Explainer: how we manage investment in research and innovation


How we approach investment in UK research and innovation

UKRI is the UK’s largest investor of taxpayers’ money in research and innovation, spanning all disciplines and sectors. In the 2022 to 2023 financial year we will invest £8 billion through our nine councils: the seven disciplinary research councils, Innovate UK and Research England. Our budget represents around half of the total UK public spend on research and development.

Our vision is for an outstanding research and innovation system in the UK that gives everyone the opportunity to contribute and to benefit, enriching lives locally, nationally and internationally. To achieve this, we consider where and what level of investment will bring the best overall returns for society, the economy and the environment, and map our strategy and spend against these goals.

We continually monitor and evaluate our investments so that we can deliver on UKRI’s strategic objectives:

  • people and careers: the UK’s continued success in research and innovation is underpinned by its ability to develop, attract and retain highly-skilled and talented people and teams
  • place: securing the UK’s position as a globally leading research and innovation nation with outstanding institutions, infrastructures, sectors and clusters across the breadth of the country
  • ideas: advancing the frontiers of human knowledge and innovation by enabling the UK to generate and seize opportunities from emerging research trends, multidisciplinary approaches and new concepts and markets
  • innovation: delivering the government’s vision for the UK as an innovation nation, through concerted action of Innovate UK and wider UKRI
  • impacts: focusing the UK’s world-class science and innovation to target global and national challenges, create and exploit tomorrow’s technologies, and build the high-growth business sectors of the future
  • organisation: making UKRI the most efficient, effective and agile organisation it can be

See UKRI strategy 2022 to 2027: transforming tomorrow together.

How we build a balanced investment portfolio

UKRI is sometimes considered to be primarily a funder of project-based research and innovation. This is of course a significant activity within our investment portfolio. In the last financial year, we:

  • assessed over 24,000 applications for funds for research or innovation projects and made 5,497 new awards
  • supported 3,375 organisations, including 182 universities and 2,650 small and medium-sized enterprises
  • supported 60,285 individuals, including principal investigators, co-investigators, fellows, researcher co-investigators and students

However, our investment portfolio is much broader than project funding. In the 2022 to 2023 financial year our investments included:

  • £1,500 million in research and development grants, including fully open funding opportunities and targeted opportunities focused on specific priorities
  • £1,930 million of institutional block funding to higher education providers in England for research and knowledge exchange, to invest as they see fit
  • £880 million in skills and training for the next generation of researchers, innovators and technicians
  • £870 million in infrastructure, from laboratory equipment to major international research facilities
  • £1,190 million towards specialist institutes, centres, facilities and catapults that provide national capabilities in specific research and innovation areas, including specialist equipment, expertise and know-how
  • £630 million in collaborative challenge-led funding to address specific national and global priorities
  • £590 million in innovation project grants that support innovative small and medium-sized enterprises
  • £420 million in international partnerships to collaborate with leaders in their fields worldwide
A breakdown of UKRI's investments each year

The pie chart shows the balance of UKRI’s investment portfolio. Funding to higher education providers in England is the highest (24%), followed by research and development grants (19%), institutes, centres, facilities and catapults (15%), skills and training (11%), infrastructure (11%), challenge-led funding (8%), responsive innovation (7%), international partnerships (5%) and public engagement (<1%).

In addition, we also invested in public engagement activities to involve wider society in research and innovation, ensure that their benefits are widely shared, and inspire and engage the next generation of researchers and innovators.

These figures represent the in-year investment in each category. Most of these investments are part of multi-year commitments.

How our investment portfolio is managed each year

Research and innovation almost always requires investments longer than one year. For example:

  • research grants are typically two to four years
  • innovation grants are typically one to two years
  • PhD programmes typically involve awards covering several annual cohorts of three to four year studentships, resulting in funding commitments over seven years or more
  • fellowships are up to seven years

As a result of the multi-year nature of our investments, combined with in-flight or new programmes government has committed to delivering, at the start of a new financial year most of our annual budget is already committed.

For example, UKRI will start the 2023 to 2024 financial year with an allocated budget of £8.6 billion, of which £7.7 billion is already committed. This falls away to £7.1 billion by the start of 2024 to 2025 as awards are completed, and £5.7 billion by 2025 to 2026.

UKRI commitments shown falling away each year

The graph shows UKRI allocations by committed and non-committed spend. The gap widens each year, from almost entirely committed for 22-23 (£8bn against an £8.1bn budget), falling to £7.7bn for 23-24, £7.2bn for 24-25, £5.8bn for 25-26, and £5.1bn for 26-27.

In addition, many of our investments form essential elements of the research an innovation ecosystem.

For example, investments in research and innovation grants or PhD studentships, whereby cancelling funding rounds would cause major disruption to the talent pipeline and long-term research and innovation capability. Therefore, fully flexible funding for new investments each year is typically quite limited.

Despite this, significant agility in our portfolio can be delivered because of the thousands of research and innovation grant award decisions made each year. New focus areas can quickly be targeted to capture new opportunities as they arise.

The balance of investments across our portfolio can therefore be dynamically tuned, year-on-year, while maintaining the skills and talent pipeline and balancing current and future opportunities and priorities. Because of its reach and scale, UKRI is uniquely able to act in this way, ensuring the long-term health of our research and innovation system while responding to immediate needs.

How the councils work together to maximise the power of our investments

UKRI is nine councils spanning all disciplines and sectors, working both collectively and individually to foster a world-class research and innovation system for the UK.

Bringing together the domain expertise of each council allows us to create an aligned portfolio of council-specific and collective activities that supports a thriving research and innovation system. It facilitates healthy disciplines and sectors that are fully connected and empowered to tackle interdisciplinary and cross-sector challenges and opportunities of the present and the future.

To achieve this, some of UKRI’s activities are managed at individual council level, while others are managed collectively, across councils.

Good examples are the UKRI strategic themes. These aim to harness the collective expertise and investments of the councils to address major challenges such as tackling infection or building a green future. Council investments are leveraged with a collectively held budget invested to bridge gaps, create synergies and build partnerships with other funders, nationally and globally.

We are also working collectively across our investments in talent, such as PhD studentships and research fellowships. The aim is to create the right portfolio of domain-focused and interdisciplinary training, foster career path diversity, and harmonise the schemes available to increase both efficiency and effectiveness.

How UKRI catalyses collaboration with and investment from industry

The future prosperity of the UK depends on creating highly-productive, innovative businesses and public services, with high-quality jobs for people across the UK. This requires high levels of private sector investment in R&D. A key aim for public sector research and development investment is therefore to leverage private sector investment.

For every £1 of public money UKRI invests, we attract a further £2 of direct private sector research and development investment, with significant further indirect leverage.

We achieve this by combining the expertise of Innovate UK, which is fully business-focused, with the knowledge exchange expertise of Research England, and the disciplinary expertise of our research councils, which foster close relationships with their business stakeholders.

Many of UKRI’s funding programmes directly leverage private sector co-investment, for example:

  • Innovate UK grants have been directly matched by £3.4 billion of private sector investment, at a rate of £0.67 for every £1, followed by net additional private investment of between £1 to £5, within one to four years of receiving a grant
  • the Engineering and Physical Sciences Research Council’s (EPSRC) Prosperity Partnerships attracted £167 million funding from industry partners and £39.2 million from universities, alongside additional funding from EPSRC and the Biotechnology and Biological Sciences Research Council (BBSRC)
  • the UK Research Partnership Investment Fund, which supports investment in higher education facilities across the UK, leverages £2 from non-public sources for every £1 invested
  • the UKRI Challenge Fund is forecast to deliver between £3.8 billion and £5.6 billion of leveraged co-investment from industry and other non-public sources, which is double the original target for the fund (£2.8 billion)
  • Innovate UK’s investor partnerships programme up to March 2022 has provided £42.8 million in grant funding alongside £123 million aligned private sector-led equity investment to highly innovative small and medium-sized enterprises (SME), as well as attracting a further £373 million in additional partner investment

Across all research councils there are collaborative schemes for co-funding PhD students that allow for partnering and investment from non-higher education providers.

This both catalyses businesses’ R&D and is part of our portfolio of investment to support diverse careers paths and develop business-relevant skills by offering opportunities for placements, internships and experiential learning in business, policy and other non-academic environments. These include:

  • more than £3 million cash and in-kind contributions to AHRC’s collaborative doctoral partnerships between 2020 and 2023
  • a minimum of 20% additional private sector cash for studentships, programme management and in-kind contributions to BBSRC’s collaborative training partnerships, totalling around £1.5 million each year
  • £6.6 million of business cash and a further £7 million of in-kind contributions in 2023 for EPSRC’s Industrial CASE studentships, as well as considerable leverage and business engagement through EPSRC’s centres for doctoral training, which as of 2022 had already leveraged £40 million of cash contributions from non-UKRI, non-university sources, and is set to increase further
  • a target for at least 30% of studentships through ESRC centres for doctoral training and ESRC doctoral training partnerships being engaged in collaboration with non-academic organisations (public, private or civil society organisations)
  • a requirement for NERC centres for doctoral training and NERC doctoral training partnerships to convert a percentage of studentships awarded to NERC CASE studentships. The first doctoral training partnerships awards saw over over 530 CASE studentships supported with 260 different CASE partners, 63% of which were in the private sector and 11% in government departments

As well as directly leveraging private sector investment, there are many examples where UKRI has indirectly generated business collaboration and R&D investment through its activities.

This includes investment through Higher Education Innovation Funding, which encourages and incentivises higher education providers to work with business, other non-academic organisations and wider society, to support knowledge exchange and increase the social and economic benefit of their work. It has a reported return on investment of £8.30 for every £1 of funding.

UKRI funding also underpins the UK’s diverse, high-quality and accessible infrastructure landscape. Over three-quarters of infrastructures conduct work with UK businesses across all economic sectors, with 17% conducting all or most of their work this way. A further 92% collaborate with international partners.

How our portfolio approach delivers on our objectives

Through our managed portfolio, we can ensure that every pound we invest delivers on multiple priorities, providing value for money and building essential connectivity into the research and innovation system, shortening the path between discovery and prosperity and public good.

A single investment delivering multiple outputs

The investment

A £7 million Engineering and Physical Sciences Research Council (EPSRC) programme to enable next-generation lithium-ion batteries.

The outcomes

People and careers

Working on the project developed the skills and careers of a cohort of researchers, technicians and support staff, who went on to cofound research institutes and spinout companies in this important research area.


EPSRC’s programme informed thinking for future investment in next-generation battery research, putting focus on a select few fundamental scientific battery challenges, and was the precursor to the government’s flagship Faraday battery challenge and £330 million Faraday Institution.


A major innovation to arise from the programme was the discovery by one research consortium of a class of high-rate anode materials that allow for faster charging. This resulted in the spinout company Nyobolt, which secured over £7 million in Series A funding in 2019.


The outcomes of this programme, coupled with the UK’s long-standing expertise in vehicle manufacturing, have helped position the UK as a key player in electric vehicles and will help to deliver our target to reach net zero emissions by 2040.

Multiple investments delivering significant impact

The investments

£25 million EPSRC funding

EPSRC funding has supported skills, infrastructure and research and technology development in its Future Compound Semiconductor Manufacturing Hub and Centre for Doctoral Training in Compound Semiconductor Manufacturing, as well as other projects that bridge the gap between academia and industry in compound semiconductors.

£50 million Catapult investment

The Semiconductor Applications Catapult is a state-of-the-art innovation centre that has initiated over £100 million in projects. This investment has supported skills development in compound semiconductors and new routes to commercialise the technology.

£47 million Research England investment

A Research Partnership Investment Fund award supported the infrastructure at the Institute for Compound Semiconductors and the Centre for Integrative Semiconductor Materials. It attracted a further £94 million investment from non-public sources.

£25 million from the Strength in Places Fund

A £25 million Strength in Places Fund (SIPF) investment supported the development of local partnerships to create the world’s first compound semiconductor cluster in South Wales. It attracted an additional £19 million from other sources.

Private and public sector investment

In addition to significant co-investment from the private sector, Welsh Government and Higher Education Council for Wales (HEFCW) have played a vital role in supporting the semiconductor industry in Wales.

The outcome

CSConnected is the world’s first semiconductor cluster, connecting leading-edge university researchers, high-tech companies and innovative businesses. The cluster:

  • makes an economic contribution to Wales of around £172 million
  • supports around 2,100 full-time equivalent jobs
  • helps position the UK as a global leader in compound semiconductor technologies



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