Definitions of R & D : report with evidence.

  • Great Britain. Parliament. House of Lords. Science and Technology Committee.
Date:
1990
Catalogue details

Licence: Open Government Licence

Credit: Definitions of R & D : report with evidence. Source: Wellcome Collection.

    65/148 (page 63)
    23 November 1989] [Continued [Lord Shackleton contd.] know whether that is shown in the GEC accounts, perhaps it may be a profit to them because the Government presumably paid for it—are those figures remotely possibly available or established? (Mr Yates) 1 think you would need to do two things. You would know from the Ministry of Defence’s accounts how much was what you might properly call manufacturing, which is producing several sets at the same time. You would also know what the Ministry of Defence called research and development. The difficulty then comes that under that definition of development there would perhaps be a lot of repetitive work which is straight forward engineering which made it possible to do the subsequent production, and it is that bit which I think you need to take away, and call the parts or elements of research and development, and engineering (or pre-production engineering) and then you can move into full production. I think they can be obtained, yes. Separating out research from development, and that element of development from the Ministry of Defence definition, is somewhat judgmental. This is where you come back to interpreting the element of novelty from the Frascati definition. I think it can be done to reasonable accuracy. Chairman 111. Let us turn to this major question of the problem which the MoD’s R&D poses, both in the question of the enormous amount they list under development and also this discrepancy between what they spend on development and what the firms who are doing the research and development for them actually say they spend themselves. What do you think ought to be done to put this right? (Mr Yates) I think if the Ministry of Defence contracts were interpreted by firms more clearly under headings which accounted for the type of work—for instance the American Department of Defense uses definitions which properly interpreted give us a fairly good handle on what we are looking for—that would be quite satisfactory. Equally, if we still left the U K Ministry of Defence with its broader definition, so long as one was fairly clear on each major project or major contract that which was innovative and that which was not, that point could be made by the contractor or the project officer, and then we could get this distinction quite clearly. 112. You think it would be done project by project? (Mr Yates) 1 think so, because the ratio of research and development differs, and the amount of development work in each product differs. It would not be reasonable to apply a blanket scaling. In electronics you could be producing a black box or a total weapons system and the ratios change. In the SBAC study British Aerospace found they had a smaller percentage of the innovative, so-called, development part than the companies providing the equipment to them. That is understandable because they would put a lot of equipment into an aircraft and then fly the aircraft, and maybe they would be looking at one-twentieth or one-fiftieth of the total system being changed between flights, whereas the 113. Is that not going to lead you down a frightfully complicated process because you have to look at each component and ask how much innovation is there in each chip? (Mr Yates) It gets ridiculous and I get back to my problem. Exactly. You can get a sufficiently accurate one by looking at the contract level. 114. This would be done by both the procurement executive and by the firm to which the contract went? (Mr Yates) I think if there is a set of definitions of the sort I have developed basically within British Aerospace, it could be applied by the aerospace industry and the defence industry. I think that could be accepted by the Ministry of Defence and one could quite readily define for most of the contracts, nearly all contracts, how much money came into each of the categories. 115. One of the arguments put forward against having a lot of sub-divisions is that this involves a great deal of subjective judgment about which division you put them into. : (Mr Yates) Well, that is inevitable, I think. it is a degree of so-called accuracy with which you strive. If you go for getting three-quarters of the truth you get it quite readily; if you try and go for 99 percent you find you are forever arguing. That would be completely nugatory. I am sure in a practical sense we can get as close as we wish. We are looking for quite a large discrepancy, I believe 30 percent odd. If you can get that down to 5 or 10 percent, we have got as close as we need. 116. You therefore think it is possible by adopting the right methodology to produce more or less accurate figures of the Ministry of Defence on research and development which then, as it were, correspond more or less to the general Frascati definitions and more or less correspond to the same definitions in the civil field and, therefore, would give a true picture of what government research and development really is and a true picture for international comparisons? (Mr Yates) Yes, I do. I believe it can be done without too great a burden. 117. Why does not the Ministry of Defence do it then? (Mr Yates) I think for their own management and accounting purposes they do not need to. It is really a question of the national good, if you like. Lord Chorley 118. Why does not the DTI do it? I understand they are responsible for making the returns for the OECD and they say they follow Frascati. (Mr Yates) They do follow Frascati. 119. But they ignore the novelty point? (Mr Yates) No, they get returns from the companies and the companies, in effect, in giving figures to DTI have made the judgment as to what is novel and what is not, and you do actually get differences between what MOD say they are paying and what the industry says it is receiving under their interpretation of Frascati, which tends to reinforce