Kelvin Humphreys and Kostas Kollydas discuss why detailed R&D is essential and examine the challenges in current data collection and availability, particularly at the sub-national level.
The UK government’s 2017 Industrial Strategy committed to spending 2.4% of GDP on Research and Development (R&D) by 2027.
Following the Levelling up White Paper, the government has embarked on significant initiatives to boost regional R&D, recognising its crucial role in driving economic growth and addressing societal challenges across the country. In the meantime, the uneven spread of government R&D spending and regional disparities in economic performance have opened up discussions about strategic approaches to devolved R&D and innovation. In this context, having reliable sets of R&D data is imperative. We should also be aware that the Office of National Statistics (ONS) significantly changed its R&D statistics in recent years. This blog delves into why detailed R&D data is essential and examines the challenges in current data collection and availability, particularly at the sub-national level.
R&D-related policy initiatives
In 2022, the government unveiled an “R&D mission” as part of the levelling up agenda. By 2030, the government aims to increase domestic public investment in R&D outside the traditional focus on the Greater South East (GSE) by at least 40%. This effort forms part of a wider strategy to engage private sector investment. The goal is to spark innovation and drive productivity growth in various UK regions. Some of the cross-government initiatives include:
The Department for Science, Innovation and Technology (DSIT) has earmarked a record of £39.8 billion for R&D from 2022 to 2025. This budget designates a significant increase in R&D funding outside the GSE compared to the amount spent in 2021/22. It also includes increased funding for UKRI.
The Department of Health and Social Care (DHSC) is also playing a key role in fulfilling the R&D mission. For instance, they have directed £50 million to 13 local authorities (Coventry City Council included) for Health Determinants Research Collaborations (HDRCs). These collaborations, involving partnerships between local authorities and universities, focus on local challenges affecting health, such as childhood obesity, COVID recovery, and mental well-being.
The Ministry of Defence’s (MoD) Future Combat Air System Technology Initiative is another R&D programme in collaboration with industry partners and SMEs throughout the UK. To date, MoD has invested £1.1 billion in R&D through this programme, in addition to £600 million from the Team Tempest industry partners. Furthermore, the Defence and Security Accelerator (DASA) has adjusted its Innovation Partner network to align with the UK’s recognised economic regions. This strategic realignment broadens DASA’s influence throughout the country, including the West Midlands.
These initiatives reflect a strategic approach to distribute R&D investments more equitably across the UK, fostering regional development, increasing job opportunities, and addressing specific local challenges.
Key issues with R&D data
Existing data is inadequate for assessing the landscape of R&D activity and its impact across regions and places, and for responding to their unique opportunities and needs.
The ONS publishes National Statistics covering R&D spending by sector of performance and funding, and by region on an annual basis. The historical data lags the reported period by over 18 months and suffers from several drawbacks that limit its usefulness. In 2022, the ONS made a huge change in the way “Business and Enterprise R&D” (BERD) expenditure is measured. Although reported figures were backdated, the changes resulted in a break in the data time series from 2018 onwards. Multiple regions were also aggregated into combined regions, such as the East Midlands, West Midlands and South West being reported as one. The consequence of these changes is more complicated trend analysis and obscuration of regional insights. A further challenge with public R&D data, albeit one that the ONS has made recent improvements on, is a lack of transparency on the actual (final) location of public-funded R&D spending and activity since funding awards may be subcontracted to other organisations that may be in other regions.
These data issues are an impediment to the effective monitoring of R&D activity and the evaluation of initiatives implemented by UKRI and other stakeholders to alter spatial patterns of R&D investment and activity. Furthermore, local and regional leaders face even bigger challenges and difficulty in demonstrating or otherwise making the case for increased investment in government and other sectors.
Recommendations for improved data collection
To effectively leverage R&D investments for regional development, the following recommendations are proposed:
Methodological consistency: Ensuring consistent data collection methodologies is crucial for reliable trend analysis and comparative studies. Where methodologies are changed, the data should be sufficiently backdated that the time-series demonstrates continuity across at least the current and previous policy cycles. Changes should not result in a reduction in data granularity, but where possible, should seek to increase it.
Improve data detail and granularity: Enhancing the detail and specificity of regional and subregional R&D data will allow for more accurate assessments and tailored place-based interventions. This includes tracking where funds are actually and finally spent. This will help assess the true impact of R&D investments on local economies and labour markets.
Foster collaborative data initiatives: Encouraging partnerships between local governments, universities, and research organisations would likely help fill data gaps and provide a more comprehensive picture of regional R&D landscapes.
Timely data release: Making data available promptly, which will facilitate prompt policy adjustments and programme evaluations.
This blog was written by Kelvin Humphreys, Policy and Data Analyst and Dr Kostas Kollydas, Research Fellow, City-REDI / WM REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WM REDI or the University of Birmingham.