HC Deb 31 July 1997 vol 299 cc448-50
19. Dr. Cable

To ask the President of the Board of Trade when she proposes to report on the tax-exempt status of those independent research and technology organisations which she is currently reviewing. [10044]

Mr. Battle

I expect to approve new arrangements for approving bodies under section 508 of the Income and Corporation Taxes Act 1988 and to issue guidance for applicants by the autumn. I shall then deal with the outstanding applications for approval.

Dr. Cable

I thank the Minister for that reply but suggest that there is considerable anxiety among scientists that, in widening his net for soft targets, which recently included pension funds, the Chancellor of the Exchequer has his eye on such admirable institutions as the National Physical Laboratory in my constituency. They contribute enormously to the science base of the country and plough back all their surpluses into scientific investment. Will the Minister give us clear assurances that they will be kept free of taxation?

Mr. Battle

The matter that the hon. Gentleman questions under section 508 of the Income and Corporation Taxes Act 1988 was raised by the previous Government who, to be fair to them, set up a review of how to tax research establishments. They published their proposals for comment on 28 April 1997, before the change of Government, but research associations will be affected. I know that the Association of Independent Research and Technology Organisations, which represents research establishments, is lobbying hard on this matter. I have met its representatives and, as far as I understand it, it is working constructively with officials, hoping to come to a mutually acceptable conclusion to ensure that genuine research is properly supported through the tax system, not priced out.

Mr. Ian Bruce

Is the Minister aware of the success of AEA Technology which, as a result of being floated and becoming a private research organisation, is expanding its employment and activities? Has he any further plans to float other Government-owned research organisations and to encourage them with the suggested tax exemptions?

Mr. Battle

I welcome the success of AEA Technology, but the answer to the hon. Gentleman's question is no.