LBS research fuels £20bn R&D bond proposal - TSC submission, UK Parliament
Professor Paolo Surico highlights the transformative potential of public R&D investment
In a letter dated 19 June 2025, Chris Coghlan MP (Dorking and Horley) urged Chancellor Rachel Reeves to consider issuing up to £20 billion annually in research and development (R&D) bonds to drive long-term economic growth. The proposal draws on insights from Professor Paolo Surico of London Business School, whose research underscores the transformative potential of public R&D investment when paired with private sector contributions.
Coghlan praised the government’s Spring Statement for its focus on innovation and noted that defence-related R&D has already contributed an estimated £11 billion annually to GDP. However, he expressed concern over stagnant public R&D investment levels, as highlighted in Professor Surico’s recent testimony to the Treasury Committee.
Speaking before the Treasury Select Committee (TSC) on 17 June 2025, Professor Surico emphasised the need for bold investment:
“If we want to raise productivity and long-term growth, we need to increase public R&D investment significantly, by £5 to £20 billion a year, and ensure it is matched by private sector commitment.”
Professor Surico was invited by the TSC to provide expert oral evidence on the recent Government Spending Review. He also noted that the UK has lagged behind the US in post-pandemic productivity growth, largely due to lower capital investment.
Coghlan endorsed these comments and referred to Professor Surico's recommendation that such investment should be financed through government borrowing rather than tax increases. He argued that this approach would stimulate productivity and economic growth without raising the UK’s debt-to-GDP ratio, while also addressing national security priorities.
In a follow-up statement, Coghlan added:
“I have written to the Chancellor asking the government to evaluate issuing R&D bonds to raise our R&D to South Korean levels and dramatically accelerate growth. I’ll be asking the Chief Secretary to the Treasury about this when he appears at the Treasury."
Professor Surico’s full testimony is available at www.parliament.uk.