Schedule 12 - Tax relief for expenditure on research and development

Part of Finance Bill – in a Public Bill Committee at 6:30 pm on 21st May 2002.

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Photo of Mark Hoban Mark Hoban Conservative, Fareham 6:30 pm, 21st May 2002

I congratulate my right hon. Friend the Member for Fylde on the way in which he has introduced the series of amendments. He has picked up some important issues about what forms a cost base for R and D activity, and he has highlighted the Bill's narrow definition of the type of costs that will gain, in the words of the Paymaster General, super-plus relief.

We have to recognise that a lot of R and D takes place in very expensive premises. People who travel up the M1 regularly will have seen the research centre of GlaxoSmithKline in Hertfordshire. That is an obvious and powerful embodiment of the issue of whether we give the extra, enhanced relief to office costs and the costs of property that large companies incur when they engage in significant amounts of R and D. If we are to encourage and stimulate research and development in the United Kingdom, we must ensure that a broad base of costs is taken into account. I shall be intrigued—if the Paymaster General has the information—to know what representations have been received from pharmaceutical and electronics companies about the structure of costs that they incur. My concern is that if we give relief on a relatively small part of their cost base, it will not trigger the increase in R and D expenditure that we hope would arise from the introduction of this relief for large companies.

I support the amendments proposed by my right hon. Friend. He has raised some valid points that strike to the core of whether the relief will be attractive and will stimulate the growth in R and D expenditure that the Paymaster General hopes for.