The taxpayer tech dividend: R&D grants provide £43bn economic boost

Study finds

Taxpayer support for high-tech innovation benefits the economy by significantly boosting jobs, turnover and productivity among the companies backed, new research has found. 

Over a 13-year period, R&D grants spurred growth worth £43bn to the British economy – more than five times the £8bn invested – and created around 150,000 jobs.

But the study - the largest and most comprehensive of its kind, carried out by the Enterprise Research Centre – also found big variations in the types of firms most likely to benefit from grants, as well as regional differences in the strength of the effects. 

Scientific and technological innovation is seen by the Government as a key plank of its new industrial strategy.  

But until now, our understanding of the effects of grants – largely distributed by research councils such as Innovate UK and the Engineering and Physical Sciences Research Council (EPSRC) and totalling some £1.7bn per year – has been patchy.  

The new research, which studied £8bn worth of grants to nearly 15,000 firms over a 13-year period (2004-2016), shows the effects can be transformative for recipients.

The main findings show: 

  • Across all recipients, employment grew by 6 per cent in the short term and 23 per cent in the longer term (after six years), compared to non-recipient firms. 
  • Taken together, grant-receiving firms created an estimated 150,000 new jobs, many in highly-skilled, well-paid sectors such as biotechnology, medical equipment, engineering, life sciences and high-tech manufacturing.
  • Across all recipients, turnover grew by 6 per cent in the short term, and 28 per cent in the longer term, compared to non-recipient firms.
  • Productivity was unaffected in the short term, but grew 6 per cent compared to non-recipient firms in the longer term.

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