UK business fears ‘Hard Brexit’

The potential for a so-called ‘Hard Brexit’ in which the UK would be outside the single market and would impose migration controls is worrying many businesses, including those in life sciences.

Growing fears about such as exit from the EU have prompted the pound to fall to a 30-year low, reflecting investors’ long-term doubts about the UK economy. However it hasn’t been bad news for all sectors – the devaluation is good for exporters and tourism, and the FTSE 100 index has soared because these top companies earn the majority of their revenues overseas.

Nevertheless, most sectors are concerned about signs that the government is drifting towards a Hard Brexit option, and the Confederation of British Industries (CBI) has pleaded with it to heed its members’ demands, with barrier-free access to the EU the priority.

The government has tried to calm fears, and says its only firm commitment is to start the Article 50 process of leaving the EU by April 2017.

UK biotech

BIA chief executive Steve Bates
BIA chief executive Steve Bates

Amid all the concern and confusion about Brexit, Steve Bates, the chief executive of biotech trade association the BIA, has been trying to keep a cool head.

The sector is taking heart from reassurances that it seen as a key industry, within the ‘industrial strategy’ outlined by Prime Minister Theresa May.

This support been backed up by the announcement that the Biomedical Catalyst – which helps build infrastructure to nurture investment – will have its funding renewed with a pledge of £100 million from the government.

Commenting in his BIA CEO blog, Bates said he was heartened by discussions with government, saying belief in the sector “came through strongly in fringe meetings and face to face meetings” with ministers and civil servants.

Nevertheless, there remain deep concerns about the implications of Brexit, not least because of the number and complexity of questions that need to be answered.

Curbing immigration is seen as a key political goal for the Conservative government, but most businesses fear it will hurt them. Home Secretary Amber Rudd had stated that all businesses would need to draw up a list of foreign nationals working for them, but a huge outcry against the plans have forced the government into a rapid u-turn.

“I’m glad to see the government backtracking already on plans outlined by the Home Secretary for companies to list non UK workers who they employ,” commented Steve Bates in his blog.

“The UK life sciences sector is part of a wider global ecosystem and we are lucky enough to be able to access some of the best talent in the world and for UK talent to be able to move freely.”

Bates said there will be “lots of chatter in the press which won’t become policy”, but clearly business will have to be ready to oppose poorly-conceived policies made on the hoof which could damage their industries.

A government-chaired UK EU Life Sciences Transition Programme was brought together over the summer, and is now meeting regularly to forge a way through the Brexit process.

The BIA and ABPI took part last week in a Brexit sub-group meeting on regulation with MHRA, Department for Exiting the EU and the Office for Life Sciences.

Bates added: “Government has recognised the issues around regulation raised in the Transition Programme and is engaging industry via this sub-group.  BIA are also working with Government on a number of other sub-groups, including around access to finance and the NHS.”

The next major decision date is 23 November, when Chancellor Philip Hammond will present his government finance plan, the Autumn Statement.

The BIA has set out its demands for extra funding ahead of this, including a range of different tax and incentive schemes to stimulate investment.

The BIA is calling for:

Maintenance and expansion of the R&D Tax Credit scheme to encourage business investments that will strengthen the UK’s economy. This includes the purchase of R&D equipment and health data sets to speed up the search for new treatments and R&D to increase manufacturing productivity in the UK

A funded Early Access to Medicines Scheme (EAMS) that provides reimbursement to SMEs supplying novel treatments to NHS patients so that more small biotech companies are able to take part in the scheme

A Citizens’ Innovation Fund (CIFs) – a tax-advantaged investment product aimed at mid-net worth individuals – to  provide more opportunities to for the public to invest in innovative UK businesses to create an economy that works for everyone

An Investor Visa Fund, which could raise £100 million per year to support innovative UK businesses by specifying that Tier 1 (Investor) Visa holders invest 10% of the £2 million required to obtain the visa in knowledge-intensive UK SMEs

Expansion of the Enterprise Innovation Scheme (EIS) to provide a 50% relief rate and a £2 million per annum cap on investment to allow larger sums to be raised from high-net worth individuals