Definitions of R & D : report with evidence.
- Great Britain. Parliament. House of Lords. Science and Technology Committee.
- Date:
- 1990
Licence: Open Government Licence
Credit: Definitions of R & D : report with evidence. Source: Wellcome Collection.
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![7 December 1989] [Chairman contd.] as basic but would be in the Government’s applied strategic. (Dr Acres) This is where you get into the second phase of R&D definition. I think you need as simple a definition of R&D as you can get, which people can understand, to give you a bottom line number. But then you have to break that number down and how you break it down depends upon what you are looking for. So for instance if in a particular company or sector or within the Government spend on R&D you wanted to have a look to see what proportion of your basic research was strategic, I would anticipate from the way we use these numbers that is a relatively simple thing to do. In my experience you want as easily understood definition of R&D as you can get, because otherwise it gets very diffuse. 199. We get conflicting demands here. You get the demand to make it as simple as possible, and then at the same time people are saying, “In order to fill it in properly, I want examples.’ You then begin to have examples of different kinds, and then you begin sub- dividing it. (Dr Acres) 1 think what people are doing, with due respect, is that they are trying to answer several questions out of one base. Our experience is that first and foremost the question is, how much do you spend on R&D, and once you have that number you can then say, what proportion do you spend on strategic research or development, however you want to cut the cake. That is the second question. Is it experimental development or is it product development. 200. Two things, it seems to me, come out of that. It seems to me from your argument you are in fact arguing for a definition of strategic. To take the overall, industry and academia, there is not much argument about what is really basic research and that industry takes very little part in it. There is then, as I see it, an area of strategic research which means different things at the moment between industry and academia, and then there is development. However, from what you said earlier on, if you are going to use these figures as a management tool or for people to analyse their industry and see how well it is going, then you need to have further sub-divisions on development, to look at it very carefully, which would perhaps involve your technical services. Now, am I right in what I have said or not? (Dr Acres) You are right. Where we as a company use it, and I do not want to impersonalise it too much, but we in fact use the EIRMA categorisation which breaks it into 5 areas. Basic research is the very long range work that we do. That is only targeted in the sense that it relates to our core businesses and that can be pretty wide. Then we have research that is targeted at a major new product or process, with the emphasis on new. That is the second category. The third one is work that is targeted at major improvements to our existing products and processes. The fourth one is devélopment and that is relatively short term and that will result in minor improvements to our existing products and processes and the fifth one is technological support. That is how we break it down and that, or something very similar to it, is how a lot of European companies and [Continued American companies break it down. In other words it is slightly different to Frascati in that it is product and business related rather than technology related but the bottom line comes to the same thing as long as you exclude technological support. Lord Nelson of Stafford 201. Supposing the Government, as_ they sometimes have, considered introducing tax incentives for R&D. Have the CBI given any thought to whether these definitions would be sufficient under those circumstances, bearing in mind what is happening in a number of other countries? (Dr Tidd) 1 think generally the CBI does not support the idea of having tax incentives for R&D. 202. It does not? (Dr Tidd) It does not. It would prefer to see blanket reductions in taxation or in interest rates because it feels specifically targeting tax incentives on, say, R&D could distort investment decisions at firm level and it feels these decisions should be left to the firm. In addition if we look to where tax incentives have been available for sometime, as in Canada and the US, academic research is inconclusive, e.g. research done by Mansfield in the US, suggests R&D spend has increased by one or two per cent at the most since it has been in force but that is more than offset by the loss of revenue to the government and the proportion of that which would be put into government R&D. So the entire cake has not increased, it is just in different areas. So I think the evidence is inconclusive and the CBI’s view on that is they would prefer a blanket reduction in tax and interest rates so profits can be ploughed back into R&D or research rather than targeting R&D as being more important than other factors. 203. That is the CBI’s view on that principle but supposing the government did decide that that is what they were going to do, would these definitions stand up adequately as the basis of any such tax concessions? (Dr Tidd) It depends what the objective of such a policy was. If it was to encourage R&D it would need to recognise Frascati as the internationally accepted definition. As far as the performance of British industry is concerned targeting R&D would be wrong because arguably that is not the major area of UK weakness. So I think it depends what your stated objectives are. The US evidence suggests that the effect of tax incentives may not be significant, but if your objectives are to increase the competitiveness of British industry I think there is almost no question that that would not be a very efficient approach. Lord Erroll of Hale 204. To go back to Dr Acres and the SSAP13 and your categories, are those compatible with Frascati or would you have to revise your categories to fit in with SSAP13? (Dr Acres) Four of those categories relate directly to Frascati. We include technological support in our analysis of our total R&D spend because we, like the other members of EIRMA and also various bodies in America, believe that it is important to have that figure alongside your R&D spend because your R&D](https://iiif.wellcomecollection.org/image/b32218540_0078.jp2/full/800%2C/0/default.jpg)
