Allocating Spending to Support R&D: UK, U.S. and Canadian Approaches

The U.S., Canada and the UK have all acknowledged the central importance of R&D even in these recessionary times.  However, the three national governments have decided to focus their spending on different steps of the R&D equation:

1. Education: UK Takes the Long View
   British PM Gordon Brown, in a speech this week, identified three priorities: research, education and training, and public discourse.  However, only one of the three, education, was the subject of specific increased targets and spending:  retraining to increase the number of science teachers, a goal to double the number of pupils in state schools taking ‘triple science’, and a new Diploma program.  The U.S. and Canada have increased funding for graduate studies, but the UK effort is focused at an earlier stage, to rebuild the interest and capabilities of domestic graduates. 
2. Publicly-Funded Research: U.S. Takes the Lead
   The focus of the U.S. R&D spending increases has absolutely been on research.  The increases for the NIH and NSF in the stimulus and the budget will go largely to increasing the volume of publicly-funded research.  PM Brown’s speech also vowed to protect funding for science from competing demands for Government support during the downturn, but did not propose increases over the existing 10-year plan.  Canada’s budget actually cut research funding across the three main granting agencies.
3. Commercialization: Canada Takes Off 
   Canada’s focus was on commercialization.  The 2009 budget included $200 million allocated to the National Research Council’s IRAP program — $170 million to double the program’s contributions to companies, and $30 million to help companies hire over 1,000 new post-secondary graduates.  It also provided significant additional funding to BDC.  The only comparable spending in the U.S. was the $400 million for ARPA-E, which is allocated to energy programs, and supports research as well as commercialization.  PM Brown’s speech recognized the importance of maintaining the country’s struggling start-ups, and he has reached out to big pharma, but promised no specific action.

What’s still missing:  Stimulating Output

• Despite calls in the UK, the U.S. and Canada, there have been no major tax policy changes enacted in this round of budgets and bailouts that ease the burden on, or return money to, early-stage technology companies.  Ontario has actually taken some steps in this direction with the Ontario Venture Capital Fund and the Ontario Tax Exemption for Commercialization.
• Nor have there been many changes that increase the value of outputs: in the bio/pharma area, the UK has probably moved farthest in this direction, with upcoming reforms of the National Institute on Comparative Effectiveness (NICE), while the U.S. has seen decreasing FDA approvals and is allocating new comparative effectiveness funds.  On the other hand, approvals of GE animals, support for personalized medicine and big spending on electronic medical records will provide support to specific industry initiatives.

Stay tuned to our Bailout Page for updates.