What does the budget mean for medical research?

Posted on March 23, 2011 by


George Osborne has just announced the 2011 budget. This included some interesting stuff for science and medical research in particular. As reported yesterday, there is £100 million capital funding for science institutions. But most of the interesting stuff for medical research is in the growth strategy published alongside the budget, this includes plans to act on the Academy of Medical Sciences recommendations to improve the regulation of health research in the UK including establishing a single Health Research Agency to regulate research and working to streamline the process of conducting clinical trials. It also announces action to make patient data safely and securely available for medical research and establishing a Cell Therapy Technology and Innovation Centre.


This is the second budget George Osborne has announced, the first was in June 2010. He also announced a comprehensive spending review in October, where the science budget was frozen at £4.6 billion annually.

What happened today?

The budget and a host of documents published alongside it are here.

This includes a growth strategy – The Plan for Growth building on the growth review announced before Christmas where six growth areas – including healthcare & life sciences – were identified.

Interesting medical research and charity mentions in George’s speech

George Osborne mentioned plans to radically reduce the time it takes to get approval for clinical trials – suggesting that they will be acting on the recommendations made by the Academy of Medical Sciences recent review of regulation in the UK.

The central role of science in the UK’s future got a mention. George Osborne referred to the action he took in the spending review, freezing the science budget, and announced in line with the reports yesterday that an additional £100 million would be invested in science – providing capital funding for the Babraham life sciences Institute in Cambridge, the Daresbury Science & Innovation Campus, the Norwich Research Park and the International Space Innovation Centre.

On R&D tax credits, the chancellor announced that the Small Companies R & D grant would rise to 200 % this year and to 225 % by next year. This is another issue that the life sciences industry in particular has been concerned about as small life sciences companies can find the current system difficult (see BioIndustry Association on why they want reform of R&D tax credits).

Substantial reforms to support giving to charity – including a plan to simplify gift aid, developing an online system by 2013. And encouraging legacies to charities; from April 2012 10 per cent cut to inheritance tax if money donated to charities or museums.

And the detail from the budget

R&D tax credits

2.79  Research and Development (R&D) tax credits – Following consultation on the effectiveness of the schemes, the Government will increase the SME scheme rate of relief to 200 per cent from April 2011 and 225 per cent from April 2012, subject to EU State aid approval. It will simplify the schemes, including removing the Pay As You Earn (PAYE)/NICs cap on the amount of payable credit that can be claimed, removing the minimum expenditure rules and allowing relief through the large company scheme for subcontracted activity which forms part of a wider R&D project. The Government will publish a response to the consultation in May 2011, which will include a consultation on the detail of proposed changes. Vaccines Research Relief will be reduced to 20 per cent for SMEs from April 2011 and not available to SMEs from April 2012. (Finance Bill 2011 for April 2011 increase to the SME scheme rate of relief and April 2011 decrease to Vaccines Research Relief, Finance Bill 2012 for other changes)

Charitable giving

1.137  The Government wants to encourage charitable giving and philanthropy and to support the voluntary sector.

1.138  Building on the 10 point action plan for philanthropy,20  the Government will encourage giving by the wealthiest by:

  • reducing the rate of inheritance tax by 10 per cent for those estates leaving 10 per cent or more to charity, from a rate of 40 per cent to 36 per cent. This will reduce the cost of giving to charity through bequests. The relief is designed so that the benefit of the tax saving is reflected in the bequests received by charities and not in payments to other beneficiaries;
  • increasing the Gift Aid benefit limit from £500 to £2,500 from April 2011 to enable charities to give ‘thank you’ gifts, to recognise the generosity of significant donors; and
  • consulting on proposals to encourage donations of pre-eminent works of art or historical objects to the nation in return for a tax reduction.

1.139  Building on the Giving Green Paper,21  this Budget will support the voluntary sector by: t reducing bureaucracy for charities through the introduction of a new system of online filing which will bring Gift Aid into the 21st century; and t introducing a Gift Aid small donations scheme. This will allow charities to claim Gift Aid on up to £5,000 of small donations per year without the need for Gift Aid declarations.

1.140  The Government will also explore how to increase the take up of Payroll Giving, which allows individuals to give through their pay and reduce their income tax bills.

2.116  Inheritance tax: reduced rate for charitable donations – From 6 April 2012, the Government will introduce a reduced rate of inheritance tax of 36 per cent for estates leaving 10 per cent or more to charity. (Finance Bill 2012) (50)

2.117  Gifts of works of art – The Government will consult in 2011 on proposals to encourage donations of pre-eminent works of art or historical objects to the nation in return for a tax reduction.

2.118  In-year repayments on tax to charities – The Government will legislate an extra statutory concession under which HMRC makes repayments of tax to certain charities without requiring a tax return to be completed. (Finance Bill 2012)

2.119  Changes to the substantial donors rules – In December 2010, the Government published draft clauses to replace the substantial donors to charities legislation. This antiavoidance legislation denies relief where the donor enters into arrangements with the main purpose of obtaining a financial advantage from the charity. The new rules will commence from April 2011. (Finance Bill 2011)

Most of the detail on the interesting announcements for medical research is in the growth strategy

This is split into a quick intro. Chapter 1 outlines the new initiatives in brief and chapter 2 goes into more detail and reports on the findings of the growth review launched in November which identified Healthcare & life sciences as a growth sector. This includes a detailed section on Healthcare & Life Sciences starting on page 91. There’s a box summarising all the action government planning to take on healthcare & life sciences on page 98.

It indicates that the government plans to implement some of the recommendations made by the Academy of Medical Sciences (AMS) in January to improve the regulation of health research in the UK (see this briefing summarising the AMS’s recommendations here) including the establishment of a single Health Research Agency regulating medical research:

healthcare and life sciences will particularly benefit from: the establishment of a new health research regulatory agency to streamline regulation and improve the cost effectiveness of clinical trials; and stripping out regulations that were never meant for the social care market and are preventing market entry and flexible services. In addition, future funding by the National Institute for Health Research (NIHR) to providers of NHS services will be conditional on meeting benchmarks, including a 70 day benchmark to recruit first patients for trials;

and on the revision of the clinical trials directive (background on why this is being revised here) – another AMS recommendation:

Government will seek to influence the Commission to bring forward soundly based proposals to reduce regulatory burdens in the European Clinical Trials Directive;

and the strategy also outlines initiatives to increase the sharing of information about clinical trials, promoting both public access and sharing to boost industry innovation and collaboration.

The strategy also includes plans to make patient data available to use safely and securely for medical research:

The Government will work with the National Information Governance Board and partners in the public and private sectors to publish plans by the autumn for a secure data service that is viable and affordable, and is focussed on linking the data sets which do most to strengthen the international competitiveness of our life sciences research.

And a plan to establish a Cell Therapy Technology & Innovation Centre

There are also measures to help develop a more educated workforce in the UK, and ensure we are developing the skills employers want including:

In the life sciences sector, the Government will work to improve market signalling by bringing companies and educators together, through Cogent, the Sector Skills Council, to ensure that educators provide the skilled individuals the sector needs to grow.

For more detail check out:

Page 22 where they outline what they have already done to support growth in science:

  • protected spending on science and research programmes in the 2010 Spending Review, and increased spending on health-related research;
  • maintained and reformed funding for university-business collaboration through the Higher Education Innovation Fund;
  • introduced the Research Excellence Framework (REF) which will recognise universities’ achievements in terms of impacts from excellent research.  Twenty per cent of the assessment will be based on the social, economic or cultural impacts from excellent university research;
  • provided funding of over £200 million to establish a network of Technology and Innovation Centres, similar to the German Fraunhofer Institutes, and £50 million of funding for the Manufacturing Advisory Service to improve the adoption of innovative processes;

1.37 on page 24 which has the detail on some of the proposals George Osborne outlined in his budget speech intended to drive innovation including R&D tax relief, the £100 million investment in science and the new Health Research Regulatory Agency and measures to help speed the process of conducting clinical trials:

  • increase the rate of the SME R&D tax relief to 200 per cent in 2011 and 225 per cent in 2012, subject to state aid approval. In addition the Government will consult on proposals  to  simplify the scheme to make it easier to use by small firms, and on changes to ensure relief is available when R&D project work is contracted out
  • invest an additional £100m in 2011-12 in science capital development to provide facilities for the commercialisation of research, accommodation for innovative SMEs and new research capabilities. This will be invested in existing campuses and clusters including the Norwich Research Park, Babraham Research Campus in Cambridge, new instruments at the ISIS research centre and development of the International Space Innovation Centre in Oxfordshire.  These new commitments build on the 2010 Spending Review settlement for science and research and underline the Government’s recognition of the contribution of science to economic growth;
  • launch the first Technology and Innovation Centre in high-value manufacturing, which will integrate the activities of a number of existing high performing centres in Rotherham, Coventry, Strathclyde, Sedgefield, Redcar and Bristol;
  • fund nine new university-based Centres for Innovative Manufacturing by 2012;
  • set up a new health research regulatory agency to streamline regulation and improve the cost effectiveness of clinical trials, and make future National Institute for Health Research (NIHR) funding to providers of NHS services conditional on meeting benchmarks, including a 70 day benchmark to recruit first patients for trials; and
  • use government procurement to drive innovation and support innovative SMEs, committing £20 million over the next two years to the Small Business Research Initiative, including £10 million from the Department of Health on specific competitions to address healthcare challenges.

And 26 & 27 summarises the raft of actions the government plans to take to support SMEs, a key component of the life sciences sector.

And this is the summary of actions government plans to take in healthcare & life sciences as laid out in the plan for growth (my notes). The pages before give more detail on how each of these will be achieved.

1 The Government will set up a new health research regulatory agency to streamline regulation and improve the cost effectiveness of clinical trials.  It will make future National Institute for Health Research (NIHR) funding to providers of NHS services conditional on meeting benchmarks, including a 70 day benchmark to recruit first patients for trials.

2 The Government will reduce perceived gold-plating and increase the proportionality of EU Clinical Trials Directive (CTD) and its application.

3 The Government will open up information about clinical trials to enable the public to get involved.

4 The Government will build a consensus on using e-health record data to create a unique position for the UK in health research.

5 The Government will open up information on clinical research to promote collaboration and innovation.

6 The Government will consider opening up prescribing data.

7 The Government will form new Translational Research Partnerships from its £775 million investment in NIHR Biomedical Research Centres and Units. (this is the fund announced a couple of weeks ago by the Department of Health – see my post and the Department of Health press release here)

8 The Government will remove any barriers that limit the further development of geographical clusters, working with industry, local government, universities, NHS and funders.

9 The Government will launch a competition to form a Cell Therapy Technology and Innovation Centre.

10 To ensure educators provide the skilled individuals the sector needs to grow, the Government will, through Cogent, improve market signalling by bringing companies and educators together.

11 The Government will ensure that the Intellectual Property (IP) system supports life sciences businesses.

12 The Government will take forward a range of measures to encourage innovation in NHS procurement.

13 The NHS Chief Executive will provide a report by November 2011, in consultation with industry, academia and other interested parties, on how the adoption and diffusion of innovations can be accelerated across the NHS.  This report will inform the strategic approach to innovation in the reformed NHS.

14 The Government will take forward a package of measures to improve the take up of assisted living technology.

15 The Government will strip out regulations that were never meant for the social care market and are preventing market entry and flexible services.

16 The Government will establish a proactive, entrepreneurial NHS Global to make the most of the NHS brand internationally and to offer support and advice to NHS trusts.

Government plans to continue reviewing this growth strategy throughout the rest of this Parliament to make sure it is working and guide their future action.


Simon Denegri, Chief Executive of AMRC welcomed government’s plans to improve the regulation of health research in the UK:

Medical research charities and patients very much welcome the steps outlined by the Government today to reduce health research regulation and help clinical trials get off the ground more quickly . They are important steps towards ensuring patients will benefit from future innovations in health and that the UK remains a world leader in research.

and check out his blog for more reflections

The Campaign for Science and Engineering has welcomed the announced investment in science Extra cash a boost for science and engineering – but plan for growth still needed tempering this with comparisons with the recent cuts of £1.4 billion in capital spending and the international trend to increase investment into science and research.

Cancer Research UK have blogged about what this means for medical research and them.

Posted in: Policy