A mixed bag of measures for science and innovation from today’s pre-Budget report.
The chancellor introduced two initiatives to support innovation and science-based industry: a reduced rate of corporation tax for income derived from UK patents, and an extra £200m for the government’s Strategic Investment Fund.
But there is also the overhanging threat of £600m savings – in other words cuts – in higher education and science spending.
As Nick Dusic, director of the Campaign for Science & Engineering, put it: “The chancellor has sent mixed signals about the future of science and innovation in the UK. He is looking for a significant cut in investment in the nation’s research and skills base, whilst providing support for innovation that stems from it.”
On the plus side, the so-called Patent Box will introduce a 10 per cent corporation tax rate from April 2013 on UK patent income “to strengthen the incentives to invest in innovative industries”. It will apply to patents granted after the implementing legislation is passed in 2011.
The pharmaceutical and biotechnology industries, which will eventually be the biggest beneficiaries of the Patent Box, welcomed the prospect.
Clive Dix, chairman of the BioIndustry Association, said: “The government has recognised that life sciences are essential to building Britain’s future, and the Patent Box shows that it is listening to the BIA and others in the UK life sciences sector.”
In the long run the Patent Box is likely become a valuable incentive for life sciences companies to locate in the UK, worth an estimated £1.3bn a year. But tax accountants point out that it will take several years for the benefits to appear, given than time-scale of pharmaceutical research and development.
”The implementation date of 2013 is unlikely to benefit companies until 2020 at the earliest,” said Andrew Packman of PwC. “We would support an earlier implementation date or the inclusion of existing patents.”
The £750m Strategic Investment Fund was set up in this year’s Budget to support advanced industrial projects. On Wednesday, Mr Darling added a further £200m to the fund – of which £150m will be devoted to low-carbon projects.
Although £600m savings are to come out of the higher education and science and research budgets, the report does not specify where any cuts will fall.
“The government cannot afford to undermine the research base if it is going to achieve its goal of a more balanced economy,” said Dusic.