With his first Autumn Statement, Chancellor Philip Hammond MP, continued the past administration’s theme of addressing Britain’s productivity puzzle and sought to show the UK remains committed to being a science superpower post-Brexit and is “open for business”. Here we look at some of the major announcements for the life sciences sector.
As expected, the Government is no longer seeking a budget surplus in this Parliament, but will look to return public finances to balance “as early as possible”. This has allowed for new spending that the Government hopes will boost productivity and the economy. However, departmental spending plans set out in 2015 Spending Review will remain in place (except for the Ministry of Justice).
National Productivity Investment Fund (NPIF)
There will be a new National Productivity Investment Fund (NPIF), which will provide £23 billion of spending between 2017-18 and 2021-22, for items such as housing and transport infrastructure and will “prioritise science and innovation spending”. The document says this represents new investment and we therefore expect this to be in addition to the real-terms increase in the Science Budget announced last year (we will keep an eye on this); new science and innovation spending over this Parliament through NPIF will be:
- £425m in 2017/18
- £820m in 2018/19
- £1.5bn in 2019/20
- £2bn in 2020/21
This spending will be distributed through two channels:
- Industrial Strategy Challenge Fund – a new cross-disciplinary fund to support collaborations between business and the UK’s science base, which will set identifiable challenges for UK researchers to tackle. The fund will be managed by Innovate UK and the research councils. The Government says this is modelled on the USA’s Defense Advanced Research Projects Agency (DARPA) programme and will cover a broad range of technologies, to be decided by an evidence-based process
- Innovation, applied science and research – additional funding will be allocated to increase research capacity and business innovation “to further support the UK’s world-leading research base and to unlock its full potential”. Once established, UKRI will award funding on the basis of national excellence and will include a “substantial increase in grant funding through Innovate UK”
The British Business Bank will also invest an additional £400 million in venture capital funds to unlock up to £1 billion of new investment in innovative firms planning to scale up.
The Autumn Statement also confirmed the £100m for the Biomedical Catalyst and a further £100m for tech transfer, both announced by the Chancellor in October (although the latter was originally announced as £120m, it’s not clear whether this is a mistake).
Science and Innovation Audits
The government has selected eight areas for the second wave of Science and Innovation Audits, most notably for us is one for the “bioeconomy of the North of England”. The others are: the East of England; Innovation South; Glasgow Economic Leadership; Leeds City Region; Liverpool City Region +; Offshore Energy Consortium; and Oxfordshire Transformative Technologies. The government is also announcing a further opportunity to apply to participate in a third wave of audits.
Tax and finance
To ensure the UK tax system is “strongly pro-innovation”, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D. The BIA will be feeding into this review and is already in conversation with relevant Government officials.
The Statement confirms that the Government will stick to the Business Tax Roadmap announced at Budget 2016. This means corporation tax will continue to fall to 17% by 2020.
HM Treasury will lead a review to identify barriers to access to long-term finance for growing firms, supported by an advisory panel led by Sir Damon Buffini. The BIA will feed into this review, building on roundtables we have already held with the Government on this issue.
Talent and skills
The government will provide £13 million to support firms’ plans to improve their management skills by implementing Sir Charlie Mayfield’s review of business productivity. This will be consulted on in December.
There was no mention of the Apprenticeship Levy in the Chancellor’s Statement but it is still forecast as a revenue stream for the Government so it looks like there is no policy change there.
The BIA’s view of the Autumn Statement
There is a lot to welcome from a life sciences perspective in today’s Autumn Statement. It’s fantastic to see this government showing an understanding of what is important to life science businesses. As trailed by the Prime Minister on Monday, there’s continued commitment to research and development and the promise of a ‘substantial increase in grant funding through Innovate UK’, this will allay concern over previous plans to convert some grants to loans. And the focus on improving the R&D tax credit regime and access to patient capital is crucial and very welcome.
One thing missing from today’s document that was trailed by the Prime Minister is the review of the Small Business Research Initiative but this will likely appear in the coming weeks along with the industrial strategy green paper we’ve been expecting. There was also no new funding for the NHS.
The reviews offer another useful opportunity to strengthen the UK’s life sciences offering. The BIA is already well-engaged with ministers and key Government officials on these issues and we’ve already held a number of useful roundtables with our members and the Government to address issues like access to capital. We will continue to use these relationships to work with Government, as well as feeding into the reviews announced today, to improve the life sciences business environment and achieve our vision to build the third global bioscience cluster.
All the Autumn Statement documents can be found on the Treasury website.