National Physical Laboratory (NPL)

Major growth in the Innovation, Research and Technology sector

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Source: National Physical Laboratory (NPL)

The Innovation, Research and Technology (IRT) sector continues to punch well above its weight in the national economy, as shown by an independent study carried out by Oxford Economics. Commissioned by the Association for Innovation, Research and Technology Organisations (AIRTO), whose members include the National Physical Laboratory (NPL), 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 12 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 gross value added (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.

The study extends the findings of the Hauser Review 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.

Professor Richard Brook, President of AIRTO, said:

'Last week the Hauser Review underlined the importance of the Catapult Centres to translational research and innovation in the UK. This new independent research from Oxford Economics extends such work, examining the wider IRT sector in greater detail to gain more visibility of its true worth. The results underline the huge importance of the IRT sector to the UK. They show it thriving even during difficult economic times, demonstrating how the organisations in AIRTO's membership are critical to the country in terms of jobs, growth and productivity, all with a minimal investment from the public purse.'

As an example of the work conducted by AIRTO members within the IRT sector, the Centre for Carbon Measurement was set up within NPL in 2012, to address the following three areas:

  • Climate data - reducing uncertainties in climate data;
  • Carbon markets and accounting - providing the robust measurement required to account for price and trade carbon emissions; and
  • Low carbon technologies - helping to develop and accelerating the take-up of low carbon technologies.

It does this by bringing measurement science to the challenging issue of climate change, and coordinating and collaborating with academic, business and government partners brought together in a strong stakeholder network. An independent report, 'Centre for Carbon Measurement - The Impact of Our Work', published in 2013, points to a reduction of eight million tonnes of atmospheric emissions as a result of the Centre's completed and ongoing project portfolio.

Read the full Oxford Economics Report: 'The impact of innovation, research and technology sector on the UK economy'

Find out more about AIRTO

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