Introduction

Overview

1.1 In November 2022, Northern Ireland’s Statistics and Research Agency (NISRA) requested the temporary suspension of the National Statistics status (now known as accredited official statistics) of the detailed breakdowns of Northern Ireland Business Expenditure on Research and Development (NI BERD) estimates. This decision followed ONS’s request for the temporary designation of its Business Enterprise Research and Development (BERD) statistics after the discovery of undercoverage of small and medium-sized enterprises (SMEs) in the UK BERD data. A change in the UK Government tax policy in 2015 gave SMEs increased tax relief for research and development (R&D) activities by these smaller businesses, which previous NISRA and ONS sampling methods were unable to capture. This review focuses on the NI BERD statistics produced by NISRA.

1.2 Prompted by concerns raised by stakeholders about the divergence of the Office for National Statistics (ONS) BERD statistics compared with the R&D tax credits data produced by HMRC, ONS significantly improved its sampling framework and methodology. Collaborating closely with ONS, NISRA similarly improved its sampling framework and methodology. These improvements included selecting businesses engaged in R&D activity directly from a Northern Ireland extract of the Inter-Departmental Business Register (IDBR).

1.3 The assessment, dedicated to NISRA’s NI BERD statistics, uses our Spotlight on Quality framework, which examines four key areas to evaluate the quality of statistics: whether the statistics are produced using suitable data sources; whether appropriate methods are used; transparent quality assurance; and whether the statistics are sufficiently prioritised and resourced proportionately to their use. We also consider the international comparability of the statistics and whether the statistics meet the quality needs of users and are not misleading.

1.4 NISRA has worked in close collaboration with ONS to ensure that the sampling methodology it uses to estimate NI BERD statistics aligns with that of ONS. NISRA implemented a two-phase approach to develop the methodology used to compile BERD statistics:

• phase 1: An interim uplift applied to the statistics that NISRA published in 2022, covering data for the years 2018 to 2021, bringing NI BERD estimates more in line with estimates from other data sources that better captured the activity of smaller businesses
• phase 2: The introduction of improved methodology and drawing the survey sample directly from the IDBR for data collected for use in the 2022 estimates

1.5 This assessment took place at the end of phase 2. We consider that NISRA has made significant improvements to the methodology used to produce the NI BERD statistics that have enhanced their quality. We recognise NISRA is continuing to work collaboratively with ONS to align their respective methodologies and to agree the alignment of the time series. We will consider reaccrediting these official statistics once NISRA has met the requirements of this report.

Requirements

1.6 We have identified two requirement that NISRA must fulfil to improve the quality of the statistics to the standards required by the Code of Practice for Statistics.

Northern Ireland’s Business Expenditure on Research and Development (NI BERD)

1.7 The NI BERD statistics provide estimates of Northern Ireland businesses’ expenditure on research and development (R&D), the source of funding for this R&D work and the number of people working on R&D in businesses in Northern Ireland.

1.8 The NI BERD statistics are produced following the internationally agreed standards as specified by the Frascati Manual 2015, published by the Organisation for Economic Co-operation and Development (OECD), defining R&D as “creative and systematic work undertaken in order to increase the stock of knowledge – including the knowledge of humankind, culture and society – and to devise new applications of available knowledge”.

1.9 NISRA is responsible for collecting and producing BERD estimates for businesses in Northern Ireland. The regional estimates for NI BERD published by ONS are slightly higher than the estimates published by NISRA. This is because a small proportion of R&D is performed in Northern Ireland by Great Britian businesses and is therefore not included in the Northern Ireland data collection process, excluding these R&D-performing businesses from NISRA’s published estimate. NISRA further explains this in its R&D statistical publication.

1.10 ONS collects BERD estimates for Great Britain and produces UK estimates. NISRA sends its estimates to ONS, which amalgamates the data to produce the UK BERD estimates.

How NISRA produces NI BERD estimates

1.11 NI BERD estimates are compiled from data received from the Northern Ireland Research & Development survey. The R&D survey used for NISRA’s February 2024 R&D publication collected data from approximately 1,500 businesses, the same number as that used in the previous year’s survey. However, the composition of the sample was improved to better represent SMEs by drawing directly from a Northen Ireland extract of the Inter-departmental Business Register (IDBR).

Uses of NI BERD

1.12 In addition to feeding into ONS’s UK BERD estimates, NI BERD statistics are used by government departments. For example, the Department for the Economy (DfE) uses NI BERD to brief ministers and officials in policy decisions affecting Northern Ireland’s Industrial Strategy. NI BERD statistics are also used by academics and research professionals in writing research publications, which can then go on to inform policy debate.