HC Deb 10 May 1995 vol 259 cc744-5
16. Mrs. Anne Campbell

To ask the President of the Board of Trade if he will outline the measures he is undertaking to encourage business expenditure on research and development. [21957]

Mr. Ian Taylor

There are a substantial number of measures, ranging from grant schemes such as SMART and SPUR, to those which improve the market intelligence available to business, such as the UK R and D scoreboard and the technology foresight programme, in which the DTI has been heavily involved.

Mrs. Campbell

Does the Minister support the view of the Science and Technology Select Committee that the evidence in favour of tax incentives to encourage business expenditure on research and development is sufficiently strong to warrant a Government review? Can he confirm that one is being carried out?

Mr. Taylor

I can reassure the hon. Lady that we constantly keep under review the need to encourage research and development and innovation in the United Kingdom. The competitiveness White Paper, which is due to be launched in a few weeks' time, will demonstrate just how extensive our thinking on those matters has been. There are provisions for companies to write off revenue or current account against related profits. That is not often drawn to our attention, but it already exists in law.

Sir Dudley Smith

Does my right hon. Friend agree that research and development is extremely expensive? There is absolutely no guarantee of success, but it is absolutely vital to the future of Britain or of any country. In the circumstances, may I reiterate what the hon. Member for Cambridge (Mrs. Campbell) said? We need always to pay attention to the tax position as well as other measures. My hon. Friend's Department can do more than any other to encourage research and development.

Mr. Taylor

I understand exactly what my hon. Friend says about the importance of R and D and innovation for British business. It is one of the keys to our competitiveness. That is why the DTI is now actively engaged in benchmarking to help companies. It is why we have expert counsellors in the business links, which are growing up around the country, promotions and conferences to encourage business to understand the importance of research and development and discussions with the City to change its attitude to the relationship between dividend policy and long-term investment in research and development.

Mr. Clapham

As the Minister accepts that innovation is vital to the competitiveness of British industry, can he explain why his Department cut support for it by £5.5 million while allocating £30 million to the renovation of No. 1 Victoria street?

Mr. Taylor

The hon. Gentleman, sadly, lowers the tone of a constructive discussion. Civil research and development in this country has been rising. The overall figures are affected by the decline in defence in R and D expenditure, but I assure him that the DTI is concentrating on assisting British industry to understand the importance of long-term R and D—particularly smaller companies. There will be further announcements in due course, when the competitiveness White Paper is published.