ABPI - BIA joint submission: British Industrial Competitiveness Scheme

The BIA and ABPI have jointly responded to Department for Business and Trade consultation on the British Industrial Competitiveness Scheme: consultation on scheme eligibility and approach. Summary of BIA response:

• The ABPI and BIA welcome the government’s plan to reduce energy costs for life sciences manufacturers, which are a vital engine for productivity growth and health resilience, and we expect the scheme to improve the UK’s attractiveness to inward investment because high electricity costs undermine our global competitiveness.
• The scheme should be accessible to all life sciences companies developing innovative products, as manufactured goods can be used in both commercial and R&D activities, such as clinical trials. Therefore, we recommend adding SIC 7211 (biotechnology R&D) to the list of eligible SIC codes.
• Stringent use of HS6 codes risks excluding innovative products, such as medicines with novel modes of action, that are not clearly categorisable using the infrequently updated HS6 coding system. The complexity of HS6 codes may also pose an excessive burden on SMEs, which risks deterring them from the scheme and limiting its ability to spur scale-up in the UK.
• Consequently, we recommend the government use HS6 codes on a preliminary basis for determining eligible products. It should then work with industry to build on this initial shortlist, ensuring the scheme keeps pace with technological developments in R&D-intensive sectors like the life sciences. Also, the government should develop clear guidance to help companies understand their eligibility.
• An expenditure-based test would more effectively encourage participation in the scheme, and thus increase its impact, because evidencing total expenditure is less administratively burdensome than evidencing Gross Value Added (GVA).
• We strongly recommend that the BICS include a mechanism for pro-rating relief so that it does not exclude companies that invest significantly in the R&D that sustains life sciences manufacturing and economic growth. To minimise this risk, we recommend the government allows R&D-intensive companies to apply for the scheme using only their manufacturing sites’ data. Alternatively, the scheme could be expanded to include electricity-intensive R&D activities, such as pre-clinical research.
• We anticipate that additional cost controls would increase the administrative burden of the BICS and reduce participation, limiting its effectiveness, and recommend the government does not introduce them at this time.