Partner Piece – The MPA Group

April 25, 2017




The MPA Group gives an assessment of Governments investment in innovation.

“Now is the time to innovate” says the latest CBI report on innovation.

The UK are only currently sitting at a R&D GDP spend of 1.7% well below our rivals with South Korea at 4.3%, Sweden at 3.3% and Germany at 2.9%.  Both the UK public and private sectors are under-investing. As 2/3rds of the UK’s R&D is being carried out by business the need to help promote this expenditure is vital. So, businesses were pleased with the government’s commitment to an extra £2bn a year for R&D by 2020, with the decision to place science and innovation at the centre of the UK’s industrial strategy, and with the creation of the Industrial Strategy Challenge Fund (ISCF).

The Spring Budget….it seems like a long time ago

The Government’s commitment to supporting business investment in innovation was highlighted again by The Chancellor of the Exchequer, Philip Hammond in his 2017 Spring Budget.

Mike Price, Director, The MPA Group shares his thoughts on the 2017 UK Spring Budget for support to innovation and R&D.

Philip Hammond set out a generally upbeat summary focussing on a positive 2016 economic performance, which saw the UK positioned as the second-fastest growing economy in the G7. Growth forecasts from the Office of Budget Responsibility have been upgraded for this year and strong employment figures also provided good news.

Part of Hammond’s productivity message centred on the need to drive up the level of private investment in science, and to encourage research and innovation across the economy. This is where R&D Tax Credits will continue to play a pivotal role.

R&D Tax Credits – the future

As part of the Budget focus on taxation and business, the continued public commitment to the original objectives and current structure of the research and development tax credit scheme is very welcome.

For many SMEs and large organisations, their ability to claim up to 33% of their innovation costs under the scheme has enabled them to use welcome funds to further invest in staff, equipment and facilities, commercialise ideas, expand their enterprises and, ultimately, grow their businesses.

“Firms who introduce a new product to market have shown to grow jobs by 4.4% and grown turnover by 10% over the subsequent 3 years, compared to a non-innovator whose jobs increased by only 2% and turn over by 5.8%”

The need to clarify

The Chancellor stated that, after listening to businesses, the Government would be looking to make ‘administrative changes’ to the process that includes simplification for the scheme for large organisations, as well as aiming to improve awareness about R&D tax credits among SMEs.

“However, my view is that simplification is not enough, as it inevitably means change. Instead, striving to provide improved clarification around the scheme would be a much more important step forward, as it would help all stakeholders better understand how they can access and ultimately benefit from the funding. Let’s see what happens if the new Government has a strong mandate“

Mike Price, Director, The MPA Group

Increasing HMRC investment in publicising the scheme so that many more companies can benefit is excellent news. It will help to add to the 21,000 organisations out of five million who have already done so. They’ve enjoyed an average benefit of almost £100,000 each.

Funding innovation

The Chancellor also pledged £570 million for disruptive technologies research, and funding for 1,000 PhDs and fellowships in scientific, technical, engineering and mathematics (STEM) subjects.

The funding, which will come from the Industrial Strategy Challenge Fund (ISCF), aims to put the UK at the leading edge of robotics, artificial intelligence (AI), biotechnology, battery technology and driverless vehicle systems. These are considered the technologies most likely to transform the UK economy in the coming years.

The Chancellor spoke of the need for technologies that could “operate in extreme and hazardous environments, including off-shore energy, nuclear energy, space and mining”, and of “accelerating patient access to new drugs and treatments through developing brand new medicine manufacturing technologies, helping to improve public health.” He allocated £270 million to fund this research.

A further £300 million was earmarked for training, attracting and retaining skilled researchers in subject areas that are aligned to the Government’s industrial strategy. Some £90 million of the money is destined for PhD places, £160 million for new fellowships, and £50 million for fellowships to attract researchers to the UK from “emerging research powerhouses like India, China, Brazil and Mexico”.

From MPA’s perspective, tangible support from government is vital if the UK is to lead the way in these emerging technologies. This welcome investment will help nurture the talent and skills the UK economy needs.

The MPA Group

The MPA Group is a team of highly experienced specialist industry analysts and expert accountants. MPA has worked in partnership with hundreds of SMEs to help them claim the tax relief of over £100m.

If your business is investing or has invested over the last two years in developing products, enhancing manufacturing processes, developing software or integrating solutions, The MPA Group can help you maximise your tax relief. To see how we could help you with this then please contact,


Samantha Wildman, R&D Advisor, on 01234 912000 or email

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