Chancellor George Osborne has unveiled a package of measures in the Budget 2013 designed to boost the UK's life sciences sector, including a more favourable tax environment.
The government is lowering corporation tax to 20% from 2015 and is lifting the rate of the above-the-line research and development tax credit to 10%, in order to boost the country's attractiveness as a destination for investment.
In addition, stamp duty on shares traded on the London Stock Exchange's Alternative Investment Market (AIM) will be scrapped, capital gains tax relief for the Seed Enterprise Investment Scheme has been extended, and an Employment Allowance to take the first £2,000 off the employer National Insurance bill of every company has been created, to help fuel economic growth.
The BioIndustry Association has welcomed the moves, which, it says, demonstrate the government's commitment to innovative bioscience companies.
Steve Bates, chief executive of the BIA, said the measures, "when combined with a well-funded science base in the UK and the strong fiscal support from government for bioscience through initiatives such as R&D tax credits, the Patent Box and the Biomedical Catalyst…create a supportive environment for this sector".
But the Chancellor should also consider the introduction of Citizens' Innovation Funds, to allow the British public to invest in the innovative companies "that will deliver future jobs and economic growth in the UK," he added.
The Ethical Medicines Industry Group (EMIG) also welcomed the government’s support for UK R&D, but called for further action to support future growth in the life sciences sector.
“Today’s announcement of the 10% increase in the rate of above the line R&D credit is a welcome boost for EMIG members," said EMIG Chairman Leslie Galloway, and he applauded the confirmation that a proportion of the £1.6 billion of funding being made available to support the government’s Industrial Strategy will be directed towards implementing the Life Sciences Strategy.
But he also questioned whether this would be sufficient to bolster a sector "facing uncertainty over future pricing arrangements and continued confusion over commissioning arrangements in the new NHS".
The UK life sciences sector is "of critical importance to future economic growth", but the sector is entering a period of unprecedented financial pressure and uncertainty, Galloway stressed, adding "what EMIG members really need is some clarity about the future pricing and regulatory environment they will be operating in to enable them to plan for their long-term investment in the UK economy”.
No action on business rates
There was also criticism of the Chancellor’s "inaction" on business rates - a local tax that is paid by the occupiers of all non-domestic/ business property - which, according to business lobby group the Forum of Private Business, would have been a blow to many SMEs hoping for a freeze at least.
“Ask any small businesses what they wanted to see from this Budget and many will have said: ‘action on business rates’,” it said, noting: "April’s increase which now goes ahead as planned will mean rates have spiralled by a mammoth 13% in just three years. There aren’t many businesses who’ve seen income increase by anything close to that figure with sluggish growth and recession to contend with in the same period".
The Association of the British Pharmaceutical Industry said it is pleased with the tax changes.
“But we need to recognise that the business environment in the UK is very challenging," noted its chief executive Stephen Whitehead, lamenting the UK's position behind many of its European peers on the adopt of new medicines and share of clinical trials. "We must reverse these trends if we are serious about maintaining the UK’s position," he argued.
“The industry stands ready to be an engine for economic recovery, but our message is simple: where such engines exist, they should not be starved of the fuel required to power growth. The UK needs to ensure that innovative medicines are reimbursed at a fair price and used rapidly and consistently throughout the NHS,” he stressed.
NHS spend protected again
And speaking of the NHS, the Chancellor has once again confirmed that the government's spend on health with be protected.
This was welcomed by the NHS Confederation, particularly in light of the ongoing financial pressures, but the group also noted that other aspects of Budget 2013 "will nevertheless have major impact on the health service".
"The NHS has never operated in isolation - nor should it - and many aspects of today's Budget are likely to increase pressure on the NHS," said chief executive Mike Farrar.
"If demands on local authorities produce a reduction in the services which help people maintain an independent healthy lifestyle, more people will end up in crisis, either needing health care in an emergency or having already passed the point where they can be helped to regain their health and independence," which isn't good for the sustainability of the NHS nor for the individuals affected and their families, he stressed.