Welcome to today’s session of the Business and Trade Select Committee, as we pursue our inquiry into industrial strategy in the United Kingdom. I am absolutely delighted that Steve and Audrey could join us today. Thank you so much for sparing the time to come and talk to us. Audrey, perhaps I could start with you. Could you give us a sense of why your industry needs an industrial strategy?

Life sciences is one of the absolutely key sectors for the UK economy. It contributes almost £40 billion of value to the economy. It is also one where there is a growing global market and the UK has a comparative advantage. If we want to take advantage of that and really compete globally, we need all parts of the ecosystem in the UK to be firing on all cylinders together. That requires an industrial strategy to really join up things such as the fantastic science sector that we have, the thriving biotech sector, the larger companies and the NHS, which is a really key part of our ecosystem when we look at how we power R&D through health data and clinical trials. That is quite an integrated landscape. An industrial strategy can help us make the most of it.

How quickly is the life science industry growing at the moment?

I do not have that to hand, I am afraid.

The Prime Minister has set out quite an ambitious plan for the United Kingdom to become the fastest-growing economy in the G7. Can we achieve that without really rowing in behind the life science industry?

As I said, it is certainly a really key part of that, partly because, in an industrial strategy and a growth strategy, you have to look at where you can win globally. This is one of those sectors where we can win globally. Certainly, at GSK we think that there is absolutely no reason not to be super-ambitious about the contribution that life sciences can make to that economic growth mission. That means being quite targeted behind that. That is what the industrial strategy Green Paper talks about—really focusing on those sectors. We think that is the right approach to achieving that.

Steve Bates, what is your view? Why does the sector need an industrial strategy? Is it not doing perfectly well without one?

The UK biotech sector was started by Margaret Thatcher’s industrial strategy in 1979, with the formation of Celltech, a key company at the time, which grew and provided jobs in Slough. That site has continued for nearly 50 years in terms of developing great jobs and growth there. The intersection of what is done in the public sector and what is done in the private sector is really important for life sciences. As you say, you have to meld the science base from the UK that comes out of universities, not simply that university research but the translational research. You need a regulatory environment that can do that. You need a clinical environment that can do the tests and the clinical trials that are needed to prove many of the products. You also need the financing environment, the entrepreneurial environment and the tax environment to do that. Because that is a complex set of things, you need an industrial strategy that brings that together at a time when other countries, such as China, have made it a core part of their five-year strategy.

We have not really had much of an industrial strategy for the last few years. Has the life science industry not been doing perfectly well without it for a while?

We think that we have been working towards an industrial strategy. Whether that has always been supported by the Government or put in lights by the Government, I am not sure. It is back in fashion now, which is great. It is very important. There have certainly been plans that we have worked to support. From an industrial perspective, we have always sought to bring those together. The epitome of that was the development of the vaccine taskforce during covid, where all of the things that were hidden or had been created in the past decade came together to produce a real impact for society.

What hopes have you got for a new industrial strategy, as promised by the Government’s Green Paper? What difference could that make if the Government were to get it right?

As ever, the nature of subsectors within life sciences that are likely to be developed as a result of developments in science is changing. We see a really big opportunity in the UK in tech bio, which is the intersection between drug development and artificial intelligence. In the same way ChatGPT is changing how you develop language with words or pictures, you can do the same in drug development by bringing those two communities together. Tech bio is a real opportunity for the global players. We have small companies such as Relation Therapeutics, which are at the forefront of that. We think there are opportunities because of new subsectors. The other one is deep biotech. Increasingly, companies are looking at applications in the net zero agenda. You can take engineered biology and use things that have come from that science base in products and packaging. For instance, that might be making stuff out of seaweed-based processes, novel foods and other things. Those are going to be big expansion areas as we transition from oil.

Why can you not just leave these firms to the tender mercies of the marketplace and let them get on with it? Why do you need Government to organise anything?

Our global competitors have Government support. The American system, the European system and the Chinese system massively support their start-up and scale-up companies with tax incentives and science support. If you leave this to the mercies of the market, you are encouraging people into a very unfair system. The Chinese have been very effective at taking some of the best talent they have had globally and reshoring that back into China to develop their biotech companies. They have put capital at risk at large scale. One of the biggest failings we have had in the UK is that we have not backed British science with British cash. We have not been able to get pension money or the financial services community leaning into British innovation. The vast majority of BIA member companies—these are great companies such as Nanopore, Autolus and Prokarium—are funded by American money. We need to have that. If that capital does not support locally, they do not grow to size and scale, and they are at risk of moving as they scale to other markets. You then do not reap the economic benefit of the core that you have started. You start the companies, but the scale-up—this is where you get the real economic benefits, such as the tax revenues, the growth in jobs and the growth in sales—has worryingly been offshored to the States or perhaps to China. We need to make sure that we can grow to scale here. You cannot do that from a small company perspective alone.

It is probably worth adding that, perhaps compared to other UK sectors, the timescale and risk of investment is a fundamental feature of our sector. There is probably a decade at least between making very significant up-front investments and the possibility of a return. It is a sector that is quite unique and has quite a complex relationship with the state. We need the regulator. We have talked about the NHS. If you leave it to the free market, you do not get the maximum benefit to economic growth. That is what we are talking about. We want to go from here to here and to be really ambitious about that contribution.

It is difficult to know exactly what that extra benefit looks like.

If I could give a specific example, it might help to illustrate this. In clinical trials, we have seen a drop-off in activity since about 2017. That brings in £1 billion of income to the NHS a year. If we were to reverse that and recover to 2017 levels, you are talking about £500 million revenue for the NHS. There is a huge benefit to patients in being on those trials and getting access to new treatments they would not otherwise have access to, and a benefit to the economy. There are absolutely some real and, in clinical trials, relatively quick economic growth benefits to be obtained. Q119       Chi Onwurah: Thank you very much, Chair, for inviting me to guest on this session. I am the Chair of the Science, Innovation and Technology Select Committee. The role of the industrial strategy and this sector are key to driving growth. I just wanted to start with Sir John. You were involved in the life science sector deal under Theresa May’s Administration and the sector vision introduced by Boris Johnson’s Government. What criteria would you use to judge the success of the Government’s forthcoming sector plan for the life sciences?

Inward investment is the standard metric in the life sciences sector, which is what we used to mark ourselves in the first life sciences industrial strategy. We brought something like £3.5 billion in; Government investment was about £600 million. It is pretty good leverage. A lot of that inward investment would not have happened without the life sciences strategy. There is also jobs, and there is the competitiveness of our existing homegrown industries, both small and large, which you can measure by the generation of products, overall sales, the number of small companies and the number of small companies with products. There is a set of pretty standard metrics you can use in this space.

What you have just said reflects a wide misconception about life sciences in the UK. One of the really powerful things, which we mention in both our reports, is that life sciences is spread pretty widely around the UK.

If you look at manufacturing, the north-east is by far the most powerful domain for life sciences manufacturing. I am thinking about the whole area up by Redcar and those areas, with companies such as Fujifilm. There is a whole set of really powerful manufacturing capabilities there. They have been amplified in part by contributions by Government to support life sciences manufacturing, which is terrific. Of course, Scotland has a terrific role to play across a number of different domains. The midlands are very powerful in medtech. There is a big medtech cluster around Nottingham, extending across to Birmingham. Of course, the south-east has quite a powerful space around the big universities in London, Oxford and Cambridge. It is not the same—if you go to the north-east, it does not look the same as it does in the south-east—but that should not be our goal. Our goal should be to back the strengths that exist in these domains and to make sure they get appropriate support for growth and development. That is a holistic view to life sciences, which we have always tried to promote.

In each of those domains, we need to think quite hard about the right deployment of Government capital. For example, there is now a large life sciences innovative manufacturing fund. A lot of that has gone to the north-east and Scotland—the north, broadly. We should continue to support that because that is where the skill base is. If you have the talent base there, you are going to expand on that in those domains. We should not be trying to create the south-east triangle in the north-east or north-west. We should play to the strengths of both of those places so that, holistically, as a country, we can operate across all the various domains of life sciences successfully.

There is always a risk that stuff will fall off the edge, but you should be reassured that there has been a lot of attention from OLS and others that have been behind this to try to make sure there is attention paid to all bits of the UK when we try to build this out.

The market in life science companies is fertile. We should enable and support private sector provision and support for entrepreneurial companies to decide where to put money. We have a very vibrant venture capital community, which knows how to deploy its capital. They also know where to sell in the world. To some extent, I am not sure this should be directed entirely by the Government. There should be space for private sector initiative. Within that, it is clear there are areas where the UK does have strength and comparative advantage. A combination of the venture capital community, the scientific community and the Government community can come together and see those comparative advantages. If you look at the development of Isomorphic Labs, that came out of Google DeepMind in London and the work that was done on protein folding. It is now one of the leading companies looking at how you then exploit that. I know big companies such as GSK have deals with companies such as Relation Therapeutics and are looking to pioneer in this space. You can see where these spots are when you get people in a room to discuss it as an ecosystem. That is how we can best prioritise those areas within this. That is how I would get to it. I did see Professor Mazzucato suggesting that we should have mission‑based industrial strategy. I think her view is a misreading of what happened during the covid period. If you look at what the BIA did, it brought together companies that already existed in the ecosystem. They came together to help and support Oxford, which produced something that was scalable for AstraZeneca to take on. That was not delivered by a Government initiative; that was delivered by private sector players coming together to produce the right product. To some degree, private sector players have to help provide the incentive. Of course, global players are viewing the whole scene and will know where they think there is comparative advantage or where they want to put money. Having players such as GSK and AstraZeneca in our ecosystem also enables us to take their advice and guidance, and we can see where they are investing.

I will try to tackle those in turn. I would absolutely agree with Steve on—I am not sure whether “subsectors” is quite the right term—the areas of strength, shall we say, in the UK. I certainly agree on tech bio. We would talk about the transformation of pharmaceutical R&D through the new technologies available, such as AI. I would also highlight genomics, which is a real UK strength based on years of private and public investment. Sir John, you may want to comment on that. If you bring those together with the potential of NHS data, you have something that is potentially globally unique and very powerful. That is certainly an area to focus on. In terms of our involvement in the sector plan, yes, we engage with Government; Government engage with us. Steve, you mentioned the Office for Life Sciences. That is a very expert team that sits across the Department for Science, Innovation and Technology and the Department of Health and Social Care. For us, that is a very important feature of the Government architecture. We appreciate the work of that team in joining up policy. As I say, they have a good understanding of the sector and the issues. Do we have confidence in the areas that the Government are focusing on? Yes. We are hearing the right things about prioritisation, health data, trials and manufacturing. The fund was a good step in the Budget. Yes, I think so. In terms of GSK’s regional pitch, we already invest a great deal here in the UK. It is an important location for us. We have sites from Scotland and the north-west down to the south. There is a strong regional pitch in terms of that manufacturing talent, as well as the strong science base.

There can be a link. We have a joint site at Ware, which is a new product introduction site. That co-location is very important there but not at all of our sites.

Sir John, perhaps I could start with you. I am interested to hear your thoughts on what has happened over the last five years. We left the EU. The European Medicines Agency shifted from London to Amsterdam. What impact has that had on UK life sciences? How has the sector been performing since we left?

It has had a drag on the sector generally. When the EMA was in London, we had the dominant set of expertise in that space and we could respond probably more effectively to UK regulatory issues than others could.

The UK had more influence on regulatory issues.

We did, yes, partly because of the people in the agency. Since it went to Amsterdam, we have lost that traction. I and others felt that that would not necessarily be disadvantageous because a regulatory agency that is freed up to be more agile, thoughtful and creative about novel technologies and how you regulate them could be a massive advantage to the UK. Of course, that has been positioned as one of the arguments for freeing up the MHRA. That has not really played out yet. The MHRA has had massive downsizing. They have been struggling to keep up with the demand on their services. There is an interesting question now as to whether, with new leadership, they can pick this up and do a better job. There is a whole set of issues in regulation that no regulator globally has dealt with. For example, we are now in a world of prevention. No one really knows how to do a primary prevention trial and get it approved by a regulator. In n-of-1 studies for cancer vaccines, every vaccine you use is different to the last one. They need to be approved. They need somebody clever to say, “Okay, we will accept this, but we will not accept that.” These are new regulatory issues. We did not have these things to test up to now, and now we do. Having a regulator that is on the front foot and thinking about this could attract a lot of activity to the UK and could really drive the industry. I am optimistic, first, that the MHRA will get the necessary support it needs from Government, and, secondly, that its new leadership will take it to another level. It is an important question.

Mr Bates and Ms Yvernault, I am keen to hear whether you have had any engagement from the new Government about their determination to reset their relationship with Europe, what the priorities are and how they have engaged with you. Do you have any comments?

As GSK, we engage with the Department for Business and Trade, which has consulted the sector on that topic. They have a fairly decent understanding of some of the areas that could benefit from closer co-operation. To give an example, one that is a bit of an overhang issue would be retesting the batches that come out of UK factories for supply to Europe. We have to retest them over on the European side. It would be very beneficial to have mutual recognition across that. That feels very achievable and a win-win for both sides. You are also helping to smooth out supply to the EU. That would be an example.

Our main beef has been that having the UK back in Horizon is helpful from a science perspective, but science does not stop when you become an economic actor. Innovation is an important part of that. At the moment, the deal is that we are in Horizon Europe, but we are not in the innovation part of it. It is very hard to translate some of that joint science into companies that can grow in the UK. We do not have access to the European Investment Bank. There is not closeness there, which would make sense, given you are doing joint scientific projects to develop companies and growth together. There are opportunities there. There are also strong investment communities such as Sofinnova, which is European-based but has an office in London. There are opportunities for closer collaboration there, which would drive economic benefit both in Europe and the UK from some of those joint science projects.

How important is trade strategy? Many of these companies, including your company, GSK, have a huge global footprint. How vital is trade strategy to this sector plan?

Life science exports from the UK are about £24 billion. GSK is £5.5 billion of that. For scale, that is roughly equal to Scotch whisky exports in their entirety. That gives you a sense of the value that there is. It is very important for the trade strategy to work very closely alongside the sector plan. One of the things that is important there is supporting companies in addressing market access barriers around the world. It is not necessarily all about FTAs, but FTAs are an important part of trying to improve those conditions for companies around the world. We would also encourage the Government to embed pretty high IP standards in those deals. Along with some other sectors I am sure you will be looking at, we are a knowledge-based sector. The UK is really strong in that. If you are going to capture the full economic value of supporting a sector like ours, it needs to follow through in protecting the value of those exports. It is very important that all of that works alongside the sector plan. We also need to make sure we are joined up with the NHS plan. You can see how important it is for all these Departments to be working together towards the same goal.

From our perspective, we have sometimes found that the Government have approached trade policy as a horizontal in the way they talk about it across sectors, whereas in fact we think there are some very important sector-specific issues here. I would look at things such as whether we could go further with partners that are strong on IP. I am not sure whether that has been given the prioritisation or prominence in our talks with Switzerland that we would see as a benefit. As you say, the thinking about this is about trading off sectors against each other in a horizontal way rather than thinking, “If we are going to support these priority sectors, what do they really need?” That would make us think about how we can do that in a vertical way. The horizontal approach has not been as engaged as I would have liked.

Finally, Sir John, can I ask you about the NHS and the importance of that? It was referenced a couple of times. How vital is the presence of the NHS database to attracting inward investment into this sector?

The NHS, broadly across the UK, has certainly some of the best patient data and legacy data going back 15 or 20 years that is digitised. Although it is true to say that not all hospitals yet have digital systems, most. There are only about 25 or 30 that do not, and they are about to fill that in. We will be an entirely digitised system soon. That is a massive advantage, but it is somewhat incoherent in the sense that bits are not hooked up to each other. The reason I say that is that during the covid pandemic, the introduction of a COPI notice—this is public health legislation that says, “We are opening up all the data because this is a public health emergency”—demonstrated how terrific NHS data was. We had GP data hooked up to hospital data, testing data and vaccine data. Everyone in the world who wanted to know what was going on in the pandemic came to the UK for the UK data. It was unbelievable. Just like an elastic band when you let go of one end, ping, we are now right back to where we were before the COPI notice.

Why is that?

Somebody did not have the nerve to say, “Guys, this is pretty good.” To be clear, the sky did not fall when we let people communicate with each other about data. For whatever reason, we are back to the beginning. In the UK today, consented patient data, where the patient says, “I would like my data to be used for this,” is not accessible to people who want to use it for that purpose. There is a problem. If you ask me—I have a list of asks for the strategy—that would immediately open up enormous opportunities for better understanding of disease, a better understanding of the best treatments and a better understanding of how we get clinical trials at pace. It is an enormous asset that has massive value to patients and the UK economy. We are completely walking by it at the moment.

Sir John, you are suggesting that if we were to open that back up and extend the elastic band, to use your analogy, we could get rapid growth out of this sector.

Yes, massive growth. I think that is true. What do you guys think? I am not making this up.

There are lots of businesses that will grow by using and engaging with that data. That is how you grow a health data business. There are lots of opportunities. There are lots of people who want to do that, and lots of people who invest in businesses that can grow who would do that in the UK, if we had access to it. That would be particularly true if we gave priority to UK SMEs, which I am not sure we have always done in the architecture of how we have built those assets.

This is to all three of you. We have touched on a few points but, in summary, how competitive is the UK’s business environment? What is holding back growth and investment? I will start with GSK.

We have a baseline business environment that is pretty competitive. Business tax is about where it needs to be. I would not want to see it get worse, but it is about where it needs to be. We have good skills. We have a good science base. There is a lot going for us. The thing to take away from today is that there is just so much more competition globally. That has really accelerated since the pandemic. Lots of countries have seen that it is really powerful to have a life sciences sector. They are being entrepreneurial—that would be the word—about attracting that investment. Yes, we are competitive, but if we want to maximise growth, if we are targeting that fastest-in-the-G7 level, we need to do more to maximise that growth. In effect, the more we put in, the more we will get. I would start with the end in mind. If the Government want that maximum growth, let us do even more to be the best that we can be.

Where is that competition coming from geographically?

It is coming from lots of places. France has really stepped up under President Macron. Ireland has always been a strong competitor. Singapore is another. The US, of course, is an enormous market and a significant science funder. I am sure I am forgetting several, frankly. It has really hotted up. On trials, Spain and Australia have made some targeted efforts. We are seeing a competitive landscape. We have talked about health data and clinical trials. Manufacturing is another area where we could maximise growth.

Mr Bates, what do you think the key barriers are to growth in the sector?

The UK is doing pretty well in the sense that we are the third global cluster for life science small and medium-sized enterprises. As Audrey says, there are people who are trying to eat our lunch with specific targeted policies that peel off certain elements of our success. R&D tax credits have been a central part of the support for UK SMEs, as has the work of Innovate UK, both of which are really important. There are schemes such as the Biomedical Catalyst that are competitive and hard to get. R&D tax credits have been focused, which is the right thing to do, but that also means that the process to get them is hard. We see other countries bringing in very aggressive R&D tax credit regimes aiming at certain types of work, particularly around clinical trials in Australia. We have to be on our mark for that. The policies in Denmark and certain parts of Belgium are very clever in how they put together a skills-based mix with a fiscal wrapper. In industrial strategy, we should always have a look and see what other people are doing, because businesses make decisions in the light of those things. Singapore has always been a major player, putting a large cheque down for certain types of manufacturing place. I have talked about the importance of the Chinese “sea turtles” returning home. We also see policies such as those around entrepreneurs and individuals. That seems to be working particularly in Italy at the moment. There may be opportunities for the UK to think about this. If UK nationals have had a successful business in Boston, Massachusetts, how do we bring them back here? What targeted incentives will do that? My view on this is that the UK is pretty good. We have the English language, the rule of law and an existing ecosystem of people to hire. If you start a company, you can pretty much find your next 10 or 20 people. That is a competitive strength because we have people who have been around the block a couple of times. That is really helpful. We have to be mindful of where the competition is at. As other territories have significant clusters, we need to make sure our cluster remains even further ahead.

I have a couple of quick points. First, you can look at the competition in the life science space internationally as being in part related to the amount of Government support that different countries provide. America is right at the top. They get massive amounts of Government input. If you look at the budget of the NIH, which is the driver for many of the discoveries in the pharmaceutical industry, it is massive. We are about to see an experiment where that may change. It will be interesting to see what will happen if that does change, in terms of the success of the industry in those settings. Steve has listed the other countries that do well—I will not list them—but they all have industrial strategies. In fact, most of them have been on the phone to me to talk about our industrial strategy, and then they wrote their own. Sweden, Denmark, Canada, Singapore and Japan have all cribbed our industrial strategy. We are okay, but we have to keep running quite fast to stay ahead. Can I suggest one other thing, though? Steve alluded to this a while ago. We have a really big problem scaling our small companies into big companies. The absence of scaling capital is a massive drag on our economic growth opportunities. There have been a variety of ideas suggested and none of them really has delivered. There is a very big problem, which is that the majority of the UK’s potential working capital in pension schemes is tied up in Government gilts. Government gilts help the Government, but they do not help anybody else. I can tell you that for sure. That absence—not having trillions of pounds of resource in the growing economy—is a really big problem for our sector, but it is also a big problem for all kinds of other bits of the British economy. If I had a magic wand and I could fix one thing, I would fix that problem. All you guys could go home; I could go home. The deal would be done, and we would all be fine. I am trying not to be flippant.

If you are managing those gilt funds, however, the problem is you do not see a portfolio of people knocking on your door asking for the money. Why are companies not going out asking for investment finance?

A lot of that money is in Government gilts, in treasuries. There is no way to get access to that money.

A lot of companies are going out—

The money is in gilts for a reason. It is seen as a safe haven, and you need a stable return for pension savers.

This is a massive misconception. Good returns come from broad asset allocation, deep capital and long investment horizons.

We will put that question to the panellist from TheCityUK in a minute or two.

You should do that. They have not done a great job on this, let me tell you.

We will let you have it out in the corridor.

They do see the opportunity in life sciences. Of course, UK life science companies are doing fantastically at attracting capital from around the world. That is why 95% of it is coming from ex-UK players. We have fantastic entrepreneurs who are doing really well and competing with the best out of the US and China for that global capital pool. It is just that what comes when you have attracted that global capital is the attraction away from the UK market.

I am just looking at a couple of charts from the Office for Life Sciences. On pharma exports from 2013 to 2023, we were No. 6, and we are now No. 10. Ireland had smaller exports and now has triple our exports. On foreign direct investment, we were No. 6, and we are now No. 8. We are bouncing along below £1 billion most years. I get the feeling somebody is eating our lunch. It does not make me happy and it is not good enough. There are multiple reasons for that, but one of the ones I am thinking about is the customs union and the single market. If we were inside the customs union and the single market—I am just talking economics here—what would it do for our life sciences sector? Would it be good, bad or indifferent? Would it make any difference or would it be a big help?

To be honest, we have adapted to the new status quo and we are not really looking back at that, as GSK. We are still a large investor in the UK. I am not an economist. I am not sure I am best placed to—

That is not my question. If we did go back today, would it be positive, negative or make no difference to your business in the UK?

Access to the EU market is a good thing. We would have to adapt back the other way. It would not be our top priority, if we were looking to unlock investment.

Therefore, “no difference” is the answer. Would it be positive or negative? You can say, “I do not want to answer the question.”

I am not sure I can speculate, honestly.

The US makes up 53% of the global market in pharmaceuticals; the EU makes up 22.7%. That is the market share. Many of these manufacturing sites are very long-term investments. If you were to change the rules, it is not as if you would move a factory overnight. The reason why Ireland had a competitive advantage for a period of time when we were in the EU was that they had tax rates, skills packages and regional funds that were particular and specific. If I am going to speculate, if the UK were back in, the question would be, “What are the tax rates? What is the regional assistance position? What is the skills position? In which products or services are new decisions likely to be made in the next year?” It is a bit more like a car plant or a gigafactory. Some of those figures are reliant on a few specific products. If you look at AstraZeneca in Macclesfield, if you take one product out of that thing, you move UK GDP. In Denmark’s figures, you can look at Ozempic and Novo Nordisk. These figures can be really dependent on some very specific things. You can move those economics. In my view, we need to make sure that, when we are doing antibody-drug conjugates with radionucleotides, the UK has the company that absolutely knocks it out of the park for the world. It may not be a GSK product today, but it may become a GSK product. That is what I would look to do. If you had that, you might—

Steve, would it help, would it not help or no answer? I just want to get to the bottom of that.

It would help if you had all of those other factors helping as well.

It does not make any difference.

My second question is for you, Sir John. You are busy with Genomics England, UK Biobank and Our Future Health. Are there any points from those that you would like to pull out and educate us about that would help the life sciences sector?

All three of them have been really interesting opportunities that are unique to the UK because we have the NHS. We have a terrific talent base of people who can do these things at scale, and we have had interaction with industry, which has allowed all three of those things to happen at scale. UK Biobank, with 500,000 people in it and a long follow-up time, is the place to correlate the different bits that we have, such as proteins, genetics or imaging, to understand disease better. We started that in 2002. It has been terrific. It continues to be a great success. Genomics England was the first effort to try to apply genetics to clinical samples in a clinical setting. No one else in the world had done that. We already had a very strong DNA sequencing industry base. That has expanded dramatically since then. It has allowed us to implement a lot of genetics in a clinical setting. Most other places just do it in a research setting. This has allowed us to do it in that space. Our Future Health is the one that I will highlight. I have just come from a board meeting at OFH. This came out of the first life sciences strategy. It came out of a meeting that I had in a room not dissimilar to this with 30 industry people. I said to them, “Where is the world going to be 20 years from now?” This was in 2016 or 2017. “Where should we develop capacity that will allow you to do the job better to get to that place?” They said, “We think prevention and early diagnosis of disease is going to be the game.” Nobody has ever collected a whole population of largely well people down to the age of 18 so we can monitor and track the progression of diseases, most of which start in your 20s and 30s, to understand how you intervene in those people to change the way we diagnose disease early and flatten that morbidity curve. As you know, very close to 1.5 million people have been recruited to that study. We have 2.3 million people consented and somewhere in the process. We are headed for 3 million. We hope to get to 5 million. It is the world’s biggest cohort. It is providing really interesting opportunities for people to explore the concepts of prevention and early diagnosis. It was created. There was no market there, and it has started to create a really big market. We should be really proud of those things because that is exactly the kind of thing that can be done through an industrial strategy with the involvement of Government, industry and our really powerful academic community. I hope that is helpful.

Thank you very much. It sounds like we have a lot of the assets in place, but I want to just set up our punch-up with TheCityUK and those from the financial services industry in slightly sharper terms. Sarah Edwards, do you want to just talk about some of the questions that we have about mobilising capital?

The Committee has heard how challenging it can be to access finance. I wonder whether I could start with you, Mr Bates, and ask what challenges start-ups face in accessing finance and the ability to scale up. We talked earlier about there being a medtech ecosystem in the west midlands. Companies want to know how they can do those things, but we know it is not easy. Could you speak to your experience about what those challenges are specifically for life sciences?

There are challenges at all stages of the journey in starting a company. The UK is not a bad place to start a company. There are some good schemes and some great accelerators that can get you going. In a sense, raising money should be hard. We have schemes for angels, such as EIS, VCT and SEIS at an early stage. Because of the quantum of capital that you need in life sciences, you have to get to some pretty big numbers. Sir John, you have used the example that you need to invest £1 billion to make £20 billion. You have to think about a series of investors that can go to that level, £1 billion, before they make any money, to reach global company size. Start-up, you can do, but you need people who can come back in and go the next round. The British Business Bank is having a crack at ensuring we have a venture capital community that can do that, but that venture capital community is small and it cannot do everything. It is also not as geographically diverse as befits the sector. We have some good players in the north and a couple in the midlands, but the majority are based in London. People go looking for money where there is money. The big problem is when you want to scale up and compete with the Americans. This is the £10 million or £50 million B, C, D rounds and onwards. That is where we have not been able, as yet, to develop enough of a community that can scale those companies. We are not going to do thousands of those a year but, if we do a few of these, they are the ones that will take the opportunity, from Our Future Health and others, and in 20 years’ time will be world leaders. That is what we are trying to do: have one or two world leaders at scale. It is about understanding that continuum. Particularly, it is the ability to take risk and go again at that scale-up point. We have some companies that go to NASDAQ, the American exchange, and effectively compete there. At this stage, there is no public market in London that supports that scale-up point. That is where I would say the biggest problem is.

Just to clarify, Mr Bates, that is £50 million to £500 million.

Yes—£50 million to £200 million is where I would put it.

That leads me into one of my other questions. I wonder, Audrey, whether I could come to you. We have just heard the ballpark figure of £500 million. The Government have allocated £520 million—you can have an extra £20 million—to support manufacturing in the life sciences sector over the course of the Parliament. Is that enough? If not, why not? What else might you be looking for?

It is a very good start, particularly considering that there are obviously choices to be made in the Treasury. If we compare with France, President Macron put in €1.5 billion. It is not quite there, but it is in the ballpark; it is not bad. To strengthen that offer for manufacturing, we could do more around process as well. We need to be giving a good proportion of the funding for a manufacturing plant up front to de-risk that, even for large companies. You might be surprised, but even for large companies these are significant capital investments to make and there are geographical choices. That is one point. We also need to make decisions relatively swiftly and give companies certainty that they will get that support early enough that the business case inside the company is made and you can go ahead and make that decision with some certainty. That is important. I would also suggest looking at the criteria. Other countries are pretty good at recognising that, in advanced manufacturing, it is more about the capital investment than necessarily lots and lots of jobs. There are very good-quality jobs, but the number is not so significant. We also need to do a better job of looking at the big picture for a site. It is not necessarily about, “This year we are investing this much in this particular site,” but the story of that site. Are you upgrading the technologies there so it is viable for the next 40 years? Is that linked to another investment that is coming in a couple of years’ time? We sometimes look at each individual run, rather than looking more holistically at maintaining and growing a site. Sometimes there is quite a big focus on bringing in new investment, but we need all of those things.

I have one last question, to Sir John. You have talked about pensions as potentially unlocking some money, and you have given us your thoughts on that. What other steps might the Government be able to take to mobilise capital and crowd in investment?

Pensions are an obvious place to go, because there is a very large quantum of money there. It is really important to remember that the Government provide a massive tax benefit for the pension money that is sitting there. It is not unreasonable to ask pension trustees and pension funds to acknowledge that as they are distributing funds. I am not saying the money should all come to biotech—do not get me wrong; that would be a bad idea—but there are lots of places where people can earn significant returns on money, if they invest it in the way I have described. In fact, you can look at any major endowment management that has a long-time horizon and the depth of capital that allows them to distribute it across multiple asset classes. They routinely return 8%, 10% or 12% every year. Compare that to what you get from gilts. This is not just about getting the country growing; it is about giving people decent pensions. Everybody has to be worried about where people are going to end up in the modern world when they cash their pensions at the age of 65. It is not going to be pretty. In the end, it will be the Government that end up bailing them out. There needs to be a more thoughtful approach to how we use our capital assets to grow them and grow the economy along with them.

We are now going to turn to one of our favourite themes, which is the lack of joined-up government.

Finally, we are keen to look at the governance and oversight of the industrial strategy and, frankly, how we make Government function alongside industry. Perhaps I will start with you, Sir John. You mentioned in previous answers that you speak to other countries. What do you say to them when you are talking about the life sciences sector deal, the problems you have encountered and the opportunities and challenges that are there?

Most recently, I had the opportunity to talk to the Canadians. The interesting thing is that the Canadians have a single-payer healthcare system, as we do. They put a lot of money in it. It is about the same percentage of their total Government spend. I was in the room with some leading Canadians, and I said, “What are your expectations about your health system contributing to economic growth?” They looked at me and went, “What is he talking about? Of course it is not going to contribute.” I said, “Have you thought about this, folks? If the taxpayer is putting in a very large amount of money to deliver healthcare, would you not expect that there should be some effort to make sure that that helps float an economic agenda?” It is quite interesting. Not everybody has that approach. The NHS gets the economic growth agenda and the life sciences strategy, and it has been helpful in many settings. Has it been perfect? It absolutely has not been perfect, but it has been okay. Part of the reason we have been successful—this goes right back to Peter Mandelson and Paul Drayson—was the creation of the Office for Life Sciences, which is a trans-departmental, cross-departmental civil service entity, which has had various names, that bridges business with the health system. That is not always easy, but in my time it has done an amazing job of stitching stuff together and getting people to look at problems together across Government. As you know, getting Government Departments to work together on anything is not an easy job, so it deserves some kind of medal for that, because it has been really impressive. No one else has that. People often ask me a lot about that, because they have often thought about how they would do these things, but no one has managed to match that. It is a really important piece of the puzzle.

Why do we not focus on that piece, then? I will go to Mr Bates first. What Government Departments have you spoken to about the life science sector plan? Are they all on the same page?

I would agree with Sir John. The Office for Life Sciences is doing a good job in pulling the various pieces together. We have seen changes to Government Departments, in the establishment of DSIT and how that works with DBT. Nothing is perfect, but the Life Sciences Council, which Sir John chairs, is a long-standing body that the key players—large, academic and small—have bought into. That has also been an important part of the architecture. It is one of the structures that other sectors are looking at. Deep sectoral knowledge, longevity and a secretariat in the OLS that can drive it have been important parts of pulling this together. We have spoken to most of the Departments all across the UK.

What has been your experience, Ms Yvernault, of speaking to the UK Government? When you speak to different Departments, do you get different answers? Can you navigate that?

Not to bore you with exactly the same answer, I would endorse what has been said. I would also really praise the close working relationship between the two Secretaries of State across DSIT and DHSC. They are very closely aligned on their vision for the sector. Correctly, the Health Secretary has stated that the Department of Health is an economy-driving Department and has taken Secretary of State-level responsibility for life sciences. Those are all really welcome statements and intentions. I completely agree with Sir John about the role of life sciences and health on the economy. I would just add that we need to think about the ageing population and how we have to make the most of every worker we have. I am sure the Committee will be interested in skills, but we have to maintain the health of that workforce. In my eyes, there is a triple benefit here.

That is a remarkable note to conclude on, is it not? All Departments are pulling together in the same direction and there is no dissonance between Departments and regulators. Is that seriously what you are inviting us to believe, Mr Bates?

They have done a good job in using the Office for Life Sciences as a way of co-ordinating that. It is hard. We see a difference between the positions in Northern Ireland and the rest of Great Britain with regard to regulation, which is hard for business to navigate. I have talked about the challenge of seeing trade in a non-sectoral session. In all sectors, I hope people would look at the Office for Life Sciences and the Life Sciences Council as a way in which to do these things. That is perhaps why we have a leading, world-class sector in the UK.

It is potentially a model for other sectors. Thank you very much indeed. That has been extremely helpful. The Committee is very grateful to you for your time and your evidence. That concludes this panel.