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Research grants
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Research grants ‘boost growth and jobs’

07/09/17Government

A UK-wide study has shown that firms receiving research and development (R&D) grants had a significant boost in growth and the creation of jobs.

Grants totalling £8bn (~€8.7bn) led to growth worth £43bn and created around 150,000 jobs.

The findings support the government’s policy of subsidising promising industrial research – the so-called practice of ‘picking winners’.

The analysis is the first to suggest that the policy might work at a national level.

Professor Stephen Roper, from the Warwick Business School, UK, and director of the Enterprise Research Centre (ERC), led the research. He said it was the first time that such a detailed analysis had been undertaken.

Roper said: “Our study is the first time we have been able to do a comprehensive assessment across the whole gamut of science support provided by a UK public sector for companies.

“It shows very clearly that grants to support R&D have a positive impact, creating jobs and fuelling growth in the hi-tech, high value-added sectors that the UK must encourage to remain competitive on the world stage.”

Roper and his colleagues tracked 15,000 hi-tech firms which received government R&D grants. It found that on average these firms employed 23% more people after six years compared with firms that did not receive grants. Turnover grew by 28% and productivity by 6% over the same period.

Job creation was strongest in London, the South East and the North West. The turnover of firms increased most in Scotland, Yorkshire and London.

Though, the new study suggests that the policy of picking winners could work if it is properly targeted, according to Roper.

“We get significantly larger growth effects in manufacturing than in services and among smaller firms than larger firms. And so we may want to try and pick winners but pick winners within those groups or emphasise those groups a little bit more.

“So rather than backing national champions we should be looking to the next generation of national champions – small, promising, up-and-coming businesses that have the potential to scale up. It is those we should be supporting.”

Pan European Networks Ltd