UK companies lag behind in R&D spending

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The Independent Online
FRESH DOUBT has been cast on UK industry's commitment to innovation with today's publication of the 1999 R&D Scoreboard, which shows that, while the country's largest companies last year spent more on research and development than in any of the previous three years, they still fell short of the best international levels.

The annual report from the Department of Trade and Industry's innovation unit showed that the world's 300 largest companies spent 5 per cent of annual sales on R&D. But in the UK, the FTSE 100 and the next biggest 250 companies invested 2.1 per cent and 1.3 per cent respectively.

With the exception of such sectors as pharmaceuticals, where the UK continues to lead the world through its top three spenders of Glaxo Wellcome, SmithKline Beecham and AstraZeneca, most UK industries seem to be investing lower proportions of turnover than their international counterparts. The picture is further complicated by the fact that some of this difference can be attributed to the mix of companies in the UK. Many of the largest companies are not in sectors where success depends on heavy R&D investment. Moreover, the UK is a small player in the information technology industry, which has been a heavy spender on R&D.

John Battle, the minister for energy and industry, said the results raised "the question of why a significant proportion of UK companies appear to place less emphasis on R&D than their international competitors". In the report, Mr Battle adds that, while the primary responsibility for assessing the importance of "investments in technology and knowledge" to business success lies with the companies, the Government could play a key role. The 1998 Competitiveness White Paper has made a range of commitments, including the proposed R&D tax credit for smaller and medium-sized firms.

Eddie George, the Governor of the Bank of England, adds that "the effective exploitation of innovation will be crucial if the UK is to remain competitive".

Norman Price, an industrialist who was part of the Scoreboard team, stressed it was not intended to "name and shame". "It's ultimately for companies to draw their own conclusions," he said, adding that the idea was to establish international benchmarks so that UK companies could assess their performance.