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Assessing the Economic Returns of Engineering Research and Postgraduate Training in the UK

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Assessing the Economic Returns of Engineering Research and Postgraduate Training in the UK March 2015 Assessing the economic returns of engineering research and postgraduate training in the UK Final report www.technopolis-group.com Assessing the economic returns of engineering research and postgraduate training in the UK Final report technopolis |group|, March, 2015 Cristina Rosemberg, Paul Simmonds, Xavier Potau, Kristine Farla, Tammy Sharp, Martin Wain, Oliver Cassagneau-Francis and Helena Kovacs Table of Contents 1. Executive Summary 1 2. Introduction 4 2.1 Scope of the study 4 2.2 Defining engineering 4 3. Engineering contribution to the UK economy 6 3.1 Engineering contribution to the UK economy 6 3.1.1 Engineers are present across all economic sectors 6 3.1.2 Pervasiveness translates into a high contribution to UK GVA 8 3.2 Engineers as drivers of innovation and competitiveness 10 3.2.1 Engineers are highly valued by the labour market 10 3.2.2 High concentrations of engineers are linked with high levels of innovation10 3.2.3 Higher innovation and productivity leads to higher competitiveness 13 3.3 Engineers produce high quality research 14 3.3.1 The UK produces world leading engineering research 14 3.3.2 The UK has numerous engineering-related centres of excellence 17 3.3.3 This academic excellence translates into tangible economic benefits 19 3.3.4 Engineering research attracts inward investments 26 4. Engineering’s contributions to policy and public services 28 4.1 Engineers are crucial to the operation of many areas of government 28 4.2 Engineering research plays a key role in policy and public services 30 5. Investment in engineering research and training 32 5.1 Engineering research is strongly aligned with UK industrial strategy 32 5.1.1 Engineering and Physical Sciences Research Council 33 5.1.2 BIS and Innovate UK 36 5.1.3 Ministry of Defence (MoD) 40 5.2 Industry is also a heavy funder of engineering research 41 5.3 International comparisons 42 5.4 Private and public investments in engineering training 44 5.4.1 Public investment in engineering training 44 5.4.2 UK Industry invests heavily in engineering training 45 6. Final remarks 48 Appendix A : Case studies 49 Appendix B : Estimating economic impact 74 Appendix C : Text mining of REF case studies 77 Assessing the economic returns of engineering research and postgraduate training in the UK i Table of Figures Figure 1 – Distribution of engineers throughout the UK economy ................................ 6 Figure 2 – Number of R&D personnel employed, by sector (000s in FTEs) .................. 7 Figure 3 – GVA of engineering related sectors ................................................................ 9 Figure 4 – Number of companies in the UK, by employment size band ....................... 10 Figure 5 – Distribution of skills across broad economic sectors ................................... 11 Figure 6 – Enterprises engaging in innovation (%) by broad sector ............................. 12 Figure 7 – Labour productivity and concentration of graduate engineers .................... 13 Figure 8 – Percentage of enterprises exporting (%), by broad sector ........................... 14 Figure 9 – Quality profile research outputs: RAE2008 versus REF2014 ..................... 15 Figure 10 – Field-weighted citation impact ................................................................... 16 Figure 11 – UK Participation in Fp7 (selected thematic areas) ...................................... 16 Figure 12 - European Research Council: Number of grants in the area of ‘Engineering and Physical Sciences’ (2007-2013) ............................................................................... 17 Figure 13 – Selected examples of notable innovations, by strategic sector .................. 20 Figure 14 – Distribution of specific sectors cited in REF Impact Case Studies ............. 21 Figure 15 – Engineering REF Case Studies across types of impacts ............................. 22 Figure 16 – Top 50 organisations in REF case studies, by number of citations ........... 25 Figure 17 – Top 10 areas supported by EPSRC where engineering research is a key component part .............................................................................................................. 34 Figure 18 – EPSRC grants and fellowships in engineering departments (active portfolio 2014) – strategic technology areas and sectors .............................................. 35 Figure 19 – Innovate UK Investments ............................................................................ 37 Figure 20 – Innovate UK investments relating to engineering (forecast expenditure 2014/15) .......................................................................................................................... 37 Figure 21 – Employment and expenditure in R&D, performed in UK businesses (2012) ........................................................................................................................................ 42 Figure 22 – Sectoral R&D expenditure as a share of all BERD, for selected countries 44 Figure 23 – Changing Composition of Employment by Occupation, 1992-2022 ......... 47 Figure 24 – Engineering research contributions to the construction sector ................. 55 Figure 25 - Main thematic fields in selected REF ‘healthcare’ impact case studies 68 Figure 26 - Information on SIC codes ............................................................................ 74 Figure 27 - REF impact case studies: analytical framework 77 Figure 28 – Number of Engineering REF Case Studies per institution (frequency) ... 78 Figure 29 – Number of received engineering impact REF Case Studies per UoA ........ 79 ii Assessing the economic returns of engineering research and postgraduate training in the UK Table of Boxes Box 1: Competitiveness and productivity ....................................................................... 22 Box 2: New economic activity ......................................................................................... 23 Box 3: Medicines and Healthcare Products Regulatory Agency (MHRA) .................... 29 Box 4: Better provision of public services ...................................................................... 30 Box 5: Innovate UK leading the manufacturing revolution ........................................... 40 Box 6: The Quantum Technology Partnership ............................................................... 40 Assessing the economic returns of engineering research and postgraduate training in the UK iii 1. Executive Summary The study This report provides quantitative and qualitative estimates of the economic impact of the UK’s investment in engineering research and post-graduate training, across the economy overall and where possible distinguishing contributions to different sectors and areas of activity. It was prepared by Technopolis with the close support of the EPSRC and the Royal Academy of Engineering, and overseen by a project steering committee chaired by Professor John Fisher. Engineering is pervasive and highly dynamic • Engineers are a pervasive force across any modern economy, with engineering research driving innovation and improved professional practice in almost every economic sector, from advanced manufacturing to software, from financial services through to the media and government. • There are around 450,000 engineers with graduate and postgraduate degrees (Level 4+) working in the UK, comprising 60% of all professional engineers nationally. Highly qualified engineers are distributed throughout the economy, which reflects the universal relevance of engineering skills, from numeracy to critical thinking, from design to communications. • Engineering graduates and especially postgraduates provide the social networks, skills and absorptive capacity to not only ‘do first-rate engineering,’ but also to drive business development more generally; in most parts of the economy, engineers can be found at the heart of almost any new product development initiative. • Engineering research and training have been critical to the profession’s ability to evolve in response to changing industrial needs and composition, reflecting the dynamic nature of the discipline and the people. What was understood as ‘engineering’ 20 years ago has changed dramatically today, with a broadening of the application of engineering and engineers in the new economy and a changing emphasis on key emerging technologies even within the more ‘traditional’ engineering sectors. This translates into a substantial contribution to UK economic output • Engineering contributed an estimated £280 billion in gross value added (GVA) in 2011, which is 20% of the total UK GVA, and back to the levels last seen in 2007, before the economic crisis1. The estimate includes the economic output of both the more ‘obvious’ engineering-related sectors of the economy, such as aerospace, and a share of the output of several other ‘less obvious’ sectors that employ significant numbers of highly-qualified engineers, including for example, knowledge intensive business services (e.g. advertising, management consultancy), health and finance. • Engineering qualifications attract an additional wage premium on average in comparison with the average for other scientific disciplines, estimated to be around 15% of the median salary for newly qualified graduates, which is a clear indication that engineers’ skills are highly valued in the economy. High concentrations of engineers are linked with innovation and competitiveness • Analysis of the UK Innovation Survey (2013) shows that sectors
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