Industrial research funding
7.32 Research does not, of course, have to be publicly-funded.
The private sector can have a significant role. Industrially-funded
research may be carried out in universities or within industrial
research laboratories. We were pleased to note that the CBI has
produced a guide on business working with universities: Partnerships
for Research and Innovation between Industry and Universities:
a guide to better practice
7.33 However, a DTI survey into UK levels of industrial research
funding showed that, except in the pharmaceuticals industry, the
levels of research were between a third and a half of the levels
in competitor countries (QQ 163 & 450). As the IoP noted
(QQ 165 & 172), reasons for this disparity may be that
UK industry management is risk averse; financial analysts do not
view R&D as an asset; and, perhaps most significantly, any
return on the investment is beyond an unreasonably short time-horizon
of as little as three or four years.
7.34 Pay back times elsewhere in Europe can be at least twice
that and, as noted by the BCS (Q 131), US companies take
an even longer term view. That was borne out during our visit
to Silicon Valley when we heard that IBM sought a return on basic
research over a period of 10 to 15 years.
7.35 There is, as the IoP noted (Q 172), no penalty for
missing opportunities at least in the short term. The
penalty not only comes much later but can also be obscured by
general company decline. Noting that CBI members found the UK
environment for industrially-funded research in academia generally
more favourable than that in the US (Q 445), we recommend
that UK companies and the finance sector should pay more attention
to investing in R&D in the field of microprocessing. This
will enable companies to maintain and develop their markets in
the longer term.
Aggregate spending on R&D
7.36 In its written evidence (p 1), DTI supplied a useful
international comparison of aggregate spending on relevant R&D.
Not least for its final sentence, this is worth repeating in full.
"Major European countries spend significant sums on R&D
for information and communications technologies (ICT). The 2001
OECD Science, Technology and Industry Scoreboard
shows the major European countries spends as:
| ||US$ billions
"This is such that European spending taken together is comparable
with that of Japan at $22.2 bn (in fact, the EU15 slightly
exceeds Japan) but the US spends roughly twice this amount ($46.62
bn). The biggest spender on ICT R&D in Europe in 1999 was
Sweden (mainly Ericsson) with Finland being the biggest spender
in GDP terms (mainly Nokia). However, to put these figures in
context, Intel has maintained its R&D spending throughout
the recent downturn in the industry at just under $3 bn per annum."