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Scientific Research

Volume 175: debated on Thursday 5 July 1990

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To ask the Chancellor of the Exchequer if he will introduce fiscal measures to benefit scientific research.

There is already a generous tax relief for capital expenditure on scientific research related to a company's trade, which is fully relieved by a special 100 per cent. capital allowance.

On public company gifts for scientific research, would a Treasury Minister be prepared to meet David Baldwin, chairman of Hewlett-Packard in Britain, who says that if the arrangements were more generous —as they are in the Federal Republic of Germany and the United States—his company would be prepared to give significantly more to universities such as Edinburgh, Strathclyde, Bristol and Cambridge? Would such a meeting be possible?

It might indeed—if we received any such request. When I was responsible for these matters, as Economic Secretary, I was in correspondence with the gentleman to whom the hon. Gentleman has referred and I believe that I asked him for any evidence that there was more favourable treatment in the federal republic. I do not know whether my successor ever received it, but I certainly did not.

Does my hon. Friend accept the important and significant conclusion of the Select Committee on Science and Technology in the other place that as a nation we are spending too little on civil research and development and that the situation is getting worse?

I would certainly not agree that the situation is getting worse. Over the past five years, spending by British industry on research and development has risen by 46 per cent. and companies now spend some £5 billion per year on research and development. We all welcome that trend.

Is not it true that our enormous and growing balance of trade deficit—currently more than £20,000 million—has risen at least in part because of the lack of scientific-based research and development, which has helped to diminish our manufacturing base? Is not it true that we are not catching up with Japan and West Germany and that under this Government we are becoming a nation of assemblers, without proper or adequate manufacturing research and development?

There were so many mis-statements in the hon. Gentleman's question that I cannot put him right on all of them. It is simply not true that things are getting worse—they are getting decidely better. During the 1980s manufacturing industry's productivity increased—not least because of research and development—faster than in any other G7 country. That is good news for the future.

Does my hon. Friend accept that, in spite of his answers to previous questions, the majority of the money to which he referred is in fact spent on development rather than research? Will he consider how the Government can help to encourage more research, particularly among manufacturing companies?

As I said in response to the main question, there is already more generous tax treatment for research than for any other kind of investment. We also have the lowest level of corporation tax on profits earned of almost any country in western Europe. That is beneficial to industry and leaves more money in industry's hands for investment in such activities, and I welcome the fact that that is increasingly happening.