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2. The guidance is intended to be fully consistent with the principles set out in Managing Public Money.

3. The objectives of this guidance are to:

• provide a high-level introduction to the objectives of ten-year R&D funding
• support departments鈥� decision-making process
• highlight key principles, including cross-government co-ordination, robust governance and monitoring, that departments and ALBs should consider in the delivery of ten-year R&D funding.

Ten-year R&D budgets

4. The government may set ten-year budgets for certain R&D activities. By giving certainty, it will better support the ability to form long-term partnerships with industry, build and develop skills and talent, and foster international collaborations to allow the UK to stay at the forefront of global innovation.

5. All relevant departments will be responsible for implementing any ten-year funding for their own R&D spend, following the criteria and guidelines.

6. Ten-year R&D funding will be delivered using existing spending powers. This guidance provides clarity on decision making, key principles and HMT approvals.

Ten-year funding: the selection criteria

7. Ten-year funding will be selective and aimed at specific kinds of activity and institutions.

8. Departments and ALBs should consider where organisations (and/or their programmes) meet the selection criteria for ten-year funding.

Selection criteria for ten-year funding

There are two primary benefits to consider

• targeting scientific benefits
• directly targeting economic benefit

Targeting scientific benefits	Possible criteria and supporting information
A: Infrastructure / core capabilities	Where ten-year funding will allow recipients to develop or maintain core national infrastructure or support improved utilisation not possible under shorter funding cycles. - Does the recipient have unique and/or high-quality infrastructure or core capabilities (such as the UK鈥檚 data infrastructure) that would benefit from long-term funding certainty? - Is infrastructure or core capability investment not being made due to funding uncertainty? -Would long-term support for the infrastructure support wider growth and investment in that region?
B: Talent attraction and retention	Where the skills development in a particular area is of demonstrable criticality to the UK growth agenda and longer-term funding would enable development of a cadre of skilled researchers, scientists or engineers that otherwise would be difficult. - Identified talent attraction, development or retention challenges that shorter funding cycles impact. -Demonstration that long-term funding would help attract internationally based researchers to relocate to the UK.
C: International collaboration	Where there are demonstrable, additional opportunities for international collaborations with strategic benefits, or where funding reflects a committed reality. - Existing or potential international collaborations (number, scale) that are not otherwise possible. - Would long-term funding allow for clearer alignment with existing international funding cycles?

Directly targeting economic benefit

Possible criteria and supporting information

D: Partnerships and Business collaboration

Where there is demonstrable need for long term partnerships with industry (including charity and philanthropy) to tackle a significant challenge relevant to economic growth, and where shorter funding cycles would impede effective partnerships. - Existing and potential partnerships the recipient has identified that are hindered by existing funding cycles. - Evidence of potential opportunities for private investment.

9. These criteria form one part of the government鈥檚 approach to ten-year funding and do not preclude other forms of delivery or recipient.

How to apply the criteria

10. Using the selection criteria, departments and ALBs should identify key R&D organisations, and/or their programmes, where ten-year funding would provide additional benefits that would not be possible within existing, shorter funding cycles.

11. Organisations would not be expected to meet all the criteria to be considered in scope. 鈥�

12. Where departments fund multiple key R&D organisations, such that decisions need to be made between organisations, the selection criteria should be used to support decision making. Departments should consider:

• the level of additional benefits identified
• the strength of the evidence 鈥� this could include qualitative and / or quantitative evidence (such as a monetised reduction in bureaucracy) or evidence from comparative (i.e. international) institutes
• departments may wish to consider additional criteria that align with the government鈥檚 key priorities, and outcomes, for the relevant spending review (SR).

13. Departments may wish to use an expert advisory panel comprised of individuals from outside of government to review prospective organisations.

14. The department鈥檚 Chief Scientific Adviser, and equivalent roles (e.g. National Technology Adviser), should be engaged to provide advice.

15. Once suitable organisations have been identified, departments or ALBs should provide a recommended shortlist of potential recipients to those who will be responsible for final selection (i.e. Ministers or appropriate alternative governance).

16. No further HMT consents are required for ten-year funding.聽Standard HMT approvals are required, as per the relevant letter of delegation. For example:

• if the funding is above the department鈥檚 or ALB鈥檚 post-SR Delegated Authority Limit (DAL) for the duration of the funding; or
• if the relevant spending power requires HMT approval

HMT will consider the application of the criteria as part of approvals.

Other considerations

17. Departments need to retain agility to respond to new and emerging priorities in the short and medium term, so should consider the appropriate proportion of department budget to commit to ten-year funding. This guidance recommends that departments or ALBs should set a maximum limit for the proportion of R&D budget that, at any one time, should be allocated to ten-year funding. For example, if a department sets a 10% maximum and has an anticipated R&D budget of 拢100 million in a given financial year, ten-year funding commitments should be no more than 拢10 million in the same financial year.

18. To support department decision making, potential recipient organisations may be asked to provide a desired minimum funding level and funding period (see paragraph 21) and (see paragraph 22) as part of the spending review and allocations process.

19. To ensure that the organisation is able to demonstrate an excellent performance track record, and that it has the structures and governance to implement ten-year funding effectively, departments may wish to limit organisation eligibility to those that have existed for a set minimum period (for example, 3 years). Whether or not this eligibility criteria is considered necessary, due diligence should be considered (see paragraph 35).

20. Departments should engage relevant R&D-funding departments and ALBs prior to any ten-year funding decisions. Appropriate forums, for example the Chief Scientific Adviser (CSA)聽network and the R&D Oversight Group, should be engaged to support cross-government co-ordination.

Delivery

The funding

21. Departments should make individual decisions on the duration of the long-term funding. While 10 years is a starting point, funding may be committed for a longer or shorter funding period with a supporting rationale.

22. The funding agreed with recipient organisations, that goes beyond the immediate spending review period, will be a minimum level of funding (subject to appropriate caveats in order to ensure the department or ALB is able to reduce or terminate funding). Recipients will be able to approach the department or ALB for additional funding at future spending reviews, for example, to benefit from a newly emerging opportunity. Departments and ALBs should provide funding flexibility, as far as is possible, to enable the organisation to achieve its objectives.

23. Ten-year funding commitments should not seek to replace competitive grant or contract funding, either from the relevant department (or ALB), or from external sources (e.g. other government departments, charities, businesses, commercial income, philanthropic donations). ^{[footnote 1]}

Extending funding

24. Extending funding beyond the initially agreed funding period will be contingent on a light-touch review process, that appropriately balances need to avoid unnecessary burden with need to protect public finance, conducted by the department or ALB.

25. The review should be performed during a spending review to ensure that departments鈥� ten-year funding commitments are considered in the round alongside wider funding priorities.

26. The timing of the review should be at least 2 years prior to the end of the ten-year funding period, to ensure cliff edges in funding are avoided.

27. To inform each review, recipient organisations should be required to:

• Monitor and evaluate the impact of ten-year funding, including agreed outcomes, metrics and evaluation questions (see paragraph 34); and
• Consider the impact of ten-year funding during wider institutional reviews and share outcomes with the relevant department(s) or ALB. While timing of wider institutional reviews may not initially align with reviews for ten-year funding extensions, where possible, scheduling of future wider institutional reviews should consider best timing to support reviews for ten-year funding.

28. If the recipient organisation is not delivering against the outcomes and metrics identified, there should be clear agreement of what needs to be improved before funding may be extended and the timeframe for these improvements. If performance against the outcomes and metrics does not improve, recommendation to reduce or claw back funding in full or in part may be made (see paragraph 32).

Funding agreement

29. Departments must ensure public funds are well protected and that any delivery of ten-year budgets is lawful.

30. Departments should work with the recipient organisation to set out funding requirements using existing agreements in place with the recipient, where possible, updated to reflect ten-year funding.

31. Due to the way funding structures can differ within and between government departments, the ability to use existing agreements should be considered on a case-by-case basis for each recipient organisation.

32. Legal and commercial advice will need to be taken on individual decisions to ensure lawfulness and ensure adequate protection of public funding. As a minimum, these should be:

• Making sure any communication is caveated so as to avoid establishing an expectation, beyond the terms of the agreement, of committed funding for the full period;
• The ability to suspend/reduce funding and (as necessary) shorten any agreement by having an early termination clause allowing HMG to terminate without fault;
• Clawback of monies already sent to the organisation (including unspent/uncommitted money in all circumstances);
• Clear exit procedures and break points
• Monitoring and evaluation process, including metrics, outcomes and evaluation questions (see paragraph 34); and
• Ensuring compliance e.g. subsidy control, public sector equality duty.

33. Where using existing agreements is not possible, departments should seek to use appropriate alternatives to deliver ten-year funding.

34. Prior to the start of the funding period, departments should agree evaluation questions with the recipient organisation and the evaluation taskforce in Cabinet Office. These should include evaluation questions measuring the impact of the ten-year funding.

35. Departments may wish to conduct additional due diligence on the recipient organisation, proportionate to any increase in risk level associated with a longer-term funding period. Recipient organisations should be able to demonstrate that they have the structures and governance to implement ten-year funding effectively.