The PBR highlights the Life Sciences Blueprint published in July and the Office for Life Sciences (OLS) initiative, including reference to medical devices.  The announcements are consistent with proposals for which industry has been making representations throughout 2009. 

PBR announces a reduced rate for corporation tax applied to income from patents (known as “Patent Box”).  The Patent Box will apply to income from April 2013 to strengthen the incentives to invest in innovative industries and ensure the UK remains an attractive location for innovation”.  The Government will consult before Budget 2011 on details, which will apply to patents granted after the legislation is passed.

The PBR reinforces commitment to R&D Tax Credits.  To improve access to the credits, PBR has announced the “removal of the condition that any IP deriving from the research and development must be owned by the company making the claim” which the intention of allowing companies to benefit without “distorting their commercial arrangements in relation to IP”.  This has been referred to in discussions with OLS as ‘consortium relief’.

Additional funding of £200 million for the Strategic Investment Fund is announced. £5 million from the fund will be allocated to a “new prize fund for open competition in key areas for innovation development”.  £150 million goes to low-carbon investments.  £45 million is unallocated.

The UK Innovation Investment Fund (UKIFF) was launched in June 2009 to invest venture capital in technology companies with high growth potential across sectors including life sciences.  Following a competitive tender process the PBR announces that the funds will be, subject to final contract:

• £200 million for investment in a general technology fund, managed by European Investment Fund.

The PBR announced “a package to ensure that NHS near-cash from front-line spending – the 95% of spending that supports patient care – will rise in line with inflation in 2011-12 and 2012-13”.

The PBR aims to make “value for money savings of around £10 billion per year” by 2012-13 through work already underway in the NHS and through other value for money initiatives including:

• Deliver more efficient and integrated community and mental health services, including by “developing common prices to reduce variation”
• “Driving down back office and procurement cost"

 

In addition, and in the small print, the amount of capital available to the NHS has been reduced (though by no means removed entirely, as some observers feared).  At the time of the Budget in April the Treasury said that the Department of Health would have £5.6 billion to spend during 2009/10 on capital, including new buildings and equipment.  That has been reduced £200 million to £5.4 billion.  Next year’s capital budget also looks to have been cut from £4.8 billion to £4.7 billion. 

ABHI comment:  the final bullet point is an old chestnut and we hope to influence expectations as we have been attempting to do since the publication of the Office for Government Commerce review a year ago.  Reduction in procurement costs will require different behaviours from the NHS as well as from industry.  There are both threats and opportunities, as Jim Easton who is leading the NHS in its planning for financial pressures, told the ABHI conference a fortnight ago. 

Budget 2010 will set out further details of the £15-20 billion of savings.

The PBR announces £5 billion of additional savings by 2012-13 including £500 million from “reducing spend on IT, including by reducing the cost and scope of NHS IT programme”.
It was announced that Government will seek a 1% cap on basic pay uplifts across the public sector for 2011-12 and 2012-13, generating savings of £3.4 billion a year by 2012-13.  For 2010-11 Government are proposing a pay freeze for senior employees including senior NHS managers, consultant doctors and GPs.

Following on from a key theme of April’s Budget, PBR highlights the need for prompt payment.  It announces that the Government remains committed to paying over 90% of invoices within the 10 day target.  It also states that “payment times to suppliers have also improved in the NHS and local authorities, with a recent Audit Commission report showing that 89% of local authorities have now introduced measures to reduce payment times to 20 days or fewer”. 

ABHI comment: performance may be generally improving but it is also reported that some of the NHS shared services arrangements are putting a brake on payment times.  More on this will be in the forthcoming edition of Primed. 

Later in December a Policy through Procurement Action Plan will be published.  It aims to use demonstrate how procurement can be used to “deliver the Government’s policy priorities of apprenticeships, skills and youth employment, small business, and low-carbon resource efficiency to stimulate economic growth.”

Focusing on SME procurement, PBR states that there has been progress in implementing the recommendations of the Glover Committee’s Report.  Government will increase the transparency of its spend and will publish in summer 2010 the level of central government spend with SMEs.

The PBR establishes a Growth Capital Fund that will target SMEs for which traditional bank finance is either inappropriate or unavailable.  Initial investors and the fund structure will be announced in 2010.

The Business Payment Support Service announced in 2008 to assist businesses facing financial difficulties spread their tax payments will continue.

The planned increase in the Small Companies’ Rate of Corporation Tax will be deferred for an extra year.  It will therefore remain at 21% for 2010-11.

To assist SMEs to access affordable finance the Government has agreed Customer Charters will RBS and Lloyds.  It aims to increase transparency of pricing for SMEs.

The Enterprise Finance Guarantee scheme will continue for a further 12 months, running up to March 2011.

In other news, as predicted by ABHI in Friday’s Update for Chief Executives it has now been confirmed that in February 2010 the Medical Devices Unit will move from DG Enterprise and Industry to DG Sanco, the Directorate with responsibility for health and consumers. John Dalli, a former Minister for Social Policy in Malta, will become the Commissioner with responsibility for DG Sanco.

As previously stated the move creates considerable uncertainty, with a potential change in emphasis given that SANCO’s responsibility is health issues, as opposed to trade.  Any on-going programmes with the Commission could come under scrutiny and could re-emerge in a less friendly form e.g. the MDD Recast, the ‘Strategic Engagement’ initiative and the work on UDI.

ABHI will be working with Eucomed and talking to both DG Enterprise and DG Sanco to understand the full implications of this move.