The UK R&D Scoreboard
The UK Government’s annual R&D Scoreboard, which is endorsed by the R&D Society, reports on the patterns and trends of the 850 largest corporate spenders of R&D in the UK and the 1,400 companies in the world most active in R&D, based on R&D expenditure reported in company accounts. Note that as company accounts do not distinguish between expenditure in the UK and outside the UK, the figures reported by the Scoreboard do not either.
The latest scoreboard, the 2008 DIUS R&D Scoreboard, published 26 January 2009 is based on companies’ reported performance up to June 2008 – before the current recession. The Scoreboard reports that the 850 top-spending UK firms spent £21.6 billion on R&D – a rise of 6.4 per cent on the previous scoreboard. The 1,400 companies in the world that spent the most on R&D increased their expenditure by 9.4% to £274 billion. 79% of this expenditure was by companies based in the USA, Japan, Germany, France and the UK.
The top 88 UK companies, who also rank in the top 1,400 global investors of R&D, increased their R&D investment by 10.3% – a faster rate than the rest of the top 1,400 companies. The remaining UK companies outside the top 88 grew their R&D by just 1.2% – a fall in real terms.
The biggest UK sector by spend remains pharmaceuticals and biotechnology (37%), with aerospace and defence, software, automobiles and parts, and fixed line telecommunications the next biggest, each with 6% share. Globally, the five biggest sectors were pharmaceuticals and biotechnology, technology hardware, automobiles and parts, software, and electronics.
The UK sectors that increased their R&D expenditure the most were oil and gas, banking, pharmaceuticals and fixed line telecommunications.
In the UK 850, 338 companies have sales of less than £50M, spending an average of 29% of their sales on R&D. This is significantly more than the larger UK firms, reflecting the tendency for smaller firms to be in R&D intensive sectors, with larger firms with larger absolute values of R&D spend being in less-intensive sectors. Listed companies (ie those with shareholders) increased their R&D by 9.8% compared with a 2.7% reduction for unlisted companies.
The Government also publishes the 2007 DTI Value Added Scoreboard lists the top 800 UK companies and the top 750 global companies by Value Added – the amount of wealth created by a company in a year. It gives R&D intensity for companies listed by value added.
National Statistics: Gross Domestic Expenditure on Research and Development (GERD)
National Statistics publish an annual report of Gross Domestic Expenditure on Research and Development (GERD). GERD covers all R&D performed in the country concerned, irrespective of who pays for it, including funding from abroad. It differs from the Scoreboard by excluding R&D paid for by UK companies but carried out outside of the UK.
National Statistics produce this information from a variety of sources, including surveys of Government departments, their annual business R&D survey (BERD – see below), information from public bodies such as the Higher Education Funding Councils for England, Scotland and Wales and estimates by National Statistics. GERD is the measure most commonly used for international comparisons.
The latest GERD report, issued 26 March 2010 (pdf), reports that “In 2008, the UK’s gross domestic expenditure on research and development (R&D) was £25.6 billion. This represented an increase, in cash terms, of 3 per cent from the level recorded in 2007. In real terms,1 gross domestic expenditure on R&D in 2008 was at a similar level to that in 2007. In 2008, expenditure on R&D was 1.79 per cent of gross domestic product, a small increase on the previous year.”
National Statistics: Business Enterprise Research and Development (BERD)
National Statistics publish an annual survey of Business Enterprise Research and Development (BERD), which reports on expenditure on R&D performed in the UK within business enterprises. It differs from the Scoreboard by excluding R&D paid for by UK companies but carried out outside of the UK, and is based on a survey of 4,000 businesses.
The 2008 figures, published December 2009 (pdf), reports that in 2008, £15.9 billion was spent on R&D performed within UK businesses, a rise of 2 per cent at cash (current) price compared with the 2007 total. Total R&D expenditure in 2008 represented 1.1 per cent of GDP, in line with recent years.. It shows that product groups with significant R&D expenditure include pharmaceuticals, aerospace, and computer and related activities and telecoms.
Funding of R&D from businesses’ own funds was £10.1 billion in 2008 (63 per cent of the total). Funding of R&D in UK businesses from abroad was £3.7 billion in 2008 (24 per cent of the total). Funding of R&D in UK businesses by
the UK Government was £1 billion in 2008, 7 per cent of the total and predominately in defence.
The number of full time equivalent staff employed on R&D decreased by 5,000, or 3 per cent, between 2007 and 2008. The number of scientists and engineers decreased by 4,000 to 86,000 and accounted for 57 per cent of all the staff employed on R&D. The number of technicians increased by 3,000 while administrative staff decreased by 5,000 between 2007 and 2008.
In Scotland: The Science and Innovation Strategy for Scotland
The The Science and Innovation Strategy for Scotland notes that in 2003, Scotland’s businesses on average invested in R&D at around half the rate as in the UK as a whole; at 40% of the OECD average; and at 30% of the target in the European Union for 2010. Over the last 6 years there has been some improvement in our figures, but clearly much remains to be done. Our investment data are also particularly volatile because much investment is concentrated in a small number of firms in a small number of sectors, many of them foreign-owned. Losing one or two of these firms could seriously reduce the Scottish figures but, conversely, attracting one or two major firms willing to spend substantial amounts on R&D could improve the figures dramatically.
The EU Industrial R&D Scoreboard and the EU Innovation Scoreboard
The 2007 EU Industrial R&D Investment Scoreboard released in early October 2007, presents information on 2000 companies from around the world reporting major investments in R&D – 1000 based in the EU and 1000 based elsewhere in the world. EU-based companies increased their R&D by 7.4%, up from 2006′s 5.3% figure – but still lower than those based outside the EU.
The EU Innovation Scoreboard, released January 2009, compared the 27 EU countries’ performance on innovation on 29 individual indicators of innovation, entrepreneurship and knowledge creation and intellectual property. The Scoreboard reports that the UK is one of six “Innovation leaders”, grouped with Switzerland, Sweden, Finland, Germany and Denmark , with scores well above that of the EU27 and all other countries.
It notes that the UK’s innovation performance is above the EU27 average but the rate of improvement is below that of the EU27. Relative strengths, compared to the country’s average performance, are in Human resources, Finance and support, Firm investments and Linkages & entrepreneurship and relative weaknesses are in Throughputs, Innovators and Economic effects. The reeport notes that contributors to the UK’s position include “Finance and support”, especially strong growth in Venture Capital and broadband access by firms. It also notes that “Performance in Firm investments, Linkages & entrepreneurship, Innovators and Economic effects has worsened, in particular due to a decrease in Knowledge-intensive services exports (-4.7%), New-to-market sales (-12.7%) and New-to-firm sales (-10.7%).”
The OECD Scoreboard
The OECD Science, Technology and Industry (STI) Scoreboard 2009, released 15 December 2009, compares countries’ performance in the areas of science, technology, globalisation and industry. Online access to the full scoreboard is provided free and a short 10 page Highlights document is also provided.
The 30 OECD member countries, and several other countries, are included in the analysis. The short online UK Country note accompanying the Scoreboard notes that the “Total R&D intensity for the UK (1.8% of GDP in 2007) is slightly below the OECD average (1.9%). UK businesses finance only 47% of total R&D expenditures, against an average of 57% for G7 countries. In 2008 defense accounted for 24% of the government R&D, the third largest share in the OECD after the United States and France. ”
The OECD summary also states that the UK “shows a high degree of international cooperation in innovation. The share of UK patents with a foreign co-inventor (24%) increased by more than 5 percentage points from 1996 to 2006 to become higher than the OECD average (22%). In 2007 R&D funds from abroad accounted for over 23% of business R&D in the United Kingdom, the second largest share in the OECD after Australia.”
The 2005 OECD Science, Technology and Industry Scoreboard reported that the United Kingdom accounted for just over 4% of worldwide value added in manufacturing in 2002, making it the sixth-largest manufacturing nation in the world. China accounted for about 8%, making it the third-largest manufacturing economy in the world, behind Japan and the United States, but ahead of Germany and France.