Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Government amendments 23 to 38.

That schedule 14 be the Fourteenth schedule to the Bill.

Clause 34 and schedule 14 make changes to how research and development relief is provided to large companies. The changes will increase the value of large company R and D relief, make the relief more visible in company accounts and provide greater support to innovative loss-making companies. The changes are designed to make R and D relief more effective in influencing large company investment decisions, and to help support long-term growth and productivity through the development of new skills, technologies and processes in the UK economy. Alongside the introduction of a patent box and the reduction in the corporation tax main rate to 20% by 2015, the changes represent another significant step towards the Government’s aim of creating the most competitive tax system in the G20.

I shall now provide a little background for members of the Committee about these matters. In November 2010, the Government opened a consultation on how to improve the United Kingdom’s R and D tax relief schemes. Smaller companies wanted the Government to make improvements to their existing system, and the Government responded in the Budget 2011 by increasing the rate of the SME R and D tax credit from 175% to 225% and removing several potential barriers to early-stage companies and start-ups claiming under the scheme.

Large businesses instead favoured a change in the way in which R and D relief is delivered. They wanted to be able to account for relief above the tax line, where it would be more visible to decision makers and of more benefit to foreign-parented multinationals looking to invest in the United Kingdom. They also wanted R and D relief to support and incentivise companies fully with no corporation tax liability, as those companies may be unable to benefit from the existing super-deduction despite having significant R and D investment and employment in the UK. The clause responds to those views by introducing the R and D expenditure credit, also known as the above the line or ATL credit.

The changes made under clause 34 and schedule 14 introduce legislation for companies to claim a taxable ATL credit for their qualifying R and D expenditure. Unlike the current system, which works by reducing a company’s profits liable to corporation tax, the ATL credit will work in a similar way to a grant, but it will be administered and settled through the corporation tax system.

Crucially, all companies will be able to benefit from the credit, irrespective of their corporation tax position. While the credit will be used first to settle against any corporation tax liability that a company owes to HMRC, any remaining amount will become payable in cash. That will greatly increase the financial and cash flow support for loss-making companies and help to acknowledge the unique risks and uncertainties that exist for companies investing in R and D, and innovation. It will also allow the credit to be accounted for above the line in a company’s profit and loss account, a key policy objective that will make it easier for companies to demonstrate the true cost of R and D investment to decision makers.

The measure introduces the credit at a headline rate of 10%. Relative to the current system, that will increase the cash value of R and D relief from around 7% to around 8% of a company’s qualifying expenditure. It further reduces the business cost of R and D investment in the UK, supporting more than 2,450 existing claimants and helping to attract the R and D activity of mobile overseas investors. It also increases the steady state cost of the reform to about £250 million a year. In the current economic and fiscal climate, that represents a strong signal of the Government’s long-term support in such matters.

The clause introduces the ATL credit alongside the existing super-deduction in April 2013, and legislates for the ATL credit to replace fully the super-deduction in April 2016. In the short term, that will provide time for companies to make the transition to the new system and help to maintain support for companies in the defence sector, while the treatment of R and D relief in Ministry of Defence contracts is reviewed independently. In the longer term, that will allow for a simple system of R and D relief that will incentivise both domestic and foreign-parented companies to invest in R and D in the UK. It also reflects views put forward at the consultation, in which about 70 respondents were in favour of the ATL credit fully replacing the super-deduction.

It is important that the Exchequer is protected from possible abuse of the ATL credit. The clause will achieve that result by capping the amount of credit that can be claimed by a company with no corporation tax liability by a measure of its UK R and D employment. The cap is not designed to be restrictive for genuine large company R and D claims, and the Government have taken steps to revise the cap in response to issues that were raised at the consultation.

I now turn to amendments 23 to 38. The ATL credit is intended to provide a consistent level of support to all companies so that they receive the same effective rate of relief irrespective of their corporation tax liability. Such consistency is crucial in ensuring that the credit can be accounted for above the line, where it will be more effective at influencing R and D investment decisions.

Following discussions with professional advisers, we have become aware that the legislation does not achieve the consistent treatment of profit and loss makers in certain circumstances. The amendments therefore make changes to address that and ensure that the legislation functions in line with the policy objective.

The legislation introduced by clause 34 and schedule 14 has benefited from open and extensive consultation. That is further evidence of how we have worked closely with business to ensure that the legislation is effective and that the positive impacts on UK R and D investment are realised.

In conclusion, the changes brought about by the clause and schedule aim to increase the generosity, visibility and certainty of UK R and D relief, and ensure that it represents best value for money for the taxpayer. Moreover, the changes reflect the importance that the Government attach to helping firms, and the wider UK economy, to increase their productive potential and improve their global competitiveness. I hope that both the clause and schedule will be accepted by the Committee.

It is a pleasure to see you back in the Chair on this sunny morning, Mr Crausby, as we make good progress through the Bill. [ Interruption. ] I am glad to hear that we have the support of the Government Whip, who seems to be cheering on the work that the Opposition are doing to scrutinise the Bill, to look at it extremely carefully and, of course, to raise appropriate queries with the iron discipline for which we are renowned. It is perhaps now best to move swiftly on.

I am grateful to the Minister for outlining the purpose of clause 34, schedule 14 and Government amendments 23 to 38. Clause 34 gives additional relief for expenditure by a large company on research and development, which is currently given in a super-deduction against corporation tax profits. The amount of tax payable is therefore reduced. The Minister made it clear that the measure was designed to encourage more R and D by large companies, and that it replaces the current deduction system with the above-the-line credit to all large companies, including those that have no corporation tax liability. It is intended to make the benefits more visible and certain, and therefore to encourage greater investment. We are generally supportive of such measures.

The Minister stated that there has been consultation, which he referred to as “extensive”. I should probably recognise that he seemed to understand that the consultation had gone on for a considerable period. At least we are now in a position to take forward the views of the industry, which is, I understand, in agreement with these measures.

I am grateful to my hon. Friend for giving way. Nowhere is our iron will more strongly embodied than in her contributions to the Committee. Does she agree that it is vital that the Treasury examines closely how effective this measure is in Scotland? There is added uncertainty about the future there, not just because of the Government’s failing economic policy, but because of the uncertainty over the constitutional future of Scotland.

My hon. Friend makes an important point in relation to Scotland at present. The business community is voicing increasing concern about the ongoing uncertainty and the questions that are arising around the proposals by the SNP and the Scottish Government to break Scotland away from the rest of the UK. That is potentially putting off very important investment decisions. We are increasingly hearing that businesses want a degree of certainty in the times ahead. They want to know the tax regime that they will be operating under. They want to know what incentives the Government have to get growth on the agenda. My hon. Friend is right to say that the Treasury has an important role to play. Far be it from me to praise anything that the Government are doing at this stage, but the reports that outline the difficulties, although we have a different view of the way forward, are an important contribution to the debate in Scotland, which she is contributing to by mentioning it this morning.

To return to the issues in the clause, amendments and schedule 14, the Minister outlined the importance of encouraging large companies to invest in R and D by replacing the current relief with the new proposal. While the rules for the eligibility of expenditure on R and D remain essentially the same, the Government state clearly in the impact assessment that the measure

“will increase the attractiveness of the UK as a location for large company R&D investment by introducing a more visible, more certain, and more effective form of R&D relief.”

The Minister referred to the consultation, which started back in November 2010. In one response to the several rounds of consultation, the ICAEW said that the change to the above-the-line credit

“could have an impact for larger companies where the people involved in the R&D are likely to be more ‘disconnected’ from the accounting for the tax credits. We have always believed that if the R&D tax credit could be given in a way that directly impacts the budgets of those responsible for the R&D spend, then this should lead to an increase in the overall R&D spend.”

We all want to see that taken forward.

The Opposition welcome the changes being made to boost R and D investment by large companies and the knock-on effect that that would have on jobs in the economy. We strongly believe that the way to move out of these difficult economic times is to boost the economy and to get growth in our manufacturing and intellectual property sectors. The best way to ensure that people in our local communities have more money in their pockets is to get them into well-paid work. The opportunities that come from R and D and the knock-on effects on jobs in the economy are important.

I wonder whether my hon. Friend shares my concerns. On Friday, I visited the largest manufacturing employer in my constituency and it seems to be unaware of many of the measures that the Government are introducing. Does she have any indication of how the Treasury is working with Scottish Enterprise to ensure that Scottish businesses get the message?

I thank my hon. Friend for that intervention. I must say that I do not have any indication as to how the Treasury is working with Scottish Enterprise, but I do know from visiting a number of companies and organisations both in my constituency and more widely in Scotland that there is a need to ensure that the links between the UK Government and the Scottish Government, and the connections through Scottish Enterprise, UKTI  and all the other sources of support to business to encourage them to grow, continue. When the Minister responds to my questions, he may want to add my hon. Friend’s question to the list. I am sure that he will answer in due course.

For my part, I am pleased to see that after the many rounds of consultation there now appears to be a degree of consensus across the industry as to the benefits of the changes. However, bearing in mind the impact that the measure could have on the economy and the fact that the large companies affected by the measure are those with more than 500 employees, an annual turnover in excess of €100 million and gross assets in excess of €86 million, can the Minister clarify a few points in his response?

First, what assessment has been made of the measure’s likely effect on jobs and the economy? My hon. Friend raised that matter and I am sure all members of the Committee would be interested to know what the Minister thinks the most likely impact of the measure will be. As he explained, the new measure opens up relief for R and D expenditure to companies with no current corporation tax liability—they will be able to get a cash benefit at the end of the subsequent accounting period subject to the PAYE/NIC cap—and to loss-making SMEs, which should be able to get an element of cash credit for expenditure that they currently have to claim under the large company scheme rules. He said that the Government were responding to issues faced in the consultation. Those are some of the issues that were raised. How many extra companies will be eligible for R and D expenditure relief as a result of this measure and what will be the cost to the Exchequer? How does he expect that to figure in his overall calculation?

Will my hon. Friend ask the Minister to reflect on whether, with big business in this country sitting on such a huge amount of cash, which could be invested in research and development, it is companies on the margins that will invest money, which they would not otherwise have, through these credits, or are we just providing money that business would automatically invest in research and development anyway, given the amount of funds at the disposal of the large business sector?

I thank my hon. Friend for that intervention. I am sure the Minister will respond in due course. It is important to recognise that some businesses are potentially sitting on pots of cash. They are concerned about what the future will hold and are perhaps not investing as much as they might in a whole range of ways. We want to see businesses invest, particularly with a view to creating jobs and increasing growth. Businesses need to recognise the value of R and D. If we can encourage them to spend on that and to improve both their products and their productivity, that will be very important for job creation.

Just to prove that we Scots can never be accused of being parochial, would my hon. Friend also ask the Minister what discussions he has had with other Government Departments, particularly the Department of Energy and Climate Change, about opportunities in green growth, jobs and investment? Britain is sadly falling down the league table.

Again, I thank my hon. Friend for that intervention. I am sure that the Minister will want to speak for himself and the Government on that point when he seeks inspiration to answer in detail the ever increasing list of questions that have been posed. It would be interesting to hear what recent discussion has taken place about so-called green jobs and renewable technologies. At one stage the Government wanted to suggest that they would be the greenest Government ever. That claim has perhaps disappeared from the agenda. There is certainly not much evidence to suggest that that is a credible claim now. Again, I am sure that the Minister will wish to pick this up.

I return to the point I was making about the measures that have been proposed and the Government amendments. As the Minister will know, concerns were raised during the consultation rounds about companies undertaking sub-contract work being disadvantaged by some of the proposals, as the credits would have to be deducted when calculating prices for Government non-competitive contracts. The Government have countered that by stating that the issue will be addressed by the single source regulations office, which will be tasked with amending and overseeing single source pricing regulations. Can the Minister address that? As I said earlier, there is a growing list of technical questions and policy issues for him to respond to in his summing up. Can he update the Committee on the progress made in setting up that office and his plans for the work it will do to address that specific problem? Also, what assurances can the Government give to affected companies that they will not be overly disadvantaged before the single source regulations office is set up and running?

Concerns were also raised during the consultation rounds about the complexity of the accounting, including the incorporation of some relatively complicated offset rules. What advice or guidance has been issued to the industry on those changes and does the Minister plan to provide any further guidance, especially once the above-the-line credit becomes mandatory on 1 April 2016? The Government’s impact note on the clause states:

“There will be some additional costs in terms of revised guidance and business support. Due to the nature of this particular change, the Company Tax return CT600 will also require some design alteration.”

Bearing in mind the questions raised by my hon. Friend the Member for East Lothian about businesses understanding what is available and being fully up to speed with the opportunities that might be available, it is important for the Government, if there are complexities or issues to be ironed out before the scheme becomes fully operational, to give some steer at this point as to how they intend to take the matter forward. Can the Minister confirm what assessment he has made of the additional costs referred to in the impact note? Can he also say a little more about what business support will be offered?

Can my hon. Friend add to the list of questions whether the Minister will spell out what mechanisms will be used at local level to deliver information to businesses, given that the Government are undermining enterprise support in local council areas?

I am sure the Minister has heard my hon. Friend’s question. I think we must be up to about 10 questions on which the Minister will have to give us information. My hon. Friend makes an important point about what happens at local level.

The impact note states:

“The measure will be kept under review through regular communication with affected taxpayer groups.”

Can the Minister elaborate on what form that review will take? Committee members will have heard me say that I am always wary when Ministers, often as inspiration strikes them during the debate, say that everything is under review all the time. As I have mentioned before, that does not mean anything if it is under review sitting on a shelf somewhere, waiting for someone to come up with a solution. The Minister might want to illuminate us as to how the matter will be kept under review. What action will be taken? Who will be consulted? How will the regular communication be taken forward? Who are the affected taxpayer groups? How will the Government engage with business? When will we get some indication of what changes might be made and what further policies might be developed in response to the review? How will the people who are interested in the matter be able to continue to look at it once the Committee completes its proceedings and we move on to deal with other things?

It is a pleasure to serve under your chairmanship, Mr Crausby.

This debate illustrates an issue with the Budget. Too many of my constituents think that the Budget is a single-day process that happens and then goes away. Although clause 34 will not be on the front pages of TheMail, TheExpress, or indeed the Southend Echo tomorrow, it is an important part of the whole process. Sometimes it is the technical detail that will get Britain back to work. It is an important part of the growth strategy. Just because it is a bit techy and complex does not mean that it is not incredibly important.

For whatever reason, certain companies look at profit before tax, particularly in looking at business on an ongoing performance basis. That is sensible. If a company has a management team in the US, in Asia and in Southend, it would be unfair to compare its performance in the UK, where it may receive advantageous tax treatment, with that in other tax entities. However, this proposal has an ongoing impact that could make the UK look more favourable. The change between above the line and below the line will certainly assist. Providing a credit or grant above the line is certainly welcome.

Comment has been made about the time it has taken to implement the policy. I would suggest that it is better to take the time and get it right rather than have it unravel. QinetiQ, a company in my constituency, said that the process has been exceptional and commended not only the Minister but his team of officials for their work. It also said that it had a high degree of confidence. It is important to get the policy right for QinetiQ. If it is not in the top 10 of R and D spend in the UK, it is certainly not far off it.

I hear what the hon. Gentleman is saying and I know the company that he is referring to. Does he agree that, having established a good working relationship with industry, further review and ongoing communication and discussion on whether the policy is working in practice are particularly important?

I do not want to get too het up on terminology. The Government should always be open to review. The hon. Lady is making it sound as if putting the policy under a slightly more formal review would be a good thing, but it has a cost. Her suggestion argues against the case she was making about long-term tax certainty. The Government should always be open if things have not quite worked out and come back and fine-tune legislation, but I do not see the need to formalise that process. I would be horrified if the Minister leapt to his feet and said, “Yes, we should review this, and we will have a little task force doing it every six months.” People would look back and ask, “Why are we doing this?” and the answer would be, “Way back in 2013, a point was made about reviews, so it was formalised.” I was exaggerating, but I find the words of reassurance sufficient in the context of what has been called an exceptional relationship with the Minister and his team.

The policy is not just about getting new business into the UK, but about retaining existing business. QinetiQ talked to me about its E-X-Drive, a transmission mechanism used in military vehicles. It is quite exceptional technology that the US buys from a UK company; it does so because the technology is the best in the world. More than 35 people are employed directly in R and D, providing the technology to military equipment. Those jobs are constantly under the pressure to move away. These changes will make sure that those jobs remain in the United Kingdom.

On a broader point, R and D expenditure and development and projects are quite often looked at over a period of 10, 15 or 20 years. I have some concerns about the projects that have had tax structures and arrangements set up in the past, looking forward over a 10, 15 or 20-year period.

I note that in part 3 of the Bill there is an arrangement by which companies can use the existing tax treatment up to 1 April 2016. Will the Minister put some meat on the bones of what will happen on that date, to confirm that that is still right? Out of curiosity—this is not desperately relevant—will he also tell us why that arrangement is for 1 April rather than 4 April? I would have thought that 4 April would have been easier in terms of everyone’s tax treatment, but, as a non-accountant, I am sure that there are good reasons.

In concluding my remarks, while not relevant to the points I made here, I draw Members’ attention to my entry in the Register of Members’ Financial Interests, as I serve a small but growing financial services company in Liverpool.

I wish to make two points. Without wanting to be unhelpful, I observe that paragraph 37 of the explanatory notes states:

“The ATL credit will be a taxable receipt and will be paid net of tax to companies with no corporation tax liability.”

I ask the Minister, in this era of deficit spending, where will the money come from? I am sure that, with the Government closing loopholes elsewhere, there must be a good idea of that.

The other point is, in relation to the clause, a lot was said by Opposition Members about holdings of cash, and also about certainty. My hon. Friend spoke about projects that run for 15 to 20 years and one of the  reasons why large companies hold on to cash, the most liquid asset, is to deal with uncertainty. I ask the Government to make sure that long-term certainty is assured in this measure.

I agree with my hon. Friend the Member for Rochford and Southend East that these types of measures are not necessarily those that catch people’s eyes on Budget day; they are more pre-occupied with fuel duty, beer duty and all the simple measures that we all notice as consumers. However, this measure, which the Government are pursuing, is extremely important and the Minister knows that I have advocated it for some time.

The measure is extremely important for my constituency, where many work in the motor manufacturing industry and have done traditionally. When we look back at the history of that industry, whose demise was gradual, we can see that the root causes included the poor management of many of those companies; the poor industrial relations and militant unions that we had over many years; and the severe lack of research and development funding, which meant that companies were churning out car models that people did not want to buy. We were overtaken by companies from abroad who invested substantially in research and development and modernised their models continually. The British public, and the public around the world, wanted to buy those models and we fell behind.

That is why this measure is so important. The resurgence of the motor manufacturing industry, particularly in Warwickshire and the west midlands with companies such as Jaguar Land Rover, has been driven by the investment in research and development in the last few years. The number of jobs created in that region under this Government, supporting companies such as Jaguar Land Rover with this type of measure, has been phenomenal. That is also having a positive effect on small and medium-sized enterprises in constituencies such as mine, which are now expanding at some pace to meet the demand in the supply chain from companies such as JLR.

The Government have been right to take their time over implementing this policy and to engage with industry and speak to all those who may be affected. Not all those companies were positive about this measure, but it seems that the Government have been able to work with them. Companies such as those in the defence sector now seem to be comfortable with what is happening. That is important because Governments of all colours are often criticised for bringing in policies that affect industry with little notice or thought. That is the perception of business.

It is, therefore, important that before any measure such as this is put in place, business is fully consulted and the implications of the policy are known by Government. I commend the Minister and the Treasury team who have done that with this policy and have brought the measure forward. I am sure that the measure will create many thousands of jobs over the next few years, not just in Warwickshire and the wider west midlands area but across the country.

I thank members of the Committee who have spoken in support of the measure. I am delighted that there is consensus that this is the right step forward. R and D tax credit proposals should be put in the  context of various measures that we are taking as a Government to make the UK tax system more competitive. That includes, of course, the cutting of the main rate of corporation tax from 28% to 20% by April 2015; the introduction of the patent box with the reduced 10% rate of corporation tax on profits arising from patents; and the introduction of competitive new tax reliefs for animation, high-end television and video games industries.

It is important that the UK is able to compete. It is important that the UK is a destination of choice for companies that can choose to invest in a number of locations. R and D tax credits fall into line with that approach. The reforms that we are making are designed to support long-term growth and productivity through the development of new skills, technologies and processes in the UK economy. I am pleased that that has the Committee’s support.

My hon. Friend the Member for Wycombe raised the point that some cases will involve an amount being paid even though there is no corporation tax liability. He asked where the money comes from. The ATL credit is designed to be more effective at influencing large company investment decisions and to provide better value for money to the Exchequer. The ATL will increase the cost of the relief by around £350 million a year. However, in ensuring that it is paid out whether a company is making a profit or not, it will provide a degree of certainty to businesses, which will know that when they make an investment decision in an area involving R and D expenditure they will benefit from this approach. We believe that will support long-term growth and productivity and make the UK a more internationally competitive location for innovation.

I will respond to the point raised by the hon. Member for Gateshead about whether the measure is cost-effective. It is worth pointing out that R and D relief is designed to address a number of risks and market failures that cause firms to under-invest in research and development. Costings assume, in line with empirical evidence, that £1 of R and D relief translates into £1 of additional R and D investment. There are then positive spillovers of skills, technologies and processes across the economy that are not included within the costing but would clearly help benefit the UK economy.

We have to remember when we talk about businesses having large sums of cash reserves that they can choose to invest, that they can choose to invest in a number of different countries. The Government want to do everything we can to encourage that investment in the UK.

I understand the point being made. AkzoNobel, the largest private sector employer in my constituency, has its international research and development division for marine paints at Felling in Gateshead and, of course, it is important that that multinational business carries on its function. It is doing some exciting work with local universities and attracting graduates into its research and development function. However, I am wondering how much more it will be doing as a result of the measure.

As I said a moment ago, the evidence that we have analysed suggests that £1 of tax relief results in an additional £1 of R and D investment, with additional spillover effects to the advantage of the UK economy. It  is also worth pointing out that a lot of R and D investment in the UK may be made where there is no corporation tax liability because the companies can be capital-intensive, operate in cyclical industries or have long product development cycles. The ATL credit will provide greater financial and cash-flow support to those companies, making the UK a more competitive location for them to invest in R and D, and bring products and technology to the market.

As for reviews and so on, it is important that we have certainty and stability within the regime. We are talking about investment decisions made for the long term, which is why it is important for the regime to be correct, and why it is right that we have a proper consultation process and ensure that we bring matters into place in a way that is sustainable. I am grateful for the remarks about the consultation process. We certainly have engaged heavily with businesses, which is the right thing for Governments to do in such circumstances. We will, of course, keep R and D relief under review to ensure that it is effective, and that it is incentivising private sector R and D investment and providing value for money to the Exchequer.

The Treasury and HMRC hold regular working groups and consultative committees to look into the concerns of interested parties and inform policy debate, and I am sure that such meetings will continue to be held at forthcoming fiscal events. I agree with my hon. Friend the Member for Rochford and Southend East that formalising a review process in such circumstances would be unnecessary. I fear that the Opposition have perhaps missed an opportunity to table an amendment requiring a formal review, as that theme has been running through our debates. However, I am sure that it is not too late for such a request to be tabled for our discussions on Report. We shall wait to hear. Perhaps there is an iron discipline—

It is a new regime.

It is a new dawn for the Opposition, and how refreshing that is.

If we table an amendment, I am sure that we can quote the Minister and say what a good idea he thought such a process was.

That would be a selective quotation.

Of course, we keep such matters under review, but what we have put in place is a regime that should provide some long-term certainty, which is why we have implemented it in such a manner. I shall refer to defence contractors in a moment or so.

I now wish to provide a little more information about the beneficiaries of the regime. As I said in my opening remarks, there are about 2,450 claimants of large company R and D relief. About 50% of those companies are assumed to have no corporation tax liability, either temporarily or permanently. The ATL credit will increase the cost of R and D relief by around £350 million a year.

National Statistics records information relating to R and D claims for businesses in Scotland. In 2010-11, there were 135 claimants of large company R and D  relief, which was worth £19 million. Those companies will benefit from a more visible, certain and effective form of R and D relief that is payable in the absence of corporation tax liability.

The Treasury is working closely with the Department for Business, Innovation and Skills and UK Trade and Investment to increase awareness of UK R and D relief. HMRC and BIS have held a number of joint workshops to raise awareness of the relief and HMRC has also attended events organised by UKTI to promote R and D relief. HMRC guidance will be published shortly to assist businesses claiming the credit. It is merely the mechanism for claiming that has changed; the underlying rules have not. Guidance on how to complete the relevant form—the CT600—has been provided in the guide that accompanies it, and HMRC has a number of specialist units that can assist businesses in making their R and D claims. When R and D tax credits were first brought in, businesses raised a number of concerns about how difficult the process of making claims was. To be fair to HMRC, specialist teams were brought in during the previous Parliament and the process was substantially improved; the complaints that we heard about in 2005 and 2006 had dissipated by 2010. HMRC has a record of effective implementation in these matters.

There is also the issue of what more we can do to publicise the steps that we have been taking. I am sure that when visiting businesses in their constituencies all members of the Committee will want to point out the many things the Government have done to improve the competitiveness of our tax system, such as the patent box, R and D tax credits and the cuts in corporation tax. I am sure we can all be ambassadors for the tax competitiveness of the UK economy as it currently stands. I look forward to hearing many reports of hon. Members visiting businesses in their constituencies and informing them of the measures that we are taking.

It is of course also the case that professional advisers will be well aware of the measures. Looking at this particular measure, which applies to large businesses, there should be considerable awareness of the opportunities with R and D tax credits.

I shall resist the temptation to ask the Minister how many times he put his name to amendments that suggested reviews when he was in opposition. I have a serious question for him, which relates to the point raised by my hon. Friend the Member for East Lothian, about Scotland, and how Scottish Enterprise links to HMRC, BIS and UKTI. Is he aware of any specific initiatives in that context to ensure that Scottish Enterprise and UKTI are able to promote these measures and that there is ongoing take-up in Scotland?

I can certainly take the hon. Lady’s comments on board, and ensure that Scottish Enterprise is fully informed—as I am sure it already is—of the measures in the clause, as part of our attempts to ensure that businesses are well aware of the steps that we have taken to make the United Kingdom an attractive regime for business investment.

The single source regulations office has been raised on both sides of the Committee, particularly in the context of companies whose R and D relates to contracts  with the Ministry of Defence. The Government believe that the treatment of R and D relief in the pricing of MOD single-source contracts is a matter of procurement policy and should be reviewed on its merits, as part of the MOD’s response to the Currie review. The SSRO, an independent body due to be set up in 2014-15 by the MOD, will conduct a review to amend and oversee the MOD’s single-source pricing regulations. Following consultation with the MOD and industry, the SSRO will make a recommendation on the fair and reasonable treatment of R and D relief in the pricing of MOD single-source contracts. Consequential amendments to the single source pricing regulations are expected to take effect from April 2016. Companies will continue to claim R and D relief via the existing super deduction until that point.

In that context, I shall address the question that my hon. Friend the Member for Rochford and Southend East raised about what will happen in 2016. The legislation ensures that only the credit can be claimed from 1 April 2016. From that date, companies will make their R and D claims using the expenditure credit rules. Why is it 1 April rather than any other date? Good question. That is the date from which corporation tax is chargeable for a financial year. I thank my hon. Friend the Member for Nuneaton. He has campaigned vigorously, representing the interests of his constituency and the wider west midlands. He made representations in advance of the Budget about where the R and D above-the-line rate should be. We had indicated that 9.1% was the likely rate; he advocated a 10% rate as being more appropriate, and his representations have borne fruit. I am grateful to him for being a doughty champion of industry in his constituency and the wider area.

I hope I have managed to address the questions that hon. Members have raised. I am grateful for the support that our approach has won.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.