R&D investment must be key priority for next government, audit body urges
The next government should boost research and development (R&D) investment and help smaller firms access finance as part of a broader strategy to spur economic growth, a leading business group has said.
In a manifesto released today, the Institute of Chartered Accountants of England and Wales (ICAEW) called on the next government to get R&D investment above three per cent of GDP.
The ICAEW said the next government should back a new competition for regional hubs to target R&D incentives and equip the Small Business Commissioner to investigate the barriers firms face to undertaking R&D.
A number of reports and business groups have identified a focus on R&D incentives as a crucial part of improving the UK’s stagnant productivity. Economists think R&D is crucial for spurring growth because it can spark invention and innovation.
According to figures released last year, R&D investment was around 2.9 per cent of GDP, above the average of rich countries, but still below the US and Germany. The main way the government incentivises R&D is through tax credits.
A report published by the Council on Geostrategy went further and suggested government R&D spending should be linked by law with the countries which invest the most.
R&D investment has been a major area of focus for the government, which has expressed hopes of turning the UK into a “science superpower”. Jeremy Hunt announced a £360m investment package into life sciences and advanced manufacturing ahead of the Spring Budget.
Alongside boosting R&D, the ICAEW said the government needed to do more on encourage more startups.
The business group called on the government to reintroduce ‘growth vouchers’, which enable smaller firms to access advice on how to improve productivity, and increase the threshold at which firms can get loans from the British Business Bank.
It also argued there should be a taskforce on business banking to deal with the barriers firms face in accessing cash.
“Entrepreneurs are the lifeblood of our economy, but our members – who advise businesses from start-up to scale-up and in many cases are founders themselves – tell me it isn’t as easy as it once was,” Iain Wright, ICAEW Managing Director, Reputation and Influence, said.