Britain still lags behind in research

Research spending in the UK has increased over the past five years - but British companies are spending less of their revenues than ever on R&D than any of the other countries in the G7 group. This result, revealed in the annual `R&D Scoreboard' produced by Edinburgh-based group Company Reporting, should set alarm bells ringing, according to science minister John Battle.

The average R&D intensity (spending as a percentage of sales) of UK companies has remained unchanged for the past five years, with companies sinking around 2.5 per cent of their revenues into R&D. However, this lags well behind the UK's major competitors - Japan and Germany both have average intensities around 5 per cent, while the US and France are on about 4.5 per cent.

The picture is no better on a sectoral basis. Only in pharmaceuticals is the UK up with the international average for R&D intensity - and even here, the UK average has dropped sharply from almost 20 per cent in 1993 to about 12 per cent last year. In chemicals, UK intensity has hovered around 2 per cent for the past five years, while the international average has been over 5 per cent.

Siebe's chief executive, Allen Yurko, comments that this approach is short-sighted. `We have found that, with few exceptions, there is a direct correlation between the amount invested in R&D and the long-term growth rate and prosperity of customers in our industry.'

Science minister John Battle shares Yurko's concern. He believes that institutional shareholders should take note of the Scoreboard when reviewing their investments. `They have an interest in the long-term health of their companies and they should encourage management not only to invest in R&D for the future, but also to declare proudly that investment,' he insists.