The new agency was announced by the business secretary Kwasi Kwarteng today (Friday 19 February), and it is part of government plans to "cement the UK’s position as a global science superpower".

The ARIA will be tasked with funding high-risk research that offers the chance of high rewards, supporting ground-breaking discoveries that could transform people’s lives for the better.

ARIA will be backed by £800 million of government funding, as set out by the Chancellor Rishi Sunak in the March 2020 Budget, to fund the most inspiring inventors to turn their transformational ideas into new technologies, discoveries, products and services.

The new agency will be independent of government and led by some of the world’s most visionary researchers who will be empowered to use their knowledge and expertise to identify and back the most ambitious, cutting-edge areas of research and technology - helping to create highly skilled jobs across the country. It will be able to do so with flexibility and speed by looking at how to avoid unnecessary bureaucracy and experimenting with different funding models.

ARIA will be based on models that have proved successful in other countries, in particular the influential US Advanced Research Projects Agency (ARPA) model. This was instrumental in creating transformational technologies such as the internet and GPS, changing the way people live and work, while increasing productivity and growth.

More recently, ARPA’s successor, DARPA, was a vital pre-pandemic funder of mRNA vaccines and antibody therapies, leading to critical COVID therapies.

Kwarteng said: “From the steam engine to the latest artificial intelligence technologies, the UK is steeped in scientific discovery. Today’s set of challenges – whether disease outbreaks or climate change – need bold, ambitious and innovative solutions.

"Led independently by our most exceptional scientists, this new agency will focus on identifying and funding the most cutting-edge research and technology at speed.

"By stripping back unnecessary red tape and putting power in the hands of our innovators, the agency will be given the freedom to drive forward the technologies of tomorrow, as we continue to build back better through innovation."

Central to the agency will be its ability to deliver funding to the UK’s most pioneering researchers flexibly and at speed, in a way that best supports their work and avoids unnecessary bureaucracy. It will experiment with funding models including program grants, seed grants, and prize incentives, and will have the capability to start and stop projects according to their success, redirecting funding where necessary.

It will have a much higher tolerance for failure than is normal, recognising that in research the freedom to fail is often also the freedom to succeed.

Legislation to create the new research agency will be introduced to Parliament as soon as parliamentary time allows. The aim is for it to be fully operational by 2022.

The new body will complement the work of UK Research and Innovation (UKRI) while building on the government’s ambitious R&D Roadmap published in July 2020.

In November 2020, the spending review set out the government’s plan to cement the UK’s status as a global leader in science and innovation by investing £14.6 billion in R&D in 2021 to 2022, putting the UK on track to reach 2.4% of GDP being spent on R&D across the UK economy by 2027.

A recruitment campaign will begin over the coming weeks to identify an interim chief executive and chair to shape the vision, direction and research priorities for the agency.

Matthew Fell, CBI UK chief policy director, said: “ARIA will create new opportunities for high-risk, high-reward research. As world leaders in R&D and home to the brightest and best scientists, the UK has a unique opportunity to play to its strength with this new agency, to help create jobs, raise productivity and tackle the biggest challenges facing our country such as net-zero. Key to ARIA’s success will be strong business engagement to make sure the brilliant ideas developed can make it through to market.

“This a prime chance for business, government and the research and innovation community to work together and turn ambitions into realities. And coalesce around an shared economic vision for the next decade in which innovation will be at the heart of it. The CBI looks forward to engaging with the government as it looks to develop its proposals further.”

Jim McDonald, president of the Royal Academy of Engineering, said: “We are delighted to see the government deliver on its commitment to a high-risk high-reward funding agency. I hope this ambitious new funding mechanism will help to unlock radical innovation and enable step changes in technology that provides value for our economy and society at large.

“Engineering is central to an ambitious innovation agency of this kind, forming the bridge between research and innovation to enable technological and commercial breakthroughs.”

Stephen Phipson, chief executive of Make UK, said: “The UK has always been an innovative nation but has struggled to turn many ideas in to commercial reality with Government and investors too risk averse to take on many projects. This new agency will provide a welcome boost towards seizing the opportunities that science and technological breakthroughs are already providing and which will be critical to solving the many societal challenges we face.

“Government must now build on this by in tandem reforming and boosting the R&D Tax Credit, in particular including capital expenditure. Together these measures should help turbocharge the UK’s science and innovation performance.”