Productivity growth, which has been exceptionally weak across our country over the last decade, is the only long-term way to deliver economic growth and prosperity.
The target is for combined public and private sector spend.
This allows Public Sector Net Investment to reach an average of no more than 3 per cent of GDP.
This will increase spending so that it reaches £18 billion in 2024-25. This will be a doubling of public R&D spending compared to 2017 and will be approximately 0.62 per cent of GDP, higher than the OECD average of 0.6 per cent and up from 0.43 per cent currently.
This will include funding for advanced maths research, a national Space Strategy, support for nuclear fusion and investment in the National Institute for Health Research to invest in translational health, social care and mental health research. Investment in R&D will also help us develop the innovations we need to tackle climate change and meet our Net Zero target.
We will invest £800 million over five years for a new research institution in the style of the US ARPA, which funds high-risk, high-reward research that might not otherwise be pursued, to support blue skies research and investment in UK leadership in artificial intelligence and data.
EU R&D programmes are currently paid for through the UK’s taxpayer-funded EU budget contributions.This £18 billion package will guarantee that all EU R&D funding will be replaced post-Brexit, including funding for universities.
Even with this huge public investment in R&D, we will need to incentivise much greater private R&D in order to meet the 2.4 per cent target. So we will introduce a new Challenge Led Innovation Procurement fund which will provide innovative firms with capital and launch an extension of the innovation loans pilot which helps improve access to finance for small businesses.
Through the National Productivity Investment Fund we are investing in areas like roads and digital infrastructure that are crucial for growth. We are spending at the highest consistent sustained level in 40 years, and is £22 billion more a year in real terms than under the last Labour Government.
The total amount of R&D support claimed rose to almost £3.5 billion in 2016-17, up over 20 per cent from the previous year, supporting £24.9 billion of R&D expenditure.
This includes £2.5 billion on a patient capital fund to help businesses grow over the long-term, and the British Business Bank has also provided more than £5.9 billion to over 82,000 smaller businesses.
The Start Up Loans programme, delivered through the British Business Bank, has lent £500 million to support 64,000 entrepreneurs.
We have announced a £3.6 billion Towns fund to improve transport and broadband connectivity, alongside £300 million for new funding for Growth Deals across Scotland, Wales and Northern Ireland.
We have created sector deals for the aerospace, AI, automotive, construction, creative, life sciences, nuclear, offshore wind, rail and tourism industries, as well as two local industrial strategies to support new the development of new technologies in the West Midlands and Greater Manchester.
We have helped create the conditions for more than a million new businesses to start up and encouraged them to invest and expand. We have cut corporation tax from 28 per cent to 19 per cent, encouraging more firms to grow in the UK, and we are supporting businesses with £13 billion worth of business rates relief.