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.

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.