Marketing No Comments

The Importance of Continued Innovation for Future Economic Growth

2020 delivered a year like no other. The economic devastation of the COVID-19 pandemic has been felt across all sectors, imposing challenges unseen in a generation. Additionally, the continued uncertainty of Brexit has left so many companies in an indeterminate state. Both events have had the potential to stunt any business growth, forcing a fire-fighting style of management.

And now in 2021, we find ourselves digesting the strategies emerging from December’s dramatic Brexit withdrawal and somehow navigating through a continued stop-start style of working as a result of COVID restrictions, still at a point where there is no clear roadmap to normality.

Discover our R&D Tax Reclaim services.

Research and development: the key to success

The COVID pandemic has been a huge disruption, both personally and professionally. If we are to extract anything remotely positive, it has demonstrated the vital importance of science, development and innovation, areas in which the UK excel.

Research and development will be critical to economic and social recovery. It will provide opportunities for companies to improve and develop new processes and products that will enhance the way we work, allowing innovation to pave the route to success.

Companies who innovate are always going to be resilient in a crisis, more likely to expand into new markets during disruptions and more likely to be able to hold on to staff and grow in difficult trading conditions.

Learn all about how our R&D Tax Claims work.

Adrian Coles, Relationship Director at Natwest Cymru, specialises in helping companies grow and believes that R&D needs to be embedded into company culture:

‘Now more than ever, a modern trailblazing leadership mindset is crucial in setting a company’s forward thinking strategy, and implementing it. Our Future Fit: traiblazing in the fourth industrial revolution research tells us that whilst manufacturers recognise the importance of leadership, many find it difficult to dedicate the time as they are working ‘in’ the business. Leaders actions on innovation and R&D do not always measure up to their good intentions to innovate and prepare for the future – to be ‘Future Fit’.’

Chancellor’s Budget: appetite for innovation

The government has continued to vocalise their support for research and development, recognising its contribution to the growth of the UK economy.

Yesterday, the Chancellor delivered arguably one of the most highly anticipated budgets seen in a generation, with hope that it will boost the UK’s economic recovery following the COVID-19 pandemic. It provided clarification on just how big of an economic impact COVID-19 has had and demonstrated the Government’s appetite to deliver a strong fiscal response, indicating that innovation remains an important factor of future growth plans.

To find out more about how we can assist you with your R&D Tax Reclaims please click here

This builds on the announcements made in the 2020 budget, when the Chancellor revealed a record increase in public investment in R&D, committing to reaching £22bn per year by 2024/25. This vision is supported by a variety of actions to help companies achieve their R&D activities, including:

  • Introducing a new R&D People and Culture Strategy in a bid to attract, retain and develop talented, diverse professionals UK wide.
  • Publication of a new subsidy aid regime which identifies innovative industries as a key area.
  • Reviewing the R&D tax credit relief to ensure that it encourages innovation.
  • Supporting entrepreneurs and start-ups by increasing the flow of capital into firms carrying out R&D, enabling them to scale up.

Source: Business News Wales

Marketing No Comments

Vaccine Success Must Prompt R&D Revolution To Level Up Regions

R&D Revolution – THE UK economy has many fundamental strengths but on one count, at least, it is fragile – its capacity for innovation.

This is a strange thing to write when UK innovations in vaccine development and gene sequencing offer some of the best hopes of beating coronavirus and reopening the world economy.

But it is true. The UK is increasingly out-spent and out-patented in research and development by our competitors. The country that led the first industrial revolution is at risk of falling behind in the next.

In 2018, UK businesses and taxpayers collectively spent 1.7 per cent of national output on R&D compared to more than three per cent in Germany and Japan and nearly five per cent in Israel. Patenting rates have fallen in the UK since the turn of the century but have risen impressively elsewhere, especially far eastern countries like Japan, South Korea and China.

Our failure to invest in innovation is one of the best explanations for why UK productivity has been in the doldrums for a decade; correcting it is one of the surest ways we can guarantee a strong and sustainable recovery.

This also goes to the heart of the Government’s ambition to “level up”, which will be front of mind for the Chancellor as he prepares for his Budget next Wednesday.

Discover our R&D Tax Reclaim services.

We not only invest too little in innovation, but what we do spend is regionally uneven. As Onward research today sets out, there are six sub-regions in the UK that spend more than the OECD average on R&D, and all of them fall within the “golden triangle” of London, Oxford and Cambridge. Germany has 17 regions that spend above this level, distributed broadly from Stuttgart in the West to Dresden in the East.

And Whitehall policy is making this worse. The way we fund research means already productive regions receive the lion’s share of public funding for R&D, in turn widening the regional productivity gap.

Half of the core research budget and three fifths of support from the Treasury’s two main start-up investment reliefs is spent in London and the South East. The recovery grants handed out by Innovate UK since the beginning of the pandemic have followed a similar pattern.

Some economists might argue that this is smart. Places like Cambridge and Oxford are globally competitive innovation ecosystems, on a par with Tel Aviv or Silicon Valley. Shouldn’t we leverage our strengths? Yes, to an extent. But these places are already successful, so the private sector has considerable incentives to invest, and diminishing returns may mean the marginal pound goes further elsewhere.

It has also generated a worryingly lopsided economy, memorably described by Professor Richard Jones as being “like Portugal with Singapore glued on to the bottom right hand corner”. In the last decade, nearly three in four jobs created in R&D intensive industries were based in London, Oxford and Cambridge, with 14 times more created in Inner London than in the North of England. It is no wonder some places feel left behind.

Learn all about how our R&D Tax Claims work.

As long as this concentration continues, the Government will struggle to close the gap between richer and poorer places.

The good news is that the Government is already taking some important steps. In 2017, the Government committed to increasing national R&D spending to 2.4 per cent by 2027. ARIA, the high-risk science agency announced last week, may well unlock countless regional innovations.

But the Chancellor should go further and now make innovation central to levelling up. By 2027, the public sector will be spending about £9bn more than it does now on R&D. We should spend every last penny in less productive regions. At the same time, the Government should build the institutions around which high-growth clusters form, and do so in different parts of the UK. Institutions like the Advanced Manufacturing Research Centre (AMRC) at the University of Sheffield have proved how good institutions can catalyse innovation in the places that need it the most.

To the average voter, R&D may seem remote, technocratic and obtuse. Innovation is not top of the list of voters’ concerns in the Red Wall.

But technological breakthroughs and commercial invention is the engine of growth. As we emerge from the pandemic, it offers not just a route to recovery but a method to level up.

The Chancellor should seize the opportunity to innovate and thrive.

By Will Tanner, director of the policy think-tank Onward

Source: Yorkshire Post

To find out more about how we can assist you with your R&D Tax Reclaims please click here

Marketing No Comments

UK R&D strategy lacks detail and funding, report says

The House of Lords Science and Technology Committee has published a report on the impact of UK innovation centres (Catapults) which concludes that additional support for the centres is vital to reach R&D spending targets.

Catapults are not-for-profit independent centres, which connect businesses with the UK’s academic community in order to translate research into commercial products. The report acknowledged that the Catapults provide valuable contributions to UK innovation and could have the potential to contribute to regional development (the ‘levelling up’ agenda).

However, the committee found that the government’s R&D strategy is failing to make the most of the Catapults, lacking a detailed plan and sufficient funding for reaching R&D ambitions. The government aims to reach 2.4 per cent of GDP spending on R&D by 2027.

The report called for a “detailed strategic plan for delivering [the government’s] R&D ambitions” with clear criteria for how technologies and sectors will be selected to receive further support.

Rules governing innovation funding need reform, the committee found: “These rules currently act as barriers to collaboration between Catapults and universities, and often place too much risk on industry to transform R&D projects.”

Discover our R&D Tax Reclaim services.

The Catapults’ innovation activities are funded with a thirds model: equal parts from a government grant via Innovate UK, industry partners, and collaborative funds bid for by consortia involving Catapults. In 2019-20, total funding for these activities was £774m; in 2019 Germany’s Fraunhofer Institutes had approximately £2bn in contract research revenue.

The collaborative R&D component was raised as a concern, as Innovate UK caps the amount of this funding that can be allocated to public sector partners in a consortium, limiting the Catapult’s ability to engage in some projects. This is aggravated when another Catapult, university, or other public research organisation wants to be involved. Other barriers include the need for industrial partners to provide a certain amount of leveraged funding, disincentivising high-risk projects, and lack of access to Research Council funding – which is available to universities – for Catapults.

“The funding available for innovation in the UK does not appear to be commensurate with the government’s ambitions […] rules governing funding for innovation create barriers to collaboration between Catapults and universities, and can deter industrial partners,” the report said.

Learn all about how our R&D Tax Claims work.

It recommended that the government set out a clear plan for how public and private funding can be made to match the scale of the UK’s R&D target. This could include allowing Catapults to apply for Research Council funding and loosening caps for collaborative R&D funds.

The inquiry also found that Catapults have the potential to contribute to regional development, aligned with the government’s “levelling up” agenda, but coordination must improve in order to unlock this potential.

“The UK’s innovation system has all the necessary components to be successful, but it lacks the necessary scale and collaboration to fully realise economic benefits for the UK,” said Lord Patel, chair of the committee. “The Catapult Network is an important national asset, which has the potential to drive further innovation. The Catapults could have a much larger impact if their performance was not held back.

“To maximise the impact and potential of Catapults, collaboration should be strengthened with academics and industry. The government should broaden access to funds and prioritise scaling up the network Catapults. Without urgent action to attract more private investment, the government is unlikely to meet its R&D spending targets.”

Source: E&T

To find out more about how we can assist you with your R&D Tax Reclaims please click here