Clause 53 - Tax relief for expenditure on vaccine research etc
Finance Bill
9:30 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
Clause 53 and schedules 13 and 14 introduce a new tax relief for spending on medical research and development. The new relief will apply to spending on vaccines and medicines for preventing or treating tuberculosis and malaria, vaccines for preventing HIV infection, and vaccines and medicines for preventing and treating forms of AIDS that are found mostly in developing countries.
The hon. Gentleman asked why we chose a tax credit rather than grants, and I expect that he will have some sympathy with the answer when he takes time to reflect on the matter. The tax credit is targeted at a
specific case of market failure. When it comes to treating most of the diseases and conditions that affect the developed world, we and our constituents can rely on the pharmaceutical industry, which has an excellent track record on research and development. In that respect, this country is pre-eminent in the world, and that is true in terms of its history and tradition and of its current market position. Although we can rely on the industry and the market to deliver on most health issues, there has been a market failure in this case, and we are promoting a market-based solution.
We could have used grants, although that might have cost more. That approach would not, however, have been as successful in underpinning the market. As I have told the hon. Gentleman before, the Government believe in the market and in its ability to deliver if it is properly regulated. It is strange to find that all the market sceptics are on the Conservative Benches. Who would have thought that that day would come? However, it explains why we are sitting here and they are sitting there.