1. Main points

In 2014, the UK government spent £11.0 billion on science, engineering and technology (SET), an increase of 0.4% in current prices compared with 2013. Allowing for inflation (in constant prices), this was a 1.0% decrease compared with 2013.

The UK Research Councils contributed the most to expenditure on SET in 2014 at £3.4 billion, 31% of all expenditure on SET. This total was a decrease of 3% in current prices compared with 2013.

Between 2003 and 2014, defence expenditure on SET decreased by £1.1 billion in constant prices to £1.7 billion. Over the same period there was an increase in Research Councils' expenditure on SET of £0.5 billion.

The 2014 SET estimate of £11.0 billion consists of expenditure on research and development (R&D) of £10.1 billion, indicative UK contributions to EU R&D expenditure of £0.6 billion and the amount spent on knowledge transfer at £0.3 billion.

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2. Statistician’s quote

"Total UK government expenditure on science, engineering and technology was £11.0 billion in 2014 – that's up 0.4% from 2013. However, the defence component increased by 12% between 2013 and 2014 to £1.7 billion.”

Kate Davies, Surveys and Economic Indicators Division, Office for National Statistics

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3. Things you need to know

Science, engineering and technology (SET) expenditure by the UK government covers expenditure by government departments, Research Councils and Higher Education Funding Councils (HEFCs). It also includes indicative UK contributions to the EU’s research and development (R&D) expenditure. This should not be confused with the UK Gross domestic expenditure on R&D: 2014 (GERD) statistical bulletin published on 18 March 2016, which only includes expenditure on R&D performed “in-house”, that is, by organisations themselves, by all sectors of the economy. This is explained in more detail in Section 13 (Quality and methodology).

SET statistics consist of:

  • UK government expenditure on R&D plus knowledge transfer (commonly known as SET): Tables 1 and 2 in the dataset
  • knowledge transfer activities (including technology transfers) that are associated with research and experimental development, and contribute to the dissemination and application of scientific and technical knowledge: separately identified in Tables 5 and 6
  • expenditure on R&D (excluding knowledge transfer): Tables 3 and 4
  • indicative UK contributions to the EU's R&D expenditure: included in Tables 1 to 4

Estimates of R&D include in-house R&D, purchased R&D or funding provided for R&D, less funding received for R&D, and are therefore on a net expenditure basis. Table 15 shows the breakdown of net expenditure on R&D in the government sector.

There are 2 types of estimates in this release: current and constant prices. Estimates in current prices present the value of expenditure in cash terms. Constant price estimates (available from 2003 in this bulletin) have been adjusted for inflation between years using the gross domestic product (GDP) deflator. This allows changes in government expenditure on SET to be examined on a comparable basis over time.

This SET release also includes data tables on qualified scientists and engineers in the labour force by sex (Tables 16 and 17).

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 (2002). 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 estimates of R&D. The definitions provided in this manual are internationally accepted and serve as a common language for designing and evaluating science and technology policy.

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

Notes

  1. Please note an updated Frascati Manual (2015) was introduced in October 2015, which improved the definitions and explanations of R&D.

  2. The GDP measure used is non-seasonally adjusted money GDP from 1955-56 to 2014-15 (1955 to 2014) consistent with UK Economic Accounts Quarter 3 (July to Sept) 2015 published on 23 December 2015.

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4. SET expenditure 2014

In 2014, £11.0 billion was spent on SET by the UK government, an increase of 0.4% in current prices compared with 2013. In constant prices, SET expenditure decreased by 1% compared with 2013. This value was 2% below the £11.2 billion seen in 2003 (Figure 1).

Figure 2 shows UK government expenditure on SET as a percentage of GDP. Total expenditure on SET in 2014 represented 0.6% of GDP. This estimate has seen a downward trend in recent years.

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5. SET expenditure by sectors of the UK government

The UK government’s expenditure on SET can be categorised into expenditure by Research Councils, Higher Education Funding Councils (HEFCs), and by civil and defence departments, all of which include elements of knowledge transfer. 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 2014 total SET estimate. Almost a third (31%) of UK government expenditure on SET was by Research Councils, with civil departments and HEFCs contributing 26% and 22% respectively. The remainder of the SET estimate consisted of defence expenditure (16%) and contributions to EU R&D expenditure (6%).

Figure 4 shows changes in SET components between 2003 and 2014 in constant prices. Defence expenditure decreased by £1.1 billion (39%), from £2.8 billion in 2003 to £1.7 billion in 2014. Over the same period there was an increase in Research Councils' expenditure on SET of £0.5 billion.

The defence estimate of £2.8 billion for 2003 was arrived at during a time of change for the Ministry of Defence (MoD), with changing internal structures and 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 the SET defence estimate for this period, as it is likely to be overestimated. More information on defence statistics can be found in Note 2 of Section 13 (Quality and methodology).

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6. Decrease in Research Councils' expenditure on SET

Research Councils UK (RCUK) is the strategic partnership of the UK's 7 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 2014, expenditure on SET by Research Councils was £3.4 billion, a decrease of £0.1 billion (3%) in current prices compared with 2013. Allowing for inflation (in constant prices), this was a decrease of £0.1 billion (4%) compared with 2013.

The research council with the highest expenditure on SET (£0.9 billion in 2014) continued to be the Engineering and Physical Sciences Research Council (EPSRC), representing 26% of Research Councils' SET expenditure. However, this saw a drop of 8% in current prices.

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

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7. Civil departments' expenditure on SET increases

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

In 2014, expenditure by civil departments on SET was £2.8 billion, showing a slight increase of £14 million (0.5%) in current prices compared with 2013. In 2014, 5 departments contributed £2.7 billion (96%) to the 2014 total. The civil department with the largest expenditure on SET was the Department for Health (including the National Health Service) which represented 38% (£1.1 billion) of total civil departments’ expenditure on SET (Figure 6).

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8. Increase in Higher Education Funding Councils' (HEFCs) expenditure on SET

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). Grant income provided by HEFCs is used as a proxy to estimate government-funded R&D expenditure in HEIs. More information can be found in Note 3 of Section 13 (Quality and methodology).

In 2014, expenditure on SET by HEFCs was £2.4 billion, an increase of £0.1 billion (3%) in current prices compared with 2013. Allowing for inflation (in constant prices) this was an increase of £34 million (1%) compared with 2013 and an increase of £0.2 billion (10%) since 2003. This was in contrast to the decrease from the peak of £2.7 billion in 2009 (Figure 4).

The Higher Education Funding Council for England (HEFCE) provides the most research funding as it has the highest number of HEIs. In 2014, expenditure by HEFCE on SET was £1.8 billion. This was 76% of the total HEFCs' expenditure on SET, a similar level to recent years.

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9. Defence expenditure on R&D increases but down on 2003 peak

In 2014, defence expenditure on SET was £1.7 billion, an increase of £0.2 billion (12%) in current prices compared with 2013. This is attributable to a 17% increase in experimental development. Allowing for inflation (in constant prices) defence expenditure also increased by £0.2 billion (11%) compared with 2013, the third consecutive increase in recent years. This was still a decrease of £1.1 billion (39%) when compared with 2003 (Figure 7).

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10. Indicative UK contributions to EU R&D expenditure

In 2014, the indicative contributions that the UK made to EU R&D expenditure totalled £0.6 billion. This is an increase in constant prices of £0.1 billion (25%) since 2003. 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 “indicative UK contributions to EU R&D expenditure”.

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11. Your views matter

We aim to improve this release and its associated commentary. We welcome any feedback you have and are particularly interested to know how you make use of these estimates to inform your work. Please contact us using the details accompanying this release.

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12. Main issues specific to this bulletin

Please note that, when examining the datasets included in this release, there may be discrepancies between totals and the sum of their independently rounded parts. Caution should also be taken when examining departmental time series.

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13 .Quality and methodology

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:

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.

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Contact details for this Statistical bulletin

Cecil Prescott
RandD@ons.gsi.gov.uk
Telephone: +44 (0)1633 456767