Labour’s financial statement contains mixed news for members and the sector.
As we were arriving in Parliament for our Reception, in the chamber nearby, Chancellor Rachel Reeves was delivering the first Budget of the new Labour Government. This marked the first Labour Budget since 2010 and the first time ever by a female chancellor.
With much of the content teased in advance, the budget contained few surprises. In line with Labour’s pre-election policy, there is a clear recognition of the importance of the life science sector to the UK economy. Health is a clear winner, with increased funding for and capital investment in the NHS. There are real term funding uplifts for DSIT and NIHR, which offer opportunities for members, and the expansion of the Life Sciences Innovative Manufacturing Fund to offer £520m of funding is also welcome.
Perhaps the biggest win is the continued focus on genuine NHS reform and innovation, which should create a better market for our products and the patients who use them.
The reverse of the coin is funding these uplifts and filling the much talked about “black hole” Labour claim to have inherited. The news of an increase in employer National Insurance rates, and the reduced starting point from £9,100 to £5,000 is unwelcome. Impacts will likely be felt in pay rises and investment, which may impact government tax revenues in the future. The OBR has already revised UK growth forecasts downwards.
Some commentators believe reduced wage inflation will allow interest rate cuts sooner, but in BIVDA’s view, the results of the US election and subsequent fiscal policy will have a far greater impact.
Key stats can be found below:
- The Government has prioritised the NHS in Phase 1 of the Spending Review, meaning resource spending for the Department of Health and Social Care (DHSC) will increase by £22.6 billionfrom 2023-24 to 2025-26.
- Chancellor Rachel Reeves also unveiled a £3.1 billion increase in capital investment in 2025-26 compared to 2023-24 outturn.
- DSIT’s funding will increase 6.5% over the next two years, with total DEL funding of £15.1 billion in 2025-26. Of DSIT’s renewed budget, £13.9 billion has been assigned for R&D and £2.7 billion for association to EU research programmes, partnerships, and Horizon.
- The Government has confirmed a provision of £70 million in 2025-26 for the new Life Sciences Innovative Manufacturing Fund, as part of a longer-term funding commitment of up to £520
million. - As part of over £2 billion of R&D funding, the National Institute for Health and Care Research (NIHR) is set to receive a real terms budget uplift.
- The Government has pledged to protect R&D investment with £20.4 billion in funding, including £6.1 billion dedicated to core research areas like engineering, biotechnology, and medical science.
- The Chancellor has allocated £2.7 billion to support the UK’s association with Horizon and other EU research partnerships.
- The Industrial Strategy and life sciences sector plans will be published alongside Phase 2 of the Spending Review.
- The Chancellor announced that Government investment in R&D would be protected, with more than £13 billion of funding, including £6.1 billion of support for core research.
