Budget boost for product designers

Product design is the sector most likely to benefit from Gordon Brown’s most underwhelming Budget in seven years as Chancellor, according to industry sources.

Tax credits on research and development spending will now kick in at £10 000 rather than £25 000 – helping smaller manufacturing groups to invest in design.

‘Anything that encourages companies to see innovation as being available to them is great,’ says Ideo studio leader Matt Hunter. ‘This might help companies that usually regard design as pure styling to make it part of their whole process.’

Hunter admits that the Inland Revenue’s ‘strict interpretation of what research is’ can be an impediment. But the Chancellor also announced a review of R&D qualification that could be positive step.

With big decisions on tax largely deferred, or in the case of the National Insurance increase already taken, the Budget talked up reductions in red tape, but to little effect.

‘Fiddling round the edges’ is how Results Business Consulting manager director Jim Surguy characterises the measures that will apply to smalland medium-sized enterprises.

Minor changes to VAT – such as raising the level before companies pay tax from £55 000 to £56 000 – should help sole traders and very small groups, but Surguy says the Budget is generally ‘dwarfed by the commercial pressures the design sector is under’.

The real tax squeeze for businesses, the 1 per cent rise in National Insurance contributions unveiled in the 2002 Budget, comes into force this month.