UK utilities’ R&D spend plummets by more than 11%

Its findings are based on its analysis of the latest data produced by the Office of National Statistics (ONS).

Total spending on R&D in the electricity, gas and water supply sector dropped to £136 million last year, a decline of £17m from the £153 million recorded a year earlier¹, according to the information.

However, the rate of decline in R&D spending has slowed from the 13.6% fall recorded in 2018. The industry now employs 1,000 people directly involved in R&D.

Uncertainty surrounds what impact the Covid-19 pandemic will have on the level of investment this year with the sector substantially short of its all-time high of £197 million recorded in 2015.

The amount that UK businesses overall have invested in R&D continues to grow, rising 3.3% to £25.9 billion² but this year has been the slowest rate of growth since 2012.

The pharmaceutical sector posted the largest increase in R&D expenditure, with an increase of £306m (6.9%) to £4.8 billion.

The largest percentage terms increase in R&D spending was achieved by the printing, pulp and paper industry, which saw a 31.4% increase to £92 million.

The number of people employed by UK businesses to perform R&D also continued to grow, rising 4.4% annually to reach 263,000 full-time equivalents².

Catax chief executive of R&D tax relief specialists Mark Tighe said:

“The utilities industry is a relative minnow in terms of R&D spending but that doesn’t mean it’s not extremely important to the future success of this sector. 

“It has now experienced two successive years of serious declines in spending on R&D and the industry needs to look very closely at this.”

Pic: Canva