How does the UK Budget impact the life sciences and healthcare sector?

The Autumn Budget 2024 set out the economic direction of travel for the new government, with significant developments for the life sciences and healthcare sector.

Departmental budget increases

The chancellor announced that both the Department for Health and Social Care (DHSC) and the Department for Science, Innovation and Technology (DSIT) would receive budget increases of 3.8% and 6.5% from last year respectively. The DSIT has ambitious plans over the coming year, including establishing and funding the newly announced Regulatory Innovation Office (RIO), which the increased funding will support.

NHS reforms

Unsurprisingly, a large focus of the Budget was on NHS reform and how that will be funded. It was announced that a comprehensive 10-year health plan for the NHS will be published in spring 2025, which will be aimed at transforming the current healthcare model by moving from analogue to digital systems and putting the emphasis on prevention of sickness.

As part of the DHSC departmental budget increase, the government will provide a £22.6 billion increase in resource spending for 2025-2026 for NHS England, which will enable it to deliver 40,000 extra elective appointments per week. This increased funding for the NHS is intended to "put it on a sustainable footing" and will be used to address some of the findings in Lord Darzi's recent review of the NHS.

For example, £1.5 billion has been promised for new surgical hubs and diagnostic scanners, while more than £1 billion will be used for critical maintenance and repairs across the NHS estate. More than £2 billion is to be used for NHS technology and digital improvements, including electronic patient records, cyber security and enhancing patient access through the NHS App. Furthermore, £460 million will be used to strengthen pandemic preparedness and health protection.

Industrial strategy

Earlier this month, the government released its new "Invest 2035" green paper, which sets out its commitment to developing a long-term and targeted industrial strategy. It identifies eight growth-driving sectors, one of which is life sciences, which will be key to driving economic growth in the UK.

The Budget states that the full strategy will be published next year, which will include individual plans for each of the eight growth-driving sectors. When available, these will give businesses more guidance on how the government plans to support and promote growth in the sector.

As part of the commitment in the industrial strategy, the Budget confirmed that up to £520 million of longer-term funding will be available for a new Life Sciences Innovative Manufacturing Fund, including £70 million in 2025/26, which is aimed at driving growth and building resilience for future health emergencies.

Innovation focus

There was a strong focus on innovation in the Budget. It confirmed that levels of research and development (R&D) investment will be protected, with £20.4 billion allocated in 2025/26, including £6.1 billion support for core research (covering Research England, Research Council, UK Research and Innovation (RI) talent, UKRI international subscriptions and national academies funding). It will also fully fund the UK's Horizon Europe association.

As foreshadowed in Labour's pre-election plan for the life sciences, the government has committed to 10-year budgets for key R&D activities to provide stability and long-term certainty, which it hopes will create an environment for productive long-term partnerships with industry. These will be set out in phase two of the government's spending review in late spring 2025.

At least £25 million in 2025/26 will be given to launch the new multi-year R&D Missions Programme to solve targeted problems, which aims to bring in private and third-sector investment to accelerate delivery of each mission.

The National Institute for Health and Care Research will receive a real-terms uplift of its budget as part of over £2 billion of R&D funding and the government is providing at least £40 million over five years for proof-of-concept funding and improvements to support for university researchers spinning out their research.

AI and digital

The Budget acknowledges that science and innovation are critical to the delivery of the government's new modern industrial strategy. As part of this, the government is committing to shortly publish the Artificial Intelligence Opportunities Plan, which will set out a roadmap to capture the opportunities of AI to enhance growth and productivity. The government will also create a "national data library" to "unlock the full value of our public data assets" that will give researchers and businesses "simple, ethical and secure access to public data assets".

Infrastructure investment

The Budget commits £10 million of funding to enable the Cambridge Growth Company to develop housing, transport, water and wider infrastructure, and taking next steps to deliver East West Rail to connect Oxford, Milton Keynes and Cambridge. The government says that this will support life sciences companies and unlock private investment to cement Cambridge's status as a globally renowned centre of excellence and its role within the new industrial strategy.

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The focus on innovation, maintaining R&D funding and the move to 10-year R&D budgets for key activities demonstrates the government's long-term commitment to the sector; that said, there is a lack of finer detail relating to many of the government's plans for the sector. What will the industrial strategy and the 10-year NHS plan look like? How will RIO function and will it be appropriately funded to make an appreciable impact on the life sciences and healthcare landscape in the UK? The lack of detail aside, the sector is central to the government's growth mission, which will mean important changes ahead for the sector.