With the general election now under a month away, Leyton have been keeping a close eye on the main parties policies and what would happen to research and development incentives if they came into power. Whilst we always face uncertainty around election time, almost every party running agrees keeping innovative and technology based incentives a crucial part of ensuring the UK remains a key market to work with whilst safeguarding our future, however uncertain that may be.
Conservatives – Making the UK a global leader in innovation
With the snap general election being a directive from the Conservative Party, one would expect the Tories to have a number of policies and ideas already announced to help swing potential voters. One of the biggest announcements came in relation to the UK’s Innovation focus and the Research and Development tax credit scheme.
In the UK we have an R&D tax scheme that is considered globally to be ‘world class’ and in November, shortly after Theresa May came into power, the conservatives pledged to boost the government investment in R&D by an additional £2bn over the coming years. This is with the goal of making the UK the ‘front runner in global innovation, creating a pioneering economic role globally’. The government’s tax reforms since 2010 have meant the UK’s R&D Tax Scheme is one of the most competitive corporate tax regimes in the world increasing from £1 billion to almost £2.5 billion a year in savings. Their research has showed each £1 spent on R&D Tax credits, stimulates between £1.53 and £2.35 of additional investment in the UK, something they are keen to maintain and strengthen should they retain their position in the general election.
Labour – Revising the available funding, UK firms need to benefit more
Should the Labour Party regain power in next month’s general election, they wish to re-examine the targeting of Research and Development tax credits (RDTC). The current targeting of RDTC has been criticised by Labour in recent years, with experts from the ‘Institute for Fiscal Studies’ noting the high deadweight cost of the scheme. In the most recent year for which figures are available, the Government spent £1.15 billion on R&D tax credits, and it is crucial that this money achieves its aim, encouraging innovative companies to invest.
They have said they will ensure that the system of R&D tax credits has the highest impact possible: rewarding genuine contributions to national research capacity, rather than activities that are outsourced overseas.
Liberal Democrats – Looking to fund and grow the UK’s IT sector
After experiencing a rocky last two elections, the Liberal Democrats have been working hard to ensure their own policies are heard.
Should they come into power, the Lib Dems want to promote the RDTC scheme further and ensure businesses are further incentivised to undertake Research & Development here in the UK.
Liberal Democrat candidate Taduesz Jones states; “There’s a history of innovation in the UK, especially the East Midlands, with Sir Peter Mansfield winning a Nobel prize for his work on MRI, Ibuprofen being developed by Boots, Rolls Royce Engineering and APT. We need to make sure this is part of our future as well by investing in R&D, which is low in the UK compared to other advanced economies. We also need to build on the good work of Liberal Democrats in government, some of which has been undone by the Conservatives since 2015 – promoting apprenticeships, R&D tax credits, evidence-based policy and continuing to support the green investment bank.”
Tax credits are a helpful mechanism for encouraging investment in research and development by industry. Liberal Democrats would seek to encourage the take-up of R&D tax credits by companies working in the IT sector. Particular care should be taken to apply criteria for accessing such credits that do not discourage the many small businesses in the IT sector from taking advantage of them.
Green Party – Greater focus on long term R&D and fewer patents
The Green Party have a number of policies which support and encourage personal and UK specific economies including initiating research and development into products and technologies specifically appropriate for use in the UK economy, rather than the global market. Changing planning and building regulations to encourage home based enterprises. The green party wish to provide further grant funding for re-skilling workers, and for the necessary tools and technology necessary for home-based enterprises.
The Green Party believe there is a lack of properly planned or adequately funded long term R&D into low carbon technology, particularly in the manufacturing and construction sectors. A new body, a Zero Carbon Sustainability Research Council, would be established. Such a body would be, like the other major Research Councils, funded by central government but independent of it.
The Green Party is also opposed to the patenting of genes and living organisms. They believe patents make access to genetic resources more difficult and in some cases block that access altogether. ‘Living organisms are not the same as human technical inventions and it is unethical to patent rights on them to an individual or company‘.