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British industry鈥檚 investment in research and development continues to fall,
leaving the country lagging far behind its major international competitors.
The UK R&D Scoreboard, published this week, compares R&D spending by 336
British companies with similar investment by the world鈥檚 200 top spenders.
The scoreboard, compiled by the Edinburgh consultancy Company Reporting,
places only 11 British companies in the top 200, two fewer than the previous
year. ICI, the highest ranked British firm, lies in 47th place, 12 down on
the previous year. It has spent 拢647 million on R&D since
May last year.
Michael Heseltine, the President of the Board of Trade, described the
figures as 鈥榮obering鈥�. Joe Carr of the DTI鈥檚 Innovation Unit said: 鈥極ur
international competitors are accelerating away from us . . . we must get to
the root cause.鈥�
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Carr points out that the British companies spent, on average, just 1.6 per
cent of their income on R&D, compared with an average of 4.6 per cent spent
by the world鈥檚 top 200 companies. 鈥楨ven if you just took the 11 British
companies in the top 200, they average just 2.5 per cent compared with
between 4 and 6 per cent by everyone else.鈥� Furthermore, British companies
spent, on average, 19.7 per cent of pretax profits on R&D. Comparable
spending by the top 200 companies amounted to a massive 94 per cent of their
pretax profits.
The most damning figures of all, says Carr, are those which demonstrate
British companies鈥� generosity towards their shareholders. On average, a
British company spends twice as much on dividends to shareholders as it does
on R&D. Companies in the top 200 invest more in the future than in keeping
their shareholders wealthy, spending around two-and-a-half times as much on
R&D as on dividends. 鈥楾hat鈥檚 a massive, fivefold difference between British
companies and the best,鈥� says Carr.
Carr believes the reason for the discrepancy is that the City cannot see a
quick return on investment from R&D. 鈥楤ritish companies believe they need to
pay five times more to dividend holders than their international
肠辞尘辫别迟颈迟辞谤蝉.鈥�
Peter Doyle, until recently research director of ICI, says: 鈥業 constantly
worry about investment figures which show (Britain) lagging behind. But it鈥檚
a cop-out to blame it on the City.鈥� Doyle is now the research director of
Zeneca, formerly ICI鈥檚 health care and biotechnology division. He says the
problem lies with the beliefs that the management have. 鈥業t鈥檚 up to industry
to respond.鈥�
The scoreboard shows, for example, that while Philips of the Netherlands did
not pay out any dividend last year, it still spent 拢1.3
billion on R&D. The company ranks 15th in the league table. Digital
Equipment Corporation, the American computer manufacturer, also left its
shareholders empty-handed but invested 拢1.16 billion in R&D.
In Britain, ICI made a loss of 拢384 million but distributed
拢393 million in dividends to shareholders.
New figures for the numbers of patents filed in the US show what bad news
this is for British industry. 鈥榃e鈥檝e seen a massive growth in the Japanese
share of patents over the 1980s,鈥� says Carr, 鈥榓nd they can鈥檛 all be junk
patents 鈥� some must be protecting something of value.鈥� Meanwhile, the
British share of patent applications has fallen steadily in every industrial
sector.
More worrying still, says Carr, is the explosive growth in the number of
patents awarded to the newly industrialised nations of Southeast Asia. 鈥業n
10 years, their patents have reached half the British level. In 20 years鈥�
time, those countries are going to be putting the squeeze on everyone else.鈥�
Of the top 200 companies, 75 are American, five more than last year, and 59
are Japanese, six fewer than in 1992. This year, a special table appeared in
the scoreboard, listing foreign companies which spend generously on R&D in
Britain. They include ICL, the Japanese-owned computer company, which spent
拢243 million on R&D last year in Britain and would have come
ninth by domestic ranking.
