UK government expenditure on science, engineering and technology: 2014

1. General information

Prior to 2012, the UK science, engineering and technology (SET) estimates were previously published annually by the Department for Business, Innovation and Skills (BIS), using estimates collected by us. If you have any questions regarding the levels of SET expenditure by government departments, or any other queries related to science and technology policy, please contact BIS at enquiries@bis.gsi.gov.uk

SET statistics are broader than just in-house research and development (R&D) as reported in the UK Gross domestic expenditure on research and development: 2014 (GERD) statistical bulletin. This is because the GERD bulletin only includes estimates of expenditure on R&D performed in-house, that is by organisations themselves, whereas SET estimates also include expenditure on externally purchased or funded R&D, as well as taking account of funding received for R&D. In-house expenditure plus purchased or funding provided to other organisations, less funding received, when aggregated together form the concept of “net expenditure” on R&D, which is the basis for SET estimates.

As a result, the estimate of the R&D component of the UK government’s net expenditure on SET in 2014 (£10.1 billion) is more than 4 times larger than the UK government departments’ expenditure on performing in-house R&D, as recorded in the 2014 UK GERD (£2.2 billion). Figure 8 and its accompanying table show the amount that each SET contributor spent in 2014 on in-house R&D performed in the UK, and on total SET net expenditure. Please note that HEFCs are only funders of R&D as they do not perform R&D themselves. Therefore the HEFCs' value in Figure 8 is all classed as SET expenditure. It is also unknown where and how UK contributions to EU R&D expenditure are spent, so none of these estimates are regarded as R&D performed in the UK. Table 15 in the dataset shows how the government net expenditure on R&D is calculated.

SET additionally includes the UK’s indicative contributions to EU R&D expenditure and expenditure on knowledge transfer. Knowledge transfer (including technology transfers) activities are designed to help the conveyance of ideas, research, results and skills between researchers, businesses and wider communities. These actions contribute to the dissemination and application of scientific and technical knowledge, including consultancy services, demonstration projects, and sharing information. Examples include developing partnerships, establishing forums for knowledge exchange, specialist training, and licensing.

The main source of the estimates related to UK government departments, Research Councils and Higher Education Funding Councils (HEFCs), is our annual Government Research and Development survey (GovERD).

Launch Investment is a risk-sharing government investment in the design of civil aerospace projects in the UK. The investment is repayable at a real rate of return, usually via levies on sales of the product. Launch Investment is only available to the civil aerospace sector, and is permitted under the Civil Aviation Act 1982, which charges the Secretary of State with “organising, carrying out and encouraging measures for the designing, development and production of civil aircraft”. These values have been negative every year since 2004. See the Department for Business, Innovation and Skills’ (BIS) Annual Report and Accounts 2013-14 for more information. The UK government’s commitment to the UK civil aerospace sector is documented in the Aerospace Growth Partnership.

The categories, as presented in Table 7, are defined by the UK government’s primary purpose for the R&D activity, and not the intentions of the researchers or the end result. The primary purposes are:

• general research – all basic and applied R&D which advances knowledge for its own sake and support for post graduate research studentships (PhDs)
• government services – R&D relevant to any aspect of government service provision (all defence expenditure is included here)
• policy research – R&D which government funds to create new knowledge which informs policy making (excluding government services and technology research), and for monitoring developments of significance for the welfare of the population
• technology research – applied and/or strategic R&D that advances the technology underpinning the UK economy

The EU supports R&D programmes in member states. The UK makes a positive net contribution to the EU budget and a proportion of this is estimated to be for R&D; it is included in SET data Tables 1 to 4. However, because no specific information is available on where and how these contributions are spent, they are excluded from the remaining SET tables.

The Organisation for Economic Cooperation and Development (OECD) terminology is used to classify the main sectors of the economy. Government corresponds to the general government sector of the UK national accounts. Prior to 2007, Value Added Tax (VAT) related to these estimates was collected separately, but has been excluded from these estimates. However, it should be noted that various amounts of VAT may have been included by some departments due to difficulties in separating out expenditure subject to VAT. Since the 2007 data collection, the GovERD survey has included additional information throughout, notifying respondents to exclude VAT from the estimates they provide.

Table 1 in the UK GERD: 2014 statistical bulletin included the totals of expenditure on performing in-house R&D by UK government civil and defence departments and Research Councils of £1.4 billion and £0.8 billion respectively. This included funding from other UK sectors and overseas. The breakdowns of these high level estimates are available in this SET publication in Tables 12 and 13.

SET also includes data tables on qualified scientists and engineers in the labour force by sex. These estimates are from our Labour Force Survey and are categorised by type of qualification and occupation from the population of Great Britain aged 16 to 64. Occupation is based on the Standard Occupational Classification 2010 (SOC2010). See Tables 16 and 17 in the data section of this publication.

2. Coherence

UK government departments' R&D expenditure in the UK is included in the UK GERD statistical bulletin.

The Ministry of Defence (MoD) publishes extensive defence statistics. Their expenditure on defence R&D is published as part of the UK defence statistics compendium.

3. Completeness of coverage

The GovERD survey is conducted annually as a census survey. UK government departments, including Research Councils and HEFCs, are contacted to establish their department’s structure and whether they carried out and/or funded R&D activities in the survey period. This ensures that the correct respondents receive the survey. Approximately 140 government departments and Research Councils are sent the questionnaire. Government departments are asked to include the R&D they performed as part of their estimates. Estimates for R&D performed by local authorities and NHS trusts are also included (Tables 12 and 13).

To estimate government funded R&D expenditure in higher education institutions (HEIs), grant income is used as a proxy for expenditure. The grants are classified into 3 groups:

• research-oriented grants – these include the block research grant, plus other grants which are all deemed to be used for research
• teaching-oriented grants – these are considered to be for teaching only activities, and are not included in the research expenditure estimate
• other grants – these are not allocated specifically for research or teaching, but may contain elements of both to varying degrees; these are reviewed annually and an estimate is made of the research expenditure elements within each grant

The estimates of R&D expenditure were collected from the HEFCs for England, Scotland, Wales and the Department for Employment and Learning in Northern Ireland (DELNI).

A quality report for this specific output is not yet available, but should be available by the end of August 2016. However, one is available for the UK GERD statistical bulletin. This contains relevant information as the majority of the SET estimates were collected via the GovERD survey, the same source as the government sector part of the UK GERD statistical bulletin.

4. Users and uses of SET estimates

There are users inside and outside government who use these estimates to produce various analyses and to inform policy decisions. These include:

• the Department for Business, Innovation and Skills (BIS), that use SET and R&D estimates to assess policy impact and inform debate
• the Welsh government (WG), Scottish government (SG) and the Department for Employment and Learning, Northern Ireland (DELNI), that use SET and GERD estimates as main indicators for measuring the performance of their respective economies within the UK, as well as to monitor and develop R&D policies which s eek to increase R&D investment
• the Research and Development Society, is a UK-based organisation formed to promote and improve the understanding of R&D in all its forms. Its members include representatives from industry, government departments and agencies, universities and consultants. The Research and Development Society uses SET estimates for understanding R&D investment and to inform wider debates about R&D

5. Official statistics

The UK Statistics Authority has not yet reviewed this publication and these statistics are still designated as official statistics.

6. Timeliness and punctuality

These official statistics were previously published by the Department for Business, Innovation and Skills (BIS) in September each year. By publishing the SET statistical bulletin in July, we have enabled access to these estimates 2 months earlier.

7. Revisions

Revisions have been made to a small number of the estimates for 2011, 2012 and 2013. These were mainly due to a combination of late returns and misreporting, which had little impact on the SET estimates.

8. Sampling variability

As the GovERD survey is a census survey, the estimates are not subject to sampling error. They may still have non-sampling errors, including factors such as population coverage, misreporting and non-response bias. These errors are generally hard to quantify because of the difficulty in identifying the population of actual or likely R&D performers, and because of problems ensuring departments adhere to Frascati R&D definitions.

The 2014 response rate was 95% and included all the departments with the highest SET expenditure. Forecast data were used to estimate for the non-responding departments, which accounted for approximately 3% of the total SET estimate.

9. Discontinuities in estimates

UK government departments and Research Councils change their reporting structures as governments and policy requirements change. These may have an impact on the comparability of individual departments' estimates over time, as responsibilities move between departments for specific projects.