Business enterprise research and development: 2021

Introduction

About this publication

This publication presents estimates of business expenditure relating to research and development (R&D) performed by businesses operating in Scotland in 2021, as well as revisions to previously published data for 2018, 2019 and 2020. The data in this release are sourced from the Business Enterprise Research and Development (BERD) survey conducted by the Office for National Statistics (ONS).

Note that all values in this release are in current prices and have not been adjusted for inflation.

In this publication, BERD is measured by the expenditure on R&D carried out by the business. This is regarded as a more accurate measure of R&D than the funding received by a business for R&D work, as not all of these funds received may be used for R&D. This publication reports on R&D expenditure in businesses in Scotland irrespective of the country of residence of the ultimate owner or users of the R&D produced.

The BERD survey follows the definition of research and development proposed by the Organisation for Economic Cooperation and Development (OECD) and published in the ‘Frascati’ Manual. According to the manual, R&D is defined as:

“creative and systematic work undertaken in order to increase the stock of knowledge - including knowledge of humankind, culture and society - and to devise new applications of available knowledge”.  R&D must contain an appreciable amount of novelty.

Changes to ONS Research & Development Statistics

The Office for National Statistics (ONS) has been leading a redevelopment project for Research and Development (R&D) statistics.  The methodology for the business sector R&D spend estimates has changed for the ONS BERD UK 2021 statistics.  The data for the BERD Scotland 2021 publication is sourced from the ONS statistics.

By comparing ONS BERD spend statistics to HMRC R&D tax credit statistics, ONS found that many small businesses performing R&D were not accounted for in the BERD estimates. ONS have now reweighted the BERD returns to take account of this. This new methodology has led to significant uplift revisions to the BERD spend estimates.  Further information on this interim methodological improvement to the BERD statisics was published by the ONS on 29 September 2022: Comparison of ONS business enterprise research and development statistics with HMRC research and development tax credit statistics - Office for National Statistics and 22 November 2022: Options for Transformation of Business Enterprise Research and Development Statistics - Office for National Statistics

More work is underway to further improve how the BERD statistics are compiled in the future, including developing a new sampling method to be used in the next BERD survey.

Further detail on these methodological changes is available in the Business Enterprise Research and Development, UK: 2021 publication, published on 22 November 2022.

These methodological changes have been implemented for the 2018 period onwards, meaning that comparisons with estimates before 2018 are not currently possible.

National Statistics Badge

The latest ONS Business Enterprise R&D (BERD) estimates reflect these significant methodological changes. These figures provide the current best estimate of R&D at the UK level, however there is currently uncertainty around the robustness of the detailed breakdowns of the new BERD estimates, which includes the data for Scotland.

As a result the ONS asked the Office for Statistics Regulation (OSR) to temporarily pause the National Statistics status of detailed breakdowns of BERD until the second stage of the redevelopment project completes in 2023. OSR confirmed their agreement to this approach in their letter published on 21 November 2022. This is until further redevelopment takes place and there is more certainty on the quality of the sub-UK data.   

The BERD estimates used in the BERD Scotland 2021 publication are sourced from the ONS publication.  Therefore the Scottish Government has also asked that the OSR temporarily pause the National Statistics status of these Scottish Government R&D publications.  OSR confirmed their agreement to this approach in this letter published on 8 December 2022.

Scottish Government statisticians will be working with the ONS on the second stage of the redevelopment project and hope to be able to resume with the National Statistics badge on the Scottish Government R&D publications in 2023.

Changes for this release

Given the current uncertainty around the BERD estimates for Scotland, this release features a reduced set of data compared with previous releases. We hope to be able to produce more detailed Scottish Government R&D publications in 2023.

R&D spend as a share of GDP

The GDP series have not yet been adjusted to incorporate the improvements to the measurement of R&D in the business sector.  This should be borne in mind when considering the R&D spend as a share of GDP estimates in this release.

It is also important to note that GDP was particularly low in 2020 as a result of the COVID-19 pandemic.

Impact of new methodology

For Scotland, BERD spend in 2020 was previously estimated at £1,437 million, whereas the newly reweighted figures show spending in 2020 at £2,927 million – an uplift of £1,490 million or 104%.      

Note that the ‘Original’ spend figures for 2018, 2019 and 2020 in the table above are sourced from Business Enterprise Research & Development Scotland: 2020