Research and development – invariably known as ‘R&D’ – is closely linked to economic growth. Investment by companies in new products, software, and improved systems plays an important role in increasing both output and productivity. Here Heather Bovill talks about the important work taking place to improve the ONS’s measurement of this vital activity.
Our current R&D data are collected by surveying thousands of UK businesses, charities and more than a hundred Government Departments about how much R&D is being carried out, where it is being performed and how much the UK is investing in R&D as a whole. These statistics can help answer several important questions, including how the UK’s investment in R&D compares internationally, but also which areas of the UK currently drive R&D and those which may have the potential to drive growth in the future.
Many of the statistics are underpinned by surveys, some of which have been in place since the early 1980s. Although the surveys have gradually evolved, it has been some time since we thoroughly reviewed them to ensure that they ask the right questions about an evolving area of the economy and gives the most useful information possible to decision makers.
We are planning a significant programme of transformation in several phases. These phases will include improving our methodology, the questions we ask businesses, and the sources for our data, with the fully transformed statistics delivered in 2024.
As part of our review of the current surveys we have looked at the methods that we use to compile the data, particularly in how we provide estimates for businesses that we don’t survey, or who do not respond. There are several improvements that we are looking to introduce to address this, the first of which will be applied later this year to our Business Enterprise R&D estimates for the most recent years. Next year we will look to improve our sample of businesses, and further improve these estimates.
We want to make sure that the information we collect is still relevant to our users, and that the information can be provided by respondents. Earlier this year we asked our users what information they needed and would like to see from these surveys in future. We are using these responses to improve the information gathered.
Regional Baselines of Research & Development Statistics
To aid the delivery of the levelling up agenda, we are also developing statistics showing R&D at a regional level. Producing complex figures at a regional basis can be challenging, so we are exploring innovative techniques to map where R&D is taking place, not simply where expenditure has been allocated. This work will culminate in the publishing of regional Government and business R&D expenditure statistics in early 2023.
Administrative data improvements
Although most of our Research and Development Statistics are informed by surveys, we are also increasingly using administrative data to inform our estimates of R&D undertaken by the Higher Education Sector. Our current source for this information is the Higher Education Statistics Authority (HESA), but over the last year we have been exploring alternative sources that provide a fuller picture of this research and development, also capturing the research and development that Universities fund themselves. This new estimate, based on the Transparent Approach to Costing data, collected by the Office for Students, will be introduced into our Gross Domestic Expenditure on Research and Development publication later this year.
Impacts on Wider Economic Statistics
The program of work to improve the Research and Development statistics is expected to take two years to fully implement, although we will reflect on incremental improvements and provide updates throughout this time.
As there are a number of significant changes taking place, we will not seek to introduce each incremental change into the national accounts. Instead, we will wait for the majority of the transformation to have been undertaken before it is fully integrated into the UK National Accounts estimates.
Today is just the announcement of the plans for this important new chapter in Research and Development Statistics. We will continue updating and engaging with our users throughout the development and begin to share analysis and insights from the transformed outputs later this year.
These plans support our wider transformation agenda across economic statistics, which has been taking place over recent years and will continue in years to come. This transformation has involved identifying and utilising new data sources (such as real time tax data) introducing new and transforming existing surveys and improving our methods to ensure we can produce the best estimates of our ever-changing economy and society.