BUSINESSES leaders have defended Southampton’s record on innovation after research suggested it lagged behind most of the nation.

Analysis by tax consultancy Catax put the city third from bottom in the UK when it came to spending on research and development (R&D).

The company based its analysis on applications for tax breaks that apply to R&D. It found Southampton businesses had made only 115 such claims, adding up to a £20million spend – 79 per head of the local population.

Portsmouth was sixth from the top of the table, with 95 tax claims representing a spend of £135m, or £628 per person.

Rebecca Coombes, head of tax services at the Southampton office of chartered accountants Smith and Williamson, said: “Although HMRC’s published statistics suggest less is being spent in Southampton, manufacturing is not the largest sector in the south east, it is professional, scientific and technical.

“The region is well placed in this sector and we are seeing this in local companies with the expansion of the science park at Chilworth and the innovation centre at Lee on Solent, and IT businesses moving into the area.

“Blue Frontier took a lease in the White Building last year and Meridian Technique moved into the science park.

“It is imperative that these new businesses have the right infrastructure spaces, as well as access to funding and talent, to be able to develop. The last recession saw the start-up of some interesting IT businesses and this one is likely to see the same again.”

Peter Taylor managing partner of law firm Paris Smith LLP and chair of the leadership team at Southampton Chamber of Commerce, said: “Creativity and innovation is evident across the city. The creative sector is strong in Southampton in our universities and colleges, the hospital, the Oceanography Centre, Ordnance Survey and many other great businesses and organisations, large and small, across the city region.

“A key reason for businesses being attracted to and developing here is creative talent which lives and works in the SO postcode. The creation of ideas and concepts, coupled with the innovation to bring some of these to a commercial opportunity delivers energy for the community which should be embraced and celebrated. The business exhibitions and shows in Southampton’s calendar are further testament to the city be at the forefront of innovation.”

He added: “R&D tax statistics may be one measure but they do not always convey the complete picture.”

The top placed UK town was reading, where £385m was spent on R&D, equivalent to £2,359 per person.

Mark Tighe, CEO of tax relief specialist Catax, said: “Thousands of companies will face financial difficulty in the coming months as the coronavirus crisis bites. It’s a tragedy that many of these companies will ultimately go bust without realisig they could have claimed significant sums under the R&D tax relief scheme.”