European Commission - Internal Market, Industry, Entrepreneurship and SMEs

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R&D Grants

Title of measure
2004 to 2020
Policy objectives Plus
4.1. Direct funding to business R&D and innovation
Presentation of the measure:

Scottish Enterprise’s (SE’s) R&D Grant supports a single company to undertake development of new products or processes to the pre-production prototype stage through discretionary grants of up to 25% of eligible project costs.

The R&D Grant supports businesses developing new products, processes and services to improve company competitiveness and to benefit the Scottish economy. Projects must represent a significant innovation for the company concerned and significant risks should be associated with the challenge of developing a new product, process or service.

Companies of all sizes may be eligible provided that they are based in Scotland or planning to set up in Scotland. SMEs must meet the EU's definition of a small and medium-sized enterprise. Most sectors are eligible and applications from traditional industries, hi-tech businesses, and the service sector are equally welcome. However, SE do not support defence projects unless they have a primary civilian application. Certain industry sectors have restrictions on state aid for R&D under the provisions of the Treaty of Rome (Articles 92 and 93). The industries currently affected include shipbuilding and transport.

Grants are made at the discretion of Scottish Enterprise (SE) and the amount offered follows an appraisal of the level of support needed. Grants are available at:

  • A maximum of 35% of the eligible project costs for grants to SMEs up to £100,000 (€117.7k);
  • A maximum of 35% of the eligible project costs for grants to SMEs above £100,000 (€117.7k);
  • A maximum of 25% of the eligible project costs for all grants to large companies.

Grants above £100,000 (€117.7k) must demonstrate a positive impact on R&D jobs in Scotland.Grants to SMEs may involve European funding on a per case basis.

The selection process takes account of a number of factors including the nature of R&D, whether it creates or safeguards R&D jobs, whether it links in to other local companies perhaps for materials or specialist knowledge, whether there is a global market opportunity, whether intellectual property has been considered. SE also looks at the financial and commercial aspects of an application as well as the management expertise available to the business.

Budget, source and type of funding
National public funds
Regional public funds177496720695383292159577647863241059210298850000069310009117000
EU Structural funds
Private funds
Form of funding provided
Policy learning
To what extent the measure can be considered as a success and worthy of policy learning?:
There is evidence of an impact of the measure based on verifiable indicators or an evaluation (e.g. sales generated from new products, jobs created, etc.)
Evidence of outcomes based on evaluation and other evidence:

The 2009 evaluation of R&D Plus project concluded that there is a strong strategic case for continued and increased support for R&D grant funding and that it makes a substantial contribution to economic development activity in Scotland. There was strong belief that the programme has had an impact on firms’ R&D capacity and spend, their turnover and employment, and therefore that it is having a positive impact on the wider economy.

The 2010 evaluation of <£100,000 (€117.7k) R&D and Innovation Support Grants concluded that each grant is used primarily by companies classed as either key sectors or growth sectors. Both schemes are generally seen to be working well, with only minor issues around the processing and evidencing of claims. There is very positive leverage associated with the two schemes. Participating companies have realised or are realising a wide range of benefits, including the development of intellectual property and its use in new products, the development of wider innovation in support of the new products and access to new revenue streams through the sale of products. The grants are also making a contribution to key national government priorities and SE targets. The evidence of wider knowledge or market spillovers was less clear, with some evidence that any effects within Scotland could be lower than effects elsewhere. This suggests the benefits are largely felt within the companies rather than across the economy as a whole. Nevertheless, the economic impact assessment suggested that there is a positive economic impact arising from the support and that the projects both deliver clear value for money.

What are the most important “Do’s and Don’ts” that regional stakeholders should be aware of when launching a similar measure?:

A number of conclusions from the 2009 indicate potential issues to be aware of when launching such a measure:

  • Explore the potential to provide a portfolio of support across the R&D, manufacturing and training and development needs of companies. By linking the range of support on offer there could be scope to maximise the impact on the economy;
  • Consideration should be given to looking at different levels of grant intensity depending on the nature of R&D and subject to the project not falling below a minimum value for money threshold;
  • Encourage account managers and innovation specialists to work more closely with companies to make greater linkages with suppliers, universities and other collaborators to enhance any spill-over effects and embed foreign owned companies.

The 2010 evaluation of the smaller grants also makes other recommendations for programme improvement:

  • SE should clearly articulate the balance between use by key sectors and the wider business base;
  • Project monitoring should explicitly consider sectoral take up;
  • Guidance should be developed for companies to ensure a minimum standard.
Would you recommend this measure as an example of regional good practice to policy-makers from other regions ?:
Organisation(s) responsible
Evaluation report(s)