Spring Budget 2024 life sciences announcements

In this blog, Dr Martin Turner, Associate Director, Policy, Public Affairs & Investor Relations at BIA takes a closer look at the impact of the Spring Budget on UK life sciences, examines key announcements and invites you to join our webinar tomorrow for a deeper dive into the implications.

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In what is likely to be the final fiscal event before a general election, the Chancellor was able to deliver large life science investment announcements alongside smaller tweaks to the tax system that should make the UK business environment friendlier for innovative businesses to start and scale. 

Key announcements were:

• A first-of-its-kind life sciences VC-pension fund consortium
• New pensions Value for Money reforms
• An industry expert advisory panel to improve the R&D tax relief claims process
• £650 million AstraZeneca investment in the UK
• New government-supported life sciences manufacturing investments
• Funding boost for early-career researchers and apprenticeships

All the Spring Budget documents and the Chancellor’s speech can be found on the Treasury website. BIA’s CEO, Steve Bates, has welcomed the announcements.

Join our webinar to hear more tomorrow. 

A first-of-its-kind life sciences VC-pension fund consortium

The BIA’s mission to unlock pension funds for investment into UK life sciences took a great leap forward with the announcement that the life sciences team of Intermediate Capital Group (ICG) has successfully partnered with Phoenix Group, the UK’s largest pensions provider, with the support of the Government’s Long-term Investment for Technology and Science (LIFTS) initiative.

ICG, which is a BIA member, has been awarded £100 million by the British Business Bank to invest in the UK’s most innovative life sciences companies, which will also be matched with £100 million by Phoenix Group.

The government will also require pension funds to disclose how much they invest in UK equities, which is currently about 6% and deemed to be too low by international standards and could be harming savers’ returns. The Financial Conduct Authority (FCA) will consult on the requirements in the spring. The government is working with the FCA and The Pensions Regulator (TPR) on the upcoming Value for Money (VFM) pensions framework, which will highlight where schemes are focusing on short-term cost savings at the expense of long-term investment outcomes (which could be generated by more investment in venture capital), and where schemes’ current scale may be preventing them from offering value to savers.

To further encourage investment in UK equities, a new UK ISA will provide £5,000 allowance in addition to the existing ISA allowance and will be a new tax-free product for people to invest in UK-focused assets. The government has published a consultation on the details.

Improving R&D tax relief claims

The Budget was relatively quiet on R&D tax relief, which is welcome given the many changes our sector has been subjected to over the past few years. However, HMRC will establish an expert advisory panel to support the administration of the regime following complaints by BIA and others that the agency lacks the expertise to assess complex R&D tax relief claims efficiently and effectively.

The panel will provide insights into the cutting-edge R&D occurring across key sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants.

SEIS/EIS investor thresholds increase cancelled

The government will legislate to reinstate the previous eligibility criteria to qualify as a high net worth or sophisticated investor, which impacts companies’ and investment firms’ ability to market EIS and SEIS investment opportunities. This has been highlighted by the UK Business Angels Association and others as a threat to the start-up community. The government will carry out further work to review the scope of the exemptions.

Manufacturing and investment across the UK

The latest recipients of the Life Sciences Innovative Manufacturing Fund were announced alongside the Spring Budget, with £7.5 million to support two pharmaceutical companies that are investing a combined £84m to expand their manufacturing plants in the UK. Almac, a pharmaceutical company in Northern Ireland produces drugs to treat diseases such as cancer, heart disease and depression, while Ortho Clinical Diagnostics in Pencoed, Wales, is expanding its facilities producing testing products used to identify a variety of diseases and conditions.

At Autumn Statement 2023, the government announced a further £520 million of new funding for life sciences, called for by BIA and others. It’s now confirmed that competitions for large-scale transformational investments will open for expressions of interest this summer with a separate competition for medium and smaller-sized companies opening in the Autumn.

The Chancellor also announced that AstraZeneca intends to invest a total of £650 million in the UK. £450 million will be at their manufacturing site in Speke, Liverpool, for the research, development, and manufacture of vaccines – building on the site’s current role in supplying the world leading childhood vaccination programme. AstraZeneca will also expand its presence at Europe’s largest life sciences cluster in Cambridge with £200m in investment. The facility will house around 1,000 employees and will be adjacent to its £1.1bn global R&D Discovery Centre (DISC), which already hosts 2,300 researchers and scientists.

The Chancellor highlighted the government’s plans for Cambridge to reach its potential to be the world’s leading scientific powerhouse. The Spring Budget confirms the future development corporation in Cambridge will receive a long-term funding settlement at the next Spending Review.

The Government is providing an additional £7.2 million to unlock improvements to local transport connections between the Cambridge Biomedical Campus and the city, and making £3m available for Cambridge University NHS Trust to support plans for growth. The government also says is also on track to deliver a set of water-saving measures which if delivered as planned could allow more than 9,000 homes to be built in the Cambridge area. Transport and housing were identified as critical growth barriers at a recent BIA roundtable for our Cambridge members with the Prime Minister’s Business Advisor, Franck Petitgas. 

The government is also working with private and local government partners to identify parts of the Euston train station site for early release and development to progress plans for an internationally-leading life sciences hub at the heart of the Euston Quarter. The government is establishing a Ministerial Taskforce to oversee the next stages of delivery. £118 million is also being invested in Canary Wharf to accelerate its development as a life sciences hub.

Funding boost for early-career researchers and apprenticeships

The government is providing £45 million through the Medical Research Charities Early Career Researchers Support Fund. Congratulations to the Association of Medical Research Charities (AMRC) for securing this.

Further detail on the £50 million Apprenticeship Growth Sector pilot was also given. This will boost funding for eligible providers delivering 13 high-value apprenticeship standards in advanced manufacturing, green and life sciences sectors. Providers delivering Science Manufacturing Technician and Laboratory Technician apprenticeships will receive a £3,000 funding top-up.

Join our webinar tomorrow

We will be unpacking all the finer details of the Spring Budget alongside the Labour Party’s recently published Life Sciences Sector Strategy during our webinar tomorrow. Join us to hear what these announcements – plus those from the other political parties – mean for our sector as the UK heads towards a general election.