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R&D spending falls by 11% in ‘concerning’ turn for the energy sector

Image: Andy Beecroft.

Image: Andy Beecroft.

Over the last two years, research and development (R&D) spending in the utilities sector has fallen by 11% to the lowest level since the credit crunch.

New analysis by tax relief company Catax showed that the proportion of utilities actively innovating has fallen from 43% to 32%.

The company utilised figures released last week as part of the UK Innovation Survey. It was conducted on behalf of the Department for Business, Energy and Industrial Strategy (BEIS) and covers the period 2016-2018.

Catax said that the fall was indicative of the industry as a whole, with just 38% of UK businesses reporting they were ‘innovation active’, down from 49% between 2014-2016.

This brings it down to a level almost as low as 2008-2010, when just 37% of companies were actively pursuing innovation as they worked to recover from the credit crunch.

Mark Tighe, chief executive of R&D tax relief specialists Catax, said these figures were a “concern”, in particular as Britain needs to be “making the most of its new-found freedom post-Brexit".

“Research and development is the secret ingredient that will give our businesses a boost now that we’ve left the European Union.

“Lack of personnel, high cost and Brexit uncertainty will all be, in part, to blame but the number of businesses blaming their lack of research and development on its expense should investigate whether they are eligible for R&D tax credits.

“Most companies find that innovation pays for itself many times over once they start exploiting the government help available to them.”

Larger companies have fared better than smaller firms throughout this period, with 49% engaged in R&D whilst only 38% of SMEs were.

These findings come after a recent report by the Energy Systems Catapult found that net zero by 2050 will require “unprecedented innovation” across the economy.

Greater innovation remains one of the key hopes for the energy sector in the long awaited Energy White Paper.

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