United Kingdom innovation survey 2023: report
Published 9 May 2024
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1. Headline findings:
In 2020-2022,
36% of UK businesses were innovation active.
This is a decrease compared to 45% in 2018-2020.
Large businesses were more likely to have innovated than small and medium enterprises (SMEs). In 2020-2022, 50% of large businesses were innovation active, compared to 36% of SMEs.
The percentage of innovation active businesses was highest in England (37%) in 2020-2022. In Scotland and Northern Ireland 32% of businesses in 2020-2022 were innovation active, compared to 31% in Wales.
Figure 1: Percentage of businesses which were innovation active, 2008-2010 to 2020-2022
1.1 What you need to know about these statistics:
The UK Innovation Survey (UKIS) is the main data source for business innovation in the UK. It is used widely across Government to help improve policy and by the research community for understanding the innovation landscape. UKIS 2023 sampled 32,273 UK businesses (for the period 2020-2022) with ten or more employees. It received a response from 14,570 businesses, giving a response rate of 45.1%.
2. Introduction
2.1 Defining innovation
The UK definition of innovation is based on an Organisation for Economic Co-operation and Development (OECD) definition, outlined in the Oslo Manual 2018. This definition includes any of the following activities, if they occurred during the survey period:
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The introduction of a new or improved product (goods or services);
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Business processes used to produce or supply all goods or services that the business has introduced, regardless of their origin. These innovations may be new to business or new to the market;
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Engagement in innovation projects not yet complete or abandoned;
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Investment activities in areas such as internal research and development, training, acquisition of external knowledge or machinery and equipment linked to innovation activities.
A business that had engaged in any of the activities described in points 1 to 3 is defined as being ‘innovation active’.
A business that had engaged in any of the activities described in points 1 to 4 is defined as a ‘broader innovator’.
A business that undertakes activity 2 only is described as a ‘business process innovator’. This definition is broader than the process innovator definition in previous UKIS surveys and is therefore not comparable. It aligns with OECD’s revised approach in conceptualising “innovation”.
2.2 About this release
The UK Innovation Survey (UKIS) is the main data source for business innovation in the UK. It is used widely across Government for information and policy formation and by the research community for understanding the innovation landscape.
These statistics are produced in line with the UK Statistics Authority’s Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards. The UK information can be compared internationally with OECD published information. Table 1b in the UKIS 2023 Statistical Annex compares UKIS 2018-2020 and 2020-2022 information with a subset of industries (industrial divisions) used for reporting by OECD.
UKIS 2023 asked businesses for information on their innovation activities over the three-year period from 2020 to 2022. If information was not available for calendar years, they were asked that their return covered the nearest financial years.
Comparisons are made with previous UK innovation surveys, covering periods back to 2008-2010, where appropriate. The period covering 2008-10 was the first survey data collected using a sample based on the Standard Industrial Classification 2007 (SIC 2007). This created a break in the time series, so comparisons to surveys prior to this are not included in this publication. Previous UK innovation survey reports can be viewed on DBT Community Innovation Survey webpage and historic information prior to 2009 is available from the National Archives website.
This report uses weighted data, in order to be representative of the business population. The responses were weighted to the total business population, using the Inter-Departmental Business Register (IDBR). They were not weighted by factors which would give more weight to larger businesses, such as employment or turnover.
Geographic location of businesses are based on businesses’ head office location. For example, a business operating in a particular region / country with a head office located elsewhere, will only be counted as in the head office geographic location.
Accompanying this report is a Statistical Annex of tables that can be viewed here. The Accompanying tables section outlines changes and improvements made to tables since UKIS 2021 main report.
All percentage point changes in this report are calculated from unrounded figures.
2.3 About this survey
The survey is the thirteenth UKIS. UKIS has been conducted every two years since 2005. The survey was funded and developed by the Department for Business and Trade (DBT) and administered by the Office for National Statistics (ONS) on behalf of DBT and the Department for Science, Innovation and Technology (DSIT).
The survey focusses on business adoption of innovation through new and improved products and services, investments in different types of innovation, and changes in business structures, management, design, and marketing innovations. The survey also asks businesses about the drivers which motivate and barriers to innovation. Although innovation is a strong predictor of higher productivity, wider research shows that it can be difficult to measure accurately, partly due to the changing nature of economic activity. Innovation value is fluid and travels easily across organisational boundaries so may be hard to recoup at the point of origin.
The sample selection was conducted by the ONS and followed very similar sampling methodology to the previous surveys.
UKIS 2023 sampled 32,273 UK businesses with ten or more employees. UKIS 2023 was carried out in 2023 and asked businesses about their innovation activities in 2020 to 2022 (2020, 2021 and 2022). The three year reporting period is consistent with previous UKIS surveys and is widely used internationally, hence UK can be compared with other OECD countries. The survey was voluntary and was conducted primarily through an electronic questionnaire. Businesses that did not complete an electronic response were contacted for a telephone interview. We received a response from 14,570 businesses, giving a response rate of 45.1%. This compares to 13,598 responses for UKIS 2021 (covering the three-year period from 2018 to 2020), which was a response rate of 42.6%.
The UKIS 2023 questionnaire can be viewed here.
Businesses are self-reporting their innovation activities when responding to this survey. Businesses that have reported certain activities, and therefore are classed as innovators by our definitions, sometimes do not think of themselves as innovators.
2.4 Policy context for innovation
On 22 July 2021 the Department for Business, Energy and Industrial Strategy published the ‘UK Innovation Strategy: leading the future by creating it’. The strategy sets out the Government vision to make the UK a global hub for innovation by 2035. Main actions / pillars are:
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Unleashing business: We will fuel businesses who want to innovate;
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People: We will make the UK the most exciting place for innovation talent;
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Institutions and places: We will ensure our research, development and innovation institutions serve the needs of businesses and places across the UK;
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Missions and technologies: We will stimulate innovation to tackle major challenges faced by the UK and the world and drive capability in vital technologies.
A Machinery of Government change in February 2023 led to the Department for Business, Energy and Industrial Strategy being closed. The Department for Business and Trade (DBT) was formed, as were the Department for Science, Innovation and Technology (DSIT) and the Department for Energy Security and Net Zero (DESNZ). DSIT leads on innovation policy and strategy. The UKIS 2023 survey was funded and developed by DBT and administered by the Office for National Statistics (ONS) on behalf of DBT and DSIT.
On 2 February 2022 the Department for Levelling Up, Housing and Communities published the White Paper ‘Levelling up the United Kingdom’. The percentage of businesses that are innovation active is one of the metrics for Mission 2 of the White Paper ‘By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.’
‘The UK Science and Technology Framework’ was published by DSIT on 6 March 2023. One of the outcomes by 2030 is for ‘Increased supply of UK institutional investment to deepen the pool of domestic capital available for scaling UK science and technology firms. We will engage closely with institutional investors, particularly defined contribution pension schemes, to address any remaining barriers to investment in innovative UK companies’.
The UK information can be compared internationally with OECD published information: a subset of industries (industrial divisions) used for reporting by OECD.
UKIS is needed to be able to inform these government wide policies and strategies and for international comparison.
3. Levels and types of innovation
3.1 Introduction
Innovation types and levels vary widely by organisation size and location, while business investment and its purpose can vary according to individual business choices in the context of sector and type of innovation.
3.2 Changes in innovation over time
Innovation and type of activity
Figure 3.2: Percentage of businesses engaging in innovation by activity, 2008-2010 to 2020-2022
In 2020-2022, 36% of UK businesses were innovation active. This is a decrease compared to 45% in 2018-2020.
Table 1a in the Statistical Annex of tables that accompanies this report can be viewed here. It provides a time series table from 2008-2010 to 2020-2022, with breakdowns of innovation active businesses by size of business, country / region, and industrial sector.
In 2020-2022, 39% of businesses were broader innovators. Businesses were more likely to introduce new business processes than new products. In 2020-2022, 29% of businesses were business process innovators and 19% were product innovators. In 2020-2022, 13% of businesses were both product and business process innovators.
Innovation activity varies by size of business
Large businesses were more likely to have innovated than SMEs. In 2020-2022, 50% of large businesses were innovation active, compared to 36% of SMEs. This trend was true for each type of innovation activity.
Table 3.2: Percentage of businesses engaging in innovation by activity and size, 2012-2014 to 2020-2022
| Type of activity | 2012-2014 | 2014-2016 | 2016-2018 | 2018-2020 | 2020-2022 |
|---|---|---|---|---|---|
| SMEs (10-249 employees) | |||||
| Innovation active | 53 | 49 | 37 | 44 | 36 |
| Broader innovator | 54 | 50 | 38 | 46 | 38 |
| Innovation investment activities | 43 | 44 | 33 | 42 | 37 |
| Product innovator | 19 | 24 | 18 | 20 | 19 |
| Abandoned | 4 | 4 | 2 | 3 | 3 |
| Ongoing | 17 | 16 | 10 | 9 | 11 |
| Large businesses (250 plus employees) | |||||
| Innovation active | 61 | 63 | 50 | 58 | 50 |
| Broader innovator | 62 | 65 | 52 | 60 | 52 |
| Innovation investment activities | 50 | 58 | 45 | 54 | 50 |
| Product innovator | 27 | 29 | 22 | 27 | 27 |
| Abandoned | 7 | 7 | 2 | 5 | 5 |
| Ongoing | 24 | 28 | 19 | 18 | 19 |
This pattern of innovation activity being lower in 2020-2022 than 2018-20 for all businesses and both SMEs and large businesses, was replicated within the panel data. The panel data covers a longitudinal sub-sample of 4,111 businesses that responded to the questionnaire in each of the last three UKIS surveys (2019, 2021 and 2023). See Statistical Annex: Table P1 of Table 18.
3.3 Change in innovation investment and expenditure over time
Figure 3.3: Percentage of businesses investing in the following innovation activities in 2016-2018 to 2020-2022
There were decreases in the percentage of businesses investing in each innovation activity between 2018-2020 and 2020-2022. The largest decreases were in the percentage of businesses investing in computer hardware and software since the previous survey, nevertheless these remain the most common activities. Computer software investment decreased from 24% to 18% of businesses, and computer hardware investment decreased from 23% to 17% of businesses. The percentage of businesses investing in Internal R&D was 14% in 2020-22 and percentage of businesses investing in machinery and equipment was 13%.
The percentage of businesses investing in machinery and equipment was highest in the North East (16%) and lowest in London (8%). The relatively low percentage in London is likely to reflect the fact that a greater proportion of London businesses are in the service sector. The percentage of businesses investing in computer software was highest in the West Midlands and in computer hardware was highest in the South East. The percentage of businesses investing in computer software was lowest in Wales and in computer hardware was lowest in the South West (see Statistical Annex – Table 2).
Figure 3.4: Innovation expenditure by area, as a percentage of total innovation expenditure for all businesses 2018, 2020 and 2022
Expenditure information is only collected for one year of the survey period (for example the UKIS 2023 survey collects expenditure data for 2022).
In 2022, the percentage of innovation expenditure used for internal R&D was 45%, a five percentage point decrease since the previous survey. In 2022, the percentage of innovation expenditure used for acquisition of machinery, equipment and software was 35%, a five percentage point increase compared to 30% in 2020. In 2022, the percentage of innovation expenditure used for acquisition of external R&D was 5%, a one percentage point decrease compared to 2020.
4. Collaboration, information sources used by businesses, financial support and exports
4.1 Introduction
Developing innovations of any kind can be a complex process and businesses may decide to work jointly with other businesses or organisations and seek access to sources of advice and information to help the creative process. This section explores the types of collaborators that businesses work with and where they turn for support (both information sources used and financial support). It also looks at percentages of broader innovators and non-broader innovators that export.
4.2 Collaboration
Co-operation arrangements
Co-operation occurs when two or more participants agree to take responsibility for a task or series of tasks and information is shared between the parties to facilitate the agreement. An innovation-active business co-operates with another business if it procures ideas or inputs from the other business, by providing it with a detailed specification of its needs.
In UKIS 2023 the collaboration question was asked slightly differently to previous iterations of the UKIS survey. A filter question was introduced, so that businesses who did not co-operate with other businesses or organisations were no longer asked detailed breakdowns on their collaboration activities. Responses to the questions have been somewhat different and for this reason information below is only presented on UKIS 2023 information only.
Figure 4.2: Percentage of businesses with each type of co-operation arrangement (of broader innovators with any co-operation arrangements only), 2020-2022
In 2020-2022, 92% of broader innovators with any co-operation arrangements reported co-operating with other businesses in their enterprise group, 91% with their suppliers, and 85% with clients and customers in the private sector. Overall businesses were much more likely to work with private sector organisations than they were with public sector and government organisations. Some 27% reported working with government or public research institutes, and 33% with universities or other higher education institutions.
4.3 Trends in information sources used to support innovation activities
Figure 4.3: Percentage of broader innovator businesses rating listed information sources as “highly important” to innovation activities, 2016-2018 to 2020-2022
Note for figure 4.3: * Social web-based networks or crowd sourcing was an option introduced from UKIS 2021 onwards. Regulators and / or regulations was a new option introduced in UKIS 2023.
Figure 4.3 shows that the information sourced from within their own business or enterprise group was the most highly rated by broader innovator businesses to support innovation activities. In UKIS 2023 regulators and / or regulations was an added option, 19% of broader innovators rated this as a highly important source of information to their businesses’ innovation activities. See Statistical Annex: Table 9 for more information.
4.4 Financial support
Around 4% of businesses in the 2023 survey reported receiving financial support from UK central government for innovation activities, compared to 6% receiving support in the 2021 survey. Around 1% of businesses received direct financial support (such as smart or collaborative R&D grants, work with Catapult centres, Innovation vouchers etc) and 4% received indirect financial support (such as R&D tax credits or coronavirus pandemic support).
Businesses making use of public support, in the form of financial support via tax credits or deductions, grants, subsidised loans and loan guarantees, may benefit from greater capacity to innovate. In turn this could lead to superior performance outcomes, including increased turnover and increased numbers of employees. Regression analysis which accompanied the UK Innovation Survey 2017: main report, showed that businesses that received financial support were more likely to experience increases in turnover and employment (see Appendix 1 in UK Innovation Survey 2017: main report).
4.5 Exports
Figure 4.5: Percentage of businesses that export by employment size, 2022 only
In 2022, 16% of all businesses in UKIS exported. Around 15% of businesses left the survey question unmarked. Percentages of businesses that export are calculated from the total number of businesses (unmarked responses are included in the denominator).
Broader innovators are much more likely to export (27% of businesses), than non-broader innovators (9% of businesses). Co-operating businesses were more likely to export (33% of businesses), than non co-operating businesses (13% of businesses).
Large businesses are much more likely to export and co-operate with other businesses than SMEs.
5. Innovation by industrial sector
5.1 Introduction
Innovation engagement varies across different types of industrial sector and the type of innovation can vary according to sector, in particular whether businesses are supplying products or services.
5.2 Patterns of innovation behaviour in sectors
Figure 5.2: Percentage of innovation active businesses by industrial sector, 2016-2018 to 2020-2022
Note for figure 5.2:
The figures quoted in this chart are based on full weights for 25 sectors but only 15 broad groups are shown for presentation purposes.
Figure 5.2 shows how innovation activity varies across industrial sectors. The percentage of innovation active businesses has decreased in all industrial sectors between 2018-2020 and 2020-2022. The three industrial sectors with the largest percentage point decreases in innovation activities (each of 14 percentage points) were in: i transportation (by land, water & air), warehousing and storage ii construction and iii mining and quarrying.
Businesses in production industries generally remained more innovative than businesses in distribution and service industries. In 2020-2022, manufacture of computer, electrical and optical equipment and the manufacture of transport equipment remained the most innovative industries (62% and 61% of businesses respectively). Real estate and accommodation and food services had the lowest percentage of innovation active businesses (23% and 25% of businesses respectively). The relative order of industries in terms of their innovation activities was similar to the previous survey (see Statistical Annex: Table 1a).
This pattern of decreases in innovation activity across all industries is repeated in the panel survey, with decreases in almost all sectors between panel members who responded in both 2019 and 2021 (see Statistical Annex: Table P4 of Table 18).
6. Geography of innovation
6.1 Introduction
This section investigates variations in engagement in innovation at a spatial level over the past three waves of the survey.
Geographic location of businesses are based on businesses’ head office location. For example, a business operating in a particular region / country with a head office located elsewhere, will only be counted as in the head office geographic location.
6.2 Spatial distribution of innovative businesses
Country level differences
Figure 6.2: Percentage of innovation active businesses by country, 2016-2018 to 2020-2022
The percentage of innovation active businesses was highest in England (37%) in 2020-2022. In Scotland and Northern Ireland 32% of businesses in 2020-2022 were innovation active, compared to 31% in Wales.
The percentages of innovation active businesses in all four countries were lower in 2020-2022 than 2018-2020. The largest percentage point decrease was in Wales, where the percentage of innovation active businesses decreased from 44% in 2018-2020 to 31% in 2020-2022.
Similar trends were found in the longitudinal panel survey, with decreases in the percentages of businesses who were innovation active in all UK countries, when comparing UKIS 2023 to 2021 for panel respondents (see Statistical Annex: Table P5 of Table 18).
Regional level differences (English Regions only)
Figure 6.3: Percentage of innovation active businesses by English regions, 2016-2018 to 2020-2022
The South East and the East of England were the English regions with the highest percentage of innovation active businesses in 2020-2022 (40% and 39% respectively). The North West, East Midlands, West Midlands, and Yorkshire and the Humber were the English regions with the lowest percentage of innovation active businesses in 2020-2022 (35% for each).
There has been a reported decrease in innovation activity in all English regions among businesses between 2018-2020 and 2020-2022 (see Table 1a in the Statistical Annex). The largest percentage point decreases of thirteen percentage points were in the West Midlands and Yorkshire and the Humber. Similar trends were found in the longitudinal panel survey, with decreases in percentages of businesses who were innovation active in all English regions, when comparing UKIS 2023 to 2021 for panel respondents (see Statistical Annex: Table P5 of Table 18).
International Territorial Level 2 geographic boundary differences
Figure 6.4: Percentage of innovation active businesses by International Territorial Level 2 geographic boundaries, 2020-2022. Official statistics in development
Note for figure 6.4:
Digital boundary products and reference maps are supplied under the Open Government Licence. Source: Office for National Statistics licensed under the Open Government Licence v.3.0. Contains OS data © Crown copyright and database right [2024].
Analysis by International Territorial Level 2 (ITL 2) geographic boundary (above) and by Local Enterprise Partnership (LEP) below are official statistics in development. The sample was not selected to be representative at this geographic level. ITL 2 and LEP information has been calculated by using a separate weighting to the rest of the publication. The weighting is based on ITL / LEP boundaries, three broad sectors and business size band. The three broad sectors are: i Production – which covers manufacturing, including electricity and construction, ii Other services – retailing, accommodation etc, and iii Business Services: R&D, Real Estate and other non-financial services etc.
Figure 6.4 (above) and Statistical Annex: Table 6 show the percentage of innovation active businesses by ITL 2 boundary. The two ITL 2 areas i Berkshire, Buckinghamshire and Oxfordshire and ii Gloucestershire, Wiltshire and Bath/Bristol area, had the highest percentage of innovation active businesses in 2020-2022 (45% each). Outer London: East and North East and Cheshire were the ITL 2 areas with the lowest percentage of innovation active businesses in 2020-2022 (27% and 29% respectively). More detailed information by further types of innovation activities, by ITL 2 area is available in Statistical Annex: Table 6.
Local Enterprise Partnership (LEP) differences (England only)
Figure 6.5 (below) and Statistical Annex: Table 6a show the percentage of innovation active businesses by LEP (England only). The two LEPs, i Stoke-on-Trent and Staffordshire and ii Oxfordshire had the highest percentage of innovation active businesses in 2020-2022 (52% and 51% respectively). Hull and East Yorkshire was the LEP with the lowest percentage of innovation active businesses in 2020-2022 (27%). More detailed information by further types of innovation activities, by LEP (England only) is available in Statistical Annex: Table 6a.
Figure 6.5: Percentage of innovation active businesses by LEP (England only), 2020-2022. Official statistics in development
Notes for figure 6.5:
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LEP boundaries are based on the ONS Open Geography portal. The Greater Birmingham and Solihull LEP region overlaps with the Stoke-on-Trent and Staffordshire LEP region, and the Worcestershire LEP region. In these instances, the overlaps are shown separately on this map and allocated the Greater Birmingham and Solihull LEP value.
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Digital boundary products and reference maps are supplied under the Open Government Licence. Source: Office for National Statistics licensed under the Open Government Licence v.3.0. Contains OS data © Crown copyright and database right [2024].
7. Factors driving innovation
7.1 Introduction
Research has shown that innovation significantly boosts productivity growth. There are varying motivations for businesses to engage in broad forms of innovation, which may relate to firms’ business strategies of improving quality, reducing costs, or diversifying their range of products and services. Changes in these motivations can vary over time, reflecting evolution in the external environment and market conditions.
7.2 Trends in factors driving innovation
Figure 7.2 shows trends in motivations for businesses to engage in broad forms of innovation.
Figure 7.2 Innovation factors (percentage of all broader innovators rating factor as of “high” importance to their decision to innovate) 2016-2018 to 2020-2022
Note for figure 7.2: * Issues related to COVID-19 pandemic was an option introduced from UKIS 2021 onwards. Recent increases in energy prices was a new option introduced in UKIS 2023. Meeting regulatory requirements and meeting technical, industry or service standards were asked separately in UKIS 2023.
Businesses cited a number of different factors influencing their decision to innovate. Improving quality of goods or services remained the top-rated factor, being of high importance to 46% of broader innovator businesses in 2020-2022. The next highest rated reason for innovating was meeting regulatory requirements (37%). Issues related to the coronavirus (COVID-19) pandemic and recent increases in energy prices were each rated as of high importance by 28% of businesses. Further information on the drivers of innovation and regional / industrial sector variations among these common drivers are shown in Statistical Annex – Table 10.
Improving quality of goods or services along with meeting regulatory requirements were the most common factors in driving innovation in the 2023 wave of the panel respondents – see Statistical Annex Table P6 of Table 18.
A theme from the comments given by businesses on the UKIS 2023 survey was that many businesses innovated or diversified as a direct result of the coronavirus (COVID-19) pandemic. The majority of innovation for these businesses was in the online / digital area. There were also many comments about how businesses reduced their environmental impacts and the steps they took to do this.
8. Barriers to innovation
8.1 Introduction
Research has shown perceived barriers to innovation appear to have little relation to business performance, when focussing on highly innovative businesses. It is important to compare and track perceptions of barriers to innovation among innovative businesses and non innovators over time.
8.2 Trends in barriers to innovation
Figure 8.2: Broader innovators’ perception of potential barriers to innovation (businesses gave listed factors a rating of ‘high’ importance to constraining innovation activities), 2016-2018 to 2020-2022
Notes for figure 8.2: * Issues related to COVID-19 pandemic was an option introduced from UKIS 2021 onwards. Technical, industry or service standards and Recent increases in energy prices were options introduced in UKIS 2023.
Issues related to the coronavirus (COVID-19) pandemic was the highest rated barrier to innovation. It was rated as of ‘high’ importance by 33% of broader innovator businesses in 2020-2022. Recent increases in energy prices was rated as the next biggest barrier, of ‘high’ importance to 30% of broad innovator businesses in 2020-2022. Cost factors (including finance availability, direct innovation costs too high and finance costs) had been the biggest barrier in UKIS surveys prior to the coronavirus (COVID-19) pandemic.
The withdrawal of the United Kingdom from the European Union was of ‘high’ importance, as a barrier, to 19% of broader innovators in 2020-2022, compared to 13% in 2018-2020. UK Government regulations was of ‘high’ importance, as a barrier, to 17% of broader innovators in 2020-2022 and EU regulations to 11% of broader innovators. Further information on the barriers to innovation for broader innovators and regional / industrial variations towards these barriers are shown in Statistical Annex: Table 10a.
The main barriers to innovation for non-broader innovators were recent increases in energy prices and issues related to the coronavirus (COVID-19) pandemic. In total, 11% and 10% respectively of these non-broader innovator businesses rated each barrier as of ‘high’ importance, see Statistical Annex: Table 10b. Additionally, non-broader innovators were asked to give further information on the reasons ‘why it has not been necessary or possible to innovate?’, which are shown in table 11. No need to innovate due to market conditions (38% of businesses) and no need due to previous innovations (32% of businesses) were the main reasons given for not innovating for these types of businesses.
Main themes from businesses who gave comments on the UKIS 2021 survey were that issues related to the coronavirus (COVID-19) pandemic and increases in energy prices were the major barriers to investing in innovation. A number of businesses commented that planned innovations were no longer undertaken, due to the coronavirus (COVID-19) pandemic.
9. Skills for innovation / technology used by businesses
9.1 Introduction
Workforce skills to create and implement new products, services, practice and processes are essential components to introducing innovations. Previous research has shown that science, technology, engineering, and maths (STEM) graduates make up a greater share of the workforce in highly innovative businesses, than in less innovative organisations. STEM graduate employment is also associated with greater use of external information, co-operation, and introduction of new products. It is argued that employing STEM graduates increases demand for innovation, through greater use of external collaboration and networking, leading in turn to further demand for these graduates.
9.2 Trends in skills and innovation over time
Figure 9.2: Average percentage of employees who held a degree or higher qualification, in 2018 to 2022
Figure 9.2 compares the average proportion of the workforce holding at least a degree level qualification in non-innovators and broader innovator businesses. The average percentage of employees with a degree or higher qualification was higher for broader innovators than for non-innovators.
Amongst broader innovator businesses in 2022, 15% of employees had a science or engineering qualification, and 21% had a qualification in a non-science subject. In 2022, 7% of staff employed by non-innovators had a science or engineering qualification, and 15% had a qualification in a non-science subject.
Overall, in 2022, 11% of employees held a degree in a science or engineering subject, and 18% in all other subjects (see Statistical Annex: Table 13).
Proportions of science or engineering graduates in the workforce of broader innovators was substantially higher in London (26%) and lower in the West Midlands and North West (both 9%): see Statistical Annex: Table 13. Proportions of non-science or engineering graduates in the workforce of broader innovators were substantially higher in London (43%) and lowest in the South West (13%).
Regression analysis which accompanied the UK Innovation Survey 2017: main report showed that businesses which employed an increasing share of either STEM or non-STEM graduates, were more likely to experience improvements in turnover and employment (see Appendix 1 in UK Innovation Survey 2017: main report).
Figure 9.2a: Skills: percentage of businesses employing individuals in-house or obtaining listed skills from external sources, in 2016-2018 to 2020-2022
Note for figure 9.2a: * Data scientists was a new skill introduced in UKIS 2021.
Figure 9.2a shows that in 2020-2022, 17% of businesses employed individuals in-house with graphic arts, layout or advertising skills or obtained these skills from external sources. 17% of businesses also employed individuals in-house with multimedia or web design skills or obtained these skills from external sources. See Statistical Annex: Table 14 for further details.
9.3 Management technologies and production enhancing technologies used by businesses
UKIS 2023 asked new questions on business use of management technologies and production enhancing technologies.
Figure 9.3: Management technologies used, by all businesses that used any of the management technologies, 2022
Accountancy software was by far the most used management technology, by 92% of both broader innovators and non-broader innovators who used any of the management technologies. For all other management technologies, the percentage of business who used them was much higher for broader innovators than non-broader innovators. Videoconferencing software was the second most used management technology (by businesses that used any management technologies), used by 57% of broader innovators and 37% of non innovators.
Figure 9.4: Production enhancing technologies used, by all businesses that used any of the production enhancing technologies, 2022
Cloud based computing was by far the most used production enhancing technology, by 80% of broader innovators and 81% of non-broader innovators who used any of the production enhancing technologies. For all other production enhancing technologies the percentage of business who used them was much higher for broader innovators than non-broader innovators. Computer aided design (CAD) software was the second most used production enhancing technology (by businesses that used any production enhancing technologies), used by 34% of broader innovators and 22% of non innovators.
10. Environmental innovations
UKIS 2023 asked new questions on innovations with environmental benefits (IWEB) obtained within the business and during consumption or use of good or service by the end user.
Figure 10.1: Broader innovators that introduced innovations with environmental benefits (IWEB) obtained within the business, 2020-2022
Figure 10.2: Broader Innovators that introduced innovations with environmental benefits (IWEB) obtained during consumption, 2020-2022
Figures 10.1 and 10.2 show that 52% of broader innovators introduced an innovation with environmental benefits (IWEB). Any IWEB obtained within the business was carried out by 46% of broader innovators and any IWEB obtained during consumption, or use of good or service by the end user, was implemented by 32% of broader innovators.
The most commonly carried out IWEB obtained within the business were reduced energy use or CO2 footprint (by 32% of broader innovators) and reduced material or water use per unit of output (by 20% of broader innovators)
The most commonly carried out IWEB obtained during consumption, or use of good or service by the end user, were reduced energy use or CO2 footprint (by 18% of broader innovators) and the IWEB facilitated recycling of product after use (by 16% of broader innovators).
11. Accompanying tables
Accompanying this report is a Statistical Annex of tables that can be viewed here:
Tables 1 to 14 are consistent breakdowns for UKIS 2023 covering the period 2020-2022 or just for 2022 in certain instances.
Table 1a provides further information than previously presented. It is a time series table from 2008-2010 to 2020-2022 with breakdowns of innovation active businesses by size of business, region and sector.
Table 1b in the UKIS 2023 Statistical Annex compares UKIS 2018-2020 and 2020-2022 information with a subset of industries (industrial divisions) used for reporting by OECD. OECD publish internationally comparable UK figures in Business innovation statistics and indicators Business innovation statistics and indicators
New Table 1c compares business turnover related to innovation, between all UKIS industries sampled and a subset of industries used for OECD reporting, 2022.
New tables on management and production enhancing technologies (Tables 15 and 16).
New tables on innovations with environmental benefits (Tables 17 and 17a).
Table 18 is consistent with previously presented panel analysis, with the addition of UKIS 2023 information covering the period 2020-2022. The UKIS 2023 Statistical Annex includes 8 sub tables to table 18 (P1 to P9), for businesses that responded to the questionnaire in each of the last three UKIS surveys (2019, 2021 and 2023).
12. Technical information
This report presents the findings from the UK Innovation Survey 2023 (UKIS 2023), covering the three-year period from 2020 to 2022. This is the thirteenth UKIS and comparisons are made with the previous surveys.
UKIS 2023 sampled 32,273 UK businesses with ten or more employees. The survey was voluntary and was conducted primarily through an electronic questionnaire. Businesses that did not complete an electronic response were contacted for a telephone interview. We received a response from 14,570 businesses, giving a response rate of 45.1%.
Further details on UKIS methodology are published in the Statistical Annex to this report for UKIS 2023 and a copy of the questionnaire used can be viewed here.
13. Definitions
The UK definition of innovation is based on an Organisation for Economic Co-operation and Development (OECD) definition, outlined in the Oslo Manual 2018. This definition includes any of the following activities, if they occurred during the survey period:
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The introduction of a new or improved product (goods or services);
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Business processes used to produce or supply all goods or services that the business has introduced, regardless of their origin. These innovations may be new to business or new to the market;
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Engagement in innovation projects not yet complete or abandoned;
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Investment activities in areas such as internal research and development, training, acquisition of external knowledge or machinery and equipment linked to innovation activities.
A business that had engaged in any of the activities described in points 1 to 3 is defined as being ‘innovation active’.
A business that had engaged in any of the activities described in points 1 to 4 is defined as a ‘broader innovator’.
A business that undertakes activity 2 only is described as a ‘business process innovator’. This definition is broader than the process innovator definition in previous UKIS surveys and is therefore not comparable. It aligns with OECD’s revised approach in conceptualising “innovation”.
| Term | Description |
|---|---|
| Co-operation arrangements | Co-operation occurs when two or more participants agree to take responsibility for a task or series of tasks and information is shared between the parties to facilitate the agreement. An innovation-active business co-operates with another business if it procures ideas or inputs from the other business by providing it with a detailed specification of its needs |
| EU | European Union |
| Innovation investment activities | Business that reported spending in each of the specified main innovation related investments (as described in point 4 above) |
| Innovation-related activities | Categories of innovation directed investment such as: R&D, capital goods and software acquisition, design activity, for implementing current innovations or directed to future product or process changes. |
| Large business | A business with 250 or more employees. |
| New to market | The introduction of a new good or service to the market before competitors. |
| New to this business | Introduction of a new good or service that was essentially the same as a good or service already available from competitors. |
| OECD | Organisation for Economic Co-operation and Development |
| Product innovation | Bringing to the market or into use by business, new and improved products, including both tangible goods and the provision of services. The degree of innovativeness is shown by the distinction between products new just to the business or which are also new to the market |
| R&D | Research and Development |
| Small and medium-sized enterprises (SMEs) | Businesses with 0-249 employees. This survey does not include any businesses with less than 10 employees |
14. Further information
14.1 Future updates to these statistics
Detailed microdata will be made available to accredited researchers through the ONS Secure Research Service / Integrated Data Service and the UK Data Service and the UK Data Service.
A UKIS 2025 report covering the survey period 2022-2024 will be published in spring 2026. A Statistical Annex with further data will accompany this publication.
14.2 Related statistics
International comparisons
The UKIS data is used for international statistics on innovation:
International comparisons are published by the OECD in Business innovation statistics and Indicators. Information on UKIS 2023 will be published by OECD around summer / autumn 2025.
Research and development
The Office for National Statistics (ONS) publishes detailed statistics on research and development. The links below are the most recent data at the time of UKIS 2021 Report publication:
Business enterprise research and development (2022)
Gross domestic expenditure on research and development (2021)
Research and development expenditure by the UK government (2022)
Business statistics
For more general business statistics, please see:
Business population estimates for an estimate of the total number of registered and unregistered businesses in the UK.
UK business; activity, size and location for UK registered businesses by legal status, industry, region, employment and turnover size bands.
Longitudinal Small Business Survey for information on survey responses for businesses with employees and businesses with no employees on a range of topics including innovation.
Business insights and impact on the UK economy - Office for National Statistics (ons.gov.uk) publishes information from the Office for National Statistics Business Insights and Conditions Survey
14.3 Revisions policy
The DBT statistics error policy sets out the revisions policy for these statistics, which has been developed in accordance with the UK Statistics Authority Code of Practice for Statistics.
14.4 Uses of these statistics
The UK Innovation Survey (UKIS) is the main data source for business innovation in the UK. It is used widely across government and by the research community (including the Enterprise Research Centre) for understanding the innovation landscape, drivers of business growth and productivity and to help the Government develop, improve, and evaluate policy.
Internationally, it is used by OECD for international comparison (see Related statistics section).
14.5 User engagement
Users are encouraged to provide comments and feedback on how these statistics are used and how well they meet user needs. Comments on any issues relating to this statistical release are welcomed and should be sent to: business.statistics@businessandtrade.gov.uk
The DBT statement on [statistical public engagement and data standards](statistical public engagement and data standards sets out the department’s commitments on public engagement and data standards as outlined by the Code of Practice for Statistics.
14.6 Official statistics regulation
UKIS statistics are official statistics – they provide a factual basis for assessment and decisions on economic, social and environmental issues at all levels of society.
Our statistical practice is regulated by the Office for Statistics Regulation (OSR).
OSR sets the standards of trustworthiness, quality and value in the Code of Practice for Statistics that all producers of official statistics should adhere to.
You are welcome to contact us directly with any comments about how we meet these standards.
Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.
14.7 Pre-release access to statistics
Principle T3 of the Code of Practice for Statistics requires that access to official statistics before their public release is limited to certain individuals. This includes those involved in the production of the statistics and the preparation of the release, and those involved for quality assurance and operational purposes. Pre-release access may only be granted in accordance with the rules and principles set out in the Pre-release Access to Official Statistics Order 2008. In addition, the order requires that records are published of those who have access prior to public release.
Below is the list of roles for people who received pre-release access to UK Innovation Survey 2023:
Secretary of State, Department for Business and Trade (DBT)
DBT Minister of State, Minister Hollinrake
DBT Parliamentary Under Secretary of State, Minister Mak
DBT Special Advisers
DBT Permanent Secretary
DBT Director General, Strategy and Investment
DBT Director, Analysis
DBT Deputy Director, Chief Statistician
DBT Press Officers x2
Scottish Government, G7 Business and Innovation Statistician
Contact
Responsible statistician: James Achur
Email: business.statistics@businessandtrade.gov.uk
Media enquiries: 020 7215 1000
Public enquiries: 07391 864586
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