Chancellor focuses on the UK's technology research and skills

Chancellor of the Exchequer Gordon Brown has announced a series of measures designed to boost the UK's technology research and skills capability.

In his pre-Budget speech, Brown said the UK must invest now to compete against the rapid growth of Asian economies such as India and China.

'At the core of this Pre Budget Report is the belief that the Britain of long term economic strength will be...the Britain that resolves to invest in hi-tech, high value added manufacturing and services through world leadership in science and technology,' he told the House of Commons.

Brown reiterated the importance of the government's existing 10-year, £2.5bn Science and Innovation Investment Framework. He aims to strengthen partnerships with business on raising investment in UK research and development (R&D), and improve collaboration between businesses and universities.

The new measures he announced include:

* Re-examining the R&D tax credit for medium-sized firms

* Removing tax barriers to the formation of university spin-off companies;

* Piloting a matched funding scheme to help build up university resources through new endowments;

* Benchmarking progress in raising business R&D

* Establishing a £100 million technology investment programme for the northern Regional Development Agencies to promote 'Science Cities' for the North, starting with Manchester, Newcastle and York.

Tom Wills-Sandford, director of campaigns at IT industry association Intellect, says any measures to improve the R&D tax credit are welcomed.

But he warns that any initiatives must benefit organisations of all sizes.

'Until the effective rate has moved out of the "noise level" for all firms, and closer to the international average of 10 per cent, there will never be sufficient incentive for UK based companies to grow their share of world wide R&D,' he said.

'In addition, their ability to produce the innovative products and services that they need to compete in the global economy will diminish and the UK economy will suffer as a result.'