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Statistical bulletin: UK Government Expenditure on Science, Engineering and Technology, 2012

Released: 11 July 2014 Download PDF

Key Points

  • In 2012, £10.0 billion was spent on Science, Engineering and Technology (SET) by the UK Government. Allowing for inflation (in constant prices), this was a 1% decrease compared with 2011, and continued the downward trend in SET expenditure since 2009. These reductions were driven by Research Councils, Higher Education Funding Councils and the Ministry of Defence.
  • The UK Research Councils contributed the most to expenditure on SET in 2012 at £3.2 billion, 32% of all expenditure on SET.
  • Between 2001 and 2012, defence expenditure on SET decreased by £1.2 billion in constant prices. This was offset by an increase in Research Councils’ expenditure on SET of almost £1.0 billion in the same period.
  • The 2012 indicative UK contributions to the EU’s Research and Development (R&D) expenditure were £0.7 billion, and the amount spent on knowledge transfer in 2012 was £0.3 billion.

Overview

Science, Engineering and Technology (SET) expenditure by the UK government includes expenditure by government departments, Research Councils and Higher Education Funding Councils (HEFCs). It also includes the indicative UK contributions to the European Union’s (EU) research and development expenditure. This should not be confused with the UK Gross Domestic Expenditure on R&D, 2012 (GERD) statistical bulletin, which only includes expenditure on R&D performed within UK borders, but by all sectors of the economy (see Background Note 1). R&D is the main component of the SET statistics.

These estimates were previously published by the Department for Business, Innovation and Skills (BIS) and were referred to as “SET Statistics”. For clarification, please note that BIS included the year of publication in the SET Statistics title, not the year the data referred to. The title of this SET Statistical Bulletin includes the date to which the latest data refers, which is 2012.

For the purpose of SET statistics, UK government expenditure on SET consists of:

  • Research and Development (R&D);

  • knowledge transfer activities (including technology transfers) which are associated with research and experimental development, and contribute to the dissemination and application of scientific and technical knowledge;

  • indicative UK contributions to the European Union’s (EU) R&D expenditure.

This definition of SET excludes all other scientific, technical, commercial and financial steps that are often necessary for the successful development and marketing of new or improved products, processes or services.

Two types of estimates are presented in this release, current and constant prices. Estimates in current prices present the value of expenditure in cash terms. Constant price estimates have been adjusted for inflation between years using the Gross Domestic Product (GDP) deflator. This allows changes in the volume of government expenditure on SET to be examined on a more comparable basis over time.

Also included with this release, are data tables referring to the personnel associated with scientific and technical postgraduate education and training. These provide data on the numbers of persons with higher education qualifications, their employment status and their type of occupation. These are sourced from ONS’ Labour Force Survey, and are used in policy analyses.

In this statistical bulletin, R&D and related concepts follow internationally agreed standards defined by the Organisation for Economic Cooperation and Development (OECD), as published in the ‘Frascati’ Manual. This manual defines R&D as “creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications”.

The Frascati Manual was originally written by, and for, the experts in OECD member countries that collect and issue national data on R&D. The definitions provided in this manual are internationally accepted and now serve as a common language for designing and evaluating science and technology policy.

Estimates in this release have the status of Official Statistics as they have not been assessed by the UK Statistics Authority (see Background Note 2).

The data in this bulletin and associated data tables relate to financial years. The main source of expenditure data for both this publication and the UK GERD publication is the annual Government Research and Development survey (GovERD).

Catapult Centres

Catapult Centres are a new government initiative and have been created by the Technology Strategy Board to promote growth in R&D. To achieve this, the government has linked business and academia through these Catapult Centres. A Catapult is a technology and innovation centre where the best of the UK's businesses, scientists and engineers can work side by side on R&D, transforming ideas into new products and services to generate economic growth.

Your Views Matter

We are aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: RandD@ons.gsi.gov.uk or telephone Cecil Prescott on +44 (0)1633 456767.

SET Expenditure 2012

In 2012, £10.0 billion was spent on SET by the UK government, an increase of 1% in current prices compared with 2011. In constant prices, SET expenditure decreased by 1% compared with 2011, but increased by 4% compared with £9.6 billion in 2001. There has, however, been a downward trend since 2009 in SET expenditure, with reductions in expenditure in constant prices, driven by the Research Councils, HEFCs and the Ministry of Defence (Figures 1 and 4).

Figure 1: UK Government expenditure on SET, 2001 to 2012

Figure 1: UK Government expenditure on SET, 2001 to 2012
Source: Office for National Statistics

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Figure 2 shows UK government expenditure on SET as a percentage of GDP. Total expenditure on SET in 2012 represented 0.63% of GDP. This estimate is in line with recent years and is broadly unchanged from 2011.

Figure 2: UK Government expenditure on SET as a percentage of GDP, 2001 to 2012

Figure 2: UK Government expenditure on SET as a percentage of GDP, 2001 to 2012
Source: Office for National Statistics

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SET Expenditure by Sectors of the UK Government

The UK government’s expenditure on SET can be categorised into expenditure by Research Councils, HEFCs, and also into civil and defence departments. The indicative UK contributions to EU R&D expenditure provided by HM Treasury are also included in SET expenditure. Figure 3 shows the contribution each of these made to the 2012 total SET estimate. Almost a third (32%) of UK government expenditure on SET was spent by Research Councils, with civil departments and HEFCs contributing 24% and 22% respectively.

Figure 3: The components of UK Government expenditure on SET, 2012

Figure 3: The components of UK Government expenditure on SET, 2012
Source: Office for National Statistics

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Figure 4 shows the changes in these SET components between 2001 and 2012 in constant prices. Between 2001 and 2012, defence expenditure decreased by £1.2 billion in constant prices, from £2.7 billion in 2001 to £1.5 billion in 2012 (45%). This has been compensated for by an increase in Research Councils’ expenditure on SET of almost £1 billion in the same period, due to increased investment in the research budget.

There is no specific reason why the expenditure by the defence department peaked in 2002, but it was during a time of changing internal structures, the introduction of new accounting systems, as well as a review to ensure that Frascati Manual definitions were being adhered to. Caution is therefore advised when using SET defence data for this period, as it is likely to be overestimated. Please see Background Note 10 for more information on defence statistics.

The UK indicative contributions to the EU’s R&D expenditure increased by 54% between 2007 and 2008 in constant prices. They have remained at the same level of £0.7 billion since then. The initial rise was related to member states’ contributions being increased to meet the needs of the growing number of EU member states.

Figure 4: The components of UK Government expenditure on SET, 2001 to 2012

Figure 4: The components of UK Government expenditure on SET, 2001 to 2012
Source: Office for National Statistics

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Research Councils Expenditure on SET Decreased by 4% in 2012 Compared with 2011

Research Councils UK (RCUK) is the strategic partnership of the UK's seven Research Councils. Each year the Research Councils perform research covering the full spectrum of academic disciplines, from the medical and biological sciences to astronomy, physics, chemistry, engineering, social sciences, economics, environmental sciences and the arts and humanities.

In 2012, expenditure on SET by Research Councils was £3.2 billion, a decrease of £0.1 billion (4%) compared with 2011 in constant prices, and a decrease from the peak of £3.5 billion in 2006. The most recent decrease was mainly due to the completion of capital expenditure contributions to the new MRC Laboratory of Molecular Biology and the Francis Crick Institute.

The Research Council with the highest expenditure on SET at £0.9 billion in 2012 was the Engineering and Physical Sciences Research Council (EPSRC). This represented 29% of all Research Council’s expenditure on SET.

The Research Councils’ estimated expenditure on SET includes their pension arrangements. These pension contributions are included separately on the data tables associated with this publication (Figure 5).

Figure 5: Breakdown of UK Research Councils’ expenditure on SET, 2012

Figure 5: Breakdown of UK Research Councils’ expenditure on SET, 2012
Source: Office for National Statistics

Notes:

  1. EPSRC = Engineering and Physical Sciences Research Council; MRC = Medical Research Council; BBSRC = Biotechnology and Biological Sciences Research Council; STFC = Science and Technology Facilities Council; NERC = Natural Environment Research Council; ESRC = Economic and Social Research Council; AHRC = Arts and Humanities Research Council.

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Civil Departments Expenditure on SET was £2.4 Billion in 2012, Broadly Unchanged from 2011

The UK government owns many research institutes and laboratories that carry out R&D. It also uses a range of different suppliers with facilities to carry out research, both inside and outside the UK.

In 2012, expenditure by civil departments on SET was £2.4 billion, broadly unchanged in constant prices from 2011, but a decrease from the peak of £2.7 billion in 2003. Five departments contributed £2.3 billion (94%) to the 2012 total. The civil department with the largest expenditure on SET was the Department of Health (£0.9 billion) which represented 39% of total civil departments’ expenditure on SET (Figure 6).

Figure 6: Breakdown of UK Government Civil Departments’ expenditure on SET, 2012

Figure 6: Breakdown of UK Government Civil Departments’ expenditure on SET, 2012
Source: Office for National Statistics

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HEFCs Expenditure on SET Increased by £0.3 Billion from 2001

HEFCs promote and fund teaching and research in Higher Education Institutions (HEIs).

All HEIs (including universities) provide finance statistics to the Higher Education Statistics Agency (HESA). A method has been established between the HEFCs, BIS and ONS to estimate government funded R&D expenditure in HEIs by using grant income as a proxy for expenditure. Please see Background Note 4 for more information.

In 2012, expenditure by the HEFCs' on SET was £2.2 billion, an increase of £0.3 billion in constant prices since 2001, but a decrease from the peak of £2.6 billion in 2009 (Figure 4).

The funding council for England (HEFCE) provides the most research funding as it has the highest number of HEIs. In 2012, expenditure by HEFCE on SET was £1.7 billion. This was 78% of the total HEFCs expenditure on SET, a similar level to recent years (Figure 7).

Figure 7: Higher Education Funding Councils’ expenditure on SET, 2001 to 2012

Figure 7: Higher Education Funding Councils’ expenditure on SET, 2001 to 2012
Source: Office for National Statistics

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Ministry of Defence 2012 R&D Expenditure Decreased by 45% Compared with 2001

In 2012, expenditure on SET by the Ministry of Defence (MoD) was £1.5 billion, an increase in constant prices of £0.1 billion (10%) compared with 2011, and a decrease of £1.2 billion (45%) since 2001. This was mainly due to a decrease in development expenditure of £1.1 billion, with some large projects moving from the development phase into the manufacturing stage of their programmes, and not being replaced with other high value projects (Figure 8).

Figure 8: Defence expenditure on SET by Research and Development, 2001 to 2012

Figure 8: Defence expenditure on SET by Research and Development, 2001 to 2012
Source: Office for National Statistics

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Indicative UK Contributions to EU R&D Expenditure

In 2012, the indicative contributions that the UK made to the EU’s R&D expenditure, were £0.7 billion. This is an increase in constant prices of £0.2 billion (42%) since 2001. These figures were provided by HM Treasury and are broad estimates. This is because Member States’ contributions are not made to individual expenditure programmes, but to the EU budget as a whole. They are therefore referred to as the “indicative UK contributions to EU R&D expenditure”.

Background notes

  1. Key Issues Specific to this Bulletin

    This is the first time that ONS has published the UK Science, Engineering and Technology (SET) Statistics. These estimates are official statistics which have previously been published annually by the Department for Business, Innovation and Skills (BIS) using data provided by ONS. 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 James Achur at james.achur@bis.gsi.gov.uk or telephone +44 (0)20 7215 1331.

    SET statistics are broader than just research and development (R&D), as they comprise government R&D expenditure (performed in the UK and overseas), knowledge transfer activities, the indicative UK contributions to the European Union’s (EU) R&D expenditure, and personnel associated with scientific and technical postgraduate education and training.

    The main distinctions between this publication and the UK Gross Domestic Expenditure on R&D, 2012 (GERD) are:

    a)  UK GERD includes only R&D expenditure which is carried out within the UK borders, and includes all sectors of the UK economy. UK government departments’ expenditure on R&D both as funder and performer in the UK, are included in GERD. It also includes all the other UK sectors both providing the funding and performing R&D in the UK.

    b) SET includes all UK government departments’ expenditure on R&D, both within the UK and overseas. It additionally includes expenditure on knowledge transfer and the UK’s indicative contributions to EU R&D expenditure. As a result, the estimates of the R&D part of the UK government’s expenditure on SET are much larger than the UK government departments’ expenditure on R&D in the UK (GERD).

    UK government departments R&D expenditure in the UK were included in the UK GERD Statistical Bulletin published on 12 March 2014. Table 1 in that publication included the totals of R&D performed by UK government departments and Research Councils, £1.4 billion and £0.8 billion respectively. This included funding from other UK sectors and overseas. The breakdowns of these high level data are available in this SET publication in Tables 12 and 13.

    Figure 9 shows the amount of expenditure on SET by each contributor, and also shows the amount of expenditure each contributor who performs R&D in the UK, spent on R&D in 2012. Please note no R&D expenditure appears in Figure 9 for HEFCs as they are R&D funders and not performers. Also, it is unknown where and how the UK contributions to EU R&D expenditure are spent, so they are not included as a UK R&D performer.

    Figure 9: UK Government expenditure on SET, and expenditure on R&D by UK Government R&D performer, 2012

    Figure 9: UK Government expenditure on SET, and expenditure on R&D by UK Government R&D performer, 2012
    Source: Office for National Statistics

    Notes:

    1. The amount of R&D expenditure by UK performer in Figure 9 includes funding from other UK sectors and overseas.

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    The main source of the data related to UK government departments, Research Councils and HEFCs’ R&D and SET expenditure, is ONS’ annual R&D survey of UK government departments (GovERD). The GovERD survey collects gross and net expenditure data, and also funding received for R&D. The net expenditure is calculated as gross expenditure minus all funding received for R&D. This is to avoid any double counting.

    HM Treasury provides the indicative contributions that the UK makes to EU R&D expenditure.

    SET also includes data tables on qualified scientists and engineers in the labour force by gender. These estimates are sourced from ONS’ 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 SOC 2010. See Tables 14 and 15 in the data section of this publication.

    A quality report for this specific output is not yet available, but one is available for the UK GERD (137 Kb Pdf) . This contains relevant information as the majority of the SET data were collected via the GovERD survey, the same source as the government sector part of the UK GERD.

  2. Official Statistics

    The UK Statistics Authority has not yet reviewed this publication, and these statistics are still designated as Official Statistics. This is a new ONS publication, and feedback from users in the coming months will help shape the future of this bulletin ready for UK Statistics Authority formal assessment.

  3. Timeliness and Punctuality

    These official statistics have previously been published annually by BIS in September. By publishing the 2012 SET Statistical Bulletin in July 2014, ONS has enabled access to these data two months earlier.

  4. Completeness of Coverage

    The GovERD survey is conducted annually as a census survey. UK government departments, including Research Councils and HEFCs, were contacted to establish their department’s structure and whether they carried out and/or funded R&D activities. This ensured that the correct respondents received the survey. Approximately 140 government departments and Research Councils were sent the questionnaire. Government departments were asked to include the R&D they performed as part of their estimates. These included estimates for R&D performed by local authorities and NHS trusts.

    A method has been established between the HEFCs, BIS and ONS to estimate government funded R&D expenditure in Higher Education Institutions (HEIs) by using grant income as a proxy for expenditure.

    The grants are classified into three 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 R&D expenditure data were collected from the HEFCs for England, Scotland, Wales and the Department for Employment and Learning in Northern Ireland.

  5. Revisions

    Revisions have been made to a small number of the estimates in 2010 and 2011. These were notified through the survey process by individual departments, and were mainly due to a combination of late returns and misreporting, which had little impact on the SET estimates.

  6. Sampling Variability

    The estimates from the GovERD survey are based on a census of all UK government departments, Research Councils and HEFCs known to carry out and/or provide funding for R&D activities. They are not therefore subject to sampling errors, but may have some non-sampling errors. These include 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/likely R&D performers, and because of problems ensuring departments adhere to Frascati R&D definitions.

    The response rate was 96% and included all the departments with the highest SET expenditure. Forecast data were used to estimate for the non responding departments, which accounted for a very small amount of the total SET estimates.

  7. Discontinuities in Data

    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 department’s data over time, as responsibilities move between departments for specific projects.

  8. General Information

    These points should be noted when examining the data tables (533.5 Kb Excel sheet) :

    • There may be discrepancies between totals and the sum of their independently rounded parts.

    • For the purposes of estimation, the recommended practice of the OECD is to use information from those performing R&D, where this is available. These estimates are considered more reliable than those from surveys of R&D funders, as funds allocated for R&D may not necessarily all be spent on R&D by the recipient.

    • Caution should be taken when examining departmental time series. Please use the notes beneath each table which explain machinery of government changes.

    • 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 expenditure values have been largely negative in recent years. See BIS Annual Report and Accounts 2012-13 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 government’s primary purpose for funding 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 support), and for monitoring developments of significance for the welfare of the population; Technology support – 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 assumed to be for R&D, and 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.

    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, VAT related to these data was collected separately, but 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 data they provide.

  9. Users and Uses of SET Data

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

    • OECD uses GERD data (which contains parts of the SET data) for constructing internationally comparable databases, and producing regular statistical publications such as the ‘Main Science and Technology Indicators’ (MSTI). These data are also used for analytical studies, which underpin economic analyses and policy reviews.

    • The Department for Business, Innovation and Skills (BIS) use SET data to assess policy impact and inform debate. R&D data underpins their assessments of UK innovation performance as well as international work in this field.

    • The Welsh Government (WG), Scottish Government (SG) and the Department for Employment and Learning, Northern Ireland (DELNI) use SET and GERD data as key indicators for measuring the performance of their respective economies within the UK, as well as to monitor and develop R&D policies which seek to increase R&D investment.

    • The Research and Development Society is a UK based organisation formed to promote the better 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 make use of SET data, as a key source of information for understanding how much is being invested in R&D from the UK on an annual basis, and to inform wider debates about R&D.

    As this is a new ONS statistical bulletin relating to R&D statistics, we would appreciate your views. Do you make use of our annual estimates on the UK Business Enterprise Research and Development (BERD)UK GERD or this new bulletin? If yes, we would like to hear from you (RandD@ons.gsi.gov.uk) and understand how you make use of these statistics, and how we can seek to improve them. This will enable us, in the future, to better meet your needs as a user.

  10. Coherence

    UK government departments R&D expenditure in the UK were included in the UK GERD Statistical Bulletin published on 12 March 2014.

    The Ministry of Defence (MoD) publishes extensive defence statistics. Their expenditure on defence R&D was published as part of the UK Defence Statistics Compendium: 2012, and Finance Table 1.7 contains these data.

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  13. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Cecil Prescott +44 (0)1633 456767 Business Outputs Division RandD@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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