This is CaSE’s response to the HM Treasury consultation on R&D Tax Credits. We believe that the UK must become a knowledge-intensive economy if it is to be internationally competitive in the years to come, and it is therefore crucial that the tax system incentivises research and development activity in the private sector.
Government SET Statistics show that in 2008, 1.8% of UK GDP was spent on R&D. This compares to 3.4% in Japan, 2.8% in the USA, and 2.6% in Germany. Looking at R&D performed by business alone, the figures are 1.1% for the UK, 2.7% for Japan, 2% for the USA, and 1.3% for France. These figures underline the importance of incentivising R&D in the UK.
The pharmaceutical industry (Pharma) has made important contributions to quality of life, longevity, economic growth and education at all levels, and is a key component of the government’s growth strategy. For decades, the UK had been a world leader in medicines discovery and research with at least 10 of the top-selling drugs worldwide (>$1bn annual sales at peak) having UK-trained PhD organic chemists as named inventors. 
