Take a tax break?

The budget offered some assistance to science community with increased funding with research centres to develop the R&D base.  Of more immediate benefit for innovative companies is the increased tax break for R&D, broadly defined. This announcement was aimed at SMEs who do not make a profit in an attempt to increase R&D to drive new manufacturing. 

 

There are also other R&D tax breaks available for large companies.  These incentives were introduced by the labour government and have been in place in one form or another for a decade.  But it seems that the Chancellor doesn’t believe they work as he couched his announcements with scepticism:

“If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind. So we will establish new centres for doctoral training, for Cell Therapy and for Graphene – a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain.”

There may be examples of failures to capitalise on research developments but there are also success and ironically the last Conservative government, run by a scientist, did as much to decimate the science base as traditional manufacturing by encouraging short-term investment. Jobs for Laser researchers were as scares as mines in my home town by the Nineties. 

However, the new policy is to encourage investment in research but are the tax breaks working?  In Scotland the BERD spend has stubbornly stayed at 0.6% of GDP over the last decade and is dwarfed by the public funding of R&D.

So the world class research undertaken in Scotland does not seem to translate to products or the development of a business and enterprise research base.  However such stimuli take time to reap rewards and the large companies, particularly in pharmaceuticals, will dominate the BERD figures. Indeed, the National statistics on innovation showed Scotland as having more robust spin-outs. So are the tax breaks encouraging research in companies? 

This question is crucial as the Finance Secretary John Swinney will be considering the policy in the future.  In setting out plans on a yes vote, he said:

“Careful and targeted use of tax credits and allowances in an independent Scotland could make a difference and break down the barriers which limit private investment in R&D and harness more effectively the research in our universities.”

With a promise of more devolved powers even in the event of a no vote, he could be considering the best ways to promote research in industry and this may impact on tech companies and spin-outs.

Dr Tony Axon is Director of Positive Spin and can get your views on this and other policies to the decision makers and politicians.

Only another 6 months.

Today marks the 6 months to go point for the referendum campaign. So depending on your view point, we only have 6 more months to suffer the uncertainty or time is running out to influence the debate.  Whatever your view point, there was some news of interest to tech companies and thoughts on R&D espoused this last week.

 

BBC Scotland’s Douglas Fraser, chose to look deeper at Scotland’s economy and quoted evidence from the Bakbasel economic consultancy in Switzerland who offered their assessment of Scotland's current position and what it would have to address if it became independent. Through comparison with similar nations and regions within Europe, it emphasises that Scotland has significant advantages in its competitiveness and highlights Scotland's strong university research, but points out there's a weakness in translating it into patents and commercial benefit.

The Scottish Government addressed innovation with a gift and a promise. In the present, the Government announced £6.6M for Digital skills and in the future that R&D would be central to the economy with the formation of Scottish Agency for Innovation.  Finance Secretary John Swinney promised to continue investment in innovation centres which amounted to £124 over 5 years. Then in setting out plans on a yes vote, he said:

“Careful and targeted use of tax credits and allowances in an independent Scotland could make a difference and break down the barriers which limit private investment in R&D and harness more effectively the research in our universities.”

The latest evidence session of the Economy committee’s Inquiry into Scotland’s Economic Future Post-2014, included questions on R&D in Scottish industry from Christian Allard the SNP MSP, who lamented the decline of the manufacturing sector and question the lack of R&D in industry. In response Professor Jeremy Peat of the David Hume Institute said:“We need to stimulate an environment in which there is greater demand from the business community for innovation and interrelationship with the high-quality academics who undertake that work. We also need to set up incentive mechanisms so that those in universities are as incentivised to use what they produce by way of innovative potential in the business community as they are to produce academic journal articles, which might help in some of the assessments that take place. I want to see the desire on both sides to innovate and to use the marvellous work that is going on in a number of sectors across Scotland. If we are really interested in Scotland maximising its potential, it is critical that we make use of R&D. We all seek an innovative, productive and competitive Scotland.”  Professor Anton Muscatelli, Principal of Glasgow University agreed and went onto to say that “Not surprisingly, we find that small economies’ spend is directed to things such as economic development and education and away from things such as defence, which are less important to smaller countries than to larger ones.”

 

This week the inquiry turns to tax issues before taking evidence from Business on 2 April.

At the Scottish Conservative party conference in Edinburgh last weekend, the Prime Minister promised further devolution if the referendum is lost including greater tax powers. In the Leader speech, Ruth Davidson, also recognised the need for developing a tech economy saying:

“The greatest gift this generation can give to the next is an education system that truly prepares Scotland’s young people for the challenges of a competitive global economy.”

Next weekend it is the turn of Scottish Labour to meet in Perth. So what does the Science and the tech community want from Scotland’s opposition party?

Positive Spin will be attending the conference and can get your views to the policy makers and politicians.

Businesses say maybe aye maybes no

The surprise of last week was the intervention of big business in the referendum debate.  While many organisations are falling over themselves to remain neutral and apolitical, some businesses decided to take sides.  The promise of the SNP to remove passenger air duty prompted Ryanair and more importantly British Airways to state that independence might be a positive.  However, other businesses immediately followed on by stating that independence was a threat and were even contemplating pulling headquarters functions and staff out of Scotland if there was a yes vote.  The SNP claimed that these threats were due to the political make –up of the boards of such companies.  Of course companies have to make contingency plans as part of their financial reports and the worst case scenarios are unlikely to be enacted.  What is surprising are the strong statements either for or against which may hinder these businesses involvement in the debate and could also lead to friction with the political parties who will be making policy after September.

The Economy committee’s Inquiry into Scotland’s Economic Future Post-2014 is now in full swing with the evidence sessions dominated by the issues of currency and debt. Professor Bell of Stirling University attempted to move away from the macro-economic arguments and look at what type of economy Scotland should aspire to:

“An independent Scotland would have to think carefully about the missing middle—the gap that has opened between the relatively poorly paid workers who are involved in personalised services that cannot be substituted by Chinese labour and the very skilled people who innovate, who work in science parks, the financial sector and the oil sector and who drive the Scottish economy forward.”

He went onto to urge the government to develop a higher skill economy stating; “The Government would have to work with industry to raise the skills, competences and employability of young people to the levels at which more skilled jobs could form a bigger part of the economy than they do now.”

This was a valid attempt to look at the type of economy Scotland should build rather than the macro-economic levers which are largely out of the control of smaller nations or a matter of one-off negotiation.  Unfortunately the politicians were more concerned about the esoteric question of whether Scotland could run a tax system.

This week the Economy Committee will continue to hear evidence from experts on the economy and probably continue the discussions on whether Scotland can afford to be independent.  If instead we want to move on the argument to aspirations for a skilled economy then science and tech companies should join in the debate with informed comments rather than the maybe ayes, maybes no manner that big business has waded in.

Murdo Fraser, convener of the Economy Committee hoped in his blog that the Conservative Party Conference can raise the debate this weekend and there is still time to influence politicians in this debate and Positive Spin can help you get your issues heard.

Opportunity knocks at conference season

This month the Scottish political conference season kicks off in earnest with the major parties meeting to set-out their stall for the referendum debate.  Though policy is likely to take a back seat to campaigning, it is still an opportunity for MSPs and Scottish MPs to debate the policy that will shape Scotland in the future.

 

Policy makers within the parties will draft future scenarios and will be trying out ideas with delegates for inclusion the manifesto.  However, they are looking for outside help in developing ideas and conference is an ideal time to approach those involved in this process.

Inside the conference hall, most of the politicians mix with the delegates at the café and bar.  They will also visit the fringe meeting and exhibition stands where organisations can get their point across.  Further, it is possible to chat with the policy makers and politicians as they take a break from the main conference hall.

Therefore it is an ideal situation for business and organisations to get their points across to a captive audience due to the unprecedented access in the conference venue during the day and the hotel bars in the evening.

There is also plenty of policy to develop with both the Economy and Education Committees taking evidence on the future post-2014.  Further all parties will be at the early stages of developing policy for the Scottish Parliament election manifestoes.

Whatever happens in the referendum, changes are afoot and tech companies should ensure these policies can aid their development.

Of course most tech companies don’t have time and personal to stand around the conferences at a weekend but Positive Spin can be your voice as well as your eyes and ears.  We can offer one-off conferences services or long term political engagement to ensure your message gets across to those in power.