Science investment will rise to £6.3 billion
in a move which, along with the R&D credits, is intended to
boost hi-tech innovation.
"As part of our plan to double investment in
science, I can announce that in the next four years public
investment in science will rise from £5 billion this year to £6.3
billion by 2010-11 – a 25% cash increase," said Brown in
Parliament.
"The Secretary for Industry is also today
announcing a £100 million competition for Britain to lead in high
tech innovation – challenging universities and businesses to come
together, from medical research to environmental transport, to
convert British scientific breakthroughs into British commercial
success and jobs," he said.
Brown said that his cut in the main rate of
corporation tax is also designed to spur innovation. "Having
continued to look carefully at the requirements for a modern
corporate tax system for the global economy I propose the following
changes that reflect the increasing importance in investment
decisions of R&D, skills, intellectual property and
environmental innovations," he said. "I have decided to cut
mainstream corporation tax from April 2008 from 30p down to 28p –
at 28p a rate lower than America, Germany, France, Japan, and all
of our other major competitors."
The rate for small companies, though, will
rise, from 19% to 22%. That move, criticised by business
representative groups, was designed to close a loophole, said
Brown.
"I do need to act to deal with individuals
artificially incorporating as small companies to avoid paying their
due share of tax, a practise if left unaddressed would cost the
rest of the taxpaying population billions of pounds," said
Brown.
"To reduce the tax difference between self
employment and small company incorporation, I will raise the small
companies' rate in three stages from 20p this year to 22p in 2009,
recycling all these revenues to legitimate small businesses
investing for the future," he said.
Brown also announced that public borrowing
would hit £34 billion, £3 billion higher than previous
estimates.
Brown estimated that this year UK economic
growth would be 2.5% to 3%, that inflation will be down from 2.8%
to 2% and that the forecast for business investment growth is
7%.
