Primer caso: Recojo y transformación de plantas medicinales en pomada

The Department for Business, Enterprise and Regulatory Reform (BERR) has set up a number of Innovation and Growth Teams as a mechanism to facilitate the creation of a strategic view collectively from industry on innovation and growth challenges for future competitiveness. One of these is the New Automotive Innovation and Growth Team (NAIGT). NAIGT are currently considering issues arising from market risks associated with technological change required to address reduction in energy consumption and carbon emissions. They are also considering how the automotive industry may adapt and what partnerships may emerge as a result of future challenges and opportunities that may arise related to the electrification of transport. NAIGT recently made the following recommendations regarding low carbon vehicles, which is a consensus view of the automotive industry:

• Create a leadership team to develop future automotive strategy in the UK (Government/senior industry figures);

• Establish ‘Test Bed UK’ which is defined by the NAIGT as “a demonstrator to act as a powerful catalyst for change through demonstrating, experimenting and building the new low- carbon personal transportation system including its infrastructure48

”

• Release and maintain roadmaps and research agendas to focus funding spend and collaboration;

• Establish Government funding mechanism to support product development and industrialisation phase of R&D;

• Evaluate new emissions test procedures based on well-to-wheels methodology, and energy focused rather than current tank-to-wheel approach to quantifying CO2 emissions from

vehicles49.

SMMT and members have provided feedback on the conditions required to create a favourable investment environment in EV technology. Their views are set out in more detail in Box 1 below.

48_{http://www.berr.gov.uk/files/file50539.pdf} 49_{http://www.berr.gov.uk/files/file50300.pdf}

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Box 1: SMMT’s views on the conditions required to create a favourable investment environment in plug-in electric vehicle technology

SMMT and members see NAIGT as a very important contribution to Government strategy, as the consensus view of the auto industry. They are keen that the CCC's recommendations align with the outcome of the NAIGT, both in terms of the roadmap and the schedule. SMMT believes there is a need for consistency and durability in aligning all policies on consumer incentives to buy low carbon products. The same applies with respect to support for investment in RD&D in the UK. A key concern of NAIGT is to avoid diluting their impact through fragmentation, dispersal and a lack of materiality in the whole enabling and support framework. It is also important that the policies avoid contradicting each other. For instance, supporting UK RD&D and production of a given product and then the VED or other consumer signals giving a contradictory message further down the chain.

SMMT and its members view R&D Tax Credits as a valued support mechanism for research and innovation in firms in the automotive sector. They enable more costs to be offset against taxable profits. An enhancement of the basic rate would be the most effective change in the sector. However, the current system of offsetting the tax credit against corporation tax for large automotive manufacturing firms does not always provide a consistent incentive for creating more R&D. Under existing scheme rules the largest firms are excluded from receiving an immediately payable credit whilst small or medium companies not in profit can surrender the tax relief to claim payable tax credits in cash. In SMMT’s view this restriction should be removed.

The ability to realise immediate cash savings where there is no or insufficient profit would be welcomed by the auto industry. Large companies who have insufficient profits could benefit as per the SME regime of offsetting credits against PAYE & NIC liabilities. This would be especially valuable and appropriate to cyclical industries such as the automotive sector, which are prone to unprofitable periods and where it is essential to maintain R&D levels during these periods. This is to ensure sufficient R&D on new products can help to achieve a return to profitability. It will also assist to maintain the credit incentive to the main element of R&D costs - employment costs. Alternatively the value of the credit payment to each firm could be limited and any balance carried forward reverting to an offset to future taxable profits. SMMT recommend this as a highly effective, targeted and temporary aid to ease an exceptional squeeze on cash flow now. However, it could be adapted, further targeted or focused on larger firms to secure more high value manufacturing, engineering and scientific activity in the UK.

Whilst the manufacturers suggest a revised system of tax credits would be the best means of creating a favourable investment climate, a more rounded portfolio of measures may be preferable. By designing a suite of policies that features policy statements and emissions limits as well as grants or tax-breaks for R&D, the Government would be able to ensure the investment is being channelled in the right direction. In particular, it is important to ensure that the additional RD&D funding is used to develop low carbon vehicles that are consistent with the Government’s, short, medium and long-term aims with respect to reducing greenhouse gas emissions.

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