Small and medium-sized businesses across the North East have taken a bigger share of key Government innovation funding, new research suggests.
Tax relief and innovation funding consultancy Catax looked at Innovate UK funding allocations up to mid-November for all business projects started in the North East. It found the proportion of grant funding awarded to SMEs rose by 83.7% - an 18.6 percentage point rise on last year.
Around £9.2m was awarded to projects started in 2022 by SMEs, while larger companies secured £1.8m. This compared with £13.4m that went to SMEs in 2021 and £7.2m to larger firms.
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This year saw a raft of innovative North East businesses secure grants, including the likes of Newcastle University spin-out Atelerix, which is working on a ground-breaking cell preservation product; Newcastle based tech firm Rapid Fluidics, and Sunderland entrepreneur Vijayalakshmi Subramani, who has developed a VR platform for children with special educational needs.
Catax says the findings underline SMEs importance to innovation and point to Chancellor Jeremy Hunt's announcement in the Autumn Statement that revealed tax relief for SMEs would be reduced for expenditure incurred from the beginning of April next year while the scheme for larger businesses would remain untouched. The Federation of Small Businesses has previously called on the Government to reverse that decision and said boosting research and development among SMEs is "exactly what we need now to raise productivity and growth given the bleak outlook for the UK economy".
At present, SMEs can deduct and extra 130% of qualifying costs from their profits. This will reduce to 86%, plus the normal 100% deduction. And loss-making firms will be entitled to a tax credit worth up to 10% of the total loss, instead of the current 14.5%.
Laura O’Neill, grants manager at innovation funding specialist Catax, said: "These results show very clearly how smaller companies are fundamentally important to the drive for innovation taking place in the UK. The vast majority of innovation grant money awarded to businesses is won not by large corporations but by SMEs.
"Yet the contribution SMEs make to the UK economy is at serious risk of being overlooked. Many of them are the larger companies of tomorrow, whose journey to success and growth is often obscured by the inevitable interest of other companies and subsequent acquisition."
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