The importance of continued Research and Development in a post COVID and post Brexit era
2020 delivered a year like no other. The economic devastation of the COVD-19 pandemic has been felt across all sectors, imposing challenges unseen in a generation. Additionally, the continued uncertainty of Brexit has left so many companies in an indeterminate state. Both events have had the potential to stunt any business growth, forcing a fire-fighting style of management.
And now in 2021, we find ourselves digesting the strategies emerging from December’s dramatic Brexit withdrawal and somehow navigating through a continued stop-start style of working as a result of COVID restrictions, still at a point where there is no clear roadmap to normality.
Research and development: the key to success
The COVID pandemic has been a huge disruption, both personally and professionally. If we are to extract anything remotely positive, it has demonstrated the vital importance of science, development and innovation, areas in which the UK excel.
Research and development will be critical to economic and social recovery. It will provide opportunities for companies to improve and develop new processes and products that will enhance the way we work, allowing innovation to pave the route to success.
Companies who innovate are always going to be resilient in a crisis, more likely to expand into new markets during disruptions and more likely to be able to hold on to staff and grow in difficult trading conditions.
Adrian Coles, Relationship Director at Natwest Crymu, specialises in helping companies grow and believes that R&D needs to be embedded into company culture.
Now more than ever, a modern trailblazing leadership mindset is crucial in setting a company’s forward thinking strategy, and implementing it.
Our Future Fit: traiblazing in the fourth industrial revolution research tells us that whilst manufacturers recognise the importance of leadership, many find it difficult to dedicate the time as they are working ‘in’ the business. Leaders’ actions on innovation and R&D do not always measure up to their good intentions to innovate and prepare for the future – to be ‘Future Fit’.
Government’s appetite for innovation
The government has continued to vocalise their support for research and development, recognising its contribution to the growth of the UK economy.
In March, the Chancellor announced a record increase in public investment in R&D, committing to reaching £22bn per year by 2024/25. This vision is supported by a variety of actions to help companies achieve their R&D activities, including:
- Introducing a new R&D People and Culture Strategy in a bid to attract, retain and develop talented, diverse professionals UK wide.
- Publication of a new subsidy aid regime which identifies innovative industries as a key area.
- Reviewing the R&D tax credit relief to ensure that it encourages innovation. For example, building on the announcement at Budget 2020 to increase the Research and Development Expenditure Credit (RDEC) rate and review the scope of qualifying costs for R&D tax reliefs, to ensure that the regime reflects the changing reality of R&D and remains globally competitive.
- Supporting entrepreneurs and start-ups by increasing the flow of capital into firms carrying out R&D, enabling them to scale up.
The role of R&D tax credits
R&D tax credits is vital for stimulating research and development, with past studies showing that if you increase the generosity of the relief, R&D spending rises.
A report released by a former Bank of England economist, backed by eight industry leaders, claims that updating R&D tax credit systems in the UK would release £4 billon of growth every year. The report calls for urgent reform to R&D relief rules, stating it would kickstart recovery and create at least 12,000 new jobs in tech and advanced manufacturing.
The UK has earned a strong reputation as contributors to research and development with the aim of advancing technology and science.
LimestoneGrey works with truly inspirational companies; companies who push the boundaries and develop new products and processes, and also companies that improve products and processes that already exist by making them greener, more efficient, more time and cost effective. The combination of these two R&D approaches will allow the UK to recover from a post COVID, post Brexit economy and grow.
It is essential that the UK’s R&D tax credit relief system is globally competitive, and it is vital that it is continually reviewed to ensure this. The UK’s departure from the EU will potentially remove certain restrictions, allowing the relief to become more generous and inclusive. The budget announcement on 3rd March will hopefully provide some clarity.
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