Stormont commits to driving innovation forward for NI companies
As the Executive aims to drive Northern Ireland into the top four regions in the UK in terms of innovation by 2025, a manufacturing White Paper has been launched to ensure businesses here are getting all the support they need.
Ahead of Manufacturing Month NI in March, there are some green shoots of optimism for the industry with the January PMI (Purchasing Managers’ Index) being revised higher to 53.3. Anything over 50.00 reflects a growth in output.
The latest revision brings the PMI to its strongest reading since last April which indicates a stabilising in the industry, following a period of contraction.
Reasons for this include the stability created by the General Election in England and at home the restoration of Stormont while we also have more clarity around the issue of Brexit.
The Executive has set a target of achieving a research and development (R&D) spend of £1.2billion by 2025.
Currently Northern Ireland businesses are spending £759.2million and The Momentum Group, the tax specialists behind the White Paper, says companies here are not optimising the support that is available.
R&D Tax Credits is a government initiative developed to encourage innovation within UK businesses. They provide a valuable source of financial benefit and help to accelerate growth and prosperity.
A total of £75 million was paid out to businesses in Northern Ireland in R&D Tax Credits during 2017-18. But, while this has been an improvement on recent years, The Momentum Group believes businesses are missing out on potentially tens of thousands of pounds.
To put the level of claims into perspective, HMRC figures showed that Northern Ireland companies claimed just 1.7 per cent of the total monetary funds paid out across the UK, representing just 2.7 per-cent of all claims.
Since its inception, The Momentum Group has helped its clients identify over £135+ million of tax benefits.
Managing Director of The Momentum Group, Tom Verner said: “In my view, the key reasons why Northern Ireland is the lowest performing region are: a lack of awareness of the research and development incentive’s existence and gaps in understanding of what qualifies as R&D activity.
“Our experience is that many companies in Northern Ireland could be carrying out R&D without even realising it.
“Interestingly, the statistics show that local SME’s are driving the growth in claims, accounting for 82% of Northern Ireland’s total R&D Tax Credit claims.
“This goes to show that there is support available for companies of all shapes, sizes and sectors and our mission is to work with them to help them get their slice of the millions that the UK government has made available.”
The Momentum Group White Paper outlines why 2020 is the year companies should embark on a period of sustained R&D.
It reveals that the UK government is currently prioritising support for R&D in the manufacturing industry.
Although the manufacturing industry accounts for the majority of R&D expenditure in the UK (65% or £16.3billion in 2018), this is down from 84% in 1985.
Counteracting the effects of this trend has been one of the main focuses of UK industrial policy in recent years. For example, successive governments have supported the development of the Catapult Centre Programme.
These organisations and campuses seek to connect businesses, academics and industrial research so that technological advances can be more easily converted into commercial products or processes.
Chief Executive of Manufacturing NI, Stephen Kelly said: “R&D Tax Credits encourage innovation in the manufacturing sector, enabling companies to thrive and look to the future with real confidence.
“Companies who are attempting to develop something new or making an improvement to something already in existence to a products, process or service in the manufacturing sector could be eligible for significant financial benefits for their innovation.
“It has been encouraging to see an increase in the number of claims being made but it is still surprising to see how many companies are missing out.”
The paper also looks strategically at the manufacturing industry, which experts believe is on the cusp of a ‘fourth industrial revolution’, as it marches towards unprecedented levels of integrated automation.
Investments in R&D are seen as important ways of building for the future, with innovations in new equipment, products and processes along with investment in people and skills.
To read the Momentum Group’s White Paper visit go.aws/39QWP5X