Liam Byrne – 2014 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Liam Byrne on 2014-06-16.

To ask the Secretary of State for Business, Innovation and Skills, what assessment he has made of the effect of levels of public expenditure on science on UK economic productivity figures.

Mr David Willetts

A number of academic studies find a positive link between research and development (R&D) investment and economic growth. Much of the relevant evidence was set out in a recent report for BIS "Insights from international benchmarking of the UK science and innovation system[1]" and the 2014 BIS Innovation Report[2].

A further recent UK report estimated that public investment in science yields a social rate of return of around 20%, through its impact on private sector productivity[3]. This means that for every £1 spent by Government on R&D, private sector output rises by 20 pence per year in perpetuity. This effect could be larger where additional public spending on R&D attracts additional private R&D spending. The same report and other studies have shown that there is a "crowding-in" effect of public investment on R&D. The effect is greater in industries that conduct significant R&D or collaborate with universities.

[1]https://www.gov.uk/government/publications/science-and-innovation-system-international-benchmarking

[2]https://www.gov.uk/government/publications/innovation-report-2014-innovation-research-and-growth

[3]http://sciencecampaign.org.uk/UKScienceBase.pdf

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