In substance and timing, AstraZeneca’s decision to cancel a planned expansion of its flu vaccine facility at Speke is a blow to the government’s recent zeal for growth.
Instead of injecting £450m into the plant on Merseyside, a dispute with the new administration over the amount of government support has seen the project pulled, accompanied by a sharp rebuke.
“Several factors have influenced this decision including the timing and reduction of the final offer compared to the previous government’s proposal,” said the company, painting Labour as vaccine sceptics by comparison to their Conservative predecessors.
Coming two days after Rachel Reeves delivered a speech prioritising growth, including in the life sciences, it is a jab that might have made ministers and officials feel faint.
The company is not disclosing figures but it is understood the deal agreed with the last Conservative chancellor Jeremy Hunt last March, and confirmed in a Treasury press release, could have seen up to £90m of state support go into the project.
In July, the new government told AstraZeneca it wanted to review the deal but, after months of delay, the drugs giant has received a lower offer that it clearly does not believe makes sense.
It is a sign of its frustration felt within Britain’s largest company that it has chosen to publicly contrast the new government with the last.
Rachel Reeves. Pic: PA
AstraZeneca draws just 2% of its revenue from its home market, and can point to major recent investments in Canada, the US and Singapore that will not be mirrored here.
In a statement the Treasury was unapologetic, saying “a change in the make-up of the investment” proposed by AZ led it to reduce the grant on offer, and that the deal failed to “demonstrate value for the taxpayer”.
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AstraZeneca is the second multinational to blame the new government for a withdrawal of investment.
Two months ago Vauxhall owner Stellantis signalled it would close its Luton van plant and shift manufacturing to Ellesmere Port, blaming net zero targets.
In that case, ministers insisted with some justification that deploying state support to prolong the life of an uncompetitive facility did not make sense.
They may have strong arguments for denying AstraZeneca’s demands too, but they may be harder to sustain given the sector – high-growth life sciences; the company – Britain’s largest by market value; and the economic climate – sceptical, and potentially contagious.
