Article 50 will create ‘labour pains’ for R&D

Britain’s departure from the EU will intensify skills shortages and make it harder to carry out research and development in the UK, according to Edinburgh-based R&D tax credit specialist Jumpstart.

Managing director Brian Williamson says there will inevitably be reduced migration which will put pressure on the availability of labour, in particular amongst science, engineering and technical roles.

Net migration from the EU was estimated at around 185,000 in 2015, of which 73 per cent had a job waiting or came to look for a job. Therefore EU migrants accounted for around 135,000 UK jobs. While unemployment currently stands at around 1.8m, replacing skilled jobs will be much harder than it might appear, Brian warns.

“Negotiations with the EU are certain to be complicated, and a spirit of compromise is expected by most,” says Mr Williamson. “I believe we will see a measured reduction in migration, and a new UK focus on reaching the hard-to-help unemployed.

“However getting the long-term unemployed back to work will require a significant investment in time and money and will only tackle shortages at the lower skills levels. What about scientists, programmers and engineers? Companies are struggling to fill these roles at the moment and controls on migration will make things worse. It is exactly this type of technical labour that feeds the UK’s research and development engine and fuels innovation.

“We predict that companies will form relationships with foreign organisations initially to attempt to get this labour through some alternative route, but apart from those well-organised groups this will be time consuming and complex.

“The result will be an increase in sub-contracted labour, which the work likely to go to EU companies. Companies will need to consider their approach to R&D and to tax credits. Structuring the contracts in a compliant way will still enable them to make robust and sizeable claims.”

With 730 days to go before Britain departs the EU, Brian urges companies to decide on a systematic approach to claims for R&D as soon as possible. “By getting the right advice on how they can contract with people and organisations, companies can still retain their share of the £2.45bn given away each year by HMRC.”