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Budget support for R&D is key plank of COVID-19 economic recovery plan

4th March 2021 about a 5 minute read
"What is clear from the Budget is that this Government remains eager to establish the UK as a 'scientific superpower' and makes plain that the NHS has the potential to serve as a dynamo for job and business creation/growth." Annemarie Naylor, Future Care Capital

Chancellor Rishi Sunak has delivered a Budget outlining a variety of schemes, grants and fiscal measures aimed at boosting the UK economy in the wake of the Covid-19 pandemic and lockdown.

As expected, he confirmed £1.65bn of funding for 2021-22 to continue the vaccine deployment programme in England, alongside a range of other vaccine initiatives.

The Budget also included a range of measures designed to support and incentivise innovation, a core part of the recovery from COVID-19. The Government will commit £375m to the Future Fund: Breakthrough, which will invest in R&D-intensive industries such as life sciences.

However, health organisations expressed disappointment at the lack of extra funding for the NHS given the significant backlog of care.

There was also no funding announced for social care, although reforms are due later this year.

Also expected, the duty rates on beer, cider, wine and spirits will be frozen for another year, despite the warnings of the impact this could have on public health.

Finally, the Pension Lifetime Allowance will be frozen until April 2026, despite the BMA warning it would have a “grave impact on the medical workforce”.

Dynamo for jobs and growth

Commenting on the Chancellor’s announcement, Annemarie Naylor, Future Care Capital Director of Policy and Strategy, said :

“Like others in the sector, we had very much hoped the Chancellor might have had something to say on social care to offer some much needed certainty in that sector.

“However what is clear from the Budget is that this Government remains eager to establish the UK as a ‘scientific superpower’ and makes plain that the NHS has the potential to serve as a dynamo for job and business creation/growth.

“The Government has also underlined its intention to attract scientific talent to the UK over the years ahead by announcing changes to pertinent visa regimes”. 

Ms Naylor noted that the Chancellor also announced changes to R&D credits and consultations about tax relief with the potential to help grow the UK Life Sciences, MedTech and digital health sectors. 

“In particular, we welcome the £375million to introduce Future Fund: Breakthrough, a new direct co-investment product to support the scale up of the most innovative, R&D-intensive businesses.” 

There is to be a consultation about two R&D tax relief schemes, with the objective of ensuring the UK remains a competitive location for cutting-edge research.

The government is also considering bringing data and cloud computing costs into the scope of relief alongside a number of other policy options and priorities at the wider review.

Other commitments

The Budget includes £28m investment to increase Public Health England’s vaccine testing capacity as well as a further £5m investment in clinical-scale mRNA vaccine manufacturing. 

Meanwhile there will be £22m funding for the expansion of the first trial of combining different vaccines and the world’s first study assessing the effectiveness of a third dose of vaccine.

The Chancellor also announced a lifelong commitment to continue the Thalidomide Health Grant beyond 2022-23 in England. This includes an initial down-payment of £39m for the first four years after the current grant runs out. Future figures will be confirmed every four years following that.

Other measures include a consultation on R&D tax reliefs as well as significant changes to high-skilled migration to help the UK attract and retain talent. 

This includes a new points-based visa, reform to the Global Talent visa and a review of the Innovator Visa. As set out in the ‘Build Back Better: our plan for growth’ document, the Government has pledged to create the most advanced genomic healthcare system in the world.

The report adds that the Government will be publishing an Innovation Strategy in Summer 2021.

Summary of key announcements

Economy, business and tax

  • Corporation tax to rise to 25% from 2023.
  • £5bn of new grants to help British businesses reopen when lockdown begins to ease.
  • A “super-deduction” that provides a tax break for firms that invest.
  • Announced the locations of the eight UK freeports: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
  • Doubling the incentive payments for new apprentice hires, with £3,000 for each new apprentice hired between the 1st April to 30th September 2021.
  • Visa reforms to attract “top level talent” to the UK.

Energy & Environment

  • Green sovereign savings bond for retail investors
  • Funding for Holyhead Hydrogen Hub, Aberdeen Energy Transition, and North Sea Oil Transition deal.
  • New port infrastructure for offshore wind in Teeside and Humberside

Health

  • £1.6bn to continue the rollout of the COVID-19 vaccination programme and improve future preparedness
  • Science & Research
  • High skill visa reforms to attract talent
  • Two consultations on R&D tax credits and enterprise management incentives

Education

  • Doubling incentives for employers to take on new apprentices to £3000
  • £126m to triple the number of traineeships

Justice

  • £19m additional funding to support victims of domestic abuse

A copy of the full budget document is available here