R&D spend in Britain falls behind competitors

Britain is falling further behind international competitors in corporate research and development spending, official figures published today reveal.

The UK R&D Scoreboard shows that, although expenditure in this area has increased, it still accounts for a smaller proportion of sales than in other G7 countries. Britain spent just 2.3 per cent of sales on R&D, while Japan, Germany, the United States and France all devoted more than 4 per cent of turnover to it. Some smaller countries have seen dramatic increases in spending, but such figures are often distorted by the presence of relatively small numbers of companies.

The top UK companies have increased their spending at a similar rate to leading international companies in recent years. But - in percentage terms - they are spending only 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, managing director of Company Reporting, the corporate monitoring organisation that compiled the tables.

With commentators and heads of overseas organisations increasingly pointing out that innovation and exploitation of technology are the keys to future growth, the report will add to the pressure on Government and industy. In his foreword to the report, John Battle, science, energy and industry minister, says 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."

The seventh annual rankings sponsored by the Department of Trade and Industry are dominated by pharmaceuticals companies. Britain's strength in this sector is demonstrated by the fact that Glaxo Wellcome, which is top of the table with a R&D spend of pounds 1.16bn, is also the world's top investor in this area. However, even here, spending has fallen over the past five years - and in the UK to a greater extent than elsewhere, adds Dr Tonkin.

The report also points out that - with certain exceptions - top UK companies are investing at levels often well below the international average. Moreover, many of the companies in the list are the British arms of successful foreign- owned organisations, such as Siemens of Germany and Motorola and Hewlett- Packard of the US.

Allen Yurko, chief executive of Siebe, the engineering group placed thirteenth in the rankings and devoted 5.6 per cent of last year's pounds 2.6bn sales to R&D, says in the report that expenditure of this kind must be an integral part of business strategy.

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