R&D Threatened By Switch From Grants To Loans

UK businesses are facing the very real threat of having to scale back research and development as the government threatens to pull the plug on grants and replace them with loans.

Government grants have long been an effective way to support business innovation in the UK particularly in pharmaceutical, aerospace and automotive industries. With most advanced economies continuing to invest heavily in the research and development in their businesses, any switch to loans for UK businesses would put them at a distinct disadvantage leading to many relocating abroad.

According to the FT Whitehall sources have said that costs are being transferred from government to users but any potential move from grants to loans is likely to meet with stiff opposition from business leaders, if it means scaling back on R&D and losing their competitive advantage to businesses abroad who are benefitting from government support.

Some of the UK’s largest employers can be described as ‘research intensive’ and this provides many thousands of jobs. Speaking to the FT, Virginia Acha, executive director for research and innovation at the Association of the British Pharmaceutical Industry said “This would have potentially devastating consequences for the whole life-sciences sector, particularly the small to medium-sized biopharma enterprises.”