is to drive it up. I have that number that was missing from earlier.

Can you give it to us?

Yes, it was £46.7 billion in 2024, which is about 70% of the investment that goes into R&I in the country. We would like and absolutely need to drive that up. If you have that as a KPI right at the beginning of your challenge, however, there is a terrible danger that you wind up focusing on partnerships where businesses can put their money in up front. That means you are focusing on big business and excluding the SMEs, where quite a lot of the growth potential often is. We have learned that through the changes that we put in place in the industrial strategy challenge fund as we rolled it forward through evaluating, noticing, changing and evaluating again.

So £46.7 billion is business investment in R&D in the UK in 2024.

Yes.

It is a Treasury number, and my understanding is that it is going up, but it needs to go up more.

It is going up, but we do not have a very long time series, because you will remember that there was a correction to the ONS dataset, so we have only a small number of years. We can say it has been going up recently, but I would not be held to a long-term view on it because of the discontinuity in the dataset.

Can I get back to the lessons learned? It was very helpful to hear those reflections, because you came to the Committee for the report on the industrial strategy challenge funds back in, which came out in April 2021. I think you were looking then at some £1.2 billion of innovation, but there was a general lack of clarity at the time about what that was trying to do, with this focus on inputs rather than economic impact. We have also talked about social impact. The reason I am pressing is that I think there may be some similarities with the new missions. In taking this more mission-led approach, we need to make sure some of the lessons from the industrial strategy are applied. You started to indicate that there were some differences. I also wondered—perhaps the permanent secretary might want to come in—about what you said about keeping on going. Was one of the challenges with that industrial strategy that the priorities changed midway through implementation? Is there something about keeping on going with those?

It is definitely true that one of the difficulties—including on the pace of implementation around the industrial strategy challenge fund in the beginning—was not being clear enough about what we really wanted. Back to what I was saying, it is sort of a challenge to the R&D system as well as a broader challenge. I will bring Alex in, because she has been very involved in thinking about exactly this question: how do we learn from those programmes to make sure that the missions work is designed most effectively?

Very specifically on the R&D missions accelerator programme, we have worked very closely with UKRI to learn the lessons. Specifics include, as Ottoline was saying, co-investment. We have a target across the portfolio of investment in the R&D programme, but we are not asking for match funding up front, because that excludes small businesses—we now know that, so we are not doing it. We know that one of the challenges was having clarity about not just the very specific inputs—which was the conversation Ottoline had—but what you are trying to get to as an outcome. So it has been an iterative process of trying to define what you want in your mission, what the R&D issue is that you are trying to resolve, and then what specific R&D tools you can bring to that, with a clear senior responsible owner in Government. That was another lesson from the ISCF—that that was not as clear as it could be. We are very clear that the mission boards have to sign off those outcomes, and then we work together to make sure they are translatable into the questions of: what is the research and innovation approach to this, and how do you actually make that real? Another lesson was the timeliness. Lord Willetts did a review of business cases for DSIT, looking at how we can understand how to make sure that the business cases we do are appropriate for research and development and innovation, given that they are often designed for infrastructure, which is long term—as Sarah was saying earlier—and you are very clear about where you are going. Often with R&D, you do not have the economic analysis suggesting what that technology will be able to do, because it is relatively new and the point is that you are innovating. Lord Willetts set out a series of recommendations that we are implementing as part of our commitment to being an innovative Department. They are about trying to make sure that you get the outcome of that business case, which is the assurance you need as an accounting officer to Parliament that the money is being spent effectively and well, but we are doing it in a way that allows us to do it at pace and invest in the technology with the right information. So that is another one where we have tried to learn that lesson and make sure we are doing it differently. Again, that is straight from the industrial strategy challenge fund.

Can I double check that it will not only have the very narrow economic growth impact measures, but recognise that, for some of the missions, we are looking for social as well as economic impact?

Absolutely.

Indeed, many of the questions being put into it are very much about social impact. If you take an example like safer streets, you might hope to also get some economic growth out of it, but you are really trying to solve the problems that sit at the heart of the mission.

Another very exciting thing about the programme is the requirement for a so-called pull-through plan that links the outcomes into public procurement, which we know is critical for driving adoption in public services, for example, but also for economic impact, because it gives the order book to SMEs as they are coming up through their scale-up phase. Getting that right is critical.

I am delighted because the healthy ageing challenge, given social care commissioning and local authorities, was an absolute disaster for any of these small businesses coming through. They just did not have a customer and there was not an outcomes-based commissioner at the other end who could adopt the technologies. That was where many of them fell down, even though they were delivering some very good outcomes. The other thing that was mentioned in the pre-panel was the innovations around peer review. Very briefly, it would be great to hear either from Dame Ottoline or Siobhan about how that is going and what we have learned so far from those peer-review innovations. Are we going to free up lots of academics’ time, so they are not piling through large volumes of applications to review them, as I remember having to do?

That is an interesting question. We conducted a major review of peer review, bringing together all the evidence on innovations in peer review that have been conducted around the world over a long period of time. There are very different purposes to different innovations. Some are about saving time. Some are about ensuring that one can support high-risk research. Some are about ensuring that everybody has the opportunity to benefit; those are inclusion-type objectives. There are many different reasons for driving those changes. What we have put together is a dataset where you can go in, look and ask what the evidence base is for all these different interventions for the purpose that you are interested in. We are now using that across UKRI in some of our programmes. That database also underpins a lot of the work that is going on in the Metascience Unit that you heard about, which we set up in collaboration with DSIT to drive forward additional experiments in how to do this well—for example, how you can use AI effectively in the peer-review process. Having said all that, on your question about whether it will reduce the stack of things that people are reading through, there is a requirement to ask those judgment-based questions that Sarah has been talking about. You really do need the expert input as to whether a proposal is using the right techniques and whether the question is the interesting question. I think it is always going to be difficult at this stage to circumvent the need for experts to spend time thinking about whether that is the right research. The question is: where do the experts sit? Is it a challenge director-type model like the RDMP missions accelerator programme or ARIA? Are you giving all that responsibility to an expert who can use the advice around them, are you giving it to the world’s collection of experts that you send out for external review, or are you giving it to a panel that you have brought together? Each of those things has different benefits and disbenefits. Again, you need to ask what you are trying to achieve through your particular funding call and therefore what is the best way to pick the best research for your circumstance. It is that palette—that centre of expertise—that we can bring together, working with our councils who have had so many years of deep understanding of how to do this well in their discipline and can spread the good practice then right across the organisation. As we have heard, there is a huge global community working together to figure out how to do this well.

So in the short term, it does not sound like AI is going to be replacing the expert peer reviewer.

It is not. One of the things that is interesting from that point of view is that although there are really good examples where AI has been used to synthesise data and come up with interesting questions and so on, by definition, what we hope people are proposing to do are things that have not been done before. One’s ability to use existing everything to make the best judgments about things that have not been done before is always somewhat limited.

George Freeman touched on this, but I want to come back to the data analytical capabilities that you are obviously about to go live with. I realise that you are a bit nervous about speaking too much about it, Siobhan, but let us look ahead, say, five years. What data and analytical powers do you think the UK will need then? What more—fingers crossed that everything goes well with what you are about to turn on—are you going to need to do to get there?

That is a really helpful question, because we are wiring together complex systems. We are—touch wood—about to achieve some quite major milestones in that effort. None the less, there are systems that still need to be decommissioned, and those that need to be adapted or further developed to bring us truly on to one platform. There is a road map that we can perhaps present to you in February 2026. It talks to how we wire together the different platforms and systems that we still have in UKRI to make the best use of all our data in the most straightforward way possible. Tools such as AI give us the ability to reach into several systems and make links across even before some of that architectural work is complete, but none the less, from my point of view, as I manage public money, there are control issues that make it significantly desirable to get us to the state where we are working from single platforms with single end-to-end processes.

What would your benefit realisation be? Can you describe some of the benefits that you hope will come from this work? You talked about producing your annual accounts more effectively. I know accounting officers will be very pleased about that, and I am sure that we and the Auditor General will be too, but what other benefits do you think will come of this?

Each system has benefits specific to its own task. Right now, for the accounting, HR and procurement systems, we are implementing a far more user-friendly interface with more self-service built into it. Whereas, previously, some of our work has, I’m afraid to say, still had to be done by writing a request for a shared service provider to carry out an action on our behalf, we are implementing a system in which there is far more self-service and automated flow-through of the task to take work out of the system. That is bringing us to a place that many other organisations have been in for a while, and it will create the platform to go further. We are thinking about introducing even more automated solutions, but it brings us to the right baseline to do that from. With the funding service, we are in a different system. For ERP, we are buying an off-the-shelf system, implementing it and switching it on. Our funding service development is an in-house system development. It has therefore drawn on the wisdom of our staff and communities—as you heard earlier, we have worked in close co-operation. We have taken the Government’s strong steer over time, and the recommendations from the reviews commissioned by the previous Government, to think about the reduction in bureaucracy, and benefits for the wider stakeholder community, not just UKRI. Again, we have developed a more user-friendly interface with many fewer boxes to tick, and much more reliance on asking why we are collecting data, and how we will use it. We put that system live in an iterative way, and we are still developing some of the functionality that will bring even more benefits from what can be uploaded and exactly how you can sort tasks. Those things improve user experience, and experience externally in the community. They cut down the time spent by our staff, which means that there is more time to devote to the strategic role of asking what people are applying for and how we should shape our calls, and less time on the paperwork of putting a proposal forward.

Is there any interest from other Government Departments? You mentioned that a lot of money is spent on R&D, and given out in grants, that does not come directly from UKRI. In health, the NIHR is obviously a huge funder. Are the platforms that you are developing going to be taken up so that there will be the ability, in the future, to look across not just the UKRI portfolio but that £20 billion and understand what we have learned, and where?

There are two or three different aspects to that. One is that, in many cases, although not so much for the NIHR, we deliver for other Government Departments. Through the platforms that we have developed, we manage an additional £1 billion in funding each year, compared with the funding that is directly allocated to us. Our databank systems are being designed with all the modern interfacing tools in mind, so that even if other Departments are not using the same system, we have the Metascience Unit, sandpits, and experiments going on into how to bring those different data sources together to get that kind of ability to see across the picture.

So the long-term ambition would be to have that £20 billion.

That is the long-term ambition.

On the eve of introducing these new systems, I ought to ask you about one of the key risks that the Committee is very concerned about, which is cyber. I don’t know whether the report is true or not, but let me put this to you. On 20 May 2025, the Express said: “Enemy states attempting to steal Britain’s scientific secrets on an industrial scale are feared to be behind a chilling 600% increase in cyber attacks on the government body overseeing the financing of the crucial sector. UK Research and Innovation (UKRI), the national funding agency investing in science and research in the UK, has been targeted by 5.4m cyber attacks this year with experts warning rogue foreign powers—led by Russia—could be trying to critically damage UK interests.” First, are those numbers true? How are you designing your new systems to try to protect against it?

I am not going to comment on those precise numbers, but it is a very worrying time. It is a very, very active threat landscape, and we work very closely with relevant parts of Government to understand the threats against us. Certainly, all parts of Government, and indeed industry, are experiencing very large-scale assaults on our cyber defences. We take cyber extraordinarily seriously and have been designing with cyber in mind from the beginning of these systems, partly in conjunction with industry partners. As we have seen in the press recently, there is also the human factor. A system can be designed with security in mind, but if a human gives away a password, the system is vulnerable. We run continual cyber-awareness training with our staff and continuous phishing campaign awareness to make people aware of the risks of socially engineered phishing attacks directed against them. We monitor those and provide feedback to our staff, and we work very carefully on understanding how methods of attack are evolving and on ensuring that the training, the systems controls and the human controls are evolving to keep pace with what we understand of the cyber-threat.

Thank you for that answer to a serious question. We will have to keep the questions and replies shorter, because we still have a long, long way to go.

I will start, and then others can add. It is worth saying first that when think about the problem of risk taking and innovation in Government as a whole, I look to the world of R&D as a place that has a pretty mature understanding and approach. What a lot of people in the Government struggle to fully internalise is the idea of looking at a portfolio, but that is exactly what we do on a daily basis. It is just built into the culture on R&D. We expect multiple Government-funded projects to outright fail; they will not achieve their original objectives. They may have some useful skill-building and side benefits as they go, but the thing that the person originally hoped will not be discovered. I would love to bottle the mindset that if you do five things, and one is a big success but four do not work out so well, that is a win if the success is big enough to compensate for the four failures. I just say that by way of overall perspective. On the broader question of how you get risk taking in Government, one thing I would note—I am just observing this, not celebrating it—is that we have found that sometimes if you want a really different culture, you need a different institutional set-up. This is true in the private sector too, by the way; it is not a Government-only problem. It is really hard to get a whole thing that is operating at a massive scale to become a super-agile, risk-taking environment. That is why moves like ARIA and the vaccine taskforce, which I would put in the same category, and even something like the AI Security Institute, where we are trying to do quite different things about how we bring in external talent—

And the creation of DSIT.

Indeed. They are about the concept of a sandbox—I do not just mean in a regulatory sense, but a much wider sense—that says, “Here is a place where we are going to not just tell people that it would be a great idea to take more risk, but actively push them to take more risk.” If you do not do that, it is very hard. The truth of the matter is that, in Government, we do a lot of things that are incredibly serious. And do you know what? I don’t think the right thing to do is to tell everybody that they should go and take loads of risk, because we are managing public money and, even more so, we are dealing with public lives. Let us define the places where we need more risk and go hard at them, rather than smooching or splurging claims about risk taking across the system. That would be my advice. As I say, however, this is not the area where I would have the most complaints about risk tolerance.

It is a portfolio. As we have heard, there is plenty of low-risk, high-reward science that has to be funded. I have often used this building analogy. People are very excited about breakthrough and groundbreaking research, but groundbreaking is a building analogy: you break the ground for your new building, but that is no good unless you then build the building. You need the high-risk early stuff that is groundbreaking, but you also need everything that goes around it. That is the first thing to say. The second thing to say is that we have a very long and strong track record of taking really high risks in the research that we invest in and in that portfolio. Even then, there are different sorts of risks. There is a technical risk if you are funding something that is really technically demanding and might fail for technical reasons, or there is an intellectual risk if you are pushing an idea that might just be wrong.

There will be thousands. I can go back to my own research career. I was funded by the BBSRC for many years. One of the things that we did was discover the way in which a plant hormone called auxin works. It is absolutely fundamental to the way that plants grow and has lots of interesting applications in agriculture. The techniques we used at the time were incredibly demanding and everybody was very excited that we had managed to make them work. That is great. But now those techniques are utterly trivial—in fact, you do not use them; you use all kinds of different things. The science has moved on and—

No, it’s a chequerboard.

I guess I would point to our cross council interdisciplinary responsive mode scheme, where we have set up a specific pot of money to do interdisciplinary research that does not fit into any of the current council remits. We are running it as a pilot with the Metascience Unit embedded to assess how we do this really well as we go along. It may be that none of the things we have funded will deliver any outcomes, or it may be that they will deliver brilliant transformative outcomes. Either way, we will learn how to do this better from the embedded assessment that has gone along the way. I do not want to row back from the fact that the way we work is from the bottom up—your exciting idea coming into us. That is our daily bread. That is what we do all the time and it is really critical.

May I just follow up on George Freeman’s excellent question? That follows my question to the previous panel about whether we should worry about risk failure, because unless you stifle innovation, you are bound to get some failures, as Sarah Munby has said and you have said. On the other hand, you have to be hard-headed and say, “There comes a point where this particular research is not going to work,” but you have very excited researchers saying, “Just give us a little more time, a little more money, and it will work.” What do you do as an organisation to have that hard-headed and hard-hearted approach to projects that you have to stop when they are obviously not going to succeed?

At some level, that is baked into the way we work. A lot of the research that we fund is financed by project grants that run from two to five years, and then anybody who wants any more money will have to apply again. Whether they are successful will depend not only on their progress during the first part of the award, but on what is current and happening now—what the best use of the money is at that moment in time and whether that question is still the most important one to answer. When it comes to some of our longer-term investments in institutes, for example, again we have a regular programme of review of them all. One can say, “No, we’re not going to fund that programme in that institute any more—it’s not delivering.” Occasionally, the entire concept of the institute is no longer good value for money, and you shut it down. This comes out of our ability to manage the overall portfolio, which delivers constant churn in what we are funding—constant new choices re-tensioned against the existing choices.

You asked earlier about long-term funding. What you are seeing here is the flipside: telling people they can have funding forever and a day also has a downside.

Absolutely, understood.

I would like to turn to fraud and to address my question to you, Siobhan. The Report is clear that UKRI is not currently in full compliance with the Government’s standards for countering fraud, but it also acknowledges that action and work is already happening to address that. It is very explicit that you expect to see improvements by September 2025. What can taxpayers and grant recipients expect to see? What will that change look like for them when it comes to counter-fraud and funding assurance activity?

I will speak first about counter-fraud and then come to funding assurance. We have always had elements of a counter-fraud response; what we are now able to do is articulate the join-up between them. The Government functional standard for counter-fraud is very helpful in emphasising the preventive and deterrent elements of counter-fraud. We have always had a small active investigations team and we have always had elements of preventive work. What we are really strengthening is our fraud awareness: our fraud risk assessments and the ability to do the proactive work that enables us to design in counter-fraud measures from the beginning of a scheme, hopefully, therefore, alleviating the burden of anyone having to do the investigation side of it, although we are maintaining that investigation side in-house. UKRI as an organisation is not set up with legal powers for criminal investigation. We are very excited about the development of the Public Sector Fraud Authority, because it enables us to work in partnership with an organisation that itself is coming up to full capacity. We are working in partnership with the PSFA to make sure that we understand that join and that hand-off, and that we are doing everything we can across the full spectrum of counter-fraud work defined in the standard. On funding assurance, one of the requirements on us is to take more of a cross-sectoral approach and to ensure that we are not putting duplicative or burdensome funding assurance work into the system that, in fact, does not give a great deal of assurance but causes people to do some paperwork to tick a box. I am very proud of the work that the team have been doing for some time—they are continuing to develop it—in working with, for example, NIHR to make sure that we are aligning some of our requirements and that, where possible, we are piloting the idea of joint funding assurance visits. I have to say that because we were created out of a series of predecessor bodies, we have had quite a lot of work to do just to align our own requirements and to make sure that we are not in the unfortunate position of different bits of our own organisation needing to ask different questions. It takes time, and we are getting there. We are now at a very outward-looking phase where we are really looking to work with other funders to champion our best practice and to adopt their best practice—to make that very much a two-way process, with Wellcome and others in the sector as well.

Thank you very much. We are really going to have to speed up—short questions and short answers. Demonstrating that par excellence will be Nesil Caliskan, please.

I have a very short question about the culture of the organisation, which panel members have already spoken about. You have a very good stat that staff feel they have the skills to do their job effectively, but a not so good one, too: only 40% of staff feel that they are encouraged to speak up when they identify serious policy or delivery risk. It sounds as though some work is being done in this area in terms of culture. Is there anything you would like to add at this point or about the work going forward?

It has been a really important focus for us to ensure that we build a culture of deep psychological safety across the organisation. That is both to speak up when a problem is identified, and to speak up to propose an innovative or different way of doing things. That is really very important to me personally; it is something I am passionate about. The journey we are on has been that, on the whole, in people’s local teams, they feel pretty confident and excited and the stats are good, but when you ask these broader questions and people are thinking about challenging activity going on further away from them in the organisation, then we have those statistics that I absolutely think we need to drive up. We have a whole programme of work across the organisation to address that.

I will add that it depends on the question you ask. For example, 80% of our colleagues say they believe their opinions are valued at work, which is really encouraging. It still tells me there is room for growth. I am worried about the one in five who do not think their opinions are valued at work, but that is a very active area of focus for us and for all our senior leadership teams.

I want to ask about measurable outcomes and alignment to objectives. When the organisation was formed in 2018, DSIT set out 10 strategic objectives for it. None of the formal objectives is specific, measurable or time-bound, which makes it quite difficult to understand what outcomes the organisation is seeking to achieve, notwithstanding the very detailed responses you have given on the overall strategic direction and the link to Government missions. Given the importance of evaluation to both the Department and UKRI, could you comment on the challenges of not having specific, measurable KPIs or objectives for the organisation, and how you are able to hold it to account? How can the Department do that confidently?

I will say, as we are the setters of the homework here, that we agree that we need more objectives of that type. They are not the whole answer by any means, and they can risk oversimplifying the system that we have talked about. One of the critical elements of the work we are doing now—we expect to publish it over the summer—on an updated framework document for UKRI is: what are the strategic objectives for the organisation, and how do you put SMART targets under those, in exactly the way you describe? I am sure Ottoline will talk about this, but I think it is fair to say that UKRI does not have a lack of measurement or looking at how numbers are moving. We have not always had a very explicit set of things like, “Where do we want this number to get to?” That is partly because we have seen some of the risks of doing that on something like co-investment, where over-focusing on one goal leads you to take your eye off the ball on others. But we can and should do more, and we intend to fill that gap this summer.

So there will be a shift of expectation, from just tracking of a strategy to more measurable outcomes.

Yes.

Okay. Professor Leyser, I do not know if you want to comment on that, but also, how do you know if the organisation has been successful or not?

That is a great question. We have worked hard to develop our balanced scorecard of long-term outcomes that we are interested in. The timeframes here are critical. We are very clear about the outcomes we want: an outstanding research and innovation system in the UK that gives everybody the opportunity to contribute and from which everyone benefits. They are big, important outcomes. We have heard right through this inquiry how critical that system is to the delivery of all kinds of different Government priorities. We track the health of the system through our balanced scorecard of indicators. We use those in a proper management way. We see, “Oh, recruitment of PhD students seems to be going down a bit. What’s going on here?” and then we have to ask ourselves, “What’s the balance between the number of students we’re funding and the size of the stipend we’re giving them?”

I am not trying to catch you out, but do you recognise that the lack of measurables is challenging? Although an organisation as a whole might always be going in the right direction, the purpose of this Committee is to assess value for money. I take the point—I think it is reflected in the Report—that for every £1 spent there is a good return, but the real question is, if we had spent 50p, would the return have been the same? It is not a waste of money, but could you get more for it? I am just pressing a bit more. Has the overall scorecard left the organisation in a difficult position?

I do not think so. There are many measurables on the scorecard that we track, and we are also very interested, from an outcomes point of view, not only in the return on investment in straightforward pounds, but in the social impact and those outcomes that we are having. We need to think about all those as a whole. What we are talking about now is our entire portfolio. When it comes to specific programmes, you can very straightforwardly set them up with very much more straightforward, time-bound, measurable outcomes, but when we are talking about the whole portfolio, the timeframes we are interested in are so multiple and long scale that you have to be very careful not to set yourself some KPI that undermines what you are trying to do by constraining your ability to steer the whole system.

I want to add something from a CFO perspective about the purpose of the kind of objectives that are set in a framework document and how that sets the boundaries for our ability to innovate and take risk. For me, the objectives in a framework document are helpful in defining our vires, if you like—our ability to go somewhere. The time-bound, measurable objectives at an outcome or programme level are very important in determining the value for money of the kinds of choices we have made. But there is a risk, in setting objectives too narrowly, that you constrain the ability of this national asset to carry out the broad range of activities that the Government relies on us to carry out.

We do not track 500. We track all the things you just mentioned, actually, and they are direct management tools. We change what we do when we see any of those going in the wrong direction or stalling. It is actually a very valuable tool to us to track those KPIs that we measure regularly.

Annually through our balanced scorecard.

I do not think it is. We can make it—potentially.

Through the annual report and accounts.

We do report to DSIT quarterly.

The annual report and accounts are very reactive. Presumably, the sort of tracker that George is talking about would be much more dynamic and up to date.

Well, we track short-term input measures—“Are we actually delivering what we said we were going to deliver?”—and we track the medium-term measures, but it is also very important to track those lagging indicators. We track the field-weighted citation index for the research we are funding on a five-year moving window. As we have heard, we have this absolutely world-class research and innovation system in the UK. We do really well on that, but we cannot be complacent, so we need to track it and understand what is going on.

Yes, is the short answer, but it is going up faster in some other countries, so in terms of global competition, it is something that we absolutely need to look at.

The rankings are interesting, because usually one then adjusts those according to pounds of investment.

Absolutely, and we do that all the time.

It is worth saying that we have complete visibility of the scorecards that Ottoline is talking about. They are a UKRI management tool, but they are also really helpful for us in tracking performance. Notwithstanding all that, and returning to how we can enhance simplicity and clarity, you do want to be looking at a broad range of indicators. But we can do more, frankly, just to be clearer with UKRI about those that we consider the most critical elements of that picture. I think it is important to say that, on occasion, UKRI might come back and say, “Well, actually, that one didn’t move quite in the way that you wanted because reasons.” It is not that these then become the only goals or become isolated.

I would probably go really macro because, as you said, it is about how we can put UKRI in a position to be able to influence the overall system. I would be looking at our overall public and private spend on R&D, and then I would be looking at our global rankings on both the creation of ideas—perhaps the KPI that Ottoline just talked about—and also our scale-up growth and application of research. That includes some of those measures about numbers of companies that are innovation active, for example. I would not pick three, though; I think that is too narrow. The number of firms that are innovation active is a good measure. We measure it in our departmental plan, but it does not really give you the whole picture. I would have a small number of measures that get at scale.

That sort of number, yes.

Yes. As you would imagine, the sector plans will have metrics to measure how sectors are doing against the sector plans that will be published in the coming weeks. Because UKRI is supporting all those sector plans, we will also be looking at how that is going—that will be part of it. The challenge will be that it will add to the KPIs. It is that conversation about, “What are the strategic objectives? What are the small number of KPIs? What do you measure, and what do you track?”

This speaks to a bigger challenge that the Government are facing. We are in an environment where quangos are being abolished, and the public are saying to many of us, “Where is money being spent, and where can I feel the impact?” You will know far better than us that research and innovation is under particular scrutiny and pressure. It is not just about a narrative; it is about the potential of research and innovation to improve people’s lives. But that is absolutely rooted in an industrial strategy and in the Government’s missions, so being able to demonstrate that is really important. Do the Department and the organisation get that?

Hugely. Again, I would go back to the programme-level evaluation. For example, the industrial strategy sector plans will all have SMART goals, because they are specific for those sectors. Then you can absolutely talk about the jobs created, high-quality life days extended—all those kinds of things, which are the things that really impact people on the ground.

Let us say that we have a programme working on how to do cancer screening better with AI. The benefit to a person—you can measure it—is the number of days between entry into the system and receiving treatment for breast cancer. That is a good metric. You could see for that programme, “Did it actually help? Did it make people’s lives better?” But I would hate for that to be on our top six scorecard, because you would be missing a large number of other metrics that do the same thing. It is a combination of some big, high-level things about private investment and private sector growth but also, once we get into these specific benefits, asking, “Has the cost of developing a heat pump fallen?” Such things will be a bit more complicated and I do not think we should apologise for that. We need both. We need the top-level organisational ability—what helps Ottoline to steer the overall ship?—but we also need programme-specific real-world benefits. We need to get better at telling that story, because that is actually what people will see and feel.

Being able to monitor progress and understand what is happening is quite different from trying to reach a target and a metric. You can be an organisation that is very well versed in where your strengths and weaknesses are, what the journey is and how it is going, but then there is actually achieving an outcome. That is very important for UKRI to understand and deliver on now.

Thanks, Nesil. On this business about how we compare internationally, let me take you to paragraph 1.10 on page 18 of the Report. It says, “This system has a strong international reputation. On average, papers published by UK researchers since 2000 have since been cited 2.7 times more than the global average for papers in their academic field in the same year. In 2024, the UK also ranked fifth overall on the Global Innovation Index”. Although we are doing well, given the huge global competition that we heard about from the previous panel, there is no room for complacency in this area, is there?

Absolutely none. This is research, so you can never rest. Change will happen all the time and we absolutely need to be right at the frontier.

We have covered quite a lot about two of the three buckets: the curiosity-driven basic research and the research that is aligned to Government ambition on the missions. The third area is around investment to support innovative businesses. In the pre-panel, we heard quite a lot about some of the challenges around investments that are made at an early stage: seeing them delivering in terms of economic growth for businesses, and in particular scaling them up. We also received evidence from the Institution of Engineering and Technology, which said that we rank “third in the national league table for producing startups, but only 13th on the list for number of successful scaleups.” They identify a whole number of barriers to successful scale-ups. While recognising that UKRI is only one player in that process and is part of a wider innovation ecosystem, could you just say a bit more about how you will ensure that you are effective in supporting businesses to scale up and in supporting universities to commercialise some of their knowledge? Can you also comment on some of the things that you heard from the pre-panel?

Absolutely; this is a well-recognised challenge in our system. I must say that we have got a lot better at that early stage spin-out and start-up element, but it is the scale-up element that is critical. A lot of work has gone on to understand the challenge. There has been a lot of focus on the willingness of investors—the willingness of venture capital, and the willingness of the large asset managers—to invest in these kinds of innovative companies. There is lots of work going on across Government in reforming to support that change, with the Mansion House reforms and so on. From our point of view, at our end we do a lot of work on developing what we call scale-up ready start-ups. We are not the people who will fund the scale-up element—that is an expensive element that is not sensible within our budget—but we can absolutely get start-ups to the point where they are very attractive to scale-up funders. There are a couple of things I can talk about there; I will try to be quick. One is the evidence that, in the context of university commercialisation, our companies tend to spin out too early when they have not done enough background work to underpin the viability of their innovation—their commercialisation idea. We have started a proof-of-concept fund, which is a pre-incorporation investment to get to the point where companies are in a much more investable state when they start up. Innovate UK then has a whole business growth programme. It is putting in money, but also wraparound support, for the development of businesses. It is not just, “Do you have a fabulous idea?”, but, “Do you have a great business model and can you put together the prospectus to attract the investment that you need?” I would highlight those two things. It is a journey that needs support right the way along, linking through to the other big public sector investors such as the British Business Bank. We have a very strong partnership working arrangement with them now.

How do you work with DBT to make sure that the wider investment ecosystem will take the hopefully more investment-ready businesses that will come out of what UKRI described, so that they scale up and we grow UK plc in terms of both money and jobs?

That is an area of focus for the Minister for Science at the moment. We are looking at the join-up from Innovate UK through to BBB and thinking about the National Wealth Fund and UK Export Finance. We are working very closely with DBT and the Treasury, given the pension funds, and with the Office for Investment to think about how to get that journey right. The other area of work is procurement. The new Procurement Act makes things more flexible, but we know that many businesses struggle not at the grant stage, but at the contract stage. A contract with Government makes a huge difference. We are also looking at how we can make Government procurement easier for small businesses, particularly in tech. That is part of the thinking on the sector plans. We are thinking about how to make the journey and the hand-offs easier, how to make sure that a business does not need a PhD in the system to understand how to work through it, and that there is a trail. Procurement, where Government have a huge role, can make a huge difference. We have not been as joined-up. That conversation is going on with defence, as was mentioned earlier, and other Departments as well.

Will that be reflected in the metrics to show how many businesses are scaling up—metrics around getting businesses out of their early R&D stage and into being sustainable businesses?

We will want to think about which one of those sits at Government level. Some of that is our job—to make sure that we are joining up across the system. How do we then make sure that the right measures are there for UKRI, so it is part of the journey and it is genuinely getting businesses ready to go through the system? So, yes, we need to think about it in that way.

Alexandra, that was an excellent answer. To reinforce what you said and the goals that you could have, the Institution of Engineering and Technology tells us that MIT in the United States “not only produces cutting-edge research and innovation but also provides a steady stream of graduates who go on to become successful entrepreneurs”—this is the staggering bit—“creating two-thirds of new jobs and contribute to 44% of U.S. economic activity”. The gain there could be absolutely huge.

Absolutely. It is about understanding the skills needed to get from spin-out to scale-up to staying in the UK, which is the other aspect, as we know. UKRI run some programmes that are very specifically tailored to trying to develop those skills.

That gives me the opportunity to mention people again. We have talked a lot about investing in projects, but people are what drive this. We have done a lot of work to shift the incentives in the system to allow people to take a much wider range of careers, including dipping out, starting a company, coming back into academic research, going into the policy community and going into the investor community, where we need ROI expertise to support investment through. That career path diversity is critical to making this happen.

Yes, we do some of this and GO-Science do a lot of this. Actually, a lot of the work underpinning the industrial strategy and the selection of critical technologies is based on exactly that—where do we have credible, world-class research activity that is an opportunity to drive growth in the business sectors or to capture sovereign capability across the board?

I think I am going to get back to you on that.

Quantum: we are seeing some companies starting to grow there. Engineering biology: we are seeing huge opportunity, and I think we are seeing some growth in companies there. That is relevant to agritech. What we are seeing, though, is that where GO-Science has identified some of the technologies and the opportunities, we have sector plans where we have said, “These are the ones that generate the most strategic advantage, which we think will grow most in future.” Those sector plans are then thinking about how you grow them and how you get from some of the science—these are science-heavy ones—to start-up and scale-up. I think we should get back to you with a better answer, but those are two areas I would identify as having huge opportunity, where companies are starting to grow, but there is more we could do.

I have one final, final question, which is for you, Sarah Munby. In the pre-panel, we covered the parlous state of some of our universities’ finances. Professor Boyle openly admitted that there was a threat to UK R&I because of that. How are you, as a Department, thinking about how to fill that funding gap that could cause some of this problem?

Look, we take this issue incredibly seriously. We are looking at it and monitoring it very closely indeed. It is an issue of real concern. We are pleased that, as well as that, universities themselves are also taking action. It is important to say that these are independent organisations and we expect that, like any organisation, they are looking very seriously at their own sustainability and the options that they can take. We are not in a position to announce an answer at the moment, but I think it is fair to say that we are looking at all options and trying to be serious and open-minded about this very important question.

And working very closely with the Department for Education, as you would imagine.

As you would expect. Thank you for that answer. We have had a fascinating session today. I thank our witnesses very much for attending this session. We have learned a lot. An uncorrected transcript of this hearing will be published on the Committee’s website in the coming days. The Committee will consider carefully the evidence that you have given us today and we will produce a Report with recommendations in due course. Thank you very much. It has been very interesting.