Spring Budget 2020: Encouraging for innovation

Rishi Sunak’s first budget was announced on Wednesday amid the ensuing COVID-19 public health crisis. Whilst there was a clear focus on crisis prevention and supporting small businesses throughout the disruption, there was also a spotlight on harnessing the power of innovation to put the UK on the right track outside of the European Union.

The newly appointed chancellor outlined an ambition to deliver ‘a future where we unleash the energy, inventiveness and creativity of all British people’. His commitment to driving our economy forward by investing in science and technology is an encouraging sign, and will undoubtedly increase Britain's competitive edge when it comes to innovation.

RDEC Rates

The budget confirmed that the rate of Research and Development Expenditure Credits will increase from 12% to 13% from April 2020. In 2017/2018 alone, £2.1bn was given out in RDEC, across 6,555 claims, so the increase in rates will help a huge amount of innovating companies.

The vast majority of companies who benefit from Research and Development Expenditure Credits are larger corporations, but it's worth keeping in mind that SMEs can claim RDEC as well. RDEC is available for subsidised, subcontracted and capped R&D expenditure, if you are an innovating SME.

R&D funding

The chancellor also announced that the Government’s Research and Development spend will be increased up to a total of £22bn, the highest percentage of GDP in 40 years. This is also a higher amount than the likes of China, Japan, France and the US - cementing Britain as a key player when it comes to innovation.

Hopefully, the rise in funding coupled with the increase in RDEC rates will help to encourage businesses to invest in innovation, whilst also making the UK a prime place to do so.

Technology & Science

£800m of this £22bn fund, will see the establishment of a 'blue skies' agency. The agency will likely be modelled on America's ARPA which was introduced to improve the country's economic and environmental prosperity. This scientific research agency will be a key driver in channelling state funding into unusual and forward-thinking ideas and projects which are both high-risk and high-reward.

A further £900m of the funding will go towards nuclear, space and electric vehicles. In doing so, the funding will firmly secure Britain's position as a hot-bed for technology and science.

In all, it is encouraging to see the Government has committed to its long-term technology and science investment plan. Coupled with further pledges around green transport solutions, a plastic packaging tax, and high-skill, low-carbon jobs, this Budget has certainly been an affirmative step towards a vision of the UK as a world leader in both innovation and climate change.