Chapter 1 - Finance
Table 1.8 MOD Research & Development Expenditure Outturn
This table details the MOD's annual expenditure on Research and Development (R&D) activity. Expenditure is broken down into intramural (i.e. R&D activity undertaken within the Department) and extramural (i.e. R&D activity undertaken outside of the Department). The data included in this table are derived from an annual survey of MOD R&D expenditure conducted by DASA and information from MOD accounting systems. DASA seek to classify R&D activity within the Organisation for Economic Co-operation & Development's Frascati Guidelines which align to National Accounts definitions.
Following a recent data quality review, the MOD development estimates for 2003/04 to 2005/06 have been revised downwards. We have also sought to publish estimates for 2006-07 for the first time. Estimates for 2007-08 will appear in UKDS 2009 at the end of September 2009. The MOD research expenditure estimates remain unaffected by these revisions. For the years 2001-02 and 2002-03 MOD net development expenditure, as defined by Frascati, may have been overstated by up to 40% per year, but insufficient records exist to enable a true estimate to be made. We therefore advise that the data for these years be treated with caution as we cannot guarantee that the data complies with the Frascati guidelines and meets all of the high professional assurance standards set out in the Code of Practice for Official Statistics.
Full details highlighting the deficiencies in the estimates for 2001-02 and 2002-03, the revisions to later years and our future plans to continue to improve these statistics are published in DASA Defence Defence Statistics Bulletin No.9 which is available on the DASA website.
                               
Inclusive of non-recoverable VAT at Current Prices (£ million)
Research & Development 1990/91   1997/98   2001/021,2 2002/03   2003/044   2004/054   2005/064   2006/07
Total Gross Expenditure on R&D 2 453 || 2 371 || 2 117 2 790 || 2 200 r 2 260 r 2 318 r 2 212
Of which:                            
Intramural   902 || 750 || 419 288 || 380   357   365   361
Extramural   1 551 || 1 622 || 1 698 2 502 || 1 820 r 1 903 r 1 953 r 1 851
                             
Receipts3 116 || 57 || 60 56 || 68   69   75   88
Of which used:                            
Intramurally   53 || 39 || 44 46 || 59   61   74   81
Extramurally   63 || 18 || 16 10 || 9   8   1   7
Total Net Expenditure on R&D 2 337 || 2 314 || 2 057 2 734 || 2 133 r 2 191 r 2 243 r 2 124
Inclusive of non-recoverable VAT at Current Prices (£ million)
Research   1990/91   1997/98   2001/021,2 2002/03   2003/04   2004/05   2005/06   2006/07
Total Gross Expenditure on Research . . || 577 || 616 524 || 548   664   626   664
Of which:                            
Intramural   . . || 325 || 229 145 || 164   190   171   179
Extramural   . . || 251 || 388 379 || 384   474   455   485
                             
Receipts3 . . || 13 || 60 9 || 24   26   28   32
Of which used:                            
Intramurally   . . || 12 || 44 9 || 23   25   27   31
Extramurally   . . || 2 || 16 - || 1   1   1   1
Total Net Expenditure on Research 412 || 564 || 557 515 || 524   639   598   632
Inclusive of non-recoverable VAT at Current Prices (£ million)
Development
   1990/91   1997/98   2001/021,2 2002/03   2003/044   2004/054   2005/064   2006/07
Total Gross Expenditure on Development
 . . || 1 794 || 1 500 2 266 || 1 652 r 1 596 r 1 693 r 1 548
Of which:
                            
Intramural
   . . || 424 || 190 143 || 216   167   194   182
Extramural
   . . || 1 370 || 1 311 2 123 || 1 436 r 1 429 r 1 499 r 1 366
                             
Receipts3 . . || 44 || - 48 || 44   43   47   56
Of which used:
                            
Intramurally
   . . || 28 || - 38 || 35   36   47   49
Extramurally
   . . || 16 || - 10 || 8   8   -   7
Total Net Expenditure on Development
 1 926 || 1 750 || 1 500 2 218 || 1 609 r 1 552 r 1 645 r 1 492
Source: DASA (Defence Expenditure Analysis)
1.   Since 2000/01 the Departmental Resource Accounts (DRAc) follow Statement of Standard Accounting Practice 13, "Accounting for Research and       Development". Since 2000/01 the figures are calculated on a resource basis, and are consistent with the aggregate of Research & Expensed Development       plus Additions to Intangible Assets. Following this years quality review, figures from 2003-04 onwards continue to be consistent with the aggregate of       Research & Expensed Development but comprise only that element of Additions to Intangible Assets (taken to represent capitalised development) which has       been assessed as Frascati compliant. This table therefore comprises elements from both the Operating Cost Statement and the Balance Sheet in the MOD       accounts.
2.   On 1 July 2001 DERA was split into two organisations: the Defence Science & Technology Laboratory (Dstl) (about a quarter of DERA) staying as a
      Trading Fund within MOD, and QinetiQ, the remainder, becoming a private (extramural) company.
3.   Receipts are monies received by MOD & its Trading Funds for expenditure on R&D, for example from other government departments & private industry.
      This money is not necessarily spent on defence-related R&D.
4.   Access to project level data for the first time has enabled us to more closely align to the OECD definitions and remove activities which do not strictly comply       to these. Non Frascati expenditure during this period represented an average of 20% per year of the annual estimate of aggregate MOD net development       spend.