Following the chancellor’s autumn budget announcement, we provide a brief round-up of the key points and some of the reactions from the pharma and industry leaders.
Budget
In his second budget as chancellor, Philip Hammond announced some key changes to tax relief, such as an R&D expenditure credit increase to 12%, which will benefit companies that have received R&D credits from the government and larger companies, an increase in the annual allowance for people investing in knowledge-intensive companies through the Enterprise Investment Scheme (EIS) to £2 million as well as an increase in the annual investment that these companies can receive through the EIS and Venture Capital Trusts (VCT) to £10 million.
“As an industry that invests £11.4 million per day in R&D — employing more than 23,000 people in research-intensive roles — we are greatly encouraged by the budget's focus on incentivising science and innovation,” stressed Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI). “The government's commitment to increase R&D spending as a percentage of GDP and an increase to the R&D tax credit are welcome moves. R&D is a universal driver of productivity and meeting the Life Sciences Industrial Strategy's target of bringing UK R&D spend in-line with that of our global competitors will be an important strategic goal.”
“The UK life sciences sector already has a strong record of attracting venture capital investment. The investment in the British Business Bank, and greater flexibility given to the EIS and VCT, will help to build on this success to ensure the UK is a growing global biotech cluster,” added Steve Bates, CEO of the UK BioIndustry Association (BIA). “Today's budget announcement enables UK investors to efficiently back growing British businesses as they scale to global leadership. We will now work to showcase the life science investment opportunities available that effectively use these policies.”
NHS spending will increase with Hammond revealing that there will be £10 billion in capital investment, plus an extra £2.8 billion in resource funding.
“The strength of our sector and the strength of the NHS are inextricably linked and we welcome the chancellor's additional funding for the health service,” continued Thompson. “To meet the health secretary's ambition for UK patients to be at the front of the queue for new treatments, the NHS must have the right resources and the capacity to apply innovation.”
However, not everyone was impressed with the health announcements made by the chancellor within his budget. “With a focus on Brexit, housing and investment into digital infrastructure, it was disappointing to see a many healthcare issues overlooked in today’s budget. The additional £2.8 billion of funding for the NHS in 2018–19 is a undoubtedly a step in the right direction, but it falls short of the extra £4 billion NHS chief executive Simon Stevens says the organisation requires,” emphasized Hitesh Dodhi, superintendent pharmacist at PharmacyOutlet.co.uk. “What’s more, the budget lacked substance and specifics; it did little to progress digitalisation in the healthcare sector — an absolute must — while the opportunity to promote pharmacy to play a greater role in delivering front-line services to alleviate the burden on GPs and hospitals was also overlooked. These are both items that should feature prominently on the government’s health agenda, but the chancellor did little to address either in today’s announcement.”
With Brexit a hot topic and the forthcoming industrial strategy important for many sectors including pharmaceutical, announcements surrounding these items were met with great anticipation. “The government's commitment to a comprehensive industrial strategy and support for manufacturing, innovation and new technology is a welcome stiffener for business as Brexit anxiety looms,” stated Terry Scuoler, the chief executive of the manufacturers’ organisation, EEF. “The chancellor's explicit pledge to deliver an implementation plan ahead of Brexit will reassure companies of the government's intent, giving business certainty amid gathering Brexit jitters.”
“The life sciences sector is of critical importance to our health and wealth — and today's budget reiterates that the government recognises our industry can be a driving force behind long-term sustainable economic growth. Creating new jobs, incentivising inward investment and delivering much-needed productivity gains across the UK,” added Thompson. “As we navigate the challenges of leaving the European Union, it is important we make the domestic landscape as attractive as possible. The Life Sciences Industrial Strategy can be a roadmap for government to leverage the full value of our industry.
“Following today's budget, we look forward to working with the government to secure an Industrial Strategy sector deal that seizes the opportunity for UK life sciences to go from strength to strength. These will be investments in the UK's future and only improve the attractiveness of the UK as place to do business.”
Bates said: “These budget announcements show the government has taken on board calls from the BIA and its members by recognising the value of our sector to the UK economy now and in the future. Using tax reliefs to nudge wealthier investors into crucial growth sectors for the UK economy post-Brexit is sensible, combined with rules to ensure that taxpayer support is correctly targeted and not gamed.”