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.
86/148 (page 84)
![8 February 1990] [Chairman contd.] have not yet embarked significantly—although we are in touch with industry on a whole range of things and are aware of the Ivan Yates study for example— on any studies in depth with industry on this particular problem. 226. Do you admit that a significant element of what you classify as development and show in the Annual Review of R&D as development, is not development within the Frascati definitions of experimental development? (Mr Mumford) On the basis of our studies so far we would not admit that. We do not feel we have a sufficient statistical basis to make such a statement. 227. Why does everybody else say that is the case? (Mr Mumford) I am not sure everybody else does say it, quite honestly, but we are aware of the British Aerospace study. Of course there are some factors which have to be taken into account in considering and examining the views taken by industry on this matter. The latest Cabinet Office Annual Review of Government funded R&D did set out a number of reasons why industry could be itself under-estimating the Frascati element and indeed R&D expenditure as a whole. For example, the industry figures obtained by the DTI exclude enterprises with fewer than 200 employees, whereas Government estimates include such enterprises, and there could be quite a lot of those. Sub-contractors of prime contractors in industry are not always in a position to recognise the Government as the ultimate source of funds. Sub- contractors may not appreciate their work is an essential element of a major contractor’s R&D programme and may not therefore classify the expenses they are getting under sub-contracts as R&D. Our R&D figures include the profit element whereas with industry estimates we understand they explicitly exclude profit. This is a difficult statistical area. There are a number of quite important factors which could lead industry in assessments such as were made by British Aerospace to quite substantially under-estimate on their side. Lord Nelson of Stafford 228. To clarify your point, my Lord Chairman, could I just ask one specific question? One of the major items under your development expenditure must, I am sure, be flight trials. It is a very expensive game. Where do you put that? That presumably is in this R&D figure but there is very little innovation in flying aeroplanes around for hours and hours in order to prove the engine is reliable or something else or it will perform up to the altitude required? (Mr Mumford) lam not sure where that is. A good deal of flight trials are conducted by industry and would not necessarily be included. But I will ask Mr Lomas to answer that. (Mr Lomas) Where a flight trial is undertaken on behalf of a defence contractor as part of the pre- production process, no we would not include that. Where it was definitely part of the development activity, where there was 16 commitment to production, we would. 229. Take a piece of electronic equipment which has to be flown around for long periods of time, in the development phase of the electronic equipment does [Continued all that flight expenditure go down as development expenditure? (Mr Lomas) If it is part of a development contract with no commitment to production at that stage, yes it would be. The difficulty is that we count a lot of supporting activities, which it is necessary to carry out, as development in our expenditure of R&D. That may not be the case with industry. I have no idea how they put their figures together. 230. This is the sort of area where people think the figures are getting distorted, because such a large part of the expenditure is not innovative at all in fact. (Mr Lomas ) To quote Frascati, we have to include such things as security, storage use, repair and maintenance of buildings and equipment. They should be included in Frascati R&D expenditure. That clearly is not innovative but it is in support of an innovative activity. (Mr Humphries) When you are talking about testing, during the development phase it is undoubtedly often actually pressing the state of the art to make the thing which is being déveloped actually work. Very often development test capabilities, engine tests for example, are innovative in their own right. So there is a secondary spin-off from this work which you could not discount totally. With the work you describe as being not innovative, there are elements of it which are innovative, particularly when as so often happens our equipments are pushing the state of the art. Lord Flowers 231. We are talking very largely about words, about definitions, categories and so on. What is causing us distress is that you appear to use these words in different ways from other people, and then when comparisons are made with other countries, for example, things look funny. How much effort do you put into discussing what those categories mean in terms of how other people in the civil sector in this country, or in civil or military sectors abroad, interpret them? Because even if you were obeying, so to speak, what they appear to say to you, if other people interpret them differently, it is in a way not helpful for you to bend the rules to fit what other people do. (Mr Mumford) Certainly we keep in very close contact with the rest of Whitehall on this matter. The Annual Review of R&D is co-ordinated very systematically by the Cabinet Office. Mr Lomas can expand on the kind of contacts we have with them but they are very close. We in the Ministry of Defence have our own contacts with the other departments who contribute to Government R&D figures. As regards the international scene, we have discussed this issue with our allies, and indeed I personally took the initiative about 18 months ago to set up a workshop in NATO, the Economic Division of NATO, which was attended by all the major NATO countries, not just to discuss Frascati but to discuss the importance of defence R&D in national defence projects. In regard to your question, my Lord, I think it was quite significant that most countries who took part in that discussion, which was an informal one, admitted that they all face problems of classification, particularly in the dividing line between development](https://iiif.wellcomecollection.org/image/b32218540_0086.jp2/full/800%2C/0/default.jpg)
