Charity fundraising hit from Covid-19 will mean £7.8 billion less for medical research, warns IPPR

• Charity sector set to lose 38 per cent of their fundraising income in the last year and over 25 per cent this year
• IPPR think tank calls for government to save crucial research with a life science partnership fund to make up the shortfall

New research by the Institute for Public Policy Research (IPPR) shows the devastating impact of Covid-19 on health charities. Analysis reveals that medical research charities are expected to lose almost 38 per cent of their fundraising income last academic year, and over 25 per cent this academic next year.

Restrictions on fundraising events, charity shop closures and wider economic uncertainty are all contributing to these losses, according to the think tank.

IPPR estimates that this lost charity income and the adverse economic conditions will cause a cumulative £7.8 billion shortfall in health research and development (R&D) investment between now and 2027 - equal to 10 per cent of UK health R&D. This includes:

• Up to £4.1 billion less investment in health R&D by medical research charities, due to lost charitable income.
• Up to £3.8 billion less investment from the private sector in UK health R&D, due to the reduction in charitable investment and to adverse economic conditions.

The think tank estimates that of the £3.8 billion reduction in private sector investment, £1.3 billion is attributable to reduced charity sector spend. Charities provide the foundation for private investment, and the UK’s unrivalled medical research charities have been a long-standing draw for global businesses, according to IPPR.

These figures constitute a ‘reasonable worst-case scenario’ according to the researchers. However, even in the ‘best-case scenario’ the study predicts £4.5 billion less R&D investment - £2 billion of which is attributable to lost charity income. Ultimately, this will lead to fewer new treatments for patients, warns IPPR.

Researchers argue that these numbers are likely to prove worrying for the government and could severely damage the Prime Minister’s commitment to making the UK a ‘science superpower’.

Bad for prosperity, bad for health

The report warns that such a shortfall in R&D investment will have substantial economic impact. R&D boosts productivity, which is crucial for improving living standards, delivering better public services and sustaining wage growth. Less R&D investment also means fewer jobs for researchers and technicians, at a time when the country is on the cusp of an unemployment crisis.

The report also highlights the risks for patients. Medical research charities have been vital to some of the most important health innovations in the last 100 years: from the development of radiotherapy in the 1920s to a cornerstone cancer treatment today; and pioneering research into the drug ‘Xolair’, which has helped 250,000 people living with severe asthma.

Support the whole eco-system

The researchers urge the government to take steps to support the whole life science sector.

The report calls for the introduction of a new, three year life sciences charity partnership fund to support medical research charities. This bespoke fund should be equal to the shortfall in medical charity income caused by Covid-19 and last three years. Charities should be free to use this fund as needed to maintain their R&D portfolio. In exchange, they would be asked to document how they will meet the government’s social priorities: such as levelling-up regional economies and tackling health inequality.

IPPR also argues for an upgrade in government investment in life science infrastructure to attract and retain private investment, including physical infrastructure (transport and broadband) and social infrastructure (skills and training).

Chris Thomas, Senior IPPR Health Fellow and lead author of the report, said:

"Our new research shows that £7.8 billion - £1 in every £10 of UK medical research – is now at risk. Such a loss would be a devastating blow for the country, and could be terminal for the Prime Minister’s ‘science superpower’ aspirations.

“The impact of Covid-19 on the fundraising income of this country’s medical research charities the most pressing problem. Though their work is sometimes unseen, research charities are the lifeblood of UK life sciences. It will only be to the detriment of all our health if we leave them – in their hour of need - on the proverbial crash cart.

“Their investment is crucial to discovering the medicines and technologies that might, one day, save your life. We urge the government to put in place measures to keep their vital work going.”

Shreya Nanda, IPPR economist and co-author of the report said:

“The pandemic presents major risks for the life sciences, but also an opportunity, as countries all over the world prioritise health spending and aim to build back with a more resilient healthcare system.

“The life sciences are a key area of strength for the UK. We should position ourselves to take advantage of these opportunities, and not let a temporary drop in investment lead to a permanent loss.”

NOTES TO EDITORS

1. Up to £7.8 billion less investment, cumulative to 2027, is made up of the following components

£5.3 billion less investment caused by charity income accounts for the first two rows (rounded figures).

1. IPPR recommend that the three-year life science charity partnership fund runs as follows:

1. IPPR analysis assumed that public R&D investment would be unaffected by the pandemic and would grow in line with March 2020 GDP projections. We also accounted for the commitment, at the 2020 budget, for public spending on R&D to reach £22 billion by 2024/5.
2. To model charity sector spend, we used AMRC survey data. To model private sector investment, we assume a crowding-in effect equal to that in Sussex et al, 2016.
3. To account for uncertainty, we model three scenarios. Our best-case scenario assumes that the charity sector will recover at the same pace it recovered from the 2008 financial crash. Our moderate case scenario uses charity executive estimates of the time it will take to recover. Our worst-case scenario assumes charity R&D investment will experience ‘hysteresis’ - that is, the shock it has experienced during Covid-19 will not be temporary