Yesterday’s Autumn Statement from the ‘safe pair of hands’ Chancellor Philip Hammond was notable as being the very last. To bring Britain in line with the best practice recommended by the IMF amongst others, the Statement announced that this time next year, following the final Spring budget, there will be an Autumn Budget where policy is announced followed by a Spring Statement: an overview rather than a fiscal event.
This sleight of hand that ultimately only moves that date policy is announced around a little is reflective of the Statement as a whole. By now we’re fairly confident that you’ve watched, read or listened to analysis of the proposals and feel on top of the main announcements. If not though we recommend analysis from Larry Elliott, Tech UK and the comprehensive FT coverage. If you’ve more time, the OBR background outlook analysis is fascinating this year as it begins to quantify what the financial cost of Brexit might really be.
Digging a little deeper into the Statement for news on government support for innovation and R&D, there’s a couple of positive points worth exploring further for their impact on your business.
There was a significant tease for the Government’s forthcoming Industrial Strategy which will spend £4.7 billion to enhance the UK’s position as a world leader in science and innovation.
The R&D Tax Credits scheme is one of the foundations of the desire to increase the levels of R&D undertaken by both UK SME’s and large companies. The government is to review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D Tax Credits to make the UK an even more competitive place to do R&D. The indication here is that the Large Company Scheme – the least lucrative of the schemes – may well become more generous in its rebate rate. We will keep you up to date with news of the review process and will ensure that we are representing the interests of our existing and future clients.
Innovation grant funding is due a welcome shot in the arm. We’re encouraged that the National Productivity Investment Fund will provide an extra £4.7bn over the next 4 years to be distributed through the new Research and Innovation UK organisation. We are exercising a little caution in our response to this news as there is no clear guidance as to the split between research-led and business-led distribution. We will also have to wait for the new organisation to be launched before the money is available and that is not likely to happen until 2018.
In October the government committed an additional £100 million until 2020-21 to extend and enhance the Biomedical Catalyst. Innovate UK will also receive an extra £100 million until 2020-21 to incentivise university collaboration in tech transfer and in working with business. We have recently supported a client to win a Biomedical Catalyst grant (sadly the details are under embargo) and have fantastic experience and links with a number of leading UK Universities, so are very enthusiastic about this news.
Finally, the reveal that the British Business Bank will also invest an additional £400 million in venture capital funds to unlock up to £1 billion of new investment in innovative firms planning to scale up is equally positive. We are cynical about whether this money is to replace ESIF funds that we are likely to lose access to as a consequence of Brexit and not convinced that the BBB is the strongest organisation yet, but the thinking behind the announcement would appear to be robust. Let’s see how long it takes before it is rolled out.
Overall, this Autumn statement was positive for innovative companies with these measures designed to help support increasingly more spending on R&D during what may well be a turbulent time ahead. Our experts in tax and grant support for your activities will be happy to discuss the implications of the Autumn Statement for your business further and help you access some of the financial support that is coming.