North West Sees Second-Largest Increase in High-Reward R&D Spending
September 29, 2023
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September 29, 2023Manchester, 29 September 2023 – East Midlands business spending on the most valuable forms of innovation has fallen more than almost any other region of the UK[1], according to analysis of new Government statistics by Ryan, a leading global tax services and software provider.
Expenditure on high-reward research and development (R&D) fell in the region by 4.4% from £1.94 billion in 2020/21 to £1.86 billion in 2021/22. Only the North East had a bigger fall in spending.
The data, released last week, is captured by HMRC and is based on claims made for R&D tax relief, which reward businesses for qualifying activity.
The number of tax relief claims for R&D projects made by East Midlands businesses also shrank, falling by 1.6% to 5,790 claims. In total, East Midlands businesses claimed £335 million in R&D tax relief, with an average claim value of £57,858.
Total claims and spending by region in 2020/21 v 2021/22
| Region | Total claims 2020/21 | Total Expenditure 2020/21 (£ millions) | Total claims 2021/22 | Total expenditure 2021/22 (£ millions) | Change in claims | Change in expenditure |
| North East | 2,725 | 755 | 2,835 | 710 | 4% | -6% |
| East Midlands | 5,885 | 1,940 | 5,790 | 1,855 | -1.6% | -4.4% |
| East of England | 8,185 | 5,040 | 8,770 | 5,095 | 7.2% | 1.1% |
| Scotland | 4,575 | 1,875 | 4,550 | 1,905 | -0.6% | 1.6% |
| South West | 6,600 | 2,015 | 6,880 | 2,085 | 4.2% | 3.5% |
| Wales | 2,685 | 740 | 2,640 | 770 | -1.7% | 4.1% |
| London | 18,130 | 12,725 | 19,780 | 13,680 | 9.1% | 7.5% |
| Northern Ireland | 2,280 | 800 | 2,270 | 885 | -0.4% | 10.6% |
| South East | 12,520 | 7,645 | 13,260 | 8,640 | 5.9% | 13% |
| West Midlands | 7,335 | 2,865 | 7,430 | 3,335 | 1.3% | 16.4% |
| North West | 8,990 | 2,580 | 9,220 | 3,030 | 2.6% | 17.4% |
| Yorkshire and The Humber | 6,395 | 1,560 | 6,805 | 1,930 | 6.4% | 23.7% |
Overall, UK-wide innovation spending that qualifies for tax relief rose 8% to £44.1bn in 2021/22. However, the number of first-time claimants has fallen for the second year running.
R&D projects carried out by UK companies introduce new products and services to the marketplace, which play a critical role in economic growth as they attract investment, boost exports and lead to the creation of more skilled jobs.
R&D tax relief was introduced in 2000 to encourage and reward innovation and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum for companies seeking to resolve a scientific or technological uncertainty.
Nigel Holmes, Director, Research and Development at Ryan, said:
“While business spending on R&D has bounced back quickly from the pandemic, the East Midlands lags behind most of the country. It is also the only region to see both a fall in spending and a fall in claims.”
“Unlocking innovation plays a big role in driving economic growth and employment, and so it is important that business leaders do what they can to encourage research and development in their region.”