UK budget plans: healthcare industry reaction 

In the Autumn 2021 budget delivered by UK Chancellor of the Exchequer, Rishi Sunak, on 27 October, the Government announced a range of measures designed to benefit UK science, business, and technology. This, at a time where the UK’s health service will need to tackle backlogs through the Winter months and ready itself for future public health threats. 

Of particular relevance for the drug discovery and development industry are a number of policies of interest and benefit to the UK IVD and life sciences sector, including a £5.9 billion package for NHS England to clear the care backlog, £5 billion for health-related R&D, and an expansion of the new Community Diagnostic Centre network. 

The Chancellor said that investment in NHS capital funding will support an objective to deliver around 30% more elective activity by 2024-25 compared to pre-pandemic levels. According to British In Vitro Diagnostics Association (BIVDA), this cannot be realised without a robust and well-supported IVD sector. As set out in BIVDA’s Spending Review submission, the IVD sector requires a strong manufacturing base, talented workers, and a focus on innovation and sustainability. BIVDA said it will continue to work with Government ministers, regulators, and organisations to ensure these needs are met.  

As reported by the British Medical Association (BMA), around £2.1 billion will be invested in IT, technology, and digitising the NHS. Additionally, new funding arrangements have been proposed by NHSX to allocate digital funding directly to ICSs from 2022/23. The Chancellor also announced that investment into public R&D will increase to £20 billion by 2024/25. This includes £5 billion for health-related R&D and translates into a cash increase of £605 million compared to 2021/22. 

BIVDA CEO Doris-Ann Williams said: “The backlog funding package will help the NHS to alleviate the heavy pressure being placed on the service as 5.7 million people await care. BIVDA’s IVD member companies stand ready to play their part in the diagnostic process.  

“It is essential that IVD companies of all sizes can access the R&D funding to develop novel diagnostics and bring them to market. The access to funding must be clearly signposted and we are pleased to see testing being brought closer to home in communities. This should reduce hospital visits with the number of centres increasing to achieve nationwide screening. The focus of further funding should be directed towards diagnostic testing in pathology, as well as imaging by radiology.” 

On the topic of digitisation, David Morris, Health Services Leader at PwC, said: “The £2.1 billion investment in technology and data is particularly welcome and a clear sign that the benefits of digital transformation are being recognised. Technology has the power to drive a revolution in health and care outcomes. The pandemic has accelerated the pace of technological change but much more can be done to deliver truly innovative transformation.  

“There is no appetite to go back to the way things were before the pandemic. Patients are embracing new technology and increasingly expect care to be supported by it but they, along with staff, need to be further empowered and supported to change the way that they engage with and access care. This investment must be supported by a large-scale digital skills-building programme that provides all of those involved in the patient journey with the skills required to get real value from new technology.” 

Stephen Aherne, Pharmaceutical and Life Sciences Leader at PwC, said: “The £5 billion investment in health-related research and development over the next three years, rising to £2 billion by 2024, provides a welcome boost to the hunt for medicines preventing and treating diseases of high unmet need, which cause a huge burden on patients’ lives and the UK health system. 

“The Government continues to build on its 10-year vision for the life sciences sector, with a targeted focus on investment in life sciences as part of the £1.4 billion business investment funding, which will provide grants to support international investment. Of this funding, £354 million will be allocated to boosting investment in life sciences manufacturing, which includes future pandemic resilience. 

“Within the UK, we have an excellent science base, which is delivering a strong pipeline of life sciences innovation. Nevertheless, to fully exploit the science base and create a sustainable mature life sciences sector, the level of investment required is substantial and the need to retain and recruit talent is equally important. The Government’s steps to increase the level of target investment into life sciences, both from within and outside the UK, are welcome. The attraction of both scientific and investment talent from the UK and overseas – through the overseas ‘talent networks’ – will help to support the Life Sciences growth vision.” 

Contrasting this general optimism from the industry, Jay Bhatti, R&D tax specialist at MHA, a network of accountancy firms, says the Chancellor’s attempt to stop companies claiming R&D relief on expenditure undertaken overseas is misguided, and disagrees with the Government’s claims to be ahead of other nations in terms of R&D spending. He said: “The Chancellor’s measures to potentially restrict R&D tax relief from being available to companies carrying out R&D work abroad, are in direct contradiction to the government’s ‘Global Britain’ and ‘Science Superpower’ ambitions. 

“Although it is understandable the government is keen to ensure that the benefits of tax relief are realised in the UK, modern SMEs are increasingly reliant on foreign specialist manufacturers and coders, while the complex design and analysis work still is undertaken in the UK. The blanket approach announced today will discriminate against companies with a genuine presence in the UK but plugged into international talent networks. 

“The government’s claims about how the UK is to be a significant R&D player on the global stage do not reconcile with the rollback of the target of publicly funded R&D from £22 billion to £20 billion for 2024-25. Other modern economies recognise publicly funded R&D as a critical investment vehicle, especially needed for high-risk and high-payoff research. 

“So all in all, this budget, whatever its merits in other respects, was not a great showcase for Britain as a science superpower.” 

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