Deferral rates amongst UK students went up by almost 20% as a result of the Covid-19 pandemic, putting pressure on universities to make up the potential lost revenue. 
Past major economic crises have led to reductions in research and development (R&D) funding, despite its importance in driving innovation in modern economies.
With budget restrictions, delays in ongoing business projects, and some stopping research initiatives altogether, R&D departments had a perfect storm to deal with.
This article outlines the impacts of Covid-19 on universities’ ability to contribute to innovation, government R&D policies, and Research England developments during the pandemic.
The Impact of Covid-19 on Innovation
While both industry, and universities faced a plethora of issues caused by the Covid-19 pandemic, the ability of universities to continue contributing to innovation was something of an unknown.
A report led by the new University Commercialisation and Innovation Policy Evidence Unit at the University of Cambridge, with support from the UK National Centre for Universities and Business aimed to shed light on this grey area.
Innovating During a Crisis 2021  headline findings include:
- More than half of UK universities reported that their innovation activities with aerospace and automotive manufacturing firms had decreased by at least 20%
- Nearly half of universities saw declines of at least 6% in the overall level of innovation activities they have with industrial partners
- 88% of UK universities experiencing declines in activity cited a significant proportion of innovation projects had been delayed
- Nearly half (48%) of these universities reported the scale and scope of projects were being reduced
- More than a third (36%) saw a significant proportion being cancelled
The lack of financial resources to support collaborations, insufficient government funding to leverage for such activities and the current inability to access the necessary facilities and equipment for work to continue are reasons behind these changes. 
Activities with sectors such as aerospace and automotive manufacturing and the creative industries were particularly badly affected. These disruptions could have long-lasting effects on the competitiveness of strategic UK industries. 
Alice Frost, Director, Knowledge Exchange at Research England highlighted that there was some variation between university types, due to their different exposure to different sectors and the strength of pre-established ties to specific industries. 
However, there was very little statistical variation observed across regions. This is mainly because the initial effects were so widespread, with no one region remaining unaffected.
Most higher education institutions (HEIs) expected to see some recovery in activity across most sectors by March 2021, which has largely proven true.
Industry growth has seen investment in R&D bounce back throughout 2021, with many seeing the importance in innovation as a key driver of economic stability.
Tomas Ulrichsen summarised the report by stating that:
A strong, resilient and sustainable system of universities, research institutes and technology development organisations, working in close partnership with the private, charitable, and public sectors will be crucial to driving an innovation-led economic recovery and tackling other critical and urgent global challenges.Tomas Ulrichsen.
The government has committed to investing 2.4% of GDP, alongside £22 billion of public investment, into R&D. Current levels of investment are around 1.6% of GDP.
For context, this puts the UK around the same level as Canada, Ireland, and the Czech Republic, all of whom fall around the 1.5-1.8% level.
Leading the way with investment levels above 4% are Israel and South Korea, with Chile and Latvia dedicating the least at around 0.5% of GDP.
Boris Johnson’s government has laid out public spending priorities based on the overarching ‘levelling up’ agenda.
Breaking this down, spending has been committed to:
- Making the UK a global science superpower
- Ensuring economic growth (and recovery post-Covid-19)
- Achieving Net Zero
- Creating Global Britain
- Investing in People and Culture
Where this affects commercialisation in universities and may change the day-to-day is the potential investment in R&D strategy.
This encompasses people and culture strategies to encourage a diverse array of people into these areas, particularly those traditionally excluded from STEM careers.
Investment in creating partnerships between universities and industry is also expected to increase as part of the governments’ attempts to make the UK a world leader in innovation.
Research England Developments
Research England is a new council within UK Research and Innovation (UKRI), a non-departmental public body sponsored by the Department for Business, Energy, and Industrial Strategy.
They oversee UKRI’s England-only functions in relation to university research and knowledge exchange. This entails responsibilities such as:
- Providing grant funding for research and knowledge exchange activities
- Developing and implementing the Research Excellence Framework
- Overseeing the sustainability of the higher education research base in England
- Managing the £900 million UK Research Partnership Investment Fund
- Administering the Higher Education Innovation Fund (HEIF)
The need for Research England to exist is the explosion in university R&D funding over the past two decades.
In 2002, only £42 million was dedicated to knowledge exchange funding. In 2020, that number was up to almost £300 million.
Originally there was only the HEIF, whereas there are now multiple separate funds contributing to the overall number.
One of these is the Research England Development (RED) Fund, which is currently around £25 million per annum.
The RED Fund is focused on government UKRI priorities and includes an emphasis on new approaches to commercialisation.
This includes large projects such as the Northumbria social impact investor, Salford’s robotics innovation centre, and Surrey’s new small-medium enterprise PhD model.
There is also the Connecting Capability Fund (CCF), providing £85 million in 18 three-year projects. The projects reach over 60 different HEIs and 128 businesses.
It is mainly used to share good practice in collaborative commercialisation, and pool resources and expertise between universities.
The UKRI Strength in Places Fund (SIPF) helps areas of the UK to build on existing strengths in research and innovation to deliver benefits for their local economy.
Its two high-level objectives are:
- To support innovation-led regional growth
- To enhance local collaborations involving research and innovation
SIPF supports highly collaborative projects anywhere in the UK. The projects can be led by research organisations or businesses and should demonstrate strong engagement from local leadership partners.
There are more opportunities for funding arising as part of the governments’ plan to ‘build back better’, with a strong focus on innovation and R&D at the forefront of university spending.
 Londoneconomics.co.uk. 2020. Impact of Covid-19 on University Deferral Rates.
 Ulrichsen, Tomas. 2021.University Commercialisation and Innovation Policy Evidence Unit, University of Cambridge, UK National Centre for Universities and Business. Innovating During a Crisis.
 Frost, Alice. 2021. Director, Knowledge Exchange, Research England. Accessing Funding for Research & Development.
 re.UKRI.org. 2021. About Research England.
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