DTI Releases Annual Research And Development Scoreboard

by Robin Pilgrim, LawAndTax-News.com, London

27 October 2005

Figures released by the UK's Department of Trade and Industry on Monday have revealed the effectiveness of tax breaks put in place by the government in 2000 and 2002 to encourage research and development spending by allowing firms to offset more than 100% of their investment against tax.

According to the DTI's annual R&D scoreboard, UK companies ranked “intensive” for research and development have surged by more than 75 per cent in the past four years.

The scoreboard, published this week, found that in addition to the huge increase in middle-sized UK companies with a strong focus on R&D which has come about as a result of the tax breaks, there are 100 more UK companies with R&D expenditure over £300,000 than last year.

Large foreign-owned companies are increasingly recognising the UK as a supportive base for R&D, and according to the DTI figures, twelve of the top 17 foreign-owned UK companies analysed for the Scoreboard have much larger R&D intensity than their parent companies, investing a high proportion of their global R&D effort in the UK.

The UK software industry stands out as a leading sector, with 117 of the UK’s top 750 R&D companies and a contribution of 5.2 per cent of total R&D investment. The pharmaceutical sector also increased its levels of R&D by four per cent over the past 12 months.

Science and Innovation Minister Lord Sainsbury welcomed the Scoreboard’s findings, observing that:

“It is encouraging that R&D-intensive middle-sized companies are now found, not just in the sectors where the UK is traditionally strong, pharmaceuticals, health and software, but also in IT hardware, electronic and electrical sectors where the UK’s presence has previously been low."

“The growth in smaller R&D intensive companies is excellent news, with 100 more firms investing over £300,000 of R&D this year. The Scoreboard shows that UK businesses of all sizes recognise that to remain competitive in the global knowledge economy, science and innovation is key."

"The high amount of multi-national R&D that is located in the UK shows that we are one of the best places in the world for R&D science and innovation generally."

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