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The British government's latest measures to boost knowledge-driven economic growth, announced in last week's budget, have been applauded by scientists, universities and investors (see Nature 398, 98; 1999

Each of the measures announced last Tuesday addresses a particular stage of the commercialization of research (see table).

Table 1 Budget highlights
Full size table

Most were inspired by a report published last year by a committee of scientists, entrepreneurs and investors, set up by the government and chaired by Sir Peter Williams, chairman of Oxford Instruments, to identify ways of improving the financing of high-technology companies.

The budget measures will be complemented in the coming weeks by a report from the Department of Trade and Industry outlining its plans for implementing its recent white paper on competitiveness (see Nature 396, 714; 1998

The government last week also announced the winners of the first round of University Challenge, a competition for a £45 million (US$73 million) seedcorn fund to help universities commercialize research. Britain's finance minister, Gordon Brown, increased the fund by £5 million so that promising initiatives that did not make the final shortlist would not have to find alternative sources.

Most of the winners were joint bids by groups of large research universities. But Lord Sainsbury, the science minister, said that the government is to repeat the competition with an additional £15 million available. He says he wants every university to be involved in commercializing its research.

Alan Wilson, vice-chancellor of the University of Leeds, welcomes the “incentives for technology transfer in the budget” but is concerned that core university funding has only just kept pace with inflation.

Leeds is among a number of leading UK research universities to have enthusiastically embraced the government's technology-transfer initiatives. Together with the universities of Sheffield and York, Leeds has emerged as joint-highest recipient of University Challenge funding with £4.5 million.

Sir David Cooksey, a member of the Williams committee and chairman of the British Venture Capital Association, welcomed the measures in the budget. But he regrets the government's decision to omit a key recommendation from the Williams report: exemption from both capital-gains tax and corporation tax for large companies that invest in high-technology companies — known as corporate venturing.

The report said that such incentives could unlock vast amounts of capital for high-technology industry. Large investors such as insurance companies currently consider the high-technology sector too risky to invest in.

The government has, instead, decided to restrict tax incentives for corporate venturing to relief from corporation tax but not from capital-gains tax, although this has not been ruled out for the future.

Craig Pickering, another member of the Williams committee and a former senior civil servant at the Treasury, says that, in his experience, ideas take time to make the transition from a proposal to a change in the law. One of the reasons for this is that the government's taxation agency, the Inland Revenue, takes time to work out in detail the implications of any new proposals.

One Treasury official says that progress on further tax relief for corporate venturing is unlikely until the government is able to quantify the cost to the public purse of a more comprehensive tax rebate.

He says it is difficult to forecast the capital gains that a large company could make from high-technology investment. It is safer, he adds, for the government to set aside a fixed sum towards a venture-capital fund.