HC Deb 17 April 1986 vol 95 cc1001-2
9. Mr. Stan Thorne

asked the Chancellor of the Exchequer how much direct support for research and development was contained in the Budget measures.

Mr. Ian Stewart

The scientific research allowance has been kept at 100 per cent. despite the reduction of other investment allowances to 25 per cent. this year. The proposal in the Budget to allow companies to make one-off gifts to charities will benefit institutions which sponsor research and have charitable status.

Mr. Thorne

As Government support for research and development compares unfavourably with that of some other industrial countries, how can Britain be competitive in world markets?

Mr. Stewart

This country devotes a bigger proportion of GDP to research and development than the United States, Germany or Japan. There is, indeed, a substantial contribution to defence research and development. With regard to expenditure on civil research and development, companies with higher profits and a lower tax rate will have plenty of room to increase their expenditure on R and D, as they need to in their investments for the future.

Sir Anthony Grant

Nevertheless, is my hon. Friend aware that there is evidence of a scientific brain drain, particularly in Cambridge? Will he therefore look rather more favourably upon requests for money for research to be allocated in the next review than was the case in the last one?

Mr. Stewart

I must remind my hon. Friend that increases in both the science and the research budgets, through the University Grants Committee, were made in the autumn statement.

Mr. Wrigglesworth

Is the Economic Secretary not aware that the fall in the price of oil will increase the balance of payments deficit by about f2.5 billion this year? In the light of that deterioration in the current account of the balance of payments, is not his reply to the question totally inadequate? Do not the Government need to invest a great deal more in civil research and development?

Mr. Stewart

The evidence certainly does not suggest that the balance of payments surplus this year will be affected on anything like the scale that the hon. Gentleman suggests. We are expecting a further substantial surplus this year. Set against the decline in oil revenues, one must have regard to the fact that the costs of industry and commerce will be very substantially reduced, with the result that they should become very much more competitive.