Rachel Reeves has suffered a humiliating blow to her hopes win back business confidence after AstraZeneca has cancelled a planned £450 million investment in a vaccine manufacturing plant in Merseyside.
The announcement provided a harsh reality check at the end of a week where the chancellor had hoped to use a major speech to get her economic growth agenda back on track.
Already, her attempts to woo major companies again with pledges of major investments including the expansion of Heathrow and a new Silicon Valley between Oxford and Cambridge had fallen flat.
Praise for her speech from business leaders had not been met with actions as Lloyds Bank, Tesco, Sainsbury’s and two major universities announced thousands of job losses.
While the row with AstraZeneca appeared to be around previously promised subsidies, there is deep disquiet among business leaders about the hike in national insurance contributions dubbed the “jobs tax” and a massive rollout of employment rights with a repeal of restrictions on industrial action.
Tory shadow business secretary Andrew Griffith said: “There’s no vaccine for incompetence. In the same week they talked about growth, Labour seem to have fumbled a deal with AstraZeneca, one of the UK’s largest companies and central to the critical Life Sciences sector.
"This is yet another sign that their tax rises and changes to employment law have made the UK an unattractive place to invest.
"When will Labour learn that only businesses can creates growth and jobs in the economy?”
The major pharmaceutical company claimed Labour had failed to match the previous tory government’s offer of support.
The decision reverses an announcement made by then-chancellor Jeremy Hunt at last year’s March budget that would have seen the pharmaceutical company expand its existing facility in Speke.
At the time, the Conservative government said the investment would both boost the UK’s life sciences sector and improve public health protection and pandemic preparedness.
Confirming the reversal on Friday, a spokesperson for AstraZeneca said: “Following discussions with the current Government, we are no longer pursuing our planned investment in Speke.
“Several factors have influenced this decision including the timing and reduction of the final offer compared to the previous government’s proposal.”
The existing facility will continue to operate and no jobs are at risk.
The decision comes as a blow to the Government following a week in which Chancellor Rachel Reeves sought to stress its commitment to growing the economy and making Britain more attractive to international investors.
It also follows warnings by former health secretary Matt Hancock that the UK needed to improve its own vaccine manufacturing capability as a “critical” part of preparing for a future pandemic.
Mr Hancock told the Covid Inquiry, earlier in January, that Britain’s vaccine manufacturing capacity was “weak”, adding: “having that manufacture and fill and finish onshore, physically within the UK, is critical in the way that it simply isn’t in normal times”.
A government spokesperson said a "change in the make-up of the investment" proposed by AstraZeneca had "led to a reduced Government grant offer being put forward".
The spokesperson added: "All Government grant funding has to demonstrate value for the taxpayer and unfortunately, despite extensive work from Government officials, it has not been possible to achieve a solution.
"AstraZeneca remains closely engaged with the Government's work to develop our new industrial strategy, and more broadly we continue to have a thriving life sciences sector, worth £108 billion to the economy and providing over 300,000 highly skilled jobs across the country."
