This week’s hot topic: Life sciences industry on high alert as Rachel Reeves’s crucial budget looms
It’s just two weeks until the Labour government announces its crucial first budget, which will set the tone for Keir Starmer’s term as prime minister.
The government has been busy making its excuses ahead of the announcement. With talk of a £22 billion “Black Hole” in public finances blamed firmly on the previous administration, every sentence from Starmer and chancellor Rachel Reeves is closely monitored for clues about its contents.
While every government has a tough task to balance the books while also raising money for investment, Starmer has been clear that the government has little wiggle room to achieve his stated goals of growing the UK’s faltering economy.
Starmer failed to deny that the budget will contain a measure to raise employer’s National Insurance contributions, potentially breaking an election manifesto promise – albeit a rather loosely-worded one.
Perhaps of more concern is whether a policy intended to raise finance will also stymie the economic growth it intends to create.
It raises the big question of whether Reeves will be able achieve a balancing act that will provide a solid foundation for growth in the coming years.
This includes plans to invest in the NHS to cut waiting times and rebuilding services following the unprecedented stress of the COVID-19 pandemic.
Budgets don’t just contain broad policies such as tax hikes, and the hope will be that the smaller, targeted measures will be effective in the sectors they are aimed at.
The UK’s Association of the British Pharmaceutical Industry (ABPI) has been consistently calling for fiscal and tax measures that will boost growth and productivity.
But the industry body has also called for more policies that will specifically boost life sciences, such as boosting investment in commercial clinical trial capacity.
Whether this kind of industry-specific measure will make it into the budget document remains to be seen.
Labour produced a sector plan for life sciences in February 2024, when it was still in opposition, which championed the life sciences industry as a key sector for economic growth.
The plan included measures such as a “British Tibi” scheme allowing certain pension funds to invest a proportion of their assets in UK growth assets.
This would be split between venture capital, small cap growth equity and infrastructure investment, a copy of the French scheme pioneered by economist Philippe Tibi to boost investment in tech companies.
The hope is that such a scheme will improve the UK’s flagging reputation as a place for investment.
The life sciences industry will watch the budget closely, hoping that a combination of macroeconomic competence, and detailed policy, will boost its fortunes in the coming years.
Or will those warm words in the life sciences plan be swallowed by the “Black Hole”?
