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The Budget: BIVDA Briefing and Reaction

By March 17, 2023No Comments

The Chancellor, Jeremy Hunt, set out his inaugural Budget on Wednesday with three key aims in mind: improving growth, getting people back to work and controlling the UK’s debt. While it remains to be seen whether these grand goals will be achieved, there was plenty else of interest for IVD companies wondering what the Government will do to help them prosper.

Perhaps most intriguing from a business perspective was Mr Hunt’s announcement of a tax relief for SMEs who spend 40% or more on R&D, in a boost for the life sciences sector. Eligible companies be able to claim a credit worth £27 for every £100 they spend. He claimed this represents a £1.8bn package of support for innovative businesses.

A significant and most welcome highlight for our industry came in the form of regulatory changes. From 2024, the MHRA will move to a different model, which will allow for a rapid near automatic sign-off for medicines and medical technologies which have been approved by trusted international partners. This will allow the MHRA to act more nimbly and will ensure that the new approval process means the UK will be a ‘global centre’ for the development of cutting-edge medical devices. An extra £10m has been pledged to fulfil this ambition.

Ashleigh Batchen, BIVDA’s Head of Regulatory Affairs, said of these plans, This is a fantastic opportunity for Great Britain to ensure continued access of safe and effective medical devices and IVDs into the market. It’s likely this will alleviate some of the pressure on UK Approved Bodies, but it is also possible that additional post-market surveillance requirements might be needed for these products.”

In a bid to lift the gloom from the rise in corporation tax from 19% to 26%, Mr Hunt has introduced a ‘full expensing’ policy from 1 April 2023 to 31 March 2026, as well as an extension to the 50% first year allowance in the same period. This means that businesses who invest in manufacturing or IT equipment will be able to claim back the cost by writing it off against tax on their profits. This notable transformation in capital allowances is worth £27 billion to businesses across the three years.

To further advance business development, Mr Hunt announced 12 new investment zones outside of London. The locations of these investment zones have yet to be outlined, however, eight will be in England with at least one zone designated to Wales, Scotland and Northern Ireland. Given the broad geographical spread of BIVDA members, this is likely to benefit many BIVDA-affiliated companies. Importantly, these investment zones will be centred around universities and research institutes to foster innovative partnerships and clusters. £80m in support is being offered for a range of interventions including skills, infrastructure, tax reliefs and business rates retention.

The Chancellor has also teased further business-friendly announcements in his Autumn Statement later in the year. He promised to include plans for a “larger, more diverse financing system” for innovative businesses, which we are gleefully anticipating. Moreover, Mr Hunt stated that he will set out more details on how to boost commercial development, particularly lab space, in due course. He acknowledged how important this is to support the R&D needs of the life sciences sector.

There were no announcements regarding energy bill relief for businesses beyond March. However, in a webinar yesterday, David Smith, the Economics Editor of The Times, stated that this was not unusual. He claimed that the Department of Business and Trade likely to make an announcement imminently following consultations with the Treasury and expected it to yield good news for business.

Mr Hunt also confirmed that the route of a new rail link between Bedford and Cambridge will be established in May. This route is part of the £5bn East-West Rail project which aims to connect Oxford and Cambridge and thus “support further growth in life sciences and other high-productivity sectors across the region, connecting businesses and talent.”

The Long-term Investment for Technology and Science (LIFTS) initiative for innovative science and technology businesses was also announced, with a consultation on the initiative here. This aims to establish new investment vehicles to crowd-in investment from institutional investors, particularly defined contribution (DC) pension funds, to the UK’s most innovative science and technology companies.

This represents a mostly positive Budget for IVD businesses with a strong emphasis on how important high-growth industries, such as the life sciences sector, are to the UK economy and a clear will to improve regulatory processes for our industry.

Looking at the overall picture, Doris-Ann Williams, BIVDA Chief Executive, said, “BIVDA is pleased to see further support for R&D-intensive SMEs, which will give greater confidence to innovative companies operating in our industry. Support for high-growth industries, such as the in vitro diagnostics sector, is key to growing the economy and is vital if the Government is to achieve its ambition for the UK to be a Global Science Superpower by the end of the decade. We are interested to see how the Chancellor builds on these measures, having trailed an expanded, improved financing system for innovative businesses in the Autumn Statement.”

Natalie Creaney