A key think tank has criticised the effectiveness of the research and development (R&D) tax credit scheme, after it claimed that 80 per cent of such studies are \u201cdeadweight\u201d.<\/p>\n
The Institute for Public Policy Research (IPPR), which published the report, also claimed that a large majority of corporate research would have been carried out regardless of subsidies.<\/p>\n
The call comes despite the fact that the UK has one of the lowest rates of business spending on research and development among \u201cadvanced economies\u201d, spending just 1.7 per cent of GDP on research.<\/p>\n
This is compared to 2.8 per cent in the US, 2.9 per cent in Germany, and four per cent in Japan.<\/p>\n
But the IPPR said abolishing the scheme could save the British purse up to \u00a31.9 billion a year. It recommends that the scheme should be reformed and directed towards projects which actually need help \u2013 rather than large conglomerates which already have the capital to invest in research.<\/p>\n
Michael Jacobs, of the IPPR, said: \u201cThe Government is in danger of missing the point in its industrial strategy. Its focus so far has been on sectors engaged in technological innovation, like automotive and pharmaceuticals. But productivity in these sectors is already high.<\/p>\n
\u201cThe UK\u2019s productivity problem lies in the vast majority of ordinary firms, in sectors such as retail, light manufacturing, tourism, hospitality and social care.\u201d<\/p>\n
The Treasury said research tax subsidies help British businesses \u201cinnovate and grow\u201d.<\/p>\n
A Treasury spokesperson said: \u201cFor every \u00a31 that goes on the relief, up to \u00a32.35 in investment is created.<\/p>\n
\u201cLatest figures show that 83% of claims for R&D tax credits were from small and medium-sized enterprises.\u201d<\/p>\n
Tom Thackray, innovation director at the Confederation of British Industry, added: \u201cGetting rid of R&D tax credits and the Patent Box during a time of uncertainty, would in effect only serve as a tax on the UK’s most innovative firms.<\/p>\n
\u201cWhile more can be done to get SMEs involved, more smaller businesses are using the tax credit each year.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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