24 Mar 2011   |   Viewpoint

UK budget is putting science at the heart of a plan for growth

The UK’s science-based businesses will find much to welcome in the 2011 budget. But there are still many challenges ahead if the country is to unlock the vast potential of small and early-stage technology companies, says Jonathan Ware of the consultancy PLMR

UK Chancellor George Osborne has delivered a budget that puts young high tech companies firmly centre stage – at the heart of a national debate about the future of the economy, the challenge of paying down the fiscal deficit and Britain’s place in an increasingly competitive global marketplace. Obsborne’s speech yesterday (23 March) made his position very clear: the government backs science and technology to drive forward economic growth and job creation in the coming years.

The two documents published to accompany the budget – the usual set of budget papers, accompanied by a detailed “Plan for Growth” co-authored by the Department for Business, Innovation and Skills (BIS) – are brimming with references to the life sciences, green technology, the creative industries and information and communication technology. In the meantime, the Chancellor was delivering a statement filled with positive soundbites about science. “Science is one area where Britain already has an advantage over many other countries,” he said. “It is central to our future as a place to create businesses.”

Many will applaud the attention being given to science, particularly in the wake of recent announcements from the pharmaceutical companies Pfizer and Novartis that they will be scaling back their R&D operations in the UK, or the failure of two of the country’s home-grown biotechs Renovo plc and Antisoma plc following the failure of late-stage clinical trials.

A boost in R&D tax credits

That said, it’s vital that we look beyond the rhetoric at exactly what the government is proposing to do to help science-based businesses. There’s certainly no shortage of initiatives to highlight here, but perhaps a good place to start is R&D Tax Credits. Thousands of companies conducting research and development in the UK currently make use of this scheme, claiming back a significant chunk of the funding they put into R&D as a tax rebate.

The government will raise the rate of the relief to 200 per cent for small businesses in April, rising to 225 per cent next year. This means more money for businesses investing in research, from biopharmaceutical companies developing stem cell therapies to video games developers. Extending the scheme is perhaps this budget’s strongest measure in terms of providing direct, practical support.

An announcement that is probably more likely to grab the headlines, though, is the Chancellor’s decision to set aside £100 million in capital spending on science facilities. The money will be invested in existing campuses and clusters including the Norwich Research Park, Babraham Research Campus in Cambridge, new instruments at the ISIS synchrotron research centre and development of the International Space Innovation Centre in Oxfordshire.

The move has been greeted positively – although some, such as the Campaign for Science and Engineering (CaSE) pointed out that this news comes on the back of a £1.4 billion cut in capital spending on science, confirmed by BIS at the end of 2010.

The greenest government ever

On green energy, the Chancellor reiterated a commitment to “being the greenest government ever”. The headline announcements for the renewables sector focussed on two key measures. First, a carbon price floor for electricity generation to drive investment in low-carbon power. Second, the much trumpeted Green Investment Bank will start operation one year earlier than planned, in 2012, and will leverage an additional £15 billion of private sector investment in green projects in the coming four years.

Perhaps more interestingly for the renewables sector, the detail in the budget’s measures on reform to the planning process includes proposals to bring in a new presumption in favour of sustainable development, so that the default answer to development plans is ‘yes’. The budget papers released yesterday are short on detail as to how this will work in practice, but it will be interesting to see what effect the government’s plans in this area have on the renewable energy sector.

Amongst the many other measures targeted at science-based companies are plans to boost Entrepreneurs’ relief, extend the Enterprise Investment Scheme, and implement the Patent Box - a relief on profits made from intellectual property vested in the UK. Many life sciences companies will welcome the commitment to streamlining the process of setting up clinical trials, and will be keen to work with the government to deliver this. Similarly, many engineering firms will be pleased with support for the development of a new degree-level Higher Level Apprenticeship, which will include incorporating engineering status and professional recognition for successful apprentices when they graduate.

In summary then, there’s a huge amount in the budget for those involved in the science and technology sectors to be cheerful about, and it’s encouraging to see the government has listened to scientists and industrialists and taken on many of their ideas.

So where does this leave science-based businesses operating in the UK? The challenge ahead remains a huge one, and needs to be seen in the context of an increasingly competitive global environment. The Chinese government published its budget two weeks ago, announcing that state funding for R&D will have doubled in the two years since 2009. Competitors such as the US and Germany continue to invest heavily in technology and innovation.

When the dust settles, this budget will be seen as an energetic attempt to put science at the heart of a plan for growth. This plan needs to deliver, and whether it does or not will play an important part in deciding the future of both the UK’s reputation as a world leader in science and the survival of the government itself.

Jonathan Ware is a consultant at PLMR, a London-based public relations agency specialising in providing public affairs and media relations advice in innovative sectors.

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