Spending on science and innovation will more than double over ten years under plans to be announced by the Chancellor, Gordon Brown, before the end of the month.
The unprecedented commitment far outstrips the expectations of the scientists who have been contributing to the Treasury science review. It will represent a stunning outcome for researchers in what is set to be one of the toughest spending reviews under the Labour Government.
The settlement will allow the UK to compete with nations such as the US in the science spending stakes for the first time.
The Chancellor is not expected to announce either the government's spending review allocations or his new ten-year investment plan for science until the end of June. But senior sources close to the team working on the science settlement have confirmed that it has decided that spending on science and innovation will rise by 5.7 per cent a year over the decade beginning 2006-07. The increase, which will be inflation protected, will mean that the science and innovation budget will more than double over the ten years.
The cash injection is likely to coincide with a major reshuffling of health research funding bodies to protect the £200 million already set aside for clinical research.
The sources said that the Treasury's ultimate aim was for UK spending on research and development to rise to 2.5 per cent of gross domestic product by the end of the decade. The GDP was £1.1 trillion in 2003, and the Treasury estimates that it will rise by about 3 per cent a year for the following three years. Industry would be expected to deliver a 5 per cent annual increase in research funding to match the Government contribution.
One senior scientist said: "Gordon Brown wants reassurance from the pharmaceutical companies that have been vacating the country. It sounds like a clever manoeuvre."
Calculations from 2002 show that the UK spent 1.8 per cent of GDP on research and development - about £20 billion - which places it behind Sweden, Finland, Iceland and Japan, whose investment exceeds 3 per cent.
The new money will bring the UK closer to the US, which spent 2.7 per cent of its GDP on R&D in 2002. But the UK will still fall short of the European target of 3 per cent by 2010.
In the short term, much of the new money is understood to be committed to clinical research: the Chancellor announced a rise of about £200 million in his March budget speech.
One senior source said that to allay fears that this money might be diverted, the Office of Science and Technology had agreed under pressure last week to ring-fence £90 million specifically for clinical research.
But a Department of Health insider said a new steering committee combining the DoH and the Medical Research Council would also be set up to manage medical research. In the longer term, this is expected to lead to the UK's emulating the US National Institutes for Health, with the MRC and DoH research budgets rolled into one.
The DoH insider said: "This partnership is undoubtedly required to audit and account for this new expenditure."