Britain fails the research test

Government figures confirm that our companies are not investing enough. Roger Trapp reports

IN recent years there has been no shortage of soul searching among industrialists and policy makers about Britain's declining competitiveness.

One of the reasons for this was that even as the Conservative government was pushing forward the notion of Britain as the enterprise centre of Europe, evidence was mounting of a widespread failure to invest in the things that would create long-term prosperity rather than short-term shareholder gains.

Last week more material arrived to reinforce that view. The latest official figures show Britain falling further behind international competitors in corporate research and development.

According to the Department of Trade and Industry's UK R&D Scoreboard, although expenditure has increased, it still accounts for a smaller proportion of sales than in other G7 countries. Along with Italy, the UK spends 2.3 per cent of sales on R&D, while Japan, Germany, the United States and France all devote more than 4 per cent of turnover to it.

The top UK companies have increased spending at a similar rate to leading international companies in recent years. But in percentage terms they are only spending about half as much as these international peers, putting the UK corporate sector at the bottom of the league table of R&D intensity, says David Tonkin, the managing director of Company Reporting, the corporate monitoring organisation that compiled the tables.

Certainly, there are bright spots. Glaxo Wellcome, the pharmaceuticals group that tops the tables just ahead of SmithKline Beecham and Zeneca with a total R&D spend of pounds 1.16bn, is also the world's number one investor in this area.

Moreover, certain UK organisations, such as Siebe, arguably Britain's most successful engineering group, and Reuters, have invested a much greater proportion of revenues than the national average.

There are also some findings that confound conventional thinking. For instance, General Electric Company is traditionally thought of as a low spender on R&D, but according to the rankings it spends just under 7 per cent of sales on it, while BT is reckoned to be betting huge amounts on the future, yet is accorded an R&D intensity rating of only 2 per cent, even though its total spend of pounds 282m puts it in eighth place.

The findings of this seventh annual review are serious enough to lead John Battle, the energy and industry minister, to say in the report that under-investment by companies "could have serious implications for the long term and the crucial question must be what then is their strategy for achieving and more importantly sustaining success in the long term? Without more dynamic firms our whole economy's future is in jeopardy".

Coming on the heels of a CBI/NatWest survey showing that manufacturers are spending less on innovation (which is deemed to include training and marketing as well as straightforward R&D) this does not make for comforting reading. And it may be that Gordon Brown, the Chancellor, will use his first Budget to do something to ease the situation.

There is, however, a growing view that, except at the level of the smallest companies, governments should do no more than create the right environment. It is up to companies to set priorities correctly.

Advice on what they should do came earlier this month in a speech given by Steve Woolgar, director of the Centre for Research into Innovation, Culture and Technology (CRICT).

Among the recommendations in his 3M Innovation Lecture at Brunel University, Professor Woolgar called on organisations to beware linear thinking, to remember that many people are resistant to innovation as a result of fear of change, to realise that innovation is a social process and to encourage "intellectual promiscuity".

He said: "We need to promote greater interaction across the boundaries between government, industry and academia, preferably to the extent that we can comfortably disown the constraints of these categories."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
Season's finale brings the end of an era for top coaches and players across the continent

The end of an era across the continent

It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

'Focus on killing American people'

Released Bin Laden documents reveal obsession with attacking United States
Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

Medécins Sans Frontières's life hacks

The innovations of volunteers and medical workers around the world are helping the charity save people
Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

Same-sex marriage

As date looms, the Irish ask - how would God vote?
The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

The Mafia is going freelance

Why the underworld model depicted in The Godfather is no longer viable