Benjamin Craig, Senior Manager for R&D incentives, surveys the latest budget announcement and offers his opinions on what it means for innovation in the UK.
It’s always encouraging to see the Government place such a strong emphasis on research and development, recognising its significance in stimulating economic growth. But while today’s numbers sound impressive – £20bn a year spent on R&D by the end of this parliament – the announcement may leave many in our industry scratching their heads as to where that investment is going to come from.
Budget 2021 brings promise, as well as ambiguity
There is further ambiguity around the Government’s projection for a 1.1% of GDP spend on R&D investment by 2027. Although we welcome any increase, we are a very long way off the target of 2.4% by 2027, which looks increasingly unlikely the closer that date appears.
Changes to R&D tax relief, which means cloud computing and data costs will be included from April 2022, is great news, albeit overdue, and reflects how the innovation landscape has changed since the introduction of R&D incentives. However, there is room for concern over the Government’s pledge to incentivise greater investment at home, which may mean a crackdown on overseas sub-contracting. This could be bad news for some companies who are used to innovating in this way and, rather than bringing innovation home, could encourage them to carry on doing their R&D abroad.
Innovation is crucial, especially if we are to become the science and technology superpower that the Government has promised. Today’s focus on innovation is promising, but behind the buzzwords and big numbers, we’re keen to see the detail to ensure that the views of the industry, gathered during the consultation on R&D tax relief earlier this year and still being analysed by the Treasury, have been incorporated.
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