In his Autumn Statement, the Chancellor was keen to highlight the importance of technology sectors for the UK economy, including in particular healthcare and life sciences. The Statement recognises that “scientific breakthroughs are a crucial driver of long-run growth and play a critical role in improving lives and helping to tackle societal challenges” and, accordingly, the government intends to take further steps to ensure the UK remains at the cutting edge of science, innovation and technological development. This includes providing £520m in funding from 2025/26 to support manufacturing investments in life sciences in order to build resilience for future health emergencies and to capture and capitalise on the UK’s R&D strengths.
The Autumn Statement was also keen to trumpet the recent agreement for the UK to associate to Horizon Europe and Copernicus. As a result, the government announced investments of over £750m in UK R&D this financial year. These investments include £250m for long-term world-class Discovery Fellowships, £145m for new business innovation support, and support to establish a National Academy focussed on mathematical sciences.
Tax announcements
The tax announcements were not specifically targeted at the HLS sector, though the move to make full expensing for capital expenditure on plant and machinery will benefit those parts of the HLS sector with significant capital expenditure spend.
In addition, confirmation that the UK will proceed with its proposal to merge the two existing R&D tax relief schemes will be of particular interest for the HLS sector. In last year's Autumn Statement, the Chancellor announced significant reforms to the rates of R&D tax reliefs and a consultation on the design of a possible single scheme merging the existing, separate R&D Expenditure Credit (RDEC) and SME schemes. Draft legislation for that merged scheme was published earlier this year without, however, any commitment to go ahead with the proposal.
The 2023 Autumn Statement confirmed that the government will introduce a single, merged R&D tax relief scheme with effect from accounting periods starting on or after 1 April 2024 (rather than for expenditure incurred on or after 1 April 2024). Further details of the scheme can be found in the government's press release.
Despite the merger of the RDEC and SME schemes, the UK will still have two R&D tax relief schemes going forwards. The SME intensive scheme, for the most R&D intensive loss-making SMEs, was announced at Spring Budget 2023 for R&D expenditure from 1 April 2023. A company was considered R&D intensive where its qualifying R&D expenditure is 40% or more of its total expenditure. The Autumn Statement has announced that the threshold to be considered R&D intensive will be reduced from 40% to 30% of total expenditure with the change to be introduced in the Autumn Finance Bill 2023.
In addition, to help early-stage, innovative companies to obtain access to the investment they need to grow and develop, the government announced that it will legislate to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) to 2035.
Other announcements
University spin-outs: The Autumn Statement recognises that University spin-outs are some of the UK’s most innovative companies and play a hugely important role for the UK economy, with investment increasing almost five-fold since 2014. To capitalise on this strength, the government is accepting all the recommendations of the Independent Review of Spin-outs and setting out how it will deliver them. The government will provide £20m for a new cross-disciplinary proof-of-concept research funding scheme, to help prospective founders in the UK’s universities demonstrate the commercial potential of their research.
Access to funding: The government also remains committed to ensuring that other early-stage, innovative companies have access to the investment they need to grow and develop. To support these innovative businesses to accelerate their growth and scale up, the government is extending the British Business Bank’s Future Fund: Breakthrough programme. This will provide at least £50m additional investment in the UK’s most promising R&D intensive companies.
R&D infrastructure investment: The government will invest £25m in scientific infrastructure through Public Sector Research Establishments.
Clinical Trials Delivery Accelerator: The government is launching the first Clinical Trials Delivery Accelerator (CTDA) focused on dementia, with up to £20m of the £121m funding announced for clinical trials at the May life sciences moment, to help innovation reach NHS patients even faster.
Oligonucleotide Manufacturing Centre of Excellence (OMICE): The government is investing £10m, with an additional £10m from Scottish Enterprise, in a world-class manufacturing centre in Paisley, Scotland, to develop a novel class of therapeutic molecules to be used for the treatment of a wide variety of diseases.
Fleming Centre: The government is granting £5m to support establishment of the Fleming Centre to tackle the global fight against antimicrobial resistance (AMR). A collaboration led by Imperial College London and Imperial College Healthcare NHS Trust, the Centre will support the next generation of world changing health innovation
Our Future Health: The Autumn Statement recognises that the UK is uniquely placed to harness the power of health data to improve patient outcomes. The government is therefore announcing a further £51m for the Our Future Health (OFH) programme, a world-leading resource for health research, to genotype their first 1 million participants and to recruit hundreds of thousands of new volunteers, supporting the development of better ways to prevent, detect and treat diseases.
Rare Diseases Launchpad: The government is supporting a pilot developed by a consortium including Genomics England, Oxford Harrington Rare Disease Centre, the Medicines and Healthcare products Regulatory Agency, and Mila’s Miracle Foundation to generate evidence on a pathway for new individualised therapeutics in the UK for children with ultra-rare diseases.
Voluntary Scheme for Branded Medicines Pricing, Access, and Growth: The Autumn Statement announced that the government has reached an in-principle agreement with the pharmaceutical industry on the 2024 Voluntary Scheme for Branded Medicines Pricing, Access, and Growth. The scheme is expected to deliver around £14bn in savings to the NHS across the next five years, as well as supporting rapid patient access to new clinically and cost-effective medicines. A £400m fund will also be established by industry to support investment in the UK life sciences ecosystem, including improved clinical trial capacity.
Digital technologies and AI Life Sciences Accelerator Mission: The Autumn Statement recognises that key to the UK creating a world-leading AI ecosystem is access to compute, which powers the development of AI models. With this in mind, the Autumn Statement confirmed that the government will be investing a further £500m to the £900m announced at the Spring Budget 2023 in compute for AI over the next two financial years. It is hoped that these investments will assist the development of new foundation models and maximise the UK’s potential in AI enabling the discovery of new drugs. This complements the government’s £100m AI Life Sciences Accelerator Mission which will use health data and cutting-edge AI to address some of the most pressing health challenges.
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