Tory MPs have stepped up calls for the government to cut taxes after pharmaceutical giant AstraZeneca overlooked Britain for a new £320m drug factory.
Sir Pascal Soriot, the firm’s chief executive, said it wanted to build a new plant close to its existing sites in northwest England but “because the tax rate was discouraging” chose Dublin instead.
The UK’s corporate tax rate is due to rise from 19% to 25% in April, while a tax relief scheme for businesses is expected to end and energy support will begin to fall away.
Conservative MP John Redwood tweeted: “AstraZeneca’s decision to invest in Ireland not the UK because our tax rates are too high shows how damaging government tax policy is.
“High taxes destroy jobs and result in less tax revenue.”
Mr Redwood said the new science minister, Michelle Donelan, “needs to tell the Treasury she cannot do her job with high tax rates and additional taxes sending people and money abroad”.
Ms Donelan was appointed during Prime Minister Rishi Sunak’s shake-up of Whitehall this week, which included the creation of a new government department focused on science, innovation and technology.
The government has pledged to turn the UK into a “science superpower”, building on the UK’s COVID-19 vaccine successes.
But Matt Hancock, who was health secretary during the pandemic, said the move by AstraZeneca to build its factory in low-tax Ireland deals a blow to that ambition.
He tweeted: “This decision was completely avoidable. Across life sciences, data, AI, clinical trials & other industries of the future, we are squandering a lead, failing to capitalise on the global success of our vaccine programme.
“This is a massive wake-up call.”
Chancellor ‘disappointed we lost out this time’
Chancellor Jeremy Hunt today admitted he was “disappointed we lost out this time” in relation to AstraZeneca’s decision to snub the UK.
Speaking to broadcasters from a science facility in central London he said: “We agree with the fundamental case they’re making which is that we need our business taxation to be more competitive and we want to bring business taxes down.
“But the only tax cuts we won’t consider are ones that are funded by borrowing because they’re not a real tax cut. They’re just passing on the bill to future generations.”
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The chancellor warned the UK ‘is not out of the woods’ despite the economy avoiding a recession.
Mr Hunt has continued to resist pressure to cut taxes ahead of his budget next month, after a bleak assessment from the IMF that the UK economy will fare worse than any other advanced nation this year – including sanction-hit Russia.
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Negative ‘noise’ drowning out positive
Dr Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), also called for government action to provide a “level playing field”.
He told BBC Radio 4’s Today programme: “There are more stories about losing investment, like the one we’ve seen with AstraZeneca, than the positive noise stories coming in, and we really have to turn that around.”
Concerns within the pharmaceutical industry have also been focused on the NHS-branded medicines sales levy.
The scheme caps the health service’s branded medicines bill, meaning that drug manufacturers face a charge if it rises more than two per cent annually.
But industry leaders including AstraZeneca are lobbying for change as payments have soared because of rising demand since the pandemic.
Mr Torbett said: “The agreement we have with the NHS – that has got to the point where companies are now paying more than a quarter of their revenues – not profit but revenues – back to the government.
“That is vastly in excess of anything the industry pays anywhere else in the world and we have to get to the point where the UK is able to compete for investment on a level playing field, and we are not there yet.”