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Business, Innovation and Skills written question – answered on 10th July 2013.

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Photo of Bob Russell Bob Russell Liberal Democrat, Colchester

To ask the Secretary of State for Business, Innovation and Skills what steps he has taken to ensure that the UK is in future classed as an Innovation Leader, as opposed to an Innovation Follower in the European Commission Innovation Union Scoreboard; and if he will make a statement.

Photo of David Willetts David Willetts Minister of State (Universities and Science)

While the UK has moved from the group of Innovation Leaders in 2009 to the group of Innovation Followers in 2010 on the European Innovation Scoreboard ranking, the more recent WIPO-INSEAD Global Innovation Index shows the UK going from 14th in the world in 2010 to fifth in 2012 and now third in 2013. Innovation performance cannot be understood by looking at a single measure, but, instead, it requires a nuanced look at the different elements and how they interact.

The UK Government's Innovation and Research Strategy for Growth, published in December 2011, set out how Government would strengthen the UK's innovative capability and encourage greater investment in innovation through support for research and innovation in business; provision of incentives for companies to invest in high-value business activities; creation of a more open and integrated innovation system; and removal of barriers to innovation.

We commissioned new economic analysis of innovation to input into the policy development process and published a separate paper—BIS Economics Paper No 15—that supported the wider strategy and set out the UK's innovation system and its impacts and incorporates comparative analysis of innovation performance in other countries.

The Innovation and Research Strategy for Growth set out a range of measures that will work to improve the UK's innovation performance. Key actions include:

The Government is investing over £200 million to establish a network of elite Catapult Centres to commercialise new and emerging technologies in areas where there are large global market opportunities and a critical mass of UK capability to take advantage. The first six catapults—covering (High Value Manufacturing; Cell Therapy; Offshore Renewable Energy; Satellite Applications; Connected Digital Economy; and Future Cities—are already operational and the Transport Systems Catapult will be operational when the leadership team is complete by August 2013.

The Innovation and Research Strategy for Growth announced a £75 million package of funding for research-intensive and innovative small and medium-sized enterprises (SMEs) and an expansion of the Small Business Research Initiative (SBRI) to help Government Departments to access innovative solutions for specific public sector challenges, while, at the same time, supporting innovative companies in developing new products and services. Budget 2013 announced that the SBRI programme would be further expanded in key Government Departments.

The R&D Tax Credit scheme allows all companies undertaking qualifying research and development expenditure to claim relief from corporation tax or, in the case of certain loss-making SMEs, payable credit. The strategy also announced that, from 1 April 2012, the rate of relief under the SME scheme would increase to 225% of qualifying expenditure, one of the most competitive rates in the world.

Government also introduced a new "Above The Line" (ATL) credit for large company R&D investment from April 2013. Budget 2013 announced that the headline rate of the ATL credit will be increased to 10% from the 9.1% rate proposed at Budget 2012. This will make the UK a more attractive location for large company R&D activity by further reducing the after tax cost of investment.

Government has also committed to invest in emerging technologies, including the eight great technologies, where the UK has the depth of research expertise and the business capability to develop, exploit and protect these, and where there are likely to be significant opportunities created by global markets for those worth over £10 billion per annum. Government announced investment of £600 million in its autumn statement of 2012 for facilities for technological R&D and Research Council infrastructure. This funding will support the development of innovative technologies and strengthen the UK's competitive advantage in areas such as big data, synthetic biology and advanced materials and support innovation infrastructure to take these technologies through to market.

The Chancellor of the Exchequer, my right hon. Friend Mr Osborne, further announced a budget increase of £185 million for 2015/16 in the recent spending review for the Technology Strategy Board (TSB), the prime channel through which Government incentivises business-led technology innovation. This will enable the TSB to make a more powerful impact on the role that it can play in generating UK economic growth by building on its existing support programmes for innovative UK businesses.

We are monitoring the UK's performance through the annual innovation report and the full effects of the strategy will be realised over the medium to long-term.

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