Clause 27
Finance Bill
3:15 pm
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
Perhaps I can help the hon. Gentleman by setting out a little context. Vaccine research relief is a closely targeted scheme providing extra incentives, on top of R and D tax credits, for research and development into vaccines and medicine for the prevention and treatment of TB, malaria, HIV and certain types of AIDS, which occur predominantly in the developing world. Such a specialised scheme will, by its nature, have a small take-up. Because it is a new scheme, and given the time lags inherent in the tax system and the small number of large companies that make claims, there is insufficient evidence—we have only anecdotal evidence—to demonstrate the incentive effect of the scheme as a whole. We cannot demonstrate the necessary incentive effect to the European Commission at this point, because we are at an early stage.
That is why we have introduced this self-declaration system, which applies only to large companies. We presume that the additional administrative burden is miniscule, and we do not think that it will have an incentive effect for or against incurring the actual spend in the first place. We anticipate that in due course there will be sufficient time-series data to make our own evaluation, and it may be possible to return to the Committee and say that the measure is no longer required. For the moment, we feel that it is the simplest way to ensure that we do not end up in complicated proceedings against the European Commission.
That answers the point about whether this puts us at a competitive disadvantage—absolutely not. Every country is subject to the same framework. To give some context, the Spanish Government recently lost a case at the European Court of Justice because their R and D tax credit system was in breach of European rules. We think that by doing this simple thing, we can ensure that we are not in that situation with vaccine research relief. On the contrary, by having a European state aid-approved system like VRR, our companies will be at a comparative advantage, and that is obviously in the interests of all.