The UK has an abundance of everything necessary for high tech industry, except cash. It is like running a car without fuel.
We are awash with advice, so no more please. Just concentrate on the cash issue.
Notes of SMEIA Meeting held on 4th April 2011 in London
a) Following the welcome, Professor Stephen Hawking’s message was given out.
"As Patron of the SME Innovation Alliance, I am pleased to be able to welcome you to this meeting.
Innovators are a particularly adventurous species. They like to explore, and are inspired by journeys to the unknown. Science is a disciple of reason, romance and passion. Exploration by others inspires us.
Pushing the boundaries of science is not without its problems. There will be those that encourage you. There will be others who may try and stop you from entering their space.
Bureaucracy views innovators as small fish living in their larger world. Because it lives in a round bowl of water a goldfish sees a distorted picture of the outside world. It would have a different picture of reality. But how do we know that we have the right picture? We might also be in some giant goldfish bowl. There is no unique picture of reality. The goldfish's view is as valid as any other.
As a cosmologist, you may be interested to know that my illustrious predecessor Galileo Galilei had his design for a compass stolen, by his one time protege Baldassar Capra. I know that patent theft is one of the big issues that innovative SMEs face today. Galileo described such theft as 'worse than murder, the victim feels the loss of fame, honour and merited glory, obtained not by nature, fate or chance... but from studies, hard work and long vigils.'
May I wish the members of S.M.E.I.A. success with your studies, hard work and long vigils."
b) SME Innovation and Climate Change
Tim Crocker of Scimar Engineering admirably followed this with an interesting opening case study on. He covered the size of the market and how his company had formed Green Energy Technologies Ltd based upon one of their inventions (a new vertical axis Wind Turbine) which in itself uses another of their inventions, a power efficient convertor that can generate higher output voltage than input voltage. He explained how his business had overcome the ‘rare earth’ perennial problem, how he had obtained finance and where it was all committed.
However, Tim then explained how, despite having ground breaking technology that ‘worth hundreds of millions’ it was almost impossible to get any serious support or a sensible strategy on green technology out of Government and its myriad of so-called support agencies (with the exception of the excellent R&D tax credit scheme). The UKIPO needs to improve patent quality and SME enforcement issues sooner rather than later. He explained how banks and VC funding were inappropriate to SMEs such as his and then answered specific questions on his views and his products.
c) A European Patent
Simon Taor of Marks & Clerk then explained, in some detail, the latest position with respect to plans for a European patent. Although not all EU countries had agreed to pursue the concept, others were pressing on, including the UK - the main issue being the old problem of agreement on language(s). However, almost simultaneously the European Court of Justice ruled that the proposed enforcement system of a central court would violate European law. Thus although most Europeans welcome the possible and long awaited introduction of a European patent to reduce the costs of patenting throughout Europe (or now part of Europe) substantially, SMEs would still face the same enforcement issues in the UK. It will be interesting to see just how this develops further though no-one is holding their breath in the short term. Simon is happy to answer specific queries from members should they want to pose them.
d) Them & Us
Will Hutton then took centre stage for about an hour in a captivating talk. 'Them & Us', the title of Will Hutton's most recent book, could also be known as 'Good capitalism versus Bad Capitalism'.
Those familiar with his column in the Observer, and his earlier books will have recognised the passion and erudition that he brings to 'The State we're in' (the title of an earlier book).
His opening remarks suggested that the 'UK's financial crisis' has been exaggerated by an unholy alliance of media and politicians. As Chair of the government's recent review of public sector pay, the inequalities he has seen there have only heightened his frank disgust at the obscene rewards and self-aggrandisement, at the tax-payers' expense, enjoyed by the 'Bad capitalists' of the private sector. Their use of a limitless supply of lawyers and accountants to ensure that the letter of the law is observed, whilst asphyxiating its spirit, only heightens his sense of injustice.
At the same time he maintains an irrepressible conviction that the country can recover, however, if, and only if, the Good capitalists are encouraged to flourish.
In particular, he quotes the example of the German' Landesbanks'. These well established financial institutions have a strictly local market, defined by the steeple of the local church being visible from the customer's home. The relationships between the borrowers and lenders are nurtured over generations. Apprenticeships are also a crucial element in the development of a skilled and intelligent workforce.
Will agreed that the formation of 'local co-operative banking' in conjunction with the Alliance could provide a possible way forward.
Will Hutton holds the unenviable position in being vilified by both the far Right and Left of the political spectrum. However, he certainly does not appear to suffer any discomfort sitting on the fence. If anything, he appears to relish the advocacy of a 'mediocria firma', recognising there are no quick fixes and it is up to Us to distinguish the Good from the Bad.
e) HMRC R&D Tax Credits
SMEIA were truly honoured to have two of HMRC's top R&D tax credit experts hold an open session at our last meeting, timed just three days after the implementation (subject to EU approval) of the recently announced budget change aimed at encouraging innovation within UK SMEs. Duncan Gleig and Peter Stribblehill managed to make what could have been a dull subject into a story of how the changes came about and how their section of HMRC actually deal with SMEs - as opposed to how SMEs or their advisors may perceive HMRC.
It soon emerged that this section of HMRC were able to answer specific questions with very specific answers as to when R&D tax credits could be obtained. What they could not do was give general answers as detailed circumstances almost always vary leading to potential confusion so rather than do that, they preferred to deal with specific cases. The message that they gave was that an officer could consider any SMEs circumstances when R&D spending was involved. In many cases, such as where a grant had already been obtained, this did not necessarily preclude further R&D expenditure receiving credit - and
going back up to two years. Also there is a change coming from a credit only against PAYE to a much broader system in the near future.
Several members in attendance had been advised that they could not obtain an R&D tax credit because of grant funding. This is generally incorrect and it was advised that an officer could be contacted to discuss further (and some have already done so, such was the positive outcome from this session).
It was observed that a lot of incorrect advice had been given out by SMEs' accountants which was costly in both senses. It was agreed that direct contact between HMRC and SMEs was a better solution for all concerned at this stage.
For details of your local R&D HMRC specialist contact firstname.lastname@example.org
f) SMEIA business
Chris Wilde explained how the national SMEIA had been formed to new members and to all, just what the organisation had achieved. Meetings with several Government Departments had taken place (DBIS, HM Treasury, DECC) and presentations given to others such as the HMRC R&D tax credit officers meeting - HMRC kindly reciprocating today. Meetings had also taken place with MPs involved with business issues or Ministers such as Baroness Wilcox, Minister of Intellectual Property, and many of these situations were ongoing - at least to SMEIA. John Mitchell explained that notes were available with most posted on our web-site (www.smeia.org).
Chris then tackled the issue of a lack of administrative manpower to handle each and every issue and proposed a series of Working Parties. During this ‘the present state of confusion’ was voted on to continue with John Mitchell and Chris Wilde continuing in their present roles and jointly overseeing these Working Parties.
The following Working Parties emerged.
‘Access to Finance’
Tim Crocker - Scimar Engineering
Simon Bradley, Solutions Force
Martin Lawrence - Cambridge Optical Sciences
John Clarkson - Atlas Genetics
John Mitchell - Allvoice Developments
Patrick Andrews - Break-step Productions
Ian Dell - Chemian Technology
Mark Sheahan - Compgen Ltd (and President of Institute of Patentees and Inventors)
Branko Babic - Babic Inventions
Government Procurement and Government Training
Alan Bennetts - Bay Systems
Henry Tuck - SPI Developments Ltd
SMEIA Structure and Administration
Chris Wilde - Interdental
Victor Allan - Seymours
John Mitchell - Allvoice Developments
g) US licensing opportunities
Chris Perque of Gardere, Wynne, Sewell LLP gave a video presentation on how, given the difficulties of exploiting technology patented within the UK and Europe, how the US might offer a far more attractive alternative. He emphasised how important licensing negotiations were with SMEs often wondering quite why they were not taken at all seriously if they tried to go it alone - so partnering at an early stage was not only almost a necessity, a better return on any IP investment would become more likely. Obviously if licensing failed then litigation was customary in the US and European businesses of all sizes needed to understand this. Rather than steal all of Mr Perque’s thunder, his full ten minute presentation can be viewed at http://www.youtube.com/watch?v=oS0I_mThYsU. Members are recommended to take a look.
Mr Perque is also offering to answer questions that members may pose on the new SMEIA Member Forum. In order to access this members need to first login with a chosen username and password together with their details. Once their login is approved from the web-site manager, they are free to then post and see others postings.
h) Next Meeting
The Access to Finance WP was given the task of organising the next meeting for June 2011. After some discussion it was agreed that London had to be the venue with the majority preferring an afternoon session simply to take advantage of better travel arrangements.
The next meeting is now set for June 21st in London.