Financial Assistance to Industry
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The Chair
It may help if I clarify from the Chair that we will debate for up to 90 minutes the content of the motion in the name of the Secretary of State, which is listed on the future business section of the Order Paper. The House will be asked to pass the motion without debate after the text has been reported from the Committee.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)
I beg to move,
That the Committee has considered the motion, That this House authorises the Secretary of State to make payments, by way of financial assistance under section 8 of the Industrial Development Act 1982, in excess of £30 million to any successful applicant to the Life Sciences Large Investment Portfolio, launched on 15 November 2025, up to a cumulative total of £570 million.
It is a pleasure to serve with you in the Chair, Sir Alec. The life sciences sector is a jewel in the crown of our economy, a national asset that plays a unique role in the health and wealth of the United Kingdom. The sector consistently drives skilled employment, attracts cutting-edge research and stimulates inward investment in communities across every nation and region of our United Kingdom. From pioneering new medical technologies to developing life-saving therapeutics, life sciences generate immense economic value and vital public health benefit.
The Government’s life sciences sector plan sets out a comprehensive, long-term strategy to ensure sustainable growth across all parts of the sector. It outlines our ambition for the UK to secure more life sciences foreign direct investment than any other European economy by 2030, and to position ourselves as the third largest global destination for such investment by 2035, behind only the United States and China. Meeting that ambition requires an internationally leading support package and a clear signal to global investors that Britain is open, competitive and committed to scientific excellence.
Peter Fortune (Bromley and Biggin Hill) (Con)
Given that the individual grants can exceed £30 million and are monitored for only 10 years, if a company, say, relocates to another country or fails to deliver over that period, is there any mechanism for the Government to claw back some of that money?
Kanishka Narayan
I would not make claims about any individual-level investments we have made through the fund at the moment, but I am happy to write to the hon. Gentleman about the provisions in the fund as a whole.
Central to our ambition is boosting manufacturing through the delivery of up to £520 million to the life sciences innovative manufacturing fund, one of six headline commitments in the sector plan. The covid pandemic demonstrated beyond doubt that we cannot take our critical supply chains for granted. The disruption of that period showed the risks of relying too heavily on overseas production for medicines, vaccines and essential medical supplies. Supporting the onshoring and expansion of life sciences manufacturing through the life sciences innovative manufacturing fund is therefore a vital part of strengthening our national resilience, improving preparedness for future health emergencies and ensuring that UK patients benefit quickly from innovation.
In the past six months alone, that Government support through the life sciences innovative manufacturing fund has unlocked more than £600 million in investment in our life sciences sector, which will create and safeguard more than 600 jobs. That includes a £500 million investment by global pharmaceutical company UCB in Surrey, alongside a £23 million investment to expand production of essential medicines at Norgine’s facility in Hengoed, Wales.
Those investments position the UK as a world leader in health and manufacturing innovation and boost regional economic growth. More than that, they restore a proud culture and heritage of innovation in so many of these places. Hengoed, for example, was the place that powered this country’s industrial development across the 20th century with coal from the Penallta colliery. Now, that heritage of coal leads into the future of essential medicine production as well. The life sciences innovative manufacturing fund is unlocking expanded warehouse capacity, expanding production capacity and creating 44 new local jobs. At the heart of it all, it restores that critical heritage of innovation in our communities.
Of course, if we are to maximise the full potential of UK life sciences, we must go further and faster in our support for the largest transformational projects. That is why the life sciences sector plan includes a commitment to develop a new, bespoke approach to supporting major life sciences investments of more than £250 million. Such large-scale and globally mobile investments are particularly critical to the ecosystem here in the UK. They attract further private capital, create clusters of expertise and bring significant economic and health resilience benefits to both the local areas that host them and the UK as a whole.
The life sciences large investment portfolio is designed to meet that need. It offers tailored Government support to attract the world’s largest and most strategically important life sciences investments to the UK. The scheme enables the Government to provide bespoke support for investment portfolios with investments in manufacturing and in research and development totalling at least £250 million over a three-year period. It will give confidence to companies and ensure that the UK remains an internationally competitive destination.
Crucially, the life sciences large investment portfolio brings together regional and devolved delivery partners with UK Government support, so that we can leverage the full UK offer for investors. That means aligning national incentives with place-based strengths in skills, infrastructure, clusters and planning, so that every part of the proposition works together, and the UK is as competitive as possible for the largest and most mobile life sciences investments.
The Government are clear that the life sciences large investment portfolio is a strategic investment in our future. It will strengthen our capabilities, support high-value jobs and reinforce the UK’s global reputation as a science superpower. Most importantly, it is a vital step in delivering the Government’s commitment to support the UK’s life sciences sector, and to ensuring that our country remains at the forefront of global innovation for decades to come.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
It is a pleasure to serve under your chairmanship, Sir Alec. His Majesty’s Opposition welcome this motion, which will allow the Secretary of State to make individual payments above £30 million to successful applicants to the life sciences large investment portfolio.
The LSLIP has been developed and designed to support large-scale manufacturing and R&D investments in medicine, medtech and diagnostics, with a total budget of up to £570 million, and scope for individual awards of up to £130 million per project. It very much builds on the life sciences innovative manufacturing fund set up by the last Conservative Government to provide substantial capital grants for manufacturing innovation to strengthen the UK’s health supply chain. Together, the life sciences large investment portfolio and the life sciences innovative manufacturing fund provide a pipeline of support in the UK for both resilience-building manufacturing and global-scale industrial capability.
The year 2025 was a challenging one for the UK life sciences sector, with AstraZeneca first scrapping plans to invest £450 million in expanding a vaccine manufacturing plant in Merseyside, blaming a reduction in Government support, and then announcing in September that it was pausing its £200 million research investment in Cambridge. That same month, Merck announced that it was scrapping a planned £1 billion expansion of its UK operations. However, that was not the full extent of the problems, with Eli Lilly and Sanofi also pausing investment in their UK operations.
Several life sciences investments secured under the previous Conversative Administration were culled or put on hold after this Government took office. The life sciences large investment portfolio may go some way to recovering that lost ground and signalling to the life sciences sector that the UK remains serious about attracting, retaining and growing a world-leading life sciences R&D and manufacturing sector. Sadly, it will not be sufficient in isolation.
The Government intervened late last year to stabilise the rebate rate applied to newer medicines under the voluntary scheme for branded medicines pricing, access and growth for 2026. However, UK rates remain significantly higher and more volatile than those in many of our peer countries, which is a deterrent to significant investment in UK life science industries. My first question therefore is, what further action are the Government taking to secure longer-term stability and predictability in this area?
Last year, the Association of the British Pharmaceutical Industry made a pre-Budget submission calling on the Government to take action to restore the UK’s position as a global leader in life sciences. Among the ABPI’s recommendations was ensuring that VAT is not applied to free-of-charge medicines under early-access schemes, to preserve access for UK patients and maintain the UK’s attractiveness for clinical trials. However, The Sunday Times reported yesterday that one multinational drug company has stopped patients receiving early-access medicines, with another considering similar action after His Majesty’s Revenue and Customs issued VAT bills to pharma companies providing medicines under the scheme.
That fiscal folly has real-world effects on not only the economy, but the lives of patients with debilitating and life-threatening conditions who are taking part in those trials. Therefore, my second question to the Minister is, what discussions has he had with Treasury colleagues about the urgent need to reform the tax system to make the UK a more attractive and stable jurisdiction for investment in life sciences?
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Sir Alec. I thank the Minister for moving the motion, which the Liberal Democrats are also minded to support. It is vital that the UK life sciences sector, which is such an important part of our economy, is supported and has the potential to thrive and compete on the global stage. That is not just for economic reasons, but so that the UK can respond, and contribute to responses, to future health emergencies and pandemics, given its focus on research and development and its manufacturing capacity in medicines, medical technology and diagnostics.
The only concern we might have is based on the Competition and Markets Authority assessment of this proposal, which identifies potential downsides for small and medium-sized enterprises. I have many of those in my Oxfordshire constituency of Didcot and Wantage—for example, Adaptimmune, AMS Biotechnology and Bounce Biomedical on Milton Park, and Accentus Medical and the internationally respected diamond light source facility, used by academia and industry to conduct research in life and physical sciences, on the Harwell Science and Innovation Campus. It would be interesting to hear a little from the Minister about how the investment set out in the motion will benefit small and medium-sized enterprises, as well as the very large companies it is clearly most focused on.
Kanishka Narayan
I thank both hon. Members for their contributions. To respond to the hon. Member for Didcot and Wantage, the large investment portfolio part of the fund is of course focused on larger projects that materially move the needle for the sector as a whole. The life sciences innovative manufacturing fund as a whole is much more focused on singular sites, and as a result smaller firms are able to participate in it. That is alongside a series of measures that the Department has been taking to back the best of British start-ups in this space.
The shadow Minister, the hon. Member for Runnymede and Weybridge, asked what we are doing on longer-term stability to continue to attract large-scale investment into this country. The pharmaceutical agreement we have struck with the United States is a really important location for a series of commitments that support our commercial investment environment and provide the best care for patients within that.
We have committed to investing around 25% more in new medicines, with two key changes at the National Institute for Health and Care Excellence—an increase to the cost-effectiveness threshold, and the introduction of a new value for assessing health-related quality of life. We have also introduced a 15% cap on repayments made by industry as part of the voluntary scheme for branded medicines pricing, access and growth, with greater market predictability for investment as a consequence of that as well. Furthermore, colleagues across Government continue to work closely with industry, patient groups and the devolved Administrations on ideas to support the commercial environment, as well as on medicines pricing in a future voluntary scheme.
On the hon. Gentleman’s point around reforms to the tax system, he will be aware that discussions are ongoing across Government all the time, particularly in support of entrepreneurial investment decisions made in this country. That is true not least for early-stage founders in the life sciences and broader technology as well, where, as a consequence of decisions made by the Treasury, this country now has one of the most attractive regimes for employee equity participation.
The motion will ensure that the UK can compete for the largest and most impactful investments in life sciences manufacturing.
Dr Spencer
Will the Minister respond on the point about VAT on medicines and trials?
Kanishka Narayan
I am happy to look into the specific case study in the papers, which the hon. Gentleman referenced. I have to say that I have not seen the mention in The Times of the company he talked about, and I am reluctant to speculate on the context. However, if he is looking for an answer, I am happy to write to him about that case.
These investments will make a significant contribution to UK economic growth and outcomes for NHS patients. The life sciences large investment portfolio is a key tool that will support the Government’s missions to kick-start economic growth and build an NHS fit for the future. Working together with industry, the Government are delivering better patient outcomes and driving economic growth, and I look forward to continuing that work and building on that momentum. I commend the motion to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the motion, That this House authorises the Secretary of State to make payments, by way of financial assistance under section 8 of the Industrial Development Act 1982, in excess of £30 million to any successful applicant to the Life Sciences Large Investment Portfolio, launched on 15 November 2025, up to a cumulative total of £570 million.