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Regional distribution of funding for research and business

UKRI’s mission is to work with our partners to ensure that world-leading research and innovation continues to grow and flourish in the UK. We invest in research and innovation to push the frontiers of human knowledge and understanding, deliver economic impact, and create social and cultural impact to support society to become enriched, healthier, more resilient and sustainable.

The government has committed to ‘the fastest ever increase in domestic public R&D spending’, to accelerate its ambition of raising R&D intensity to 2.4% of gross domestic product (GDP) by 2027 and 3% in the longer term. Reaching this goal will require raising R&D intensity in all regions and nations of the UK, to ensure the whole country benefits from increased public and private investment.

World-class research and innovation takes place right across the UK. But there are clearly significant concentrations of activity, funding, skilled people and more mature ecosystems in some of the more prosperous parts of the UK – most notably in London, the South East and the East of England. As shown in Table 1, between them, these three regions make 52% of national Gross Expenditure on R&D (GERD) in 2017-18.

While a wide range of public levers are key to enabling growth and prosperity across the country, public investment in research and innovation is an important component. Therefore, it is essential that UKRI is transparent about where our funding is delivered. We are taking the first step in a programme of work to improve the public visibility of the regional footprint of our funding, starting with Research England’s quality-related research funding allocations (QR) and Innovate UK’s funding.

R&D Activity in the UK

On a national level business makes up the biggest proportion of GERD with 68% of total expenditure being performed in the private sector. It is important to note that this figure includes any public grants businesses might have received to fund R&D.

Regional GERD and Business Enterprise R&D (BERD) data show a concentration of R&D activity in London, the South East and East of England. To a large extent, this is likely to reflect the high concentration of businesses, skilled people and availability of investment in those areas.

Table 1: R&D Activity by Region 2017-18

  Gross Expenditure on R&D (GERD) 1 Gross Expenditure on R&D (GERD) % Business Enterprise R&D (BERD) 2 Business Enterprise R&D (BERD)%
NUTS 1 Region 3 2017, £m 2017 2017, £m 2017
East Midlands 1,938 6% 1,521 6%
East of England 5,938 17% 4,677 20%
London 5,548 16% 2,796 12%
North East 707 2% 384 2%
North West 3,040 9% 2,174 9%
Northern Ireland 695 2% 512 2%
Scotland 2,529 7% 1,247 5%
South East 6,730 19% 4,860 21%
South West 2,334 7% 1,652 7%
Wales 744 2% 457 2%
West Midlands 2,965 9% 2,467 10%
Yorkshire and The Humber 1,641 5% 938 4%
United Kingdom 34,809 100% 23,685 100%
         

Support for academic research

Public funding for research in Higher Education Institutions (HEIs) is administered under a 'dual support' system. While Research England and the equivalent funding bodies in the Devolved Nations (Department for the Economy Northern Ireland, HEFCW, SFC) provide annual funding in the form of a block grant, the UK Research Councils provide funding for specific research projects and programmes.

The table below provides a breakdown of Quality-related research (QR) funding, allocated to eligible HEIs in England by Research England. Institutional allocations are made following a periodic UK-wide assessment of the quality and impact of institutional research, run by Research England and the devolved HE Funding Bodies, most recently in 2014 as the Research Excellence Framework. The equivalent allocations in Scotland (called Excellence Research Grant), Wales (called QR) and Northern Ireland (two funding streams – QR and Postgraduate Research funding) are outside of UKRI’s remit and are determined and allocated by the devolved administrations and HE Funding Bodies in those nations, also in the table below.

The distribution of Research England’s QR allocations is largely driven by the scale, cost and quality of research-activity in universities. Table 2 provides a summary of the research allocations distributed by Research England and the funding bodies in Scotland, Wales and Northern Ireland, by region, and reflects the number of universities in receipt of research funding in each region. The data shows high concentrations in London, the South East, Scotland and East of England, reflecting the presence of very large research-intensive institutions in those regions. Taking the number of universities receiving research funding in a region into account, the picture changes bringing the North East into the top four best performing regions

Accounting for the number of researchers in each region receiving QR (or equivalent) funding is still reflective of the concentration of research-intensive universities and skills, however it shows a different distribution with Northern Ireland emerging as the top recipient.

Table 2: Quality Related (QR) Research, Postgraduate Research Funding (PGR) and Research Excellence Grant (REG), academic year 2017/18

 

QR, PGR and REG Research Funding Allocated 4

QR, PGR and REG Research Funding per researcher approximation (£) 5

QR, PGR and REG Research Funding per research active university(£m) 6

NUTS 1 Region

2017/18 AY, £m

 

 

East Midlands

101

6,078

11

East of England

165

8,753

16

London

476

10,080

12

North East

68

6,679

14

North West

146

5,755

10

Northern Ireland

49

10,339

12

Scotland

278

9,979

15

South East

291

8,517

15

South West

107

6,862

8

Wales

63

6,265

7

West Midlands

99

5,546

8

Yorkshire and The Humber

135

6,329

12

United Kingdom

1,978

7,916

12

Support for Business-led Innovation

Innovate UK funding is focused on supporting UK business innovation, including in collaboration with research organisations. The regional distribution of Innovate UK allocations is closely linked to the economic composition of each part of the country. The data shows large year on year fluctuations in funding allocations, driven in part by occasional large grants for centres such as the Catapult network.

The standard convention is to publish annual data, which we have provided in Table 3. A multi-year average provides a better indicator of how funding is distributed regionally. This shows that since 2010 London, South East, West Midlands and South West are the top 4 regions receiving Innovate UK funding.

To account for the differing economic structure and number of innovative businesses in each region, we normalise by the number of businesses claiming R&D tax credits, over multiple years. This shows the North East, West Midlands, South West and Scotland emerge as the top 4 beneficiaries of Innovate UK R&D funding. North West, Wales and Northern Ireland on average receive the least Innovate UK funding.

Table 3: Innovate UK Funding, 2017-18 financial year

 

Innovate UK Total Allocation 7

Innovate UK total allocations per business claiming R&D tax credit 8

NUTS 1 Region

2017-18 FY, £m

2017-18 FY, £

East Midlands

65

20,870

East of England

114

24,267

London

214

22,126

North East

32

19,958

North West

55

11,150

Northern Ireland

9

6,576

Scotland

44

19,801

South East

184

24,685

South West

134

36,463

Wales

20

13,003

West Midlands

235

56,659

Yorkshire and The Humber

47

13,964

United Kingdom

1,152

24,149

What the above data shows us is that, the overall level QR (or equivalent) and Innovate UK funding reflect the regional R&D concentrations across the wider economy. When taking the research active businesses/universities populations into account, these UKRI funding streams builds on strengths in all parts of the UK, but there are still variations which require further investigation.

Next steps

This short publication is only a first step. As a next step over the coming months, we will be preparing a far more comprehensive publication of our funding that includes research council and cross-cutting investments. We will also commit to updating and publishing this data on an annual basis, to ensure we are fully transparent about the regional footprint of our full portfolio of funding.

Improving our data will allow a more in-depth understanding of how UKRI funding supports R&D related growth in different places and different contexts. This will be part of a wider work programme in partnership with BEIS and other government departments to understand the evidence on regional R&D activity and the opportunities for further investment in R&D across the country. Outputs of this work will contribute towards the development of our ongoing strategy to ensure that the UKRI is supporting economic development across the UK as we reach the goal of 2.4% of GDP invested in R&D.

Annex: Table 4: Additional figures used in calculations

NUTS 1 Region

Number of universities receiving QR (2017/18)

Number of researchers (2017/18) 9

Number of businesses claiming R&D tax credits (2017-18) 10

East Midlands

9

16,584

3,120

East of England

10

18,813

4,715

London

39

47,217

9,675

North East

5

10,247

1,615

North West

15

25,351

4,930

Northern Ireland

4

4,707

1,310

Scotland

18

27,870

2,210

South East

19

34,198

7,440

South West

14

15,580

3,680

Wales

9

10,125

1,530

West Midlands

12

17,931

4,140

Yorkshire and The Humber

11

21,285

3,350

United Kingdom

165

249,908

47,715

Notes

1, 2. Source: ONS, available at: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/datasets/ukgrossdomesticexpenditureonresearchanddevelopmentregionaltables

3. For this publication we are presenting the data using NUTS1 regional classifications which divides the country into 12 major nations and regions: East Midlands, East of England, London, North East, North West, Northern Ireland, Scotland, South East, South West, Wales, West Midlands and Yorkshire and the Humber.

4. Figures for 2017/18 are the latest available for funding received. QR funding is allocated within the academic year. It is allocated by different organisations in each nation of the UK; Research England in England, SfC in Scotland, HEFCW in Wales and DfE in Northern Ireland.
Source: HESA, available at: https://www.hesa.ac.uk/data-and-analysis/finances/income

5, 6. See Table 4 in appendix for denominators used in calculations.

7. Includes all Innovate UK allocations in financial year 2017-18 from transparency data. Value is calculated using grant offered variable, and project start date. 
Source: Innovate UK funded projects since 2004, available at: https://www.gov.uk/government/publications/innovate-uk-funded-projects
Note: Innovate UK total allocations are subject to annual variation. Additionally, the figures do not account for a headquartering effect, whereby a grant location may be recorded as the headquarter of a firm and not where the R&D takes place.

8. See Table 4 in appendix for denominators used in calculations.

9. Researchers is the combination of staff and student researchers. Staff researchers have been defined as staff who are on an ‘Academic contract that is research only’ or an ‘Academic contract that is both teaching and research’. Student researchers have been defined as those registered for a ‘Doctoral degree that meets the criteria for a research-based higher degree’.
Source: HESA microdata

10. Source: HMRC, available at: https://www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit