In his first ever budget the Chancellor was bold and ambitious with his plans but since the 11 March the world and economy have changed beyond compare and the subsequent financial response from the Chancellor means the budget has paled into insignificance. Here Luke Hamm, CEO at GovGrant, considers how innovation is being promoted by the government and how speed is critical to any success.
The speed and success of government measures
I, for one, do not think the government should face a tirade of criticism on their response to Covid-19 – the fact of the matter is they had a black swan event and we should be proud of how the nation has responded and the financial support the government has put in place. It is far better to think about the successes and what more we could do with infrastructure that is already in place.
The Coronavirus Business Interruption Loan Scheme (CBILS) had issues at the start and needed a rethink, which resulted in an instant impact on take up. This scheme also highlighted the need for the bounce back loan which, at least from first-hand experience, is working well (my wife’s business had the bounce back support within 48 hours). But there are other areas where scrutiny is worthwhile and I’m sorry to say but the recent update from Innovate UK seems to suggest that the model needs some work. Is the government deploying the funds in the most effective way?
Covid-19 fast track competition
Innovate UK launched a Covid-19 fast-track competition at the beginning of April where UK businesses could apply for a share of £20 million to develop new ways to tackle disruption by COVID-19.
Innovate UK has received over 8,600 applications to this rapid response competition, which as of today, are still being reviewed with no particular date being set for the publication of outcomes. In unprecedented times, this is a unprecedented response, and it comes as no surprise if Innovate UK have been overwhelmed.
When you think about the Innovate UK competition in normal times, it is a competitive process and the best idea wins. This makes sense, but there are issues. Some fantastic ideas will come in second place. Others will be entered at the wrong time and then not get the support. Or an application succeeds because the presentation was better but the idea itself wasn’t.
Now we have 8,600 businesses applying for £50k because they think they have a brilliant response to Covid-19 and using this mechanism doesn’t sound the right model to me. Now more than ever we need to let a hundred flowers bloom. Rather than have innovative companies pitting their ideas against each other is there a way of letting every good idea progress? We don’t want the infrastructure itself to stifle innovation. I am certainly not advocating we spend £430m just because people asked for it but there must be a better way.
Is deploying through HMRC the answer?
Unsurprisingly, I am an advocate for the use of HMRC as a deployment mechanism. It’s been successful at getting the funds out to furloughed employees, it is the only source of information that can make the self-employed support work and it has kept the wheels turning on R&D tax credits.
HMRC have updated advisors with a 28 day turnaround on R&D tax relief and we have seen payments as quickly as 3 days from filing. So when it comes to rapid response this infrastructure gets a big thumbs up from me.
There are no easy answers but it’s important to learn quickly as we make our way through unchartered waters. The question is how can we use tax incentives pre-emptively, ahead of the information to get the ball rolling. I’m not sure of the answer but it feels like there is merit in some serious consideration. Here at GovGrant we are keen to engage to take discussion forward.