Labour's Plans for UK Innovation - Good for Your Business?
Grantify examines Labour's plans for UK innovation. Learn about potential impacts on grant funding, R&D tax credits, and tech sector support.
The General Election saw a landslide victory for the Labour party, but what might this mean for the UK’s innovators?
The Manifesto makes clear that they are committed to boosting innovation in the UK, with promises of more opportunities to partner with Public services through procurement contracts and wider engagement with those businesses. Increasing investment opportunities for businesses features heavily, along with supporting university spin-outs. We dug a little deeper into Grant Funding, R&D Tax Credits and Investment to share our insights with you.
Reassuringly, the previous Labour shadow science minister Chi Onwurah announced 10-year budgets for UK Research and innovation (UKRI), the UK’s funding organisation under which Innovate UK and our other research councils that deliver grant funding sit. Long-term relationships and commitment to supporting business growth are also stated in Labour’s Manifesto. The existing UKRI strategy is in place until 2027, so grant funding will continue, and it would appear that Labour intends for it to continue for several years beyond this.
With a growth of 600% in UK AI companies, Labour would has been remiss to exclude AI from their campaign. With big plans to create a National Data Library and encourage partnerships between research programmes, we can hope that this signals more support for funding AI within the UK, despite the increased regulations that the Party intends to deliver.
Tech as a whole is a sector that this new Government is committed to, with the new Department of Science, Innovation and Technology incorporating representatives from three critical areas:
- Government Digital Service (GDS)
- Central Digital and Data Office (CDDO)
- Incubator for AI (i.AI)
Whilst the intention here is to digitise more Governmental processes, the step change here may help to drive recognition or investment in tech across the government’s other responsibilities.
Interestingly, the new Government has pledged to support financial services and new technology developed within the sector, with a ‘pro-innovation regulatory framework’. We hope this means that we will see more competitions like Innovate UK’s Innovation in Professional and Financial Services, and that those businesses who have won funding are able to commercialise effectively without regulatory burdens.
We also see reference to advanced manufacturing, creative industries, automotive, life sciences and transportation, defence, improving international connections as we continue to navigate a post-Brexit Britain, and supporting healthcare in the UK. Reflecting on the opportunities that Innovate UK has provided over the past few years, Grantify has supported businesses applying for Innovation in Professional and Financial Services, Creative Catalyst, Advanced Precision Medicine, Resource Efficiency for Materials and Manufacturing, Defence and Security Accelerator and many more grant funding opportunities. We hope that competitions such as these will continue to support innovation in those sectors which will help to strengthen the UK economy and support industries such as the creative and healthcare sectors that were most damaged by COVID.
There will undoubtedly be change, but we will be keeping our nose to the ground to seek out those opportunities which are the best fit for you.
A hot topic of late has been the legislation changes and increased scrutiny from HMRC on the R&D tax credit incentive. With a number of fraudulent claims, a swathe of hiring for tax inspectors took place, whilst the industry campaigned for change to legislation to ensure that innovative businesses were rewarded and not punished by being able to claim for certain expenses. The industry has seen a long period of unsettled change.
The Labour Government has committed to ensuring that businesses continue to access R&D tax credits, with little change planned or intended to the current legislation guiding R&D tax after a turbulent few years of change. The crackdown on fraudulent claims is also continuing, which a robustly prepared claim will help to prevent. Speak to one of Grantify’s R&D tax credit team for help.
Interestingly, according to a press release from the Government, a sector-specific review of the scheme will be undertaken to evaluate the impact that it has on growth of key areas in the UK. We are looking forward to this data, and will be interested to understand what future outcomes it may lead Labour to deliver.
Above all, it looks like R&D tax credits will be stable for the next few months - if not years - which is undoubtedly a relief for businesses, accountants and tax advisers alike!
Investment has been a key talking point within Labour’s manifesto. Increasing public investment to de-risk private investment is a core strategy with £7.3bn allocated under a National Wealth Fund intended to upgrade ports, build supply chains across the UK, rebuild the steel industry, build new gigafactories, accelerate the deployment of carbon capture, and support the manufacturing of green hydrogen.
A report published in 2022 by the Labour Party identified critical gaps in the business development pathway - pre-seed/seed and Series B funding - and the lower rates of investment seen for women and minority groups. Whilst these don’t appear to be addressed directly within the manifesto, a promise of increasing investment is given, so we must wait for the data to see if Labour delivers on this promise.
UKRI remains firmly committed to enhancing the grant funding they award by partnering with key investment agencies and leveraging private investment opportunities, so securing grant funding is a positive step towards securing private investment. If you’d like to discuss an opportunity with us, book a call with one of our team who will help guide you to a good fit.
Sources:
https://labour.org.uk/change/labours-fiscal-plan/
https://labour.org.uk/wp-content/uploads/2022/12/WEB-17247_22-Start-up-review-v12-ALT-2.pdf
https://www.techuk.org/resource/dsit-to-merge-experts-from-central-government-organisations.html
Related posts
With up to €2.5M in non-dilutive funding at stake, choosing between EIC Accelerator and Smart Grant could transform your startup's trajectory. But these heavyweight programmes serve very different purposes and suit different types of innovation. Here's your expert guide to making the right choice.
