16 February 2017
Thus far, the UK economy continues to defy expectations, though forecasters generally agree that it is only a matter of time before the more complex and substantial effects of actually leaving the EU begin to materialise. In recent weeks, as the government continues its covert negotiation preparations, the NHS remains in crisis and the bioscience sector has received reassurances and promises, but little concrete action. The Autumn Statement - expected to be a defining moment for health and science – has now delivered tangible rewards for the life sciences community (whilst leaving the health community disappointed) as the government focus shows a belief that science and research are crucial in a post-Brexit UK.
Chancellor Philip Hammond provided clear support for UK science and research in the Autumn Statement. A National Productivity Investment Fund of £23 billion will be spent on innovation over the next five years in four sectors, including research and development. Recognising R&D as a “key-driver of economic growth”, the Chancellor announced the largest increase in R&D investment in any parliament since 1979, with an extra £4.7 billion by 2021 (representing a 20% increase in UK spending, from 1.6% to 1.7% of GDP). An additional $400 million was also earmarked for scaling up innovative businesses, unlocking £1 billion of new finance for innovative UK start-ups, which could include health and science-based firms. Finally, the Chancellor announced a Treasury-led review of the barriers to accessing patient capital in the UK, which refers to funds focused on longer-term returns – a model often used to back academic-associated life sciences start-ups. The government is clearly investing heavily in those sectors where the UK already has a competitive advantage, presumably with a view to strengthening its position for the forthcoming Brexit negotiations.
Prime Minister Theresa May provided further reassurances to the science and research industries just days before the Autumn Statement. She pledged to review the R&D tax credit scheme, acknowledging that £1 spent on R&D tax credits stimulates between £1.53 and £2.35 of additional investment in the UK. Admitting that Britain “has until now been relatively weak on commercialisation”, May also announced the Industrial Strategy Challenge Fund, which “will back emerging fields such as robotics, artificial intelligence, industrial biotechnology and medical technology”. Both the science and innovation audit and the Biomedical Catalyst programmes have been extended, the former expanding into a second wave of regions and the latter receiving an additional £100 million investment. In fact, a separate £100 million fund was also allocated “for incentivising collaboration in technology transfer and working with business”.
Few details have been released to explain how the new funds announced in the Autumn Statement will be invested. The public will have to wait until the government publishes the Green Paper on the Industrial Strategy (delayed until the end of this year) and the subsequent White Paper (to be expected in 2017). Similarly, it will be some time before it is clear how funds will be distributed between the various UK research bodies, particularly given the creation of UK Research and Innovation (UKRI), the planned strategic body intended to bring together the seven Research Councils, Innovate UK, and Research England. Given that the majority of government funding is not expected to flow through the system until 2019/20, UKRI will almost certainly play a key role in this distribution process.
It will be some time before it is clear how funds will be distributed between the various UK research bodies
It is safe to conclude that science and innovation will be a cornerstone of the government’s economic strategy moving into an uncertain, post-Brexit world. As previously highlighted, Chancellor Hammond has been meeting with representatives from innovative industries; the Chair of the Prime Minister’s Policy Board (former Life Sciences Minister, George Freeman) continues to stress the importance of science and innovation to the Industrial Strategy; and the Minister for Universities and Science, Jo Johnson has similarly expressed a deep commitment to ensuring UK science and research are supported into the future.
It is now abundantly apparent that UK health communities should not expect any additional support from this government beyond those funds already committed. As the accuracy of the government’s £10 billion investment in the NHS has been repeatedly questioned, numerous reputable organisations petitioned the Chancellor ahead of the Autumn Statement to provide the NHS with additional funds, or at least provide social care in particular with additional resources. No new money was promised for either sector and the Chancellor instead chose to focus on wages, taxes and other efforts “to ensure every household has opportunities to prosper” – though it is worth noting that a household burdened by a chronically ill or disabled person with limited health and social care available will find it harder to prosper.
Whilst the additional investments in science and research are encouraging and demonstrate the government’s recognition that these industries hold great potential to improve the British economy, improving productivity and efficiency in sectors including healthcare, they will not be sufficient to address the mounting operational and financial pressures on the NHS posed by an increasingly ageing population. Indeed, better biomedical and technological innovation and commercialisation will not necessarily provide any direct health benefits for the UK population at all, unless they can be incorporated constructively into the NHS. This is a significant challenge, given limited funding, resistance to change and the current necessity for active efficiency savings. Without a simultaneous consideration for how science and innovation can improve care pathways and reduce costs prior to their insertion into the healthcare system, their impacts will be limited, if not actively counterproductive.