The chancellor has not done enough to provide real R&D incentives in today's Budget, according to the IT Industry trade association, Intellect.

In the run up to today's budget, the body had called for the ceiling on R&D tax credits to be raised to 10 per cent. However, Tom Wills-Sandford, Intellect's director of campaigns, said that it is still below the "noise level" of real incentive.

Yesterday, the government published details of its ten-year strategy for science. Chancellor Gordon Brown said his goal is "to make Britain the best and most attractive location in the world for science and innovation". Tax breaks and collaboration with industry are key to achieving this.

Today's Budget has now revealed the extent of government support. Intellect is "seriously concerned about the outlook for the UK as a base for research and development and innovation".

Despite this, the government has an impressive line-up of companies advising how best to support R&D in the UK. Brown said that "a range of leading R&D businesses have indicated that they wish to work with us on our science strategy and to make their own commitments to the future of British science and innovation over the next decade".

Intellect argues that tax credits are not aggressive enough, despite the widening of allowable costs. They will fail to provide British firms and multi-nationals with enough incentive to invest in the UK as an R&D base.

In particular, Intellect highlights software R&D. The Inland Revenue does not understand the role it plays in innovation, it claims. ®