Clause 28
Finance (No. 2) Bill
12:15 pm
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
I rise to speak to the first of the two clauses dealing with research and development tax credits simply to emphasise the point, of which Labour Members are well aware, that the tax credits are a key part of the Government’s strategy to increase business research and development. In so doing, we will boost the levels of science and innovation in the economy to help to secure long-term prosperity.
Since the scheme was introduced in 2000 for small and medium-sized enterprises, the support claimed amounts to just under £1 billion for such enterprises and almost £1.8 billion overall. Early evaluation of the scheme suggests that companies claiming R and D tax credits generally find the process quite easy and find that it is having a positive impact on their R and D spending. However, we have constantly looked at ways to improve the package and to make it easier to apply for and more effective in its application. The amendments and changes announced in the pre-Budget report should improve the experience of companies claiming the credits. The announcement was widely welcomed, as was the fact that HMRC will set up dedicated units to specialise inR and D tax credit claims.
We also announced that the range of qualifying costs for the scheme will be expanded to include payments made to clinical trial volunteers. The clause will enact that announcement. It follows the suggestion put to us by the Association of the British Pharmaceutical Industry, which argued that the cost of paying volunteers for clinical trials is a legitimate R and D cost incurred by pharmaceutical and biotech companies and others undertaking medical research.
The clause also makes equivalent changes to vaccine research relief, which was introduced in 2002 to provide extra incentive for R and D on drugs and vaccines to treat or prevent diseases.