Putting Britain at the “cutting edge of the global economy” was the theme of the Chancellor’s first and last Spring Budget. However, there were few giveaways after an Autumn Statement last November that delivered significant new funding for research and innovation.
Announcements for the life sciences sector include:
- New medicines manufacturing technologies will be one of the first competitions of the Industrial Strategy Challenge Fund following proposals put forward by the Medicines Manufacturing Industry Partnership, which the BIA is part of.
- The government will make administrative changes to the R&D tax regime to increase the certainty and simplicity around claims made by large businesses and improve awareness among SMEs. There were no changes proposed to the scope of the R&D tax regime.
- Almost £300 million will be made available for 1,000 new PhD places, fellowships and attracting “global talent”.
- The government will introduce T-levels – technical education equivalent to A-levels – and fund maintenance loans for students pursuing technical education at higher levels, as is available to those studying on the academic route.
First tranche of the Industrial Strategy Challenge Fund allocated
At the Autumn Statement, the Chancellor announced a new Industrial Strategy Challenge Fund as part of a £4.7 billion extra investment in science and innovation in this Parliament.
The first tranche of this – amounting to about £270 million – has been allocated today to “disruptive technologies”: biotechnology, robotics, and driverless vehicles. The Budget document expands on this to say it will accelerate “patient access to new drugs and treatments through developing brand new medicine manufacturing technologies, helping to improve public health”.
The investment will allow the implementation of recommendations in the Advanced Therapies Manufacturing Action Plan to anchor this sector in the UK. The Plan was published in November by the Medicines Manufacturing Industry Partnership, which is a collaboration of the BIA, ABPI, Innovate UK and the government. The BIA understands that a little below £100 million will be made available for match funding with industry through a competition run by Innovate UK.
R&D tax incentives review
This was announced at the Autumn Statement 2016 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.” There has been no public consultation but the BIA has met with the Treasury officials leading the review and submitted evidence and policy recommendations to inform their thinking.
The Chancellor said that the government has concluded that the R&D tax regime is internationally competitive but did not outline any plans to enhance or reduce it. He committed to reducing the administration burden for companies claiming relief – a point the BIA raised in our submission – and raise awareness of it among SMEs. The government will keep the system under review.
Investment in STEM skills
The Chancellor also announced £90 million for 1,000 PhD places in Science, Engineering, Technology and Maths (STEM) subjects and £200 million to support new fellowships for early and mid-career researchers, in areas identified as important to the industrial strategy (this includes the life sciences and medicines manufacturing); £50 million of this will be for programmes to attract “top global talent”.
The Chancellor also announced the introduction of new T-levels – age 16-19 technical education equivalent to A-levels, which will include an industry placement. From 2019-20, the government will provide maintenance loans – like those available to university students – to students on technical education courses at levels 4 to 6 in National Colleges and Institutes of Technology.
Corporation tax and the apprenticeship levy
The Autumn Statement confirmed that the government remains committed to the Business Tax Roadmap implemented by George Osborne at Budget 2016. This means the rate of corporation tax will be cut from 20% to 19% next month and will continue to fall to 17% by 2020. The apprenticeship levy is also due to come in next month, which will be charged at 0.5% of annual pay bills of more than £3 million.
No mention of Brexit
There was rumour that the Prime Minister would trigger Article 50 as early as tomorrow but this now looks unlikely after the House of Lords added amendments to the Notification Bill to secure the rights of EU nationals in the UK and give both houses of Parliament a vote on the final agreement. This means the Bill will now go back to the Commons for further debate. Lord Heseltine – a long-time advocate of industrial strategy and investment in science – has been sacked as a government adviser for voting against the government.
You can keep up with the latest news on Brexit and the BIA’s activity with our monthly Brexit webinars.
The BIA’s conclusion on the Budget
As promised by the Chancellor himself, this was a low-key Budget.
However, it’s great to hear him put biotechnology first in the list of areas the industrial strategy will support. We are working hard in partnership with the government and our members to ensure public investment and support is well-targeted to grow our sector. The fruits of this are paying off with cash today to implement the proposals of the Advanced Therapies Manufacturing Action Plan, which the BIA helped produce.
The R&D tax review provided an opportunity to enhance the system to put it head and shoulders above other highly-competitive regimes, such as Belgium and France. It’s a shame the government hasn’t taken that opportunity but we are pleased that it listened to the BIA’s call to reduce the administrative burden for businesses claiming R&D tax reliefs.
Finally, it’s worth noting that the robust growth of the UK economy reported today combined with the reducing corporation tax rate and commitments to invest in sciences and innovation – including the Biomedical Catalyst – demonstrates that the UK remains a highly competitive place to invest in and grow biotechnology companies.