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UK rejoins Horizon Europe: what it means for innovation

Director - Grant Advisory
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Road heading to the horizon

For many years, the UK was a major beneficiary of Horizon Europe grants. Its world-class research organisations played a pivotal role in leading projects funded by the programme.

One consequence of the UK’s exit from the European Union was the suspension of its participation in EU-funded research and innovation programmes. Following the decision to rejoin Horizon Europe, we assess the likely impact for businesses seeking funding for innovation.

Why the UK has rejoined Horizon Europe

As the UK finalised the terms of the EU withdrawal agreement, the government aimed to tailor research and funding collaborations to national interests, fostering innovation directly aligned to the UK’s principal ambitions.

Despite this, uncertainty regarding the UK’s access to the Horizon Europe programme had damaging effects on the scientific community. It effectively closed off access to knowledge, resources, and collaborative opportunities to stimulate investment in R&D. Acknowledging these drawbacks, the UK rejoined Horizon Europe in early 2024.

The impact of the UK’s time outside Horizon Europe

A guarantee scheme set up by the government in lieu of Horizon Europe funding paid out an average of £740 million annually between 2021 and 2023 (the years following the UK’s exit from the programme). By comparison, British researchers previously received £940 million annually on average between 2014 and 2020 with Horizon Europe. This is more than a 20% annual reduction, suggesting that the guarantee scheme did not plug the gap left by Horizon Europe.

Getting the balance right between public and private sector R&D

The UK’s involvement in Horizon Europe comes with concerns over the long-term balance of grant applications made between the public sector and the private sector. This influences the direction of the programme in Europe and impacts the speed of innovation across the nation.

A key issue during the UK’s earlier involvement in Horizon Europe was the intense competition for grants. The consistent success of publicly funded research organisations in securing Horizon Europe backed projects was contrasted by a lack of awareness in the private sector.

It could even be argued that the success of these research organisations in claiming grants led to a homogenisation of research perspectives, stifling commercial R&D. This issue remains and will need to be addressed following re-entry.

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The reliance on publicly funded research organisations in claiming these grants has highlighted a gap in the private sector’s engagement with Horizon funding opportunities. By contrast, the Scandinavian approach to grant funding presents a strikingly different landscape – perhaps a model that the UK could seek to emulate.

For example, a strategy employed in Denmark sees the provision of vouchers worth around £20,000 to facilitate the grant application process for investing businesses. This approach streamlines the process as well as leveraging professional expertise to maximise the chances of successful grant acquisition.

Meanwhile, the UK’s three-year absence from these grant funding opportunities has led to both companies and research organisations becoming somewhat ‘rusty’ in making applications. As a result, there is an emerging focus in the UK on improving the return on investment from grant contributions. A new initiative to provide vouchers of up to £10,000 to assist companies in applying for Horizon grants is less generous than the Scandinavian model but is certainly a step in the right direction.

Funding stability is vital to future innovation

The UK’s departure and subsequent re-entry into the Horizon Europe programme has raised questions about the long-term stability of grant funding. In a related area of tax policy, the period of uncertainty for businesses since the opening of a consultation into the R&D tax relief incentive in 2021 is one example of how frequent piecemeal changes can over-complicate funding opportunities for innovative companies. It’s important that lessons are learned and persistent change in the UK grants landscape is avoided for the benefit of those claiming.  

A commendable example of a clear policy framework in the UK is the Industrial Energy Transformation Fund (IETF), which has provided clarity for applicants and a strong strategic fit with policy objectives. R&D tax relief will also be important in supporting spin-outs and promoting extensive work in regular reviews and application processes.

Maximising the potential of Horizon Europe grants across both public and private sectors by learning from the Scandinavian experience will pave the way for a more sustainable UK grant funding landscape that fosters innovation across the UK economy.