Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it’s investigating the financials of Elon Musk’s pro-Trump PAC or producing our latest documentary, ‘The A Word’, which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.
In May 2024, plans were cheerfully announced for a £450m facility to be built in Speke, Liverpool, where the pharmaceutical company AstraZeneca would be manufacturing vaccines.
Last week, that deal was officially confirmed as off the table – a massive blow to Rachel Reeves and the Labour government’s pursuit of growth. The collapse has left questions on why it fell through despite an apparent agreement on all sides.
“Several factors have influenced this decision, including the timing and reduction of the final offer compared to the previous government’s proposal,” read a statement by AstraZeneca. “There’s no vaccine for incompetence,” offered Tory shadow business secretary Andrew Griffith, saying Labour had “fumbled” the deal.
From the current government, it’s again a different explanation.
Labour’s minister for science, innovation and technology, Chris Bryant, told the House of Commons there was “a significant change in the […] proposed investment [by AstraZeneca], resulting in a smaller level of research and development being conducted in the UK”.
He added: “That change in AstraZeneca’s investment resulted in a corresponding change in government support.”
What happened and what’s next for AstraZeneca in the UK, if not expansion on Merseyside, are the lingering questions.
Firstly, some context. AstraZeneca, a pharma and biotechnology business, is the biggest company listed on the London Stock Exchange (LSE) by market capitalisation.
With its market cap at over £180bn, it’s a massive organisation in UK terms – bigger than BP, National Grid and Barclays combined. As the government and LSE have been coming under pressure for exits from the national stock market too of late, both of those sides could have done with continued good news regarding the stock exchange’s biggest constituent.
So too Rachel Reeves and the government over growth plans, particularly following downgraded economic forecasts.
And with this deal having been initially arranged under Conservative leadership, there’s obviously scope for further blame-game comments rather than firm reasonings being offered.
At the heart of the deal for AstraZeneca’s new facility was a £90m outlay in grants and aid, announced by Jeremy Hunt. The Financial Times reported this was comprised of £70m in grants to develop an existing AstraZeneca facility at the same location, plus £20m in research and development support from the UK Health Security Agency.
However, government sources have told The Independent that when they came into power, they could find nothing in writing on the £90m pledge by Tory ministers.
While Sir Keir Starmer’s party initially put forward only £40m of public money available for the deal, it was eventually raised to £78m – but AstraZeneca, claiming reasons beyond the funding not matching that of the previous government, rejected and cancelled the deal.
Mr Bryant’s comments in the House of Commons therefore sought to explain that £12m gap, stating that the pharma company was reducing its investment in UK-based research and development from £150m to £90m, and so public money was reduced accordingly.
AstraZeneca did not comment on a question put to them around on the numbers but industry insiders have told The Independent that the company did not at any point disclose the breakdown of their planned investment, which involved product manufacturing and facilities as well as research. It is understood that a total figure of £450m investment was required for the facility.
There is no suggestion that existing jobs at Speke are under threat as a result of the deal for a new hub falling through.
Along with the £12m gap in government funding offers – equivalent to just over 2.5 per cent of the entire £450m deal – AstraZeneca cited “timing” as another reason for rejecting the deal.
Comments from chief executive Pascal Soriot explained there was “zero link” between a recent decision to reject breast cancer drug Enhertu in England – it is available in Scotland – and a breakdown in Speke negotiations. Mr Soriot did acknowledge that drug pricing clawback tax discouraged investment, but noted it was also “absolutely separate from Speke”.
Shadow chancellor Mel Stride told The Independent: “The collapse of this deal shows loud and clear that Labour cannot be trusted to deliver growth in this country. To hear that hundreds of millions of pounds of investment has been lost because the government’s total inability to negotiate is deeply troubling – and just goes to show that Keir Starmer and Rachel Reeves’ short term economics is holding back this country’s long term prospects.”
“In the same week they talked about growth, Labour seem to have fumbled a deal with one of the UK’s largest companies and [one] central to the critical Life Sciences sector,” added Mr Griffith. “This is yet another sign that their tax rises and changes to employment law have made the UK an unattractive place to invest.”
Liberal Democrat Treasury spokesperson Daisy Cooper said: “Investment like this is vital to securing the growth needed to rebuild our public services and create good quality jobs. To see it thrown away in this way is infuriating.”
There has been suggestion India or Philadelphia could now be locations for investment in a new hub. AstraZeneca have not stated plans for an alternative. An FT report meanwhile said that vaccines were “off strategy” for AstraZeneca, suggesting “figures on both sides of the negotiations have questioned how committed” the company were to the project.
Mr Soriot said on Thursday that there was “no tension, no issue” with the government after the decision. “We’re all very disappointed but that’s business life,” he said.
