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Financial Times: BP and BAE buck R&D trend

By John Willman, Business Editor
Published: November 12 2007 02:00 | Last updated: November 12 2007 02:00

BP and BAE Systems are among British companies that slashed their research and development spending last year, according to government figures that show a 9 per cent rise in R&D investment by top UK groups.

The annual R&D Scoreboard, published on Monday by the Department for Innovation, Universities and Skills, says the 850 largest companies, including subsidiaries of foreign groups, spent almost £21bn ($43.6m) on R&D in 2006.

The 75 companies with the most R&D increased their spending by almost 12 per cent – faster than their global competitors.

However, BP cut £55m from its R&D investment, a 21 per cent cut in a year when Royal Dutch Shell boosted its spending by £152m, a 51 per cent rise. BP said the figure for R&D in its annual accounts did not encompass all such expenditure, some of which was embedded in ongoing business.

BAE made a 14 per cent cut of £201m, taking its R&D spending down to £1.2bn. Competitors that boosted their R&D investment included Rolls-Royce, whose £59m was an increase of 17 per cent, and Airbus, a foreign-owned company, that added £102m to its R&D budget, a 30 per cent rise. BAE said it had not seen the scoreboard and was unable to comment.

Another large group cutting its R&D was Unilever, whose £32m cut was the fourth in succession and took the total down to £610m, from £786m in 2002.

The biggest jump in R&D expenditure was reported by BT, which boosted its spending by £392m to £1.1bn – a rise of 54 per cent. This has raised its R&D budget from 2 per cent of sales revenue in 2003 to more than 5 per cent last year and the telecommunications has group has rapidly expanded its network and services businesses.

The 75 largest R&D investors based in the UK raised their spending 12 per cent, led by pharmaceuticals companies such as GlaxoSmithKline and AstraZeneca which collectively invest more than £7.4bn a year. The aerospace and defence sector has the second-highest R&D spending, followed by software and computer services, fixed-line telecommunications and automobiles and parts.

UK aerospace and software companies invested more than they reported as operating profit according to the scoreboard, which says the figures are evidence that they are putting R&D ahead of short-term profits.

The authors say they could find no hard evidence that investment in R&D improved performance.

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1 Comment on “Financial Times: BP and BAE buck R&D trend”

  1. #1 Corporate Welfare? « I have a theory about that…
    on Jun 3rd, 2010 at 18:05

    […] decade, BP made a big deal of changing its name from "British Petroleum" to "Beyond Petroleum," paying lip service to their commitment towards developing alternate energy sources– my guess is mostly as a PR move. […]

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