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According to a report submitted to the government by top business groups, reform of R & D could lead to significant numbers in job creation. The submission from the Engineering Employers Federation and the Society of Motor Manufacturers and Traders, outlines reforms to the tax credits system which would create up to 31,300 jobs.

The report suggests a cash benefit rather than the current tax relief to compensate for Research and Development costs, would encourage investment from overseas companies and UK businesses. Although the government would have to look at an investment of £205 million each year, a cautious estimation of jobs which would be created is 7,700. If the best case scenario was to occur, up to 31,300 jobs could be created.

Businesses which are US owned pay more tax in the United States if they receive UK tax credits, making a cash incentive an attractive bonus to foreign companies. Other countries, like France have considerably more attractive incentives for Research and Development. The cost to the government would be outweighed by the increase in economic output, which is estimated at £665 million.

The chief executive of the EEF, Terry Scuoler said:

“Measures to boost growth have to be the government’s number one priority given the weak state of the UK economy. Encouraging high value investment and innovation by UK-based companies as well as attracting foreign investment is crucial for ensuring UK manufacturing and the wider economy can continue to grow.”

Reform of the current system would encourage long term investment and growth for the UK economy.

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