Definitions of R & D : report with evidence.

  • Great Britain. Parliament. House of Lords. Science and Technology Committee.
Date:
1990
Catalogue details

Licence: Open Government Licence

Credit: Definitions of R & D : report with evidence. Source: Wellcome Collection.

    12/148 (page 10)
    Discrepancies between surveys 1.42 One indicator that something is awry in defence R&D is the apparent discrepancy, identified by the Annual Review, between what MoD says it funds in industry and what industry claims to receive from MoD. The discrepancy is not small. In 1985 MoD’s reported expenditure on industrial R&D (£1516m) was 50% higher than the expenditure reckoned by industry to have been received from MoD (£1012m). 1.43 The Annual Review (para 2.2), referring to the DTI’s industrial survey in 1985, explains this as follows: ‘The industrial survey collects statistics of R&D carried out within the responding organisation (intramural R&D) irrespective of the source of funding. They are also asked to give information on the funding of that R&D by the Government, from overseas, and by the firm itself and other sources. This method of collecting intramural R&D expenditure avoids double counting and is the approach adopted by other OECD countries. The approach does however lead to certain apparent differences when the figures which industry produces for R&D performed by them and funded by Government are compared with the contrasting statistics from the Government Survey for R&D funded by Government but performed in industry. The reasons for the differences include: (i) the industrial survey is directed to enterprises with 200 or more employees but there is no lower limit in the data collected in the Government survey; (ii) a company sub-contracting from another company may not recognise the Government as the ultimate source of funds; (iii) a company sub-contracting from another company may not appreciate that the work it is carrying out is an essential element of the contracting company’s R&D programme and may not therefore classify it as R&D in the industry survey; (iv) the returns from industry and Government are treated differently in respect of profit related elements. The Government expenditure figures include the profit element of any R&D contract placed with industry. The industry figures, however, exclude profit”. 1.44 The Committee accept that these reasons may partly explain the discrepancy and similar problems may arise in other OECD countries. But they consider the discrepancy too large to be acceptable. It must be reduced. The aim is accuracy in both the Annual Review and SSAP13 returns and as close a reconciliation as possible between the two. The way forward here might be for the statisticians to undertake a detailed survey in a sector where the discrepancies are particularly large. The Committee have no wish to promote an “engineered fit’ between the statistics collected by different routes but see efforts to minimise discrepancies as likely to increase the quality of the figures overall. Small Firms 1.45 Among the reasons for the ‘‘apparent discrepancy” given above was the exclusion of small firms from the DTI survey. However evidence from the MoD (QQ 278-84) and DTI (see below) seems to indicate that the contribution of small firms to this discrepancy is not great. If so, the other reasons for the discrepancy assume greater importance. The small firm issue cannot be dismissed lightly: its significance ought to be tested. 1.46 The DTI believes that its four yearly benchmark survey of private industrial R&D captures 99.5 per cent of the total and that its yearly survey covers 75 per cent of the total. The surveys include firms employing more than 200 people and DTI’s confidence is based on the fact that when industrial firms employing between 100-200 people were last surveyed, in 1975, their contribution to the total of private R&D was less than 0.5 per cent. Omitted even from the four year benchmark survey are firms of less than 100 employees. Some at least of these, for instance those established on Science Parks, can be expected to be R&D rich. 1.47 Reliable information about R&D in small firms could be of considerable policy relevance. Even though large established firms make up the bulk of a country’s private R&D, the development of new firms is of critical long-run importance to the economy. It would be undesirable to add to the burdens on the smallest firnys by requiring them to fill in forms simply to get greater accuracy in the last one per cent of national R&D figures. On the other hand, the DTI might consider it worthwhile commissioning studies to shed more light on the small firms issue. This would probably be more cost effective than aiming to include the firms in the benchmark surveys.