A third of UK firms failing to invest in R&D

Research by consultancy Portal reveals a shocking lack of investment and an increasing amount of R&D cuts

Amost a third of UK companies (31 per cent) are spending absolutely nothing on research and development (R&D), according to a report released by IT consultancy Portal.

The survey, which looked at 500 companies, found a major reason for the lack of investment was the current economic downturn.

In addition, only a fifth of companies spend more than five per cent of their revenues on R&D.

The report said that less than seven per cent of respondents have increased their investment in this area since the start of the recession in 2008, and 14 per cent claimed to have cut their investment 'enormously'.

However, despite companies cutting their budget for R&D, nearly 52 per cent did recognise that innovation is critical to maintaining and enabling growth in market shares, and 45 per cent said they would invest more if the government offered tax incentives.

Tony Egerton, marketing director of Portal said: "We all know that in a downturn we must try to find easy ways to cut costs. But cutting R&D is a corporate version of cutting your nose to spite your face and is only going to be bad news for companies that think it's a rational business strategy.

Key report findings:

• 31.4 per cent of companies spend absolutely nothing on innovating while 56.6 per cent spend less than two per cent of their revenue.
• 82.2 per cent of companies spend less than ten hours a month innovating. Assuming a 35-hour week and a 48-week working year, that translates to 0.5 per cent of time spent on R&D.
• 51.8 per cent of respondents acknowledged that R&D can help maintain or build market share.
• 35 per cent of respondents felt that keeping people focused on R&D was the main process challenge, while understanding available skills was an issue for 14.8 per cent.
• Getting people to collaborate was a challenge for a further 12 per cent of respondents
• 45.8 per cent would invest more in R&D if the government offered tax incentives