WIREDGOV

A few weeks ago, the Chancellor Rachel Reeves delivered the UK Government’s long-awaited Spending Review. This has since been followed by the Industrial Strategy and Digital and Technologies Sector Plan (along with other sector plans). 

Positioned as a roadmap for economic renewal, it sends signals that the UK is backing tech and innovation to drive growth. At the heart of this was the protected, and more ambitious, support for R&D.  

There is recognition that R&D is a key UK strength, and that government investment stimulates private investment. On average, every £1 of government spending delivers £7 of economic benefits in the long term. 

In this insight, we outline what has been announced through the recent ‘growth package’, and our understanding of what this means looking ahead. Essentially, the R&D budget can be apportioned to mission-led R&D, future-facing R&D, place-based and sector-specific R&D. 

Government announces £86 Billion for R&D until 2029/30 

The key announcement, trailed ahead of the Spending Review, and within the Industrial Strategy and Spending Review was £86 billion over four years, with annual research and development spending to rise £22.6 billion by 2029–30.  

This is earmarked as an above inflation increase and reaffirmation of the UK’s ambition to put science and tech at the heart of growth. techUK have long called for R&D spend to reach 3% by 2030. You can read techUK’s full thoughts here.  

The R&D budget will be allocated to the Department for Science, Innovation and Technology and will include funding for UKRI and association to Horizon Europe and its successor, along with a new wave of mission-led innovation initiatives.  

Mission-led R&D: Innovation programmes to align with strategic goals 

To align research with strategic goals, the government is introducing a £500 million R&D Missions Accelerator Programme. These include health, security, climate and productivity. This is expected to unlock an additional £1.5 billion in private co-investment. 

The Advanced Research and Invention Agency (ARIA) (a moonshot agency) will receive at least £1 billion. ARIA will maintain its commitment to backing ambitious, transformative research that falls beyond conventional funding mechanisms. 

This is welcome to continue to support the strategic role of R&D, and cutting-edge innovation, for our greatest economic challenges – including reaching net zero by 2050, and reducing NHS waiting times. 

Future-facing R&D: Supporting AI and supercomputer 

Other investments included within the R&D budget include: 

• £2 billion between 2026 and 2030 to supercharge AI compute capacity and create a UK Sovereign AI Unit. 
• £750 million for a new national supercomputer at the University of Edinburgh. 
• A new AI Adoption Fund aimed at scaling practical use across health, manufacturing, and public services. 
• Fellowships and scholarships to build AI and quantum skills across the UK talent pipeline. 

All are welcome in recognising the role of AI in the digital economy. 

Place-based R&D: Supporting local innovation partnerships  

A key highlight of the R&D budget is the £410 million Local Innovation Partnerships Fund, giving regions control over R&D investment through a place-based approach. This supports local innovation ecosystems, from South Wales microchips to Liverpool life sciences, based on regional strengths. 

This is welcome and techUK continue to call for R&D to be invested in across regions of the UK – particularly in clusters of strength. 

Sector-Specific R&D: Investing in clean tech, health, and defence 

The Spending Review includes support for specific sectoral R&D initiatives. These initiatives reflect the convergence of innovation to secure the future sustaining and resilience of the UK economy. For instance, advancing clean growth, public health, and national security. 

These include: 

• Life sciences: Life sciences manufacturing secures £520 million  
• Defence and security: Autonomous defence systems, including drones and AI-enabled weapons platforms assigned over £4 billion. 
• Public Health: Health Data Research Service, co-funded with the Wellcome Trust, receives £600 million  
• Net zero: £2.5 billion+ each for Small Modular Reactors (SMRs) and nuclear fusion 
• Net zero: £9.4 billion for Carbon Capture, Usage and Storage (CCUS) 

Department-led R&D: 

Finally, according to the UK Treasury’s departmental figures, R&D investment will be driven by: 

• Department for Science, Innovation and Technology (Science, Innovation & Technology): £15.2bn by 2029–30 
• Ministry of Defence: £2.4bn 
• Department of Health: £2.0bn 
• Department for Energy: £0.8bn 
• Business and others: £2.2bn combined 

Looking ahead… 

The 2025 Spending Review establishes a definitive framework for more ambitious government R&D initiatives, enhanced regional innovation coordination, and increased private sector partnership investment. 

techUK, on behalf of our members, will continue to advise the UK government on key policy leavers to drive innovation throughout the entire pipeline – spanning early-stage research to commercialisation and market deployment.  

Ahead of the Budget, we will be looking at ways to encourage more businesses to invest in R&D – for instance, through the R&D tax relief scheme. 

Key to this is securing the right programmes and institutions with longer-term funding through the 10-year budgets, getting support for later stage innovation right (big role for the Nation Wealth Fund here) and ensuring R&D programmes invest strategically.