back to article UK PM Theresa May's £2bn in R&D still a drop in the ocean

UK Prime Minister Theresa May has promised to fling £2bn extra at Blighty's woeful research and development spend – a figure that still brings us well below the amount industry has previously called for. In a speech to the Confederation of British Industry (CBI) today, May said her government will invest an extra £2bn a year …

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*sigh* What's the point any more? The money for infrastructure is a drop in the ocean too. Anyone got the nerve to make Angela Merkel an offer?

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Confederation of British Hypocrites

So the CBI want government to spend more on R&D (3% of GDP equates to an extra £10bn?), at the same time as they lobby for lower taxes on business.

Where's the money going to come from? And if business want R&D to support their shareholder returns, why don't they do it? As a personal thought, the Apprenticeship Levy appears to be looking to have a fairly good early outcome for those sectors where real technical skills are needed (I'm less sure about the service sector). Maybe we need an R&D Levy on businesses?

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Anonymous Coward

Re: Confederation of British Hypocrites

Realistically the money will come from clever manipulation of the statistics, so don't worry too much.

Change accounting periods to make comparisons with previous years impossible and play around with what counts as R&D until you get the number you want.

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Re: Confederation of British Hypocrites

They were always lobbying for an immediate skilled workforce via immigration, but since that's not possible any more they want R&D funding. They don't care where it comes from, they just want it.

They still want lower taxes. They don't where they come from, they just want them. And now that they just need to insinuate that they'll leave because Brexit, they're going to get them.

Which means that the Tories of all parties could be bringing in Scandi-style taxes (low business, high personal). Who would have thought? Shame that there won't be a Scandi-style safety net or services.

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Re: Confederation of British Hypocrites

"Maybe we need an R&D Levy on businesses?"

Perhaps we need to emulate the australian example (other countries too) where R&D spend gets a 150% tax credit.

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Re: Confederation of British Hypocrites

where R&D spend gets a 150% tax credit

That's a subsidy you have to make up elsewhere or forgo tax take. The good thing about an offsettable levy is that those who do the levied activity get the benefit - anybody who chooses not to pays the tax.

I suspect that either way there's immediate attempts to game the system - banks claiming that a new bonus structure represents "research". Talking of the apprenticeship levy, I went to the "Skills Show" at the Birmingham NEC this weekend, taking the Padawan Ledswinger to scope out what was on offer. That was an exhibition focused on youngsters looking for post-school training+work opportunities, up to and including degree apprenticeships and it was excellent, showed off people like AIrbus, JLR, BAES, Qinetiq, Dyson et al in an excellent light, and was damned good for people seeking more vocational types of training in say construction or other trades related activity.

Funny thing was that the whole IT sector was conspicuous by their absence (within the IT sector Birmingham City Council and O2 were key exhibitors, so kudos to them, a pox on all the other "IT" companies who couldn't be arsed). Whether UK or foreign owned, the poor showing for IT was f***ing disgrace that every large UK IT employer ought to be ashamed of, useless bastards (GCHQ, this includes you).

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Re: Confederation of British Hypocrites

Perhaps we need to emulate the australian example (other countries too) where R&D spend gets a 150% tax credit.

----

Like this https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief

Yep, exists here already. Lots of accountants specialise in the area, taking a percentage of the gain.

If you're particularly innovative, you can end up being owed money by hmrc.

Keep up guys.

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£2b is rather less than the annual cost of employing the extra 30,000 civil servants who are needed to find out what "Brexit" means.

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Brexit means Hard Brexit as that was the worst case scenario on offer and the majority still voted for it. Some may wish for something less than the UK leaving all EU treaties and institutions but at the end of the day if that's all on offer then that'll be what we get.

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'£2b is rather less than the annual cost of employing the extra 30,000 civil servants who are needed to find out what "Brexit" means.'

I'd hope not. A lot of those 30,000 would be clerical grades which ought to pull down the average somewhat.

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Anonymous Coward

It is a matter of priorities, after all

Fraction of GDP in percent spent on R&D and defence (the last year where data is available), rounded to the second digit after the decimal point.

Country R&D(2014) Defence(2015)

Canada 1.61 0.97

France 2.26 2.10

Germany 2.87 1.17

Italy 1.29 1.31

Japan 3.58 0.99

UK 1.70 1.95

US 2.73* 3.32

Russia 1.19 5.01

China 2.05 1.98

India ** 2.42

Brasil 1.24* 1.38

*: 2013; later data not available

**: No recent data available

So UK is certainly not the worst in the G7, but it is very far from being a world leader in R&D spending (That would be Korea, with 4.29% and Isreal, with 4.11%). On the other hand, the UK is doing quite well with spending money on its military (not on getting anything done with that money mind you, but we digress here).

In any event, the UK is not broke, and it looks like Her Majesty's loyal government can always find the funds for the little projects it occationally fancies. So it is all a matter of priorities.

Source of the data: The World Bank

R&D: http://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS

Defence: http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS

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Re: It is a matter of priorities, after all

Exactly. Headlines like "a drop in the ocean" don't exactly reflect the true situation, that 2bn moving us from 0.48% to around 0.6% doesn't actually compare too unfavourably to the EU average of 0.67%, or the G8 average of 0.77%.

It would be good to do better, of course, but it's a start, and one that we will hopefully build on.

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Unhappy

"doesn't actually compare too unfavourably to the EU average of 0.67%,"

Note that is the average figure over 28 countries.

Including those R&D powerhouses Greece, Portugal, Romania and Hungry. :(

Not impressed.

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A useful rule of thumb

[This is for the UK, other countries need to do their own sums.]

Whenever a politician announces they're going to spend N billion pounds a year on something, just multiply N by 0.3. That's the amount per person per week it is equivalent to, so this is 60p a week for every man, woman and child in the country. Now compare that to the amount you spend a week on beer (or chocolate or whatever else you like).

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How much will be lost because of Brexit?

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There's no direct connection. Most European R&D spending is with organizations that are much larger than the EU, and whether the UK is in or out of the EU need not change any of its contributions to such projects.

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Joke

All I'm saying is that R&D will account for 6% of GDP by 2020, without the Government having to announce any new spending.

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Boffin

However...

I understand that the EU currently spend £1.3bn/year on R&D in the UK, so whilst £2bn/year is an increase, it ain't much of one. And that assumes that May isn't indulging in the normal politicians' hobbies of double- and triple-counting, announcing stuff they know will never happen, or just flat-out lying.

GJC

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Hang on a minute...

What she said was "the government will invest an extra £2bn a year in R&D by 2020. So this doesn't actually commit her to doing anything before her present term of office ends, nor does it mean that there will be any extra money in the next 3 years.

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'She said: “We need to make the UK outside the EU the most attractive place to invest.”'

Which might need more than financial incentives if the EU decide that businesses subject to May-style spyware can't be allowed to handle citizen's personal data.

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If this year has taught us anything it is that most people in this country cannot grasp that Millions and Billions aren't a lot of money overall when you are considering a nation's finances.

They got all frothy over £350m a week! A drop in the nation's finances in absolute terms. Yet used to devastating effect to gain votes illicitly, before being dropped like a hot potato as soon as objective was achieved.

The BBC celebrate raising nearly £50m for Children in Need. It's Sweet FA in real terms for the scale of the problem that it's trying to help. If the BBC ran adverts for charity for a week it would earn loads more, and nobody would have to suffer this event.

Absolute figures are used by anyone in government, or opposition, when it suits them to argue that something is expensive and shouldn't be done. Another favourite tactic is 'rolling up' - taking the cost of a 10-20 year projects and presenting it as a single figure that looks very high on its own. This is often used to stop large investment projects, sometimes for the overall good (HS2!) or for dogmatic reasons.

So absolute figures should be secondary to relative and percentage figures when it comes to sums of money being spent by government from the GDP pot.

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It could be you.

If this year has taught us anything it is that most people in this country cannot grasp that Millions and Billions aren't a lot of money overall when you are considering a nation's finances.

Probably not, most people only encounter those figures in connection to the National Lottery.

They got all frothy over £350m a week!

- This weeks Rollover?

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Anonymous Coward

They got all frothy over £350m a week!

The important figures are the UK budget deficit (say £1,300m a week) or the balance of payments deficit (say £1,900m a week). On that basis £350m is fairly significant, albeit not the full answer.

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It was still a lie though.

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Mushroom

May you live in interesting times

The political horizon has never been closer - April 2017 is as far as May's calendar goes and that's looking like a fair distance itself.

Just saw on the news that Ukrainian demonstrators smashed up a Russian bank - and then we have that new country arriving in January - the Republic of Trumpton, IS part 2 "No more Mr Nice Guy" and China's first industrial recession.

"I promise to pay you 2bn by 2020" - translation - "Piss off and stop bothering me"

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