Wednesday 23 November 2016 2:17 pm

Here's exactly what the £2bn boost for UK R&D entails

More cash will be ploughed into research and development, as a major part of the government's industrial strategy.

R&D spend will increase by an extra £2bn by 2020/21 to boost the UK's homegrown innovative businesses and spur productivity.

The injection of cash was first trailed by Prime Minister Theresa May during a speech at the CBI conference on Monday, where she signalled technology would form a fundamental part of the government's new industrial strategy.

The cash increases government funding by 20 per cent in this parliament.

What will the investment include?

Creating the UK's very own DARPA

An industrial strategy challenge fund will be be created to foster collaboration between science, technology and business. It will be modelled on the US's hugely successful 50-year-old Darpa programme which helped produce GPS technology and the early work which underpinned the invention of the internet.

The areas which the fund will focus on will be decided in due course.

New research grants

Grant funding will increase "substantially", the government said. This will come via Innovate UK and the newly created UK Research and Innovation (UKRI) which will bring together several different grant organisations under one body.

What else is the government promising for British research?

Tax incentives for R&D will be reviewed

Here's exactly what the Autumn Statement said: 

To ensure the UK tax system is strongly pro-innovation, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D.

Innovation audits

Further areas will be identified across the UK where top innovation is taking place. The goal is to identify areas ripe for support across the country to propel it globally.

"Auditing the strengths in our regions will help us to build a long term strategy for global competitiveness and help ensure that hotspots generate more than the sum of their parts," said former business secretary Sajid Javid earlier this year. 

How are people reacting?

"In today’s tech-driven UK economy, R&D is the new rock n' roll," said Mark Tighe, the managing director of R&D tax relief specialists RD Tax.

Rapid technology advances have made R&D something that more and more businesses can enter into and commit budget to. In a growing number of sectors companies need to invest in R&D just to stay in the game. However, there's still a wide misconception that R&D tax relief is really only available to giant pharmaceutical companies employing armies of people in white coats. In reality, we are securing tax relief on a daily basis for smaller companies ranging from breweries and vets to manufacturing and construction companies.

Chief investment officer of Close Brothers Asset Management Nancy Curtin, said: 

Additional fiscal support for R&D should be well received by science and tech firms, helping offset some of the damage of many companies curtailing their own investment plans until there is more certainty over the terms of Brexit.