The Chancellor of the Exchequer, Philip Hammond has delivered his 2017 Spring Budget.
He set out a generally upbeat summary focussing on a positive 2016 economic performance, which saw the UK positioned as the second-fastest growing economy in the G7. Growth forecasts from the Office of Budget Responsibility have been upgraded for this year and strong employment figures also provided good news.
Part of Hammond’s productivity message centred on the need to drive up the level of private investment in science, and also to encourage research and innovation across the economy. This is where R&D Tax Credits will continue to play a pivotal role.
The future of R&D Tax Credits
As part of the Budget focus on taxation and business, the continued public commitment to the original objectives and current structure of the research and development tax credit scheme is very welcome.
For many SMEs and large organisations, their ability, with the guidance of MPA, to claim under the scheme has enabled them to use welcome funds to further invest in staff, equipment and facilities, commercialise ideas, expand their enterprises and, ultimately, grow their businesses.
The need to clarify
The Chancellor stated that, after listening to businesses, the Government would be looking to make ‘administrative changes’ to the process that includes simplification for the scheme for large organisations, as well as aiming to improve awareness about R&D tax credits among SMEs.
However, my view is that simplification is not enough, as it inevitably means change. Instead, striving to provide improved clarification around the scheme would be a much more important step forward, as it would help all stakeholders better understand how they can access and ultimately benefit from the funding.Mike Price, Director, The MPA Group
Increasing HMRC investment in publicising the scheme so that many more companies can benefit is excellent news, and will help to add to the 21,000 organisations out of five million who have already done so.
The Chancellor also pledged £570 million for disruptive technologies research, and funding for 1,000 PhDs and fellowships in scientific, technical, engineering and mathematics (STEM) subjects.
The funding, which will come from the Industrial Strategy Challenge Fund (ISCF), aims to put the UK at the leading edge of robotics, artificial intelligence (AI), biotechnology, battery technology and driverless vehicle systems. These are considered the technologies most likely to transform the UK economy in the coming years.
The Chancellor spoke of the need for technologies that could “operate in extreme and hazardous environments, including off-shore energy, nuclear energy, space and mining”, and of “accelerating patient access to new drugs and treatments through developing brand new medicine manufacturing technologies, helping to improve public health.” The Chancellor has allocated £270 million to fund this research.
A further £300 million is earmarked for training, attracting and retaining skilled researchers in subject areas that are aligned to the Government’s industrial strategy. Some £90 million of the money is destined for PhD places, £160 million for new fellowships, and £50 million for fellowships to attract researchers to the UK from “emerging research powerhouses like India, China, Brazil and Mexico”.
From MPA’s perspective, tangible support from government is vital if the UK is to lead the way in these emerging technologies. This welcome investment will help nurture the talent and skills the UK economy needs.