Pfizer (Sandwich)

Lord Willetts Excerpts

Monday 7th March 2011 Commons Chamber

[The Minister for Universities and Science (Mr David Willetts)]

I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing the debate. The presence of other hon. Members in the Chamber is a reminder of the strength of feeling in Kent about this issue. The important contribution of my hon. Friend the Member for Dover (Charlie Elphicke) and the presence of my hon. Friends the Members for North Thanet (Mr Gale), for Folkestone and Hythe (Damian Collins) and for Rochester and Strood (Mark Reckless) shows that the issue affects a wider community than that in Sandwich.

We in the Government were deeply disappointed by Pfizer’s decision. I vividly remember the meeting at No. 10 Downing street with the new chief executive of Pfizer on 24 January. I thought I was going to meet the new chief executive and learn about his plans for the future, so I was shocked and disappointed when he revealed that he was proposing to announce, in a week’s time, Pfizer’s withdrawal from its Sandwich plant. Of course, I asked immediately whether anything could be done in terms of national policy to change his mind and whether there was something we had got wrong that needed to corrected, but he was insistent that the decision was based on Pfizer’s wider global view about the strands of medical activity on which it wished to focus. Sadly, some of the activities at Sandwich are ones from which it plans to withdraw. Since that conversation, in which Pfizer insisted that there was nothing we could do at the national level, the focus has quite rightly been on what we can do for the local community in Sandwich, the economy of that part of Kent and, more widely, for the life sciences in our country. I pay tribute again to my hon. Friend the hon. Member for South Thanet and her colleagues who are present for the incredibly constructive and energetic way in which they have tried to address that challenge.

We decided immediately to invite Paul Carter, the leader of Kent county council, to lead a local taskforce that would assess the impact on the local economy and look at measures that could be taken so that the local economy was not damaged severely by this decision. Of course, my right hon. Friend the Secretary of State for Business, Innovation and Skills and I are waiting for the report that he will bring to us, but it is already clear that three key issues have emerged, all of which were touched on by my hon. Friend the Member for South Thanet in her speech, the first of which is transport connections. It is clear that this is a long-standing problem in the area and, as she has said, it is one that I personally experienced in my painfully slow journey to Sandwich the other day.

Clearly, there are some important transport challenges, but my hon. Friend will understand that I can make no commitment tonight on public expenditure issues, which are matters for the Chancellor and the Secretary of State for Transport, but she, her colleagues and Kent county council have made very strong arguments about the need for a transport upgrade in the area. I understand the different things they are calling for, one of which is an improvement in the rail service. A powerful argument has been made that reducing the journey time to London to less than an hour would transform people’s perceptions of the site and its accessibility.

The second argument that has been made is about the case for a new station and how that would encourage investment and would encourage people to move to the area.

Thirdly, there is the whole issue of the airfield at Manston. Occasionally, I think that we have found Boris Johnson’s island. The existence of the runway and the great significance it could have for improving transport links has been drawn to our attention. I cannot make any commitments tonight, but that logic and the connection between the rail links, the new station and the future of the airfield have all been very well made and I know from my conversations with Councillor Paul Carter that he will be making those points in his report. We will then consider them very seriously indeed, because of the importance of the area and the severe blow that it has had with the withdrawal of Pfizer.

The second set of local issues concerns employment. My hon. Friend put it eloquently. After 60 years of presence in the area, during which time the researchers and staff at Sandwich developed some extraordinarily successful drugs, it is understandable that the prospect of 90 days’ notice is extremely painful for people. There is great interest among the venture capital community and others in what could be done to support MBOs—to support new contract research organisations, perhaps to buy particular physical assets and intellectual property that has been generated on site. I understand that going through that process in the tight time scale of 90 days is very demanding. That is one of the reasons why we in the Government have tried to keep ahead of events and move with all necessary speed.

I will take up with Pfizer the points that my hon. Friend made about the need to give sufficient time for such options to be properly explored. As she knows, I have already convened a brainstorming session of venture capitalists and others at the Department for Business, Innovation and Skills, and I am keeping in close touch with the venture capital community. Yes, I will make the point to Pfizer that it has an obligation to ensure that such options are properly investigated.

The third thing that is on the agenda for the local community is the enterprise zone idea. I was at the Conservative party’s spring conference in Cardiff this weekend, speaking on growth. The Chancellor gave an important speech with a clear commitment to back enterprise zones. Again, I cannot give any commitment this evening, but I know that my hon. Friend and her colleagues and the leader of Kent county council will be eloquent in making the case for the area as an enterprise zone, and I well understand the arguments that they will put.

There is much work to be done on the exact design of an enterprise zone—to what extent it is a matter of rate relief, liberalising the planning regime or other special tax reliefs. All that, I am sure, will be unveiled at the Dispatch Box in a fortnight, when the House may be even more crowded than it is tonight. We have only a short time to wait, but both the definition of the scope for enterprise zones and the choice of the areas where those will be is important. I know that the case for this area of Kent as an enterprise zone will be made powerfully.

I see those as the big local issues. We are focusing on all of them, working with the taskforce—the transport issues, the employment issues and the enterprise zone. Perhaps I can briefly mention the wider context. Although the decision has been a blow for the local community in Sandwich, it has led to stocktaking about life sciences as a British-based industry. It is clear now, especially when we put the Pfizer decision alongside a similar decision by AstraZeneca at Charnwood, that there are some big structural changes going on in the industry. I referred to one—Pfizer’s decision to withdraw from some strands of research—but there is another issue as well.

There is a shift away from in-house research and development towards contractual arrangements with outside research organisations or contractual arrangements with university departments, where firms look for the original medical research to take place. Also, increasingly, the larger companies are waiting to see what small and medium-sized enterprises come up with and buying up the SMEs when they have clearly got the product. Just as the disappearance of Bell Labs was a wake-up call about changes in the structure of the IT industry 20 years ago, we are seeing an important change in the structure of the pharmaceutical industry.

The Government, and I with my responsibilities for life sciences, are committed to making sure that as these structural changes occur, Britain remains at the forefront of life sciences, and that we are sufficiently nimble footed and skilful that we ensure that as these changes happen Britain emerges from them with an even stronger life sciences economy than we have at present. That is why we have, for example, protected in cash terms the science and research budget and, within that, given particular protection to the Medical Research Council’s budget, supported by the patent income it receives from successful patents. We know that high-quality medical research is absolutely fundamental to ensuring that we have a strong life sciences industry.

That is also why we are looking carefully at how we can improve the environment for clinical trials in this country. I see a great potential future for the Sandwich facility as a place from which clinical trials are run, even if no primary pharmaceutical or medical research is undertaken there. It is a scandal that we have inherited a regulatory regime in which it takes 660 days from the decision to test a drug to the first patient receiving it in a clinical trial. When we on the Government Benches talk about the burdens of red tape, it is not simply an abstract issue; we have a real example of that burden in front of us. The Secretary of State for Health and I received an excellent report on that in January, and I know that the Chancellor is very aware of it. I am absolutely committed to working with the Secretary of State to try to transform the environment for clinical trials so that Britain’s declining market share in clinical trials is reversed. We have gone from having 6% of clinical trials to 2% in the past 15 years. That shocking decline under the previous Government must be arrested and reversed. We are trying to create a better environment for clinical trials, which could be of direct benefit for people at the Pfizer facility in Sandwich.

We are also looking carefully at the regime for venture capital investment, as we need to do everything possible to ensure that venture capitalists are keen to invest in this important sector. Again, we have seen a decline in venture capital investment in recent years, which we need to address and turn around. Finally, we must ensure that we have an environment in which contract research organisations—I suspect that we will hear more about those in the years ahead, as they will be an important part of the industry’s future structure—have a tax and regulatory regime that supports them so that Britain becomes Europe’s preferred environment for contract-based research.

If we put together our commitment to the local community, our willingness to focus on the specific issues that my hon. Friend the Member for South Thanet raised—transport, employment, redundancy arrangements and enterprise zones—and our commitment to life sciences as an important British strength where we can do better and must not settle for decline and contraction, I hope that she will take some comfort from this debate that she has rightly secured.

Question put and agreed to.