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UK must subsidise R&D into green technology, says Tory think tank

The government must create a new high-risk laboratory to research cutting edge green technology and hand out tax breaks for businesses that replace gas boilers with heat pumps, according to a leading Tory think tank.

Onward, which is run by a large number of Conservative MPs and party grandees, today said in a new report that the UK is lagging behind in “the development of technologies likely to be critical to decarbonisation in the next thirty years”.

Boris Johnson’s government has a target to reach net-zero carbon emissions by 2050.

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The landmark United Nations Cop26 climate summit in Glasgow next month is being billed as one of the last opportunities to broker a global deal to keep global climate change to less than 1.5 degrees.

Onward said the government needed to pull policy levers to spur more private sector research and development (R&D) spending in green technologies.

The think tank says this could be done by direct subsidies to labs researching carbon capture technology and tax breaks to businesses that replace their boilers with more environmentally friendly heat pumps.

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The report also suggests creating a National Energy Laboratory to “conduct high-risk net zero research to overcome energy system challenges” that is modelled on similar agencies in Germany and the US.

Ted Christie-Miller, co-author of the report and head of carbon removals at BeZero Carbon, said: “The government needs to consciously create the incentives and build the institutions necessary to create an explosion in the R&D, commercialisation and diffusion of key net zero technologies.

“If we don’t act fast, we will pay the price in higher emissions, lower competitiveness, greater societal disruption and higher costs for consumers and taxpayers.”

By Stefan Boscia

Source: City AM

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New grants announced to innovate horticultural food and drink industry

Growing Kent & Medway has announced £3million in R&D grants for projects that support inclusive economic growth and environmentally sustainable practices and innovations.

Funding grants of up to £250,000 will be made available to assist projects that aim to develop green technologies, processes or products for horticultural food and drink businesses across Kent and Medway.

A unique requirement of the funding application will be an expectation that businesses commit to delivering social value back to the region. Whether through community engagement or by raising awareness around career pathways in horticulture, food production or AgriFood technologies.

The grants were announced as part of Growing Kent & Medway’s official launch at Fruit Focus on Wednesday 21 July 2021. They offer businesses operating in food production, packaging, processing or enabling AgriFood technologies the first opportunity to benefit directly from the program.

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Dr Nicola Harrison, Program Director for Growing Kent & Medway, said: “The large-scale collaborative R&D grants we are making available will be awarded to projects that will help to establish the Kent and Medway area as a world-leader in climate-smart, sustainable horticultural food and drink production.

“These grants are an important part of our wider program to build on the region’s reputation and international gateway status. We are investing in state-of-the-art infrastructure and research facilities, scientific expertise and enterprise growth to make this region one of the most dynamic, competitive and successful horticultural and agri-tech locations in the world.”

Priority innovation themes set out for the grant funding include;

  • Minimising waste and maximising recycling
  • Improving resource use efficiency and sustainability
  • Increasing productivity
  • Resilient food production, such as supply chain resilience and nutritional security
  • Precision technologies, including sensor technologies, AI or robotics
  • Solving the challenge of access to labour.

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Oliver Doubleday, Chair of East Malling Trust, said: “Funding for research and innovation to support the horticultural industry has been at the heart of the Trust’s work for more than a century.

“Thanks to Growing Kent & Medway’s grant scheme, it will ensure the sector can make an even greater contribution to the development and sustainability of the local economy through the commercial application of science and research.”

Applications open from 6 September 2021 and must be a Kent or Medway-based businesses, or carrying out significant economic activity in the region, working in the horticultural food and drink sector or enabling technologies.

Source: Horti Daily

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UK research and development tax reliefs under review by the government

At Budget 2021 the government announced a review of research and development (R&D) tax reliefs, supported by a consultation seeking views from stakeholders. The government hopes that, by reducing the costs of innovation, R&D tax reliefs will play a key role in achieving its ambitious target to raise total investment in R&D to 2.4% of UK GDP by 2027.

Structure and administration of the scheme

Currently, the two principal tax reliefs available to companies undertaking R&D in the UK are as follows:

  • R&D Expenditure Credit (RDEC): an “above the line” credit equal to 13% of qualifying R&D costs
  • R&D tax relief for small and medium enterprises (SME scheme): an additional deduction of 130% of qualifying costs from an SME’s profits on top of the normal 100% deduction, and, if lossmaking, a tax credit worth 14.5% of the surrenderable element of that loss.

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To qualify for relief, expenditure on R&D must be incurred on particular types of activity, currently limited to staffing costs, consumable or transformable materials (such as water, fuel and power of any kind), certain types of software, payments to clinical trials volunteers and, depending on the relief, some subcontracting costs.

The consultation

The government aims to maximise the additional R&D expenditure generated for each additional pound of tax (additionality) foregone under the R&D schemes, and ensure that administrative complexity is kept to a minimum. To achieve this the consultation asks stakeholders to consider:

Unifying schemes

The benefits and disadvantages of consolidating the two schemes into a single coherent system. The consultation proposes “RDEC for all”, with a higher rate for SMEs as a potential solution.

Claims process

Changes that might help claims to be dealt with more smoothly, while ensuring better compliance. This follows growing concerns that the current claims system does not provide adequate controls over the allocation of the increasingly large sums of tax reliefs being given for R&D.

International competition

Whether the rates of relief offered for R&D are internationally competitive, noting that the rate of relief provided by the SME scheme is significantly more generous than that provided by the RDEC when compared to global competitors. However, some countries with higher rates of relief achieve lower rates of additionality, where investment decisions would have proceeded without relief.

Qualifying R&D

Whether there are valuable activities that might currently be excluded from the scope of the reliefs, and for which a case can be made in terms of their economic value for example, data and cloud computing.

Varying rates of R&D support

In line with other countries who have varied their rates of R&D support by sector and activity, whether this could be used to incentivise R&D with specific social value, for example developing green technology.

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Claiming outside London & South East

How the offer of R&D tax reliefs could be improved to better support R&D in different regions across the UK as opposed to London, the South East or the East of England, where claims tend to be concentrated.

Expenditure outside the UK

Recognising that the spill over benefits are likely to be greater where activity takes place domestically; whether there should be provision in the R&D tax reliefs requiring expenditure to take place in the UK.

The UK Patent Box

In conjunction with the R&D tax relief schemes, UK companies can take advantage of the Patent Box if they are liable to pay Corporation Tax and if they are currently making a profit by exploiting patented inventions and/or other qualifying forms of IP. Companies who elect in to the Patent Box will pay a reduced rate of Corporation Tax at 10% on all relevant IP income from qualifying IP rights. The Patent Box will be increasingly beneficial to eligible companies as the UK corporation tax rate is set to rise from 19 percent, to 25 percent, from 1 April 2023.

Source: Lexology

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Innovate UK Women In Innovation Award For Cardiff-based Entrepreneur

Alison Ettridge, CEO of Cardiff-based tech scale-up, Talent Intuition is one of 40 female entrepreneurs to be awarded a cash injection by Innovate UK of £50,000 to bring an innovative idea to market. The award, announced to coincide with International Women’s Day, will be used to improve female representation in engineering roles though accelerating the development of the firm’s Stratigens platform.

Engineering is a cornerstone of the UK economy, accounting for £1.2 trillion of revenue per year but a talent shortage, exacerbated by an ageing workforce poses a future talent risk. The Women in Innovation project announced today will use data on skills, location and diversity to help companies understand the flow of talent into engineering from education into early careers and career paths for engineering talent.

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Innovate UK launched the Women in Innovation programme in 2016, after research revealed that just 1 in 7 applications for Innovate UK support came from women. Boosting the number of female entrepreneurs could deliver £180 billion to the economy. This programme seeks to find women with exciting, innovative ideas and ambitious plans that will inspire others.

Award winner and Talent Intuition CEO, Alison Ettridge added:

“Not only will this award enable us to accelerate ambitious plans for our business, but it will also in turn help other organisations to attract and develop more diverse talent. As one of the founders to have been selected, I am privileged to be in such a strong company and it’s my hope that our collective effort will inspire other female innovators.”

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Announcing the awards at an online event today to mark International Women’s day, Science Minister Amanda Solloway said:

“Today we are supporting 40 of our most trailblazing female entrepreneurs, helping them to turn their innovative ideas and aspirations into a reality, creating the products and services that will help improve our lives and boost our economy.”

The project will begin this month and Talent Intuition is looking for large organisations that hire engineering skills to contribute to this project through using its Stratigens platform. The overall goal for the Women in Innovation award is that within two years of this project, 100 global companies will change who and how they hire because of the outcomes from this work.

By Lisa Baker

Source: News from Wales

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Government Funding Secured By Heathrow For Net-zero Aviation Roadmap

Heathrow Airport has secured Government funding for a project dedicated to developing a blueprint for delivering a net-zero UK aviation sector, by or ahead of the national 2050 deadline.

The Airport confirmed today (18 February) that it has secured funding from Innovate UK, through the organisation’s Future Flight Challenge, for two sustainability-related projects.

Project NAPKIN (New Aviation Propulsion Knowledge and Innovation Network) is the first of these initiatives. The project is an R&D initiative which will combine expertise, data, insights and technologies from across the value chain to plot a national course to net-zero, assessing which technologies will play a role and when.

Organisations supporting Heathrow with Project NAPKIN include Oxford University, Cranfield University, Kings College London, NATS, SITA, Rolls Royce, The University of Southampton, Deloitte, UCL, London City Airport, Highlands and Islands Airports and IAG, the parent company of British Airways.

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The second project is called Fly2Plan. It will investigate how emerging technologies like cloud infrastructure and blockchain could be used to collect and manage data from Heathrow Airport. The hope is the creation of a “decentralised, resilient and efficient operating model to support cross-company collaboration”. Such a model will be necessary if Heathrow is to scale up drones in line with the Government’s broader aviation innovation plans.

Heathrow has already begun the first stage of research for both projects. In both cases, this phase is due to last around 12 months more. The second phase will entail live demonstrations of key technologies and systems, alongside work to get businesses across the sector to adopt shared decarbonisation goals.

Innovate UK’s Future Flight Challenge is offering a total of £125m in Government grants. It has not disclosed what share of this government funding will be allocated to Heathrow. Aside from reducing emissions, the aims of the Challenge are to create economic opportunities for new forms of air mobility (such as drones and air taxis) and safeguarding the UK’s international advantage in aerospace R&D.

“Heathrow has always served as a testbed for ground-breaking green technologies,” the Airport’s chief executive John Holland-Kaye said. “These concepts go further than ever before, with the potential to transform the role that aviation plays in Britain’s economy.

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“The Future Flight Challenge has come at a critical time for the country and our industry. We’re proud to be driving forward with these disruptive initiatives in the year that the UK hosts COP26 and our industry builds back better, as we work to recover from the devastating impacts of this pandemic.”

National approach

Pre-pandemic, the aviation sector contributed at least £14bn to national GDP – but it was also a hard-to-abate and fast-growing source of emissions.

The UK Government’s vision for creating a green recovery for the sector, beyond the initial funding, also involves a ‘Jet Zero Council’ – a coalition of Ministers, businesses, trade bodies and environmental groups mapping the technologies that will be needed to get the sector to net-zero. It has additionally earmarked £200m from Treasury coffers and £200m from the industry for projects developing SAF, energy-efficient electric aircraft components, high-performance engines and wing designs intended to minimise fuel consumption.

Pressure is mounting, however, for the Government to publish its net-zero roadmap. The framework will outline short and mid-term, sector-specific decarbonisation targets aligned with the long-term net-zero goal. It will also contain recommendations for the technologies and systems it intends to support most, and, as such, is expected to boost investor certainty. Ministers have promised the roadmap before COP26 begins and are being urged to ensure that it does not face delays, as has been the case for the Heat & Buildings Strategy, Hydrogen Strategy, Energy White Paper, National Infrastructure Strategy and Environment Bill.

Ministers are also being urged to include international aviation in the UK’s climate accounting framework and to cap growth in the sector – recommendations previously made by the Climate Change Committee (CCC).

On the latter, the UK Government did not appeal a court decision to block a third runway at Heathrow, but the corporate owner of the airport did so successfully in December 2020. More recently, Leeds City Council approved plans to expand Leeds Bradford Airport earlier this week, in a move that disappointed many green groups.

By Sarah George

Source: Edie

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Industry calls for reform to ‘outdated’ R&D tax credit regime

Tax credits for companies doing research and development must be reformed to kick-start the economy and make the UK a more attractive place for investment after Brexit and Covid, industry leaders have warned.

Eight powerful trade bodies representing firms spanning the pharmaceuticals and tech industries to food and drink and aerospace have come together to urge Chancellor Rishi Sunak to change the rules in a bid to kick-start a wave of innovation.

The current “outdated” rules do not allow companies to claim R&D tax breaks on capital spending, such as on labs and buildings and machinery, unlike in other countries such as France, Spain and Japan.

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A report commissioned by the industry bodies said: “In other words, there are far stronger incentives to physically locate new research facilities in other countries.”

Enhancing the R&D tax credit regime to include capital spending could create a strong incentive for companies to invest in Britain.

The change could add £4bn a year to the economy within a decade, according to the report, and create at least 12,000 jobs – mostly in high-skilled, high-wage manufacturing areas such as new medicines, robotics and clean energy. It would pay for itself in seven years, and produce a net gain for government coffers.

Richard Torbett, chief executive of the Association of British Pharmaceutical Industry (ABPI), said: “This report shows just how critical R&D will be to our recovery, but also how we do not have the incentives other countries do to attract more investment and job creation in the UK. We are calling on the Chancellor to reform tax credits and give a real kick-start to the recovery.”

The policy would also create new investment and jobs created in regions like the North and, the groups said, areas where the Government has committed to boosting employment and the economy. It would also help the government to meet its pledge to increase the country’s R&D spend to 2.4pc of GDP by 2027, from the existing level of 1.7pc.

Business R&D expenditure has increased by more than a third in the last decade, rising from £19bn in 2010 to £26bn in 2019. It now accounts for 8.3pc of all company spending, up from 5.2pc in 2010.

There are some tax benefits attached to R&D capital expenditure, but they treat loss-making and profit-making firms differently.

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Profit-making businesses get back 19pc on R&D capital expenditure through the tax system, but loss-making ones get nothing back. This is important in the context of a pandemic-related economic downturn, the report argues, because many more firms are expected to make a loss.

Steve Hughes, the report’s author, said: “The move to include capital expenditure allowances in R&D tax credits would be very simple to implement, would make the UK a better place to invest in, would drive jobs and growth across the regions that most need levelling up, all for a policy that is self-financing. It should be adopted as an immediate priority.

“Of all the options the Chancellor has at his disposal to reboot the economy, this is the no-brainer. The UK cannot be the best place in the world for scientific research if incentives for investing in it are suboptimal compared to elsewhere.”

The report was put together by the ABPI; manufacturing body Make UK; space industry group UKSpace; TechUK; the Confederation of British Industry; The Food and Drink Federation; The Association of British HealthTech Industries; and ADS, which represents aerospace, defence, security and space companies.

By Julia Bradshaw

Source: MSN

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