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The impact of tax credits on innovation to be studied

19 December 2012

An investigation into business innovation in the UK is being launched at the University of Greenwich. Experts from its Business School are looking, in particular, at the impact of tax subsidies on firms that carry out research and development, and will assess whether innovation improves a firm’s performance in terms of growth and job creation.

Dr Mehmet Ugur, Business School, University of Greenwich
Dr Mehmet Ugur, Business School, University of Greenwich

The 18-month project, worth more than £125,000, is being led by Dr Mehmet Ugur, from the university’s International Business and Economics department. The work will be funded by the Economic and Social Research Council, the UK's largest organisation for backing high-quality research which has an impact on business and society.

It is expected that the existing tax credits scheme for research and development will be extended to more small firms and start-up companies in the future. Dr Ugur says the comprehensive study, which will be based on Office for National Statistics data going back more than a decade, could help in the development of government policy on innovation, productivity and growth.

Dr Ugur says: “While innovation in the UK clearly helps drive economic growth, it is vital to investigate what works and what doesn’t when it comes to the tax credits scheme.

“We will be finding out whether the credits really encourage innovation in all types of firms, or whether it mainly benefits firms who are already innovators. We will also look at the broader picture, of whether the ability to innovate boosts a firm’s chances of survival and growth, and see how UK firms compare in this area with their counterparts in Europe and North America.”

The project will have significant implications for jobs, business competitiveness and for public policy, he adds. “Ultimately we want to find out how the UK compares with its major trading partners and competitors, and see which type of companies are using innovation to secure growth and job creation.”

The university’s researchers will consult with high-level organisations during the project including the Department of Business, Innovation & Skills and the Trades Union Congress (TUC).

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