British Businesses Show Support for Labour’s Innovation Agenda, New Study Finds

British Businesses Show Support for Labour’s Innovation Agenda, New Study Finds

14 Mar    Finance News, In Business

Recent research has identified a new trend among British businesses, with an overwhelming majority backing the Labour Party’s stance on fostering innovation.

The study, which surveyed over 600 leaders in business, finance, and innovation, reveals that four out of five (79%) believe that a Labour Government would positively impact innovation in the UK, with less than 5% anticipating a negative effect.

The research further highlights the significance of innovation within the agendas of UK firms. “Driving innovation” ranks as the second most critical priority for businesses, trailing only behind the imperative of enhancing operational efficiency.

However, despite the prioritisation of innovation, challenges persist within the UK’s research and development (R&D) landscape. Issues with the HM Revenue & Customs (HMRC) concerning R&D tax credits loom large, with 58% of businesses unaware of recent reforms to the scheme. Additionally, 22% acknowledge the reforms but remain uncertain about their implications for their operations.

HMRC’s stringent compliance measures have led to delays in payments for 23% of firms, discouraging a quarter of businesses from claiming R&D tax credits. Benjamin Craig, Associate Director at Ayming UK, remarks on the disconnect between governmental priorities and tangible support for businesses. He emphasizes the need for a comprehensive vision from the Labour Party, addressing longstanding challenges and revitalizing business innovation.

Confusion Surrounding Reforms

Confusion surrounding eligibility criteria is compounded by a lack of awareness regarding upcoming reforms. As of April 2024, the merger of the SME scheme with the RDEC scheme, along with reductions in relief rates, threatens to impede innovation funding for many businesses. Yet, 58% of enterprises remain uninformed about these impending changes, posing a risk of disengagement or inaccurate applications.

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In light of these challenges, the government’s ambition to establish Britain as a “Science Superpower” remains aspirational. Njy Rios, Director at Ayming UK, who conducted the research, stresses the necessity of nurturing homegrown STEM talent to sustain innovation in the long term, advocating for proactive initiatives to inspire future generations.

Offshoring Trends in R&D

Amidst these complexities, offshoring of R&D activities has become increasingly prevalent among UK firms. The research indicates a shift towards international innovation, with 79% of businesses conducting R&D projects abroad. Notably, Europe emerges as the primary destination for UK R&D efforts, despite significant offshoring to other regions.

Mark Smith, Managing Partner at Ayming UK, underscores the need for policies that incentivize domestic R&D, acknowledging the inevitability of offshoring while emphasizing the importance of bolstering UK competitiveness in innovation.

In conclusion, while the Labour Party garners support for its pro-innovation stance, tangible action is imperative to align governmental aspirations with the realities faced by businesses. Only through collaborative efforts to address regulatory challenges, foster local talent, and incentivize domestic R&D can the UK hope to realize its ambition of becoming a true Science Superpower.

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