The UK ranked fifth in the world in terms of research and development in 2005-6, accounting for 5.3 per cent of the global total. Spending on R&D increased by 8.2 per cent compared with the previous year, more than the average increase in spending of 7 per cent among the world’s top 1,250 companies, and the UK spends 1.8 per cent of GDP on R&D.
More than 10 per cent, and rising, of UK companies spend more than £2.9 million a year on R&D, which is above that of the rest of the EU. Particular strengths of the UK lie in the pharmaceuticals and aerospace, and there is also a growing software sector, made up of 119 companies in 2006.
Significantly, eight out of the top ten foreign-owned companies (which taken together account for more than half of the £4.4 billion of R&D performed in the UK by foreign-owned businesses) spend a higher proportion of their budgets on R&D than their parent companies do. These companies include Ford, Pfizer and Airbus. This can be taken as an indication that the UK is a particularly attractive place to site R&D activity.
All of these indicators bode well for the UK economy, because there is a strong body of evidence linking R&D and innovation with higher economic growth and a more flexible economy; as well as access to government grants and an export-driven economy.
The picture of R&D across the UK is extremely varied and complex: from small start-up businesses, to university research departments spinning out their own commercial arms, to large multinationals making inward investments in the UK. Among the top sectors for R&D investment are pharmaceuticals, aerospace, computer software, energy and environmental technologies. The service sector also accounts for an increasing proportion of R&D – for instance, the retailer Tesco, the bank HSBC and the insurer Royal and Sun Alliance all substantially increased their R&D in the past few years, making them some of the biggest R&D spenders in the UK.
Aerospace is one of the most R&D intensive sectors, worldwide. The aerospace giant Boeing sums up some of the advantages of siting research in the UK. “Every year Boeing invests up to $3 billion on research and technology partnerships within the UK and this investment is reflected by the fact that the British aerospace industry, with its broad range of scientific and manufacturing capabilities, allows Boeing to be at the forefront in the areas of aerodynamics, composites, engines, control surfaces, electronics, machining and fuel systems,” says Nick West, communications director at Boeing UK.
Boeing has worked with Cambridge University on IT such as automated reasoning, intelligent systems, natural language, information processing, information manipulation and information security. It has also collaborated with Cranfield University on aeronautics and aircraft development, including the production of a 21ft wingspan demonstrator of a blended wing-body aircraft. Boeing also finds access to the skilled employee base it requires in the UK.
Oxford Economic Forecasting has estimated that Boeing’s expenditure supports up to 40,000 jobs in the UK as well as stimulating new capital investment, which in turn helps companies to maintain their competitive edge.
Mr West points out that the largest international source of high-tech products and services for Boeing comes from the UK, with the existing supply chain consisting of more than 250 partners and suppliers. In particular, he cites Boeing’s investment in its new 787 Dreamliner aeroplane. Messier-Dowty, a landing-gear maker based in Gloucester, worked with the Advanced Manufacturing Research Centre in Rotherham to develop new techniques that were critical to its success in being chosen to supply the landing gear for the 787.
The government has also supported aerospace research, with an investment announced in 2007 of £40 million to develop environmentally-friendly engines, as part of the £95 million Environmentally Friendly Engine programme, led by aero-engine maker Rolls-Royce. The consortium for the programme includes Bombardier Aerospace, Goodrich Corporation, HS Marston Aerospace and Unison Engine Components. The universities of Birmingham, Cambridge, Loughborough, Oxford, Queens Belfast and Sheffield are participating.
This illustrates the growing importance of the environmental focus to research, as new technologies in a broad range of business areas from energy to automotive, aerospace and agriculture will be needed to combat climate change. Sir John Rose, chief executive of Rolls-Royce, says: “Innovation will be at the heart of society’s response to climate change, with new technology having to be applied on an industrial scale if that response is to be effective.”
Sir Terry Leahy, chief executive of Tesco, agrees: he announced a £25 million investment to form a Sustainable Consumption Institute at the University of Manchester, which will produce research on how to help consumers towards a low-carbon lifestyle. The findings will be freely shared with all companies.
Sir Terry chose Manchester because “its research programmes were able to bring various strands of research together in an interdisciplinary way, which impressed me”.
| The energy
sector is also gaining an environmental focus. Nina Skorupska, head of
technology services at RWE npower, says: “Our R&D is focused on the need
to protect the climate in future. This means improving the efficiency of
our existing technologies and, increasingly, looking into new ways of
generating power which produce less carbon dioxide.” She adds: “The UK is an excellent place for R&D because it combines world-beating institutions that are real innovators, with the commercial savvy of big energy players. The UK’s R&D heritage is strong and the government has recently been demonstrating renewed interest and commitment.” Colin Drummond, chief executive of Viridor, chairs the UK’s Environment Sector Advisory Group. He says the group found that the UK was the leading country in the world for innovation and investment in environmental goods and services, for several reasons. The first was financing because of the knowledge and awareness of the sector among the UK’s financial community. More than half of the investments in carbon credits come through UK financial institutions. |
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Second was the university league tables: the UK was responsible for 12 per cent of the most highly cited learned articles, second only to the US, which has a much bigger university sector.
Third, says Mr Drummond, was the UK’s “market-friendly regime”, and fourth was a good track record on solving environmental problems and a large number of environmental consultancies. “It all adds up to a leadership position,” he says.
PV Crystalox Solar is one of the world’s biggest makers of components for solar cells, and is based in the UK with a large export market to Japan and Europe. Iain Dorrity, chief executive, says: “We have been working in the UK for 17 years, because here we can have access to a very well trained workforce. There is very important expertise here, and we have a very low labour turnover we have people who have been with the company for more than 15 years.”
| TMichael
Liebreich, chief executive of New Energy Finance, points to several
clusters or hubs of innovation in the UK where environmental technology is
particularly strong: Cambridge, Southampton, Imperial and St Andrews. He
notes: “As a country, we have good strength in materials and biotech. Of
the European nations, we have the strongest venture capital
infrastructure.” “Green biotech” is also well-represented in the UK, which has a long history of far-reaching research in biotechnology and pharmaceuticals. Andrew Coker, head of communications at Syngenta, says the company spends $800 million a year on R&D, of which $200 million is spent in the UK, most of it at Jealott’s Hill, Europe’s largest agricultural research centre. He explains: “The reason we invest so heavily is that we have the right infrastructure here to carry out the research, the people and, importantly, the right fiscal climate in which to operate.” The growing appetite for “green” products among businesses and consumers is leading to a huge variety of innovation, from small companies as well as large. For instance, Cranberry, a UK-based technology company that started up in 1999, has developed an energy-efficient computer that is as powerful as standard desktop computers, but consumes a fraction of the power. Simon Ponsford, chief executive of Cranberry, says the product took the company’s eight-person R&D team three years to produce. He briefly tried “offshoring” the company’s R&D to China, because he thought it would save costs. But he found the opposite: “It did not work. It was not as productive as having people sitting in the room together here in the UK.” One prominent research cluster has formed around Cambridge University, one of the top two universities in the world, which operates a large number of partnerships with business. For instance, Microsoft has one of its biggest research laboratories in conjunction with the university, and companies such as Schlumberger, Toshiba, Hitachi, Kodak and Genzyme also have a research presence in collaboration with the university. Ian Leslie, pro vice chancellor for research at the University of Cambridge, says: “The amount of collaboration done with business has increased, and we have created an atmosphere in which collaboration happens. There is a critical mass of intellectual capital here.” He quotes a study showing the Cambridge area’s “vibrant cluster” attracts as much as eight per cent of the total venture capital in Europe. |
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Other universities, such as Bristol, Cranfield, Oxford, Southampton and Manchester, are also building on their relationships with industry. Hewlett-Packard, the computer company, has its largest R&D facility outside its Silicon Valley headquarters based in Bristol.
Martin Sadler, director of the Trusted Systems Lab at HP Laboratories, says: “The UK Technology Strategy Board has worked hard to create the mechanisms that foster open collaborative innovation, aligning very well with HP’s approach to research. The Knowledge Transfer Networks establish the communities from which it is easy to assemble quality partnerships to bid for projects.”
He believes that companies need to react quickly to changing priorities and the company’s Bristol labs excel at this: “We are very excited with the speed and agility with which new research areas can be identified, the rapid establishment of funding calls and with the ability to assemble cross-disciplinary teams to meet the challenges. For such fast moving areas, EU and US mechanisms often aren’t responsive enough.”
CONTACTS:
Association of Independent Research and Technology Organisations
www.airto.co.uk
Medical Research Council
www.mrc.ac.uk
National Endowment for Science, Technology and the Arts
www.nesta.org.uk
National Environmental Research Council
www.nerc.ac.uk
National Health Service R&D Forum
www.rdforum.nhs.uk
Research Councils UK
www.rcuk.ac.uk
RSA
www.rsa.org.uk
The R&D Society
www.rdsoc.org
UK Energy Research Centre
www.ukerc.ac.uk
Universities UK
www.universitiesuk.ac.uk
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