The UK’s public research system is entering its biggest shake-up in years. Speaking at the UKRI Growth Summit in London, Science and Technology Secretary Liz Kendall outlined a major redesign of how the government allocates its £38.6 billion research and development budget. The new model moves away from broad, traditional funding and instead concentrates investment on areas where the UK already excels and on companies with real potential to scale.

UK Research and Innovation, the UK’s largest public research funder, will deliver this more targeted approach through three main channels. £9 billion will go to fields where Britain has clear global strength, such as AI and quantum. Another £8 billion will focus on government priorities like climate resilience and flood protection. The final £7 billion will back high-growth businesses, helping to develop the next generation of UK industry leaders. These changes sit alongside new efforts to attract international talent and strengthen the Modern Industrial Strategy.

Backing Britain’s Highest-Strength Sectors

The new allocation strategy is based on a clear-eyed assessment of where Britain is strongest. Funding for artificial intelligence will more than double to £1.6 billion, while engineering biology will receive almost three times its previous amount at £644 million. These increases reflect targeted investment in areas where UK institutions and companies already perform well, rather than speculative bets on unproven fields.

The International Monetary Fund estimates that AI breakthroughs could boost productivity by 1.5 percentage points annually, potentially worth £47 billion to the UK economy each year over a decade. Quantum computing projects similarly substantial returns, with forecasts suggesting over £11 billion in GDP contributions by 2045. These projections inform funding decisions but also highlight the economic rationale behind sector selection.

UKRI CEO Professor Sir Ian Chapman said the goal is to focus investment where the UK can secure meaningful global market share. That means backing not just promising technologies, but those where British scientists and companies can compete and win on the world stage. The strategy recognises that leading in a few key sectors delivers far greater economic value than spreading resources thinly across many.

Turning High-Potential Start-Ups into Global Players

The £7 billion set aside for innovative company growth is designed to tackle the familiar problem in the UK, addressing tthe tendency for promising start-ups to either struggle to scale or relocate abroad as they expand. This funding focuses on businesses that pair strong technological innovation with real commercial promise, with Cambridge-based Paragraf being a prime example.

Since its launch in 2018, Paragraf has raised about $140 million and become a leader in graphene-based technologies used in electric vehicles and medical imaging. Its success shows how focused support can help build meaningful economic activity while keeping jobs and intellectual property in the UK. Similar stories are emerging from IFast, which is developing rapid antibiotic-resistance detection, and Ceres Power, a clean-energy company that now employs around 600 people and has a market value of more than £700 million.

These companies illustrate the qualities UKRI wants to back: cutting-edge technology with clear commercial uses, leadership teams capable of scaling, and business models built for global reach. The new funding aims to bridge the gap between early venture capital and large-scale institutional investment—a gap that has long held back the growth of UK tech companies.

Protecting the Science Behind the Next Big Idea

While £15 billion is directed toward priority sectors and commercial growth, the strategy still reserves £14 billion for curiosity-driven research. This recognises that many major breakthroughs come from fundamental exploration rather than targeted projects. The internet and key genetic treatments, for example, began as open-ended research, evidence that long-term discovery remains worth funding even when short-term economic pressures loom.

Universities remain major beneficiaries, with core grants and commercialisation support rising in line with inflation throughout the Spending Review period. This stability gives institutions the confidence to plan, supporting both focused research and more exploratory work, and helping balance immediate economic goals with long-term knowledge creation.

The government is also launching two new challenges through the R&D Missions Accelerator Programme, backed initially by £4 million. One aims to industrialise and digitalise construction; the other will develop infrastructure for creative content exchange. Both areas are expected to move faster through coordinated, mission-led research than through isolated efforts by individual organisations.

Attracting International Research Talent

Alongside the funding restructure, the government is investing £54 million through the Global Talent Fund to bring leading researchers to the UK. The first four recruits show the programme’s breadth. Professor Baljit Khakh joins Cardiff University from UCLA as Director of the UK Dementia Research Institute, specialising in neurobiology and neurodegeneration. Professor Armin Raznahan arrives from the US National Institute of Mental Health to take up the W. A. Handley Chair in Psychiatry at Oxford, focusing on youth mental health.

Dr Hassan Salem has moved to the John Innes Centre from Germany’s Max Planck Institute for Biology, tackling crop losses from pests and diseases, which is an issue that could cost the global economy more than £400 billion a year if left unaddressed. Dr Sven Truckenbrodt joins the MRC Laboratory of Molecular Biology from California, advancing molecular connectomics and new methods for mapping brain function. Each researcher brings not just their expertise but teams of up to ten scientists, amplifying the talent boost.

The Global Talent Fund sits within a wider £115 million effort to attract world-class researchers, including expanded Encode: AI for Science Fellowships and Turing AI Fellowships. These programmes compete with major initiatives in the US, Europe, and Asia, demanding not only strong financial packages but supportive research environments and clear career pathways. To help this, the Medical Research Council has committed £8.5 million to expand its Career Development Award and Clinical Scientist Fellowship schemes, making it easier for international researchers to build long-term careers in the UK.

Reforming Systems and Setting New Leadership

UKRI has launched the competition for its next Board Chair following Sir Andrew MacKenzie’s term conclusion. The position requires someone capable of protecting curiosity-driven research whilst addressing government priorities and enabling R&D-intensive companies to establish, scale, and remain in Britain. The role also involves leveraging private sector investment to advance discoveries beyond initial research stages, a critical function given limited public resources relative to commercial capital pools.

The government has tripled investment in the Metascience Unit to £49 million, supporting research into increasing the impact and efficiency of science investment itself. Early successes include trials of Distributed Peer Review, where applicants participate in assessing research proposals. UKRI will expand this method across the organisation, enabling researchers to access funding more quickly with fewer delays between proposal development and project initiation. A new £6 million grant opportunity for UK-led metascience projects accompanies this expansion.

Innovate UK’s Women in Innovation Awards, with £4.5 million available for up to 60 women, address the economic opportunity from equalising business formation and scaling rates between men and women. Research indicates this could add up to £250 billion to the UK economy, though achieving such parity requires sustained intervention across funding, mentorship, and network access. Applications remain open until 4 February 2026.

Putting the UK’s High-Value Growth Plan into Practice

The funding overhaul is part of a wider economic strategy to strengthen Britain’s position in high-value sectors. A key test will be whether this more concentrated model delivers better results than the previous, more dispersed approach. The strategy is built on the belief that leading in a handful of priority fields will generate more economic value than maintaining a broad but shallow presence. That will depend on choosing the right sectors, supporting companies effectively, and sustaining funding long enough for commercial outcomes to emerge. Early progress will shape future allocations, adding pressure for visible results within political timelines.

The plan also relies on private capital stepping in at the right moment, particularly to support later-stage growth. Public funding is meant to de-risk early development and validate technologies so commercial investors feel confident scaling them. How well this handover works will be crucial in determining whether the UK can grow the industry leaders envisioned in the strategy.