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Promoting enterprise, innovation and skills

Britain has high employment levels but the amount of output produced per worker – productivity – has historically been lower than in other major economies. Britain’s relative performance has been improving in recent years, with productivity now higher than Germany and moving close to France. A flexible, enterprising and high-skilled economy will help deliver faster productivity growth and ensure the UK is well-placed to prosper in the global economy. Budget announcements include:

• major reforms to the corporate tax system, including a reduction in the headline corporation tax rate from 30 per cent to 28 per cent from April 2008 and a series of reforms to simplify the capital allowance system;

• further enhancements to research and development tax credits, to encourage innovation;

• an increase in the tax rate for small companies to tackle individuals artificially incorporating to minimise tax;

• reforms to reduce the regulatory burden on business, including tackling concerns about the burden of workplace dispute resolution;

• the restriction of tax relief available on empty commercial properties, to encourage the supply of office, retail and industrial premises; and

• an increase in investment in public science of 2.5 per cent from 2008-09 to 2010-11.

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