Results extend recent Hauser Report to show full value of wider sector to UK plc.
The Innovation, Research and Technology (IRT) sector continues to punch well above its weight in the national economy, as shown by an independent study commissioned by the Association for Innovation, Research and Technology Organisations (AIRTO). Carried out by Oxford Economics, the study reveals the sector has more than tripled in size since 2006, with turnover up from £1.9Bn to £6.9Bn over that period – despite the recession.
Taking into account the sector’s induced and catalytic effects on the economy, the total impact is assessed at between £32Bn and £36Bn, equal to 2.3-2.6% of total UK GVA, achieved with just 0.3% of government spending. This unusually high impact ratio underlines the sector’s unique position in the national economy.
Over 80% of the turnover generated in the IRT sector originates from AIRTO members, who represent a network of organisations that is both significantly larger and responsible for a wider spread of activities than the equivalent Fraunhofer Institutes in Germany. AIRTO members also employ people in each of the UK’s twelve regions and devolved administrations, with more than half of employees located outside London and the South East.
In addition to its significantly increased turnover, the sector has also grown substantially since the last impact report was carried out in 2006. Over 57,000 employees now work in the IRT sector, a figure which matches the total academic staff of the Russell Group universities. The GVA per employee, commonly referred to as productivity, is 50% higher in the IRT sector than the national average and has risen 3% over the period since the previous survey in 2006, against a backdrop of stagnation across the economy as a whole over the same period. Owing to the sector’s considerable indirect and induced impact, for every 100 people employed within the sector, another 140 are shown to be employed elsewhere in the economy.
The study extends the findings of last week’s Hauser Report into the UK’s Catapult Centres by examining the broader IRT sector as a whole. The organisations that populate this sector include Catapult Centres, other independent Research and Technology Organisations (RTOs) and many of the Government’s Public Sector Research Establishments (PSREs), as well as some university enterprise departments and specialist private companies providing services in this area.
The sustained growth of the IRT sector has the potential to significantly enhance UK productivity. Research suggests that every £1 spent in this area in recent years has generated, on average, £7 for the wider economy and that, more broadly, every £1 of public spending on R&D adds £4 to the value of market sector output.
Any future enhancement to the level of government funding in this area would therefore boost sector activity and catalyse significant returns for the wider UK economy. Such investment would contribute to increased international competitiveness of UK research and industry, an improved ability to attract and train a highly-skilled workforce, and, ultimately, the potential to improve quality of life.