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08/12/03
Pre-Budget must cultivate innovation, says Intellect
Intellect has warned that unless Government, through its Pre-Budget report, commits to cultivate the UK as a research and development (R&D) base, then innovation will go offshore and the UK will no longer be in a position to produce the products and services it needs to compete in the global economy.
Tom Wills-Sandford, Campaigns Director, Intellect says, "The effective rate for undertaking R&D needs to increase significantly. For large companies the effective reward they get for investing in R&D in the UK is between 3.75% and 5% of the actual cost of the R&D. Government must understand that this figure is drastically below the 'noise level'. The implication of this is a massive drop in influence on R&D decision makers, who are firstly deciding whether to undertake R&D, and secondly where to do it. It is further drowned out by other uncertainties, such as the results of the R&D itself, exchange rates, and what the competition is doing. "
"Until the effective rate moves closer to the international average of 10 per cent, there will never be sufficient incentive for UK based technology companies to grow their share of world wide R&D. In addition their ability to produce the innovative products and services that they need to compete in the global economy will diminish and the UK economy will suffer as a result."
Intellect is also calling on Government to clarify the definition of R&D.
Wills-Sandford continued, "We urge Government to ensure that the definition of R&D is clearer and easier to understand, providing much needed certainty to R&D decision makers so that they know that an R&D project will qualify before the work is undertaken. In addition we will be looking to the Treasury to ensure that we do not lose the gains we made earlier this year in ensuring that ‘engineering R&D' and 'software R&D' both unequivocally qualify for the Tax Credit."
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