How Does Government Policy Shape UK Grant Management?

April 25, 2024

Grant management is continually shifting in response to government policy. Funders’ strategic priorities and internal policies often change as a result, whether to comply with new laws or better follow the guidelines that aim to address various societal, economic, and environmental issues.

This article explores some critical policies that influence funding in the UK when it comes to innovation and research, sustainability, social impact and inclusivity, and education and skills development.

Innovation and Research

Funding in this domain not only fuels the UK’s status as a global leader in scientific innovation, but also fuels developments that improve quality of life, create new economic opportunities, and address complex challenges (such as climate change).

Recent Changes to Science and Technology Funding

Over the last few years, the governance of such funding has changed significantly. For example, the seven research councils, Innovate UK, and Research England have joined forces under the umbrella of UKRI.

The government also founded the Department for Science, Innovation & Technology (DIST) in February 2023. This is the first time a secretary of state for science has been established since 1994. Before this, such activity was conducted within the Department for Business, Energy, and Industrial Strategy (BEIS).

The plans for DIST include to improve STEM capabilities within the public services and strengthen international collaboration on science and technology. There is also the intention to deliver reforms on the regulation of AI, as well as the Data Protection and Digital Information Bill, and the Digital Markets, Competition and Consumer Bill.

UKRI Funding Allocations for 2022 – 2025

Investment in research and development increased after a 2021 review. In 2022, R&D funds of more than £25 billion were allocated to UKRI for projects spanning until 2025.

Allocations are funding activities by the Natural Environment Research Council (NERC), the Science and Technologies Facilities Council (FTSC), the Biotechnology and Biological Sciences Research Council (BBSRC), the Engineering and Physical Sciences Council (EPSC), and the Medical Research Council (MRC) – among others.

UKRI have stated that they intend to improve their R&D system, attract and develop top research talent, use R&D funding to assist levelling up, and to unlock investment from the private sector – among other strategic objectives.

Environmental Sustainability

The UK has a comprehensive regulatory framework to mitigate against climate change and support environmental conservation. As we have seen above, there is increased funding in science and technology, which includes initiatives targeting climate change. 

The UK Green Financing Allocation and Impact Report 2023 shows that the Green Financing programme brought about the following results in 2021/22:

  • Around 1,200,000 trees were planted.
  • At least  9.6 MtCO2e of greenhouse gas emissions were prevented.
  • 226,947 electric vehicle charging points were installed, and 212,312 electric vehicles were funded.
  • £9.5 million per year was saved on household energy bills.
  • 31,100 jobs were supported.

These figures are based on the programme’s execution within the UK only. The financing extends to Official Development Assistance (ODA)-eligible countries, so the total impact is greater on the whole. For example, 214 MtCO2e of GHG emissions were prevented overseas.

Below are some other policies that have contributed to the UK’s status as a global leader in sustainability. These policies indirectly create a variety of grant funding opportunities by establishing ambitious targets and mandating significant changes in how businesses, local authorities, and communities interact with the environment.

The Climate Change Act (CCA) of 2008

The target for 100% net reduction in GHG emissions by 2050 (compared to 1990 levels) is stipulated in this act. It also provides a system of legally binding carbon budgets. Once these budgets are set, the government then has to create policies to ensure they are met.

The Act requires the government to complete a Climate Change Risk Assessment (CCRA) every five years, which identifies risks and opportunities relating to climate change. They must then complete a National Adaptation Programme which states how any risks identified in the CCRA will be addressed.

The Environment Act of 2021

This act pertains to cleaning up the air, reducing waste, improving biodiversity, and restoring natural habitats. It was introduced to ensure that sufficient environmental protection remained after leaving the EU.

Here are a few ways the Environment Act 2021 influences grant funding:

  • Local Nature Recovery Strategies (LNRS): The Act mandates the creation of LNRS across England, which encourages the pooling of resources and funding, to support projects that align with these strategies. This fosters collaboration between local governments, NGOs, community groups, and landowners.
  • Waste and resources: With ambitious targets for waste reduction and recycling,  the Act prompts funding for innovations in recycling technology, waste reduction initiatives, and community recycling schemes.
  • Air quality management: The Act prompts opportunities for projects aimed at reducing air pollution, such as the development of low-emission technologies, urban greening projects, and initiatives to encourage active travel.

Other policies of interest that will influencing funding priorities include Powering Up Britain, The Environment Improvement Plan 2021, and The International Climate Finance (ICF) Strategy 2023 (which stipulates how the UK will support international climate change action).

Social Impact and Inclusivity

UK government policies affecting equity, diversity, and inclusion help ensure a fair, transparent, and inclusive approach to allocating funds. Several key strategies and frameworks have been instrumental in shaping EDI considerations in grant funding over the years, outlined below.

The Equality Act of 2010

This cornerstone piece of legislation consolidates and strengthens all previous equality laws in the UK. It protects people from discrimination in the workplace and in wider society, including the provision of grants.

The Act covers nine protected characteristics, and funders must ensure that their processes consider and address potential biases and barriers faced by individuals with these characteristics.

Public Sector Equality Duty (PSED)

Arising from the Equality Act, the PSED requires public bodies to have due regard to the need to eliminate discrimination, advance equality of opportunity, and foster good relations among individuals when carrying out their activities. This duty encourages funders to consider how their policies and practices can be more inclusive.

The Social Value Act of 2013

This Act requires public sector organisations to consider how the services they commission and procure might improve the economic, social, and environmental well-being of the area they serve. Its principles therefore encourage inclusivity and diversity in public spending decisions.

The Affordable Homes Programme

The nation’s Affordable Homes Programme is another example of how policy affects the measures organisations have to take to ensure inclusivity. Partners of the programme are obliged to meet the following requirements within one year after their grant allocation is confirmed:

  • They must develop and publish an EDI action plan for their organisation.
  • They must meet at least five EDI standards. The minimum standards are:  offering EDI training for all employees; publishing gender and ethnicity pay gaps; implementing a zero-tolerance approach to all forms of discrimination, harassment, and bullying; broadening recruitment channels to encourage applications from diverse and underrepresented groups; collecting and monitoring workforce data to compare against the London benchmark.

Education and Skills Development

Grant funding in education and skills development supports lifelong learning, enhances workforce capabilities, and addresses skills gaps in key sectors.

Related policies often target various demographics, including young people, adults seeking retraining, and underserved communities, to ensure wide-reaching benefits.

Below are several key policies and initiatives regarding funding in this area.

Education and Skills Funding Agency (ESFA)

Sponsored by the Department for Education, the ESFA oversees the funding for education and training for children, young people, and adults. It manages various grants and funding streams aimed at schools, colleges, and training providers to support education and skills development across the UK.

Lifetime Learning Entitlement

The LLE aims to transform the adult education system by broadening the opportunities for eligible adults to access post-18 education. Under this umbrella, the Modular Acceleration Programme was launched in September 2023, which helps expedite the delivery of individual modules of technical qualifications. The programme is a grant competition that is disbursing up to £5 million for successful providers until 2025.  

Digital Inclusion Initiatives

The government has been criticised over its response to the issue of digital division, so this will be an area to watch in the near future. The issue has long been recognised and various initiatives have been funded over the years, such as the Future Digital Inclusion and Widening Digital Participation programmes.

Other sources of funding are tackling this issue to give disadvantaged individuals better opportunities in this regard. For example, the National Lottery Community Fund’s Digital Inclusion Project awarded several small value grants to support vulnerable young persons that were digitally excluded. The funds were allocated to young people’s centres to update their IT infrastructure and purchase new equipment.

Implementation Challenges

Some key challenges that present themselves when implementing policies pertain to transparency, administrative efficiency, and achieving the equitable distribution of funds.

All of these are critical yet complex tasks, so effective grant management requires robust systems and processes that can handle the intricate details of fund allocation, monitoring, and reporting.

In addition, transparency is essential to maintain public trust and ensure that funding decisions are made fairly and objectively.

Lastly, achieving an equitable distribution of grants necessitates ongoing efforts to identify and reach underserved populations, ensuring that the benefits of funding are widely and fairly shared.

How Grant Management Software Helps

Cloud based grant management software tackles the above challenges by:

  • Streamlining many repetitive administrative tasks.
  • Providing advanced data collection and reporting capabilities, for greater visibility and compliance monitoring, and improved stakeholder communication.
  • Providing tools for monitoring EDI within the grant management lifecycle.
  • Easily processing large volumes of data, helping large organisations manage virtually endless numbers of schemes.


The UK’s grant management landscape is shaped by a range of policies that reflect national priorities. These include commitments to innovation, sustainability, social impact and inclusivity, and education.   

High level policy trickles down to influence not only the priorities of funders, but in some cases, their day to day operations. As such, funders need to keep a close eye on how changing policy affects their processes.

When organisations are mandated to comply with such regulations, effective monitoring and reporting is a must. That’s why organisations trust market leading software such as Flexigrant to manage their operations.

The benefits exceed merely automating processes – our software also has built-in tools to improve EDI as well as advanced monitoring data visualisation capabilities. To learn more or request a demo, contact us today.

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