1. Methodology background


 National Statistic   
 Survey name  UK gross domestic expenditure on research and development QMI
 Frequency  Annual
 How compiled  A combination of sample and census based surveys and administrative sources
 Geographic coverage  UK
 Last revised  13 March 2013

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2. Overview

  • provides information on research and development (R&D) expenditure
  • data are collected from a combination of 4 different sources
  • covers all organisations known to conduct R&D: business enterprise, higher education, government and private non-profit bodies
  • data are available dating back to 1981

The UK gross domestic expenditure on research and development (GERD) provides information on total R&D expenditure in the UK. R&D is defined as “Creative and systematic work undertaken in order to increase the stock of knowledge - including knowledge of humankind, culture and society - and to devise new applications of available knowledge".

Variables include gross domestic expenditure on R&D, performers of R&D and funding of R&D in the UK. They are produced in current prices and constant prices (adjusted to remove the effects of inflation).

R&D estimates are used by major policy makers in the UK and in the EU, as R&D expenditure is perceived as an important determinant of economic growth. They are also used as part of EU aggregates.

Estimates are published on an annual basis in the UK gross domestic expenditure on research and development (GERD) statistical bulletin, in March.

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3. Executive summary

Research and development (R&D) and related concepts follow internationally agreed standards defined by the Organisation for Economic Co-operation and Development (OECD) and published in the Frascati Manual. This is a document that stipulates the methodology for collecting and using statistics about R&D in countries that are members of the OECD.

R&D is defined as “creative work undertaken on a systematic basis in order to increase the stock of knowledge of humans, culture and society and the use of this stock of knowledge to devise new or enhanced materials, products, devices, processes or services”. R&D must contain an appreciable amount of novelty.

The UK gross domestic expenditure on research and development (GERD) publication includes estimates for R&D carried out by the following four sectors of the economy, as defined in the Frascati Manual: business enterprise (BERD), higher education (HERD), government (GovERD), which includes research councils, and private non-profit bodies (PNP). GERD uniquely provides information on total R&D expenditure in the UK and is the UK’s preferred measure for international comparisons of R&D expenditure.

R&D estimates are used by major policy-makers in the UK and in the EU, as R&D expenditure is perceived as an important determinant of economic growth. GERD estimates are also used as part of EU aggregates.

The estimates from the surveys that contribute to GERD are published annually as a statistical bulletin, in UK gross domestic expenditure on research and development, and are also transmitted to Eurostat to comply with EU Commission Regulation no. 995/2012.

This report contains the following sections:

  • Output quality
  • About the output
  • How the output is created
  • Validation and quality assurance
  • Concepts and definitions
  • Other information, relating to quality trade-offs and user needs
  • Sources for further information or advice
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4. Output quality

This report provides a range of information that describes the quality of the output and details any points that should be noted when using the output.

We have developed Guidelines for Measuring Statistical Quality; these are based upon the five European Statistical System (ESS) quality dimensions. This report addresses these quality dimensions and other important quality characteristics, which are:

  • relevance
  • timeliness and punctuality
  • comparability
  • coherence
  • accuracy
  • output quality trade-offs
  • assessment of user needs and perceptions
  • accessibility and clarity

More information is provided about these quality dimensions in the following sections.

This report relates to UK gross domestic expenditure on research and development (GERD). The GERD publication brings together research and development (R&D) estimates for the four sectors of the UK economy (as defined in the Frascati Manual). Estimates are published annually.

GERD covers all organisations that are known to perform R&D within the sectors of the UK economy. These sectors are:

  • business enterprise
  • higher education
  • government – including research councils
  • private non-profit bodies

Business enterprise

Approximately 60% of GERD is collected as part of our annual Business Enterprise Research and Development (BERD) survey. The statutory basis of the BERD survey in Great Britain is the Statistics of Trade Act 1947 and in Northern Ireland, it is the Statistics of Trade and Employment (NI) Order 1988. Questionnaires to businesses in Northern Ireland are dispatched by the Department of Finance and Personnel, Northern Ireland (DFPNI), with the responses then being transferred to Office for National Statistics (ONS) at the end of the survey cycle.

Approximately 5,000 questionnaires are sent to businesses known to perform R&D. This includes around 400 of the largest R&D spenders, which account for approximately 80% of the total business R&D expenditure total. Smaller R&D performers and others believed to be performing R&D are selected using various sampling fractions. Industry product group and business employment size are used as the stratification variables. A Quality and Methodology Information report for BERD is also available. .

Higher education

Higher education data are collected by the Higher Education Funding Councils for England, Scotland, Wales and the Department for Education in Northern Ireland. A census of higher education institutes (HEIs) provides ONS with R&D expenditure that is funded from profit and non-profit businesses, and from abroad. R&D funding provided to the higher education sector from government departments, research councils and the Higher Education Funding Councils (HEFCs) are collected in the Government Research and Development (GovERD) Survey and included in this sector’s R&D expenditure.

Government (including research councils)

The UK government owns many research institutes and laboratories, which carry out R&D into many different research areas. These are managed by different government departments, most notably the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Environment, Food and Rural Affairs (Defra) and the Department of Health (DoH). The variety of R&D in the government sector includes research carried out by the Central Science Laboratory, National Institute into Medical Research and the Meteorological Office.

Approximately 140 government departments and research councils are sent a questionnaire. Government departments are asked to include their in-house R&D as part of their estimates – this includes estimates for R&D performed by local authorities and NHS trusts.

Private non-profit bodies

The not-for-profit business sector includes registered charities and trusts who specialise in mainly health and medical research. Some of the largest are based in the UK. This sector includes, for example, a number of cancer charities that carry out extensive research into all types of cancer prevention through to drug development and clinical trials. A new methodology was introduced for compiling the R&D expenditure for the private non-profit (PNP) sector in 2011, and approximately 200 non-profit businesses received the questionnaire. The estimates from this census survey have been used in the compilation of this publication for the first time since 2005. Previously, estimates had been based on a number of sources including funding provided to this sector from other sectors.

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5. About the output

Relevance

(The degree to which the statistical outputs meet users’ needs.)

What it measures

UK gross domestic expenditure on research and development (GERD) includes estimates for research and development (R&D) carried out by the following sectors of the UK economy:

  • business enterprise
  • higher education
  • government – includes research councils
  • private non-profit

The published variables are gross domestic expenditure on research and development (R&D) in the UK, performers of R&D in the UK and funding of R&D in the UK. They are produced in current prices and constant prices, which have been adjusted for inflation. An R&D performer is an organisation that carries out R&D activities itself, instead of funding another organisation to undertake it.

Frequency

Estimates are published on an annual basis, usually in March. For example, 2011 GERD estimates would be published in March 2013.

Sample size

The sample sizes for the four surveys combined to create GERD are:

  • Business Enterprise Research and Development (BERD) Survey – the selected sample of 5,000 UK business enterprises is limited to that needed to provide good quality results at a national level
  • Government Research and Development (GovERD) Survey is a census of all government departments; approximately 140 including agencies and research councils
  • private non-profit (PNP) data for 2011 was collected from a census survey of 200 non-profit bodies known to perform R&DHigher Education Research and Development (HERD) Survey is a census of all 164 UK higher education institutions

Periods available

GERD data are available from 1981.

Business and private non-profit estimates relate to the calendar year. Government estimates relate to the financial year and higher education estimates relate to the academic year.

Sample frame

The sample frame includes all known R&D performers. The sample frames are:

  • BERD has a sampling frame of approximately 25,000 known UK R&D performers and these businesses are maintained in a reference list, which is updated annually; detailed information is available in the BERD Quality and Methodology Information report
  • HERD is a census of all 164 UK higher education institutions (HEIs) and the list of these institutions is maintained by the Higher Education Statistics Agency (HESA) and each institution must complete an online survey for HESA or incur financial penalties; HESA provide data to the Higher Education Funding Council for England (HEFCE) for further analysis and R&D data is provided to Office for National Statistics (ONS) in an agreed format
  • GovERD is a census of all UK government departments – there are approximately 140 including agencies and research councils, and a reference list is updated annually prior to the survey dispatch; each department is contacted 2 months before the survey dispatch to check changes in structure and responsibilities
  • the PNP sampling frame consisted of 200 non-profit bodies known to perform R&D and a reference list is maintained of these known R&D performers, which were identified from previous surveys and proving exercises; important industries in this sector were identified as likely to perform R&D, including library and archive activities, botanical and zoological gardens and nature reserve activities, engineering and design activities, and technical testing and analysis.

All these were included in the sampling frame and surveyed.

Sample design

The sample design for GERD is:

  • BERD is detailed in the BERD Quality and Methodology Information report
  • HERD is a census of all UK higher education institutions (HEIs) registered in the UK
  • GovERD is a census of all UK government departments including research councils; he list of departments is updated annually and structures are checked prior to each survey
  • PNP is a census of R&D performers in this sector, identified from a proving exercise in 2012, and a pilot survey in 2011, and also of previously known performers; as part of this process, certain industries were identified as most likely to perform R&D in this sector – these activities include library and archive activities, botanical and zoological gardens and nature reserve activities, engineering and design activities, and technical testing and analysis

Weighting and estimation

  • BERD estimation uses a simple matched pairs methodology and ratio estimation detailed in the BERD Quality and Methodology Information
  • HERD is a census of all UK higher education institutions (HEIs); all universities provide required data to Higher Education Statistics Agency (HESA), otherwise they would receive financial penalties
  • GovERD is a census of all UK government departments including research councils and the target response rate is 98%; future estimates provided on previous surveys are used for any non-responding departments
  • PNP is a census survey of non-profit businesses and the target response rate is 92% and for the non-responders, imputation was used; first we modelled the probability of zero value, and if not zero, we imputed the mean value from positive returns

Outliers

This only currently applies to the BERD data – see the BERD Quality and Methodology Information report for more information.

Primary use

The primary use of GERD is to present data on R&D for policy purposes. GERD is the most reliable estimate of national R&D spending. It draws together information on R&D spending in the public and private sectors. This includes government departments, research councils, higher education, business enterprises and private non-profit organisations.

The main component of GERD, BERD (which accounts for approximately 60% of total UK R&D expenditure), was previously reviewed every 5 years in accordance with standing instructions on the control of statistical surveys to businesses, the BERD Quinquennial Review (see the “Assessment of user needs and perceptions” section for further information).

Users and uses

GERD data are recognised as being unique outputs on R&D expenditure as they combine data from all sectors of the UK economy. One of its main uses is to supply data for policy and monitoring purposes on science and technology in the UK, of which R&D is an important part. It is used internationally in EU aggregates and is also compared with GERD data in Organisation for Economic Co-operation and Development (OECD) countries.

Changes introduced as part of the amendments to the System of National Accounts (SNA) in 2008 and European System of Accounts (ESA) in 2010 specify that R&D, from 2014 onwards, should not be considered as an ancillary activity and instead expenditure on R&D should constitute investment in R&D assets, which as a consequence needs to be capitalised in the UK National Accounts. In short, R&D expenditure will now contribute to the compilation of the value of the UK’s net worth and be included as part of gross domestic product (GDP) estimates. Please see the ESA 2010 page for more information. There are numerous users within and outside government who use these data to produce various analyses and to inform policy decisions.

European Union’s Statistical Office (Eurostat) – the UK provides statistics measuring R&D activity in accordance with the European Commission Regulation No. 995/2012 of the European Parliament and the council. The estimates in this publication are used to provide information that is consistent with other EU member states and to enable benchmarking to be achieved. Europe 2020 targets for economic growth include 3% of the EU’s GDP (both private and publicly-funded) to be invested in R&D and innovation by 2020. This means that these estimates are essential in monitoring progress towards this target.

The OECD use GERD data for constructing internationally comparable data tables and producing regular statistical publications such as the Main Science and Technology indicators (MSTI) and The Annual Business Enterprise Research and Development’ statistics (ANBERD). The data are also used for analytical studies, which underpin economic analysis and policy reviews.

The European Commission’s Research and Innovation Directorate have recently published the Innovation Union Competitiveness report, 2011. One of the main findings is that the EU is slowly moving towards its target of 3% of GDP being spent on innovation and R&D. However, the report acknowledges that there is a widening gap between the EU and its world competitors notably due to weaker business R&D investment.

The Department for Business, Energy and Industrial Strategy (BEIS) (previously the Department for Business, Innovation and Skills (BIS)) use GERD data to assess policy effect and inform debate. R&D data underpin their assessments of UK innovation performance as well as international work in the field. BIS produced an R&D Scoreboard until 2010. The R&D Scoreboard was the leading source of information and analysis on the world's top R&D active companies, both in the UK and globally. The R&D scoreboard listed the 1,000 UK and 1,000 global companies investing most in R&D, enabling companies to benchmark their own investments against sector leaders. The scoreboard was based on data abstracted from companies’ annual reports and accounts. BEIS also publish government department R&D expenditure in the Science, Engineering and Technology (SET) tables. These include R&D expenditure by each research council, civil and defence departments.

The Welsh Government (WG) and the Scottish Government (SG) use GERD data as an important indicator for measuring the performance of their respective economies within the UK, as well as to monitor and develop R&D policies that seek to increase R&D investment.

HM Revenue and Customs (HMRC) use GERD data to support analysis and advice on policy development. GERD is one of the main data sources for policy evaluation.

The Department of Finance and Personnel, Northern Ireland carry out their own annual survey into R&D and then provide ONS with the Northern Ireland R&D data for inclusion in the UK published results.

The Research and Development Society is a UK-based organisation formed to promote the better understanding of R&D in all its forms. It holds regular afternoon and evening meetings, usually at the Royal Society in London. The Research and Development Society makes use of GERD data, as a main source of information, for understanding how much UK businesses are investing in R&D on an annual basis and to inform wider debates about R&D.

For users of business statistics, there is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s new interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via the StatsUserNet website.

Timeliness and punctuality

(Timeliness refers to the lapse of time between publication and the period to which the data refer. Punctuality refers to the gap between planned and actual publication dates.)

For the GERD output the time between the end of the reference year and the publication date is approximately 14 to 15 months. The results are usually published in March each year. It is important to note that business estimates, for both profit and non-profit businesses, relate to the calendar year, the government estimates refer to the financial year and the higher education estimates refer to the academic year.

The reason for the delay in the publication of GERD is that the higher education sector data are not available until February each year, as it is measured in an academic year, which ends in the previous September.

In the unlikely event of a change to the release dates, public attention will be drawn to the change and the reason fully explained as set out in the Code of Practice for Official Statistics.

For more details on related releases, the GOV.UK release calendar is available online and provides 12 months’ advance notice of release dates. If there are any changes to the pre-announced release schedule, public attention will be drawn to the change and the reasons for the change will be explained fully at the same time, as set out in the Code of Practice for Official Statistics.

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6. How the output is created

Data collection

UK gross domestic expenditure on research and development (GERD) is compiled from four sources, which are detailed in this section.

Business Enterprise Research and Development (BERD) Survey – paper questionnaires are dispatched to businesses. The Quality and Methodology Information report for the BERD survey provides more detailed information.

Government Research and Development (GovERD) Survey – all UK government departments are sent an Excel-based questionnaire via Secure Electronic File Transfer (SEFT). Government departments are provided with detailed notes, which accompany the GovERD survey to ensure that they adhere to the Frascati Manual definitions of research and development (R&D). The completed questionnaires are returned to Office for National Statistics (ONS) also via SEFT. Research councils are included in the annual government survey and their expenditure is shown separately in the published data tables.

Higher Education Research and Development (HERD) Survey – Higher education R&D is provided by the Higher Education Funding Councils for England, Scotland, Wales and the Department for Education in Northern Ireland. Data are also obtained from them on the external research funding from abroad, non-profit organisations and businesses. The timeliness of these data is the main reason for the delay in publication of GERD. Data are provided to ONS during February of a given year;

Private Non-Profit (PNP) Survey – it is recognised (as with the business sector) that only a small number of businesses in the non-profit sector perform R&D. A letter was dispatched in 2010 to 344 businesses who were classified as non-profit bodies, across all industry classifications and UK regions, asking if they undertake R&D activities. The response rate was 50%, with 14% of all businesses surveyed responding positively, confirming that they perform R&D. Deeper analysis of these responses indicated that only a few industries were identified as performing R&D in this sector. Activities included library and archive activities, botanical and zoological gardens and nature reserve activities, engineering and design activities and technical testing and analysis. In 2011, all 690 businesses in these industries were sent a letter to further identify R&D performers. The response rate was 60% with 18% indicating positively. All these identified R&D performers, together with known performers from earlier surveys, were sent a paper questionnaire to collect their estimates for 2011.

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7. Validation and quality assurance

Accuracy

(The degree of closeness between an estimate and the true value.)

Sampling error

Sampling error arises because the variable estimates are based on a sample rather than a full census of the population. The difference between the estimates derived from the sample and the true population values is referred to as the sampling error. Standard errors are not produced as part of UK gross domestic expenditure on research and development (GERD), but are produced as part of the Business Enterprise Research and Development (BERD) publication. The other sources are census collections, and therefore not subject to sampling error. The standard errors in this table, which relate to business research and development (R&D) expenditure by product group, are expressed in pounds millions. The vast majority of these errors are small, but there are a few larger ones which relate to Pharmaceuticals and Aerospace. This is due to the large range of expenditure of businesses performing R&D into these product groups.

Non-sampling error

Non-sampling errors are not easy to quantify and include errors of coverage, measurement, processing and non-response. There is some difficulty in identifying the population of actual and likely R&D performers and also problems in ensuring that organisations adhere to the Frascati Manual R&D definitions. However, response rates are high and response bias minimised due to recent questionnaire design reviews. The BERD survey uses a reference list of known R&D performers to select the sample of businesses that receive the questionnaire, and the other sectors use reference lists of relevant R&D performing units. These reference lists are maintained and updated annually. More information is available in the BERD Quality and Methodology Information report.

Survey procedures

Estimates are revised in accordance with our Revisions Policy. The majority of revisions are due to misreporting and the late receipt of data. For BERD, results from the previous 2 years are open to revision. Government Research and Development (GovERD) Survey and Higher Education R&D (HERD) Survey data can both be revised for longer than 2 years and this then affects GERD since GERD is a combination of the BERD, GovERD, HERD and Private Non-Profit (PNP) series.

Comparability and coherence

(Comparability is the degree to which data can be compared over time and domain e.g. geographic level. Coherence is the degree to which data that are derived from different sources or methods, but refer to the same topic, are similar.)

The GERD publication contains high-level data on the four sectors of the UK economy. This includes the expenditure of all known UK R&D performers and who is funding them.

Government department R&D expenditure are published annually by the Department for Business, Energy and Industrial Strategy (BEIS) (previously the Department for Business, Innovation and Skills (BIS)) in the Science, Engineering and Technology (SET) tables. These include R&D expenditure by each research council, civil and defence departments.

The BIS R&D Scoreboard reports the R&D expenditure of the top 700 performing R&D UK-based businesses taken from business accounts, but includes R&D performed overseas using funding from UK businesses.

Defence Analytical Services and Advice Agency (DASA) provides professional analytical, economic and statistical services and advice to the Ministry of Defence (MOD), and defence-related statistics to Parliament, other government departments and the public. The MOD intramural expenditure on R&D is included in Chapter 1 - Finance, Table 1.7 of the UK Defence Statistics 2011 release.

It is recognised that R&D is performed in only a small number of businesses. The R&D survey of non-profit businesses ceased in 2005 due to difficulties producing robust estimates from a small number of R&D performing businesses in this sector. A pilot survey was run in 2011 to collect 2010 reference year data from a sample of 200 businesses. This was followed by a proving exercise and a further survey of 200 businesses in 2011. A new methodology has recently been introduced and PNP sector performer estimates were included in the 2011 GERD estimates for the first time (see the “How the output is created” section for more information on this sector).Government departments are provided with detailed notes, which accompany the GovERD survey to ensure that they adhere to the Frascati Manual definitions of R&D.

In response to a UK Statistics Authority requirement to improve published information on the coherence of R&D statistics, which was reported in the Assessment of Compliance with the Code of Practice for Official Statistics: Statistics on Research and Development, ONS published an I ass Information Note on 20 November 2012. This information note concluded “that BERD and GERD statistics are consistent with most other National Statistics relating to R&D available from other departments.”

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8. Concepts and definitions

(Concepts and definitions describe the legislation governing the output, and a description of the classifications used in the output.)

The provision of the information contained in the UK gross domestic expenditure on research and development (GERD) output is required under EU legislation, Regulation (EC) no.995/2012.

Users need to be aware that research and development (R&D) activity is distinguished by the presence of an appreciable element of novelty. If the activity follows an established pattern it is excluded; if it departs from routine and breaks new ground it is included. For example, activities such as routine testing, market research, patent applications, trial production runs and artistic work are excluded. Overheads of R&D projects are included. Value Added Tax (VAT) is excluded.

Organisation for Economic Co-operation and Development (OECD) terminology is used throughout the statistical bulletin. “Government” corresponds to the “general government” sector of the national accounts and includes local as well as central government.

“Business enterprise” corresponds to the “corporate” sector and includes public corporations and research associations as well as commercial and industrial companies.

“Private non-profit” corresponds to the “personal” sector of the national accounts, except that higher education institutions are excluded and put into a separate OECD sector (“higher education”).

“Abroad” corresponds to the “overseas” sector.

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9. Other information

Output quality trade-offs

(Trade-offs are the extent to which different dimensions of quality are balanced against each other.)

In addition to being analysed by sector of performance, UK gross domestic expenditure on research and development (GERD) may be analysed by sector of funding. The research and development (R&D) performed by any one sector of the economy can be funded by any of the other sectors or by the performing sector itself.

For the purposes of estimation, the recommended practice of the Organisation of Economic Co-operation and Development (OCED) 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. This is why, in the UK GERD table, the estimate of businesses’ R&D funded by government is taken from the business enterprise R&D survey rather than the government R&D survey.

Assessment of user needs and perceptions

(The processes for finding out about users and uses, and their views on the statistical products.)

Previously, reviews of surveys were conducted as a requirement of the Prime Minister's Instructions. These reviews provided a detailed evaluation of the survey, including justification for the survey's existence, cost to both respondent and government, user views and options for change. The most recent review for the Business Enterprise Research and Development (BERD) survey, a main component of GERD, was conducted in 2012.

As of 2013 and in compliance with the Code of Practice for Official Statistics in seeking to achieve continuous improvement in statistical processes, we will be extending the review process to provide a structured assessment of both the survey's methods and processes. A review of the BERD survey will be conducted in due course.

Changes to the component surveys (most notably BERD) must be made when changes to European law are introduced. The classification of R&D as an intangible asset in the System of National Accounts 2008 means that work is being undertaken to ensure that the additional requirements will be available to meet these changes, and also to ensure that the UK does not incur financial penalties.

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10. Sources for further information or advice

Accessibility and clarity

(Accessibility is the ease with which users are able to access the data, also reflecting the format in which the data are available and the availability of supporting information. Clarity refers to the quality and sufficiency of the release details, illustrations and accompanying advice.)

Our recommended format for accessible content is a combination of HTML web pages for narrative, charts and graphs, with data being provided in usable formats such as CSV and Excel. We also offer users the option to download the narrative in PDF format. In some instances other software may be used, or may be available on request. Available formats for content published on our website but not produced by us, or referenced on our website but stored elsewhere, may vary. For further information please contact us via email at RandD@ons.gsi.gov.uk.

More information regarding conditions of access to data is available:

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Contact details for this Methodology