Private sector's £100m to boost innovation

The Government has promised to spend £100m outsourcing research and development work to small companies, in a package of measures aimed at stimulating private-sector R&D.

The Government has promised to spend £100m outsourcing research and development work to small companies, in a package of measures aimed at stimulating private-sector R&D.

Tax breaks for innovation and measures to promote the commercialisation of university research were also included in the Budget speech.

The public sector spends more than £4bn a year on private-sector R&D, mainly on medical research through the Medical Research Council and on defence. Gordon Brown said he would guarantee that 2.5 per cent, or £100m, is spent with the most dynamic small and medium-sized companies.

He repeated a promise to bring forward proposals that will extend R&D tax credits for Britain's most innovative firms. The Inland Revenue will consult soon on how to "enhance the credit for the mid-sized research company". Debate is expected to centre on whether the credit can be used to encourage progress in favoured medical or technological areas such as stem cell research.

The Government is planning to offer extra funds to universities that allow private firms access to their research facilities.