What did the Autumn Statement say about Life Sciences?
The life sciences sector featured prominently in the Autumn Statement, reflecting the government's recognition of its strong potential to create jobs and spur economic growth.
8 minutes to read
These measures build on the UK’s strengths as a global leader in life sciences, strengths that include its renowned academic and R&D capabilities, pioneering work in emerging areas like AI and genomics, access to NHS patient data, and competitive labour costs compared to other top clusters.
Notably, Rachel Reeves from Labour largely supported the announced initiatives, suggesting political consensus across party lines regarding the strategic importance of nurturing this vital industry.
Investment zones and Levelling Up
• New investment zones in the West Midlands, East Midlands, and Greater Manchester, as well as Wrexham and Flintshire and Cardiff and Newport were also announced. In total, these new investment zones are expected to help catalyse over £3.4bn of private investment and c.65k jobs. The Greater Manchester Investment Zone will focus on advanced manufacturing and materials. The West Midlands investment zone will focus on advanced manufacturing and the East Midlands investment zone will focus on green industries and advanced manufacturing. Businesses established in an approved investment zone can benefit from full relief from stamp duty land tax and business rates as well as other benefits.
• A day before the Autumn statement the government launched another investment zone in West Yorkshire, which will help create more than 2,500 jobs across the region over the next five years and could unlock £220m investment. It will be focused on life sciences and the existing HealthTech/Digital Health cluster. There was further good news for West Yorkshire with the announcement that Leeds Teaching Hospitals NHS Trust and Johnson & Johnson MedTech have formed a strategic collaboration to drive health innovation in West Yorkshire.
• Confirmation that the investment zones programme in England will be extended from five to ten years, with the envelope of government funding and tax reliefs on offer now doubled to £160m.
• £50m of funding will be allocated to regeneration projects in communities including Bolsover, Monmouthshire, Warrington, and Eden Valley.
• £80m was also announced for new Levelling Up Partnerships in Scotland.
• Four new devolution deals across England announced.
The expanded investment zones programme reflects a dedication to spurring regional growth by incentivising business investment in strategic geographic areas. This long-term policy commitment should reinforce existing industry clusters across the UK, giving companies greater certainty to locate and expand operations in targeted regions.
Advanced manufacturing
• £520m funding package for life sciences manufacturing, which lasts between 2025-30. The funding is in the form of grants to support capital investments into manufacturing facilities. This is part of a broader £4.5bn package of grants and loans for British manufacturers, including more than £2bn for automotive manufacturing and £960m for clean energy manufacturing. The funding will start from 2025 and last for five years.
The £520m investment in life sciences manufacturing marks additional progress toward enabling domestic production of new medicines and treatments alongside UK-based development. However, realising the country's full potential as a hub of life sciences manufacturing will necessitate further support. This includes ensuring that life sciences manufacturers can access the skilled talent and infrastructure crucial for scaling production capacity.
Taxation
• Full expensing will be made permanent. Investments made by companies in qualifying plant and machinery will continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first-year allowance for special rate assets.
• The existing Research and Development Expenditure (RDEC) and SME schemes will be merged to simplify the system for R&D tax reliefs.
• The notional tax rate applied to loss-makers in the merged scheme will be lowered from 25% to 19%.
• The intensity threshold in the additional support for R&D intensive loss-making SMEs will be reduced from 40% to 30%, bringing approximately 5,000 more R&D intensive SMEs into scope of the relief. The government will also introduce a one-year grace period, so that companies that dip under the 30% qualifying R&D expenditure threshold will continue to receive relief for one year.
Companies will need HMRC guidance to navigate the R&D tax relief changes, especially around calculating R&D intensity ratios. Still, current policy is vastly improved over 2021's Autumn statement that proposed cuts. Moreover, permanent full expensing capital allowances cement the UK as far more globally competitive while supplying stability absent in annual schemes. Indeed, the OBR expect this will unlock an additional £14bn of investment over the longer term and £3bn per annum. Notably, Labour backed the full expensing announcement, marking cross-party support.
Labour market
• Establishment of a National Academy focused on Mathematical Sciences.
• £250m in new fellowships for world-class mid-career researchers.
• A further £50m in funding to increase apprenticeships in engineering and other key sectors.
While these measures will be welcomed, more needs to be done to address the critical skills shortages in life sciences. The Association of the British Pharmaceutical Industry (ABPI) has calculated that, with over 6,000 businesses in the life sciences sector competing for highly skilled scientists, there will be more than 31,000 new jobs that will need to be filled by 2025.
Infrastructure and planning
• The Department for Levelling Up, Housing and Communities will bring forward plans for authorities to offer guaranteed accelerated decision dates for major developments in England in exchange for a fee, ensuring refunds are given where deadlines are not met and limiting use of extension of time agreements. This will also include measures to improve transparency and reporting of planning authorities’ records in delivering timely decision-making. The government will also incentivise greater use of Local Development Orders to ensure key commercial developments are approved faster.
• A further £2m to address water scarcity in Cambridge, alongside £3m to support the Cambridge Delivery Group drive the long-term vision for Cambridge by exploring the case for a development corporation.
• Changes to the grid connection process to reduce wait times. The government will also create a plan to build additional grid infrastructure in seven years, rather than the current fourteen.
Planning system reforms are much needed, however it must be done in tandem with actions to resolve staff shortages.
Regulation and clinical trials
• £20m (pre-committed) funding to launch dementia-focussed clinical trial delivery accelerator.
• Full government response to the O’Shaughnessy review into clinical trials.
Early data from the ABPI indicates initial recovery in UK clinical trial initiations after a concerning downward trend. Maintaining this positive momentum through supportive policies will prove critical to further arrest declines and raise the UK’s standing as a prime destination for vital clinical research.
Funding and foreign direct investment
(In some cases it isn’t quite clear whether this is brand new investment or pre-committed)
• At least £50m of additional funding to the Future Fund: Breakthrough investment programme.
• £500m of funding over the next two years to establish two more Compute Innovation centres, supporting the development of AI. They will build on similar initiatives in Edinburgh and Bristol.
• Additional resource for the Office for Investment, allowing it to deepen its concierge offer to strategically important investors.
• Development of a fellowship course targeting mid-career science and technology venture capital investors, to be operational in 2024.
• Space Clusters and Infrastructure Fund – The government is awarding up to £59m to 15 projects, which will leverage significant additional private funding from the sector, representing an expected £100m of new private / public investment in space research and development infrastructure.
• £25m investment in scientific infrastructure through Public Sector Research Establishments.
• £145m investment through Innovate UK to support business innovation.
• Rare therapies launchpad.
• £10m investment into an Oligonucleotide Manufacturing Centre of Excellence in Paisley.
• £5m to Imperial College and Imperial College Healthcare NHS Trust to set up a Fleming Centre to “inspire the next generation of world changing innovations.”
• Government-backed spin-out review. Published on Tuesday, the review included a recommendation for universities to take a 10% to 25% stake in IP-intensive spin-outs – such as life science firms – and no more than a 10% stake in less IP-intensive start-ups. Universities on average own around 22.8% of start-ups founded by faculty and students at the time of spinning out, according to data from Beauhurst, but at some universities it’s as high as 42%. Other recommendations included sharing resources and expertise across university technology transfer offices and bringing greater consistency to spin-out term deals. Universities will also receive a £20m government-backed investment to help them “spin out” research into commercial businesses.
• £320m plan to unlock pension fund investment from the Mansion House Reforms. This will be supported by a new Growth Fund established within the British Business Bank. It is estimated that all together, Hunt’s pension reforms could help unlock an extra £75bn of financing for high growth companies by 2030. It has also committed £250m to two successful bidders under the LIFTS initiative.
• Building on the £2.5bn ten-year National Quantum Strategy by publishing a set of quantum missions, including a mission to have accessible, UK-based quantum computers capable of running 1 trillion operations by 2035.
• £51m to the UK’s largest health research programme to recruit hundreds of thousands of new volunteers and genotype the first 1m participants.
Sustained investment into the life sciences sector is critical to achieving the governments ambition to make the UK a “sciences and technology superpower”. Further funding will translate into real estate demand and infrastructure investment.
It was also great to see that an agreement has been reached on a successor to the VPAS, the system of revenue rebates used to limit rises in medicines spending in the UK. All in all a great week for life sciences.
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