'No case' for tax relief on R&D

MICHAEL Heseltine, President of the Board of Trade, told MPs yesterday he saw no case for tax incentives for industry to invest in research and development as it would distort commercial investment decisions.

The pharmaceutical and defence industries were examples of how industry could invest to good effect within the present tax regime.

Appearing before the Coons Trade and Industry Select Committee, Mr Heseltine also said he regretted the passing of the Rover car group out of British hands. He would have loved to see a serious British buyer come forward for the company. Earlier this year British Aerospace sold Rover to BMW of Germany in a controversial pounds 800m agreement.

'I regret it. But there was not in the end any doubt that the deal with BMW was the best that could be done,' he said.

The Government could do little when faced with the fact that British Aerospace could not carry the strain of investing in Rover and decided to divest.

He rejected a challenge from Richard Caborn, chairman of the select committee, that the Government might have backed a management buyout.

Mr Heseltine said that no management team could have raised pounds 800m without some government guarantees and that he would not have approved such a move.

'I had no proposal on my desk that I regarded as a serious British option.'

He also rejected some key recommendations by the select committee in its recent report on the competitiveness of British manufacturing industry. These included a call for an increase in government support for research and development in civil aerospace.

He told the select committee that he shared its concern about education and training and their importance to Britain's competitiveness.

But he ruled out demands that targets for training should be set for each sector of industry with the introduction of levies and some element of compulsory training to ensure the goals were met.