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16/03/05 Immediate Reaction - Budget 2005
John Higgins, Director General of Intellect said:
"Today's Budget is halfway to getting it right for the knowledge economy. However, the Chancellor must do more if we are to become 'the world’s leading location for research-based, science-based and knowledge-based industries'.
UK hi-tech firms will appreciate the commitment to encourage investment in design, as this is an area where UK technology, telecoms and electronics firms have the most opportunity to add value and become more competitive.
Firms will also welcome the Chancellor's announcement to deliver greater consistency in the R&D Tax Credit. However we look to Government to ensure that software is included within this, as this is the area that has suffered most due to inconsistent treatment by tax inspectors.
I am delighted that Mr Brown has tasked George Cox, chairman of the Design Council, to undertake a review of how manufacturers can work with the "creative" industries, universities and cultural organisations. At last we see a real attempt to tackle outdated ways of working, and to encourage UK firms to develop and exploit knowledge for wealth creation across all industries and sectors. I look for confirmation that the software industry will be included within this review.
We do welcome the consultation on R&D tax credits, and the 2.5% set aside for SMEs in government R&D spending. However, in my view this Budget has failed to provide UK firms with the incentives they need to invest in training and still fails to offer sufficient incentive to firms considering the UK as an R&D base. Through its failure to improve the Home Computing Initiative it has also failed to adequately help the section of the population which is at most risk from digital exclusion.
Our message to Government now is; you'll have to do more than that if you want to make any impact on the UK's competitiveness – to fail at this is not an option."
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