Keir Starmer and Rachel Reeves have been left with egg on their face once again, after yet another fresh blow was delivered to Labour’s ‘growth agenda’.
On 31 January, just hours after the chancellor praised AstraZeneca as one of Britain’s “great companies” in a speech about boosting growth, the pharmaceutical giant shocked the government with an unexpected announcement: it was scrapping its plans to build a £450 million vaccine plant in Speke, near Liverpool.
“Hissy fit”
To cut a long story short, AstraZeneca had the red carpet rolled out for them by the Conservative government back in 2023. Former Tory chancellor Jeremy Hunt had offered the bosses £90 million of public money to invest £450 million in the Speke factory.
This public ‘subsidy’ – which looks suspiciously like bribery – came despite the fact that AstraZeneca is Britain’s most highly-valued company, turning over £6.6 billion in profits in 2023, and likely even more last year. They clearly aren’t short on cash.
The Tory’s calamitous defeat in last year’s general election put this deal on hold. Enter Rachel Reeves, setting out on an impossible mission to slash public spending and grow the economy at the same time.
Despite all their yapping about going “further and faster to kick start the economy”, Labour curiously lowered the government’s funding offer to £40 million, souring a once sweetened deal.
This “bean counting” sent senior figures at AstraZeneca into a “hissy fit”, according to one official. The company’s negotiators, like extorting mafiosi, threatened to up sticks and move their planned factory to the USA.
You can just imagine the panic-stricken faces as Treasury staff scrambled to save the deal. In the end, Reeves and her team offered the company a revised figure of £78 million, almost the same amount that was initially offered.
But it was ‘too little, too late’ for our Big Pharma robber barons. Talk about shooting yourself in the foot!
There is more to this sordid tale than a measly £12 million, which is chump change to the company’s bosses and shareholders.
Despite claiming that this had nothing to do with their withdrawal, the AstraZeneca bosses were reportedly furious that the NHS spending watchdog had rejected the pharma firm’s breast cancer drug, Enhertu, due to its extortionate price.
Alongside this, the government’s ‘clawback tax’ on pharmaceutical companies was higher than expected last year, which cut into AstraZeneca’s profits. Labour’s national insurance hike and their workers’ rights bill – even in its emasculated form – no doubt contributed further to the company’s decision.
Caught between a stagnant, second-rate economy and Labour’s miserly penny-pinching, and with the prospect of much more attractive markets for investment elsewhere, the AstraZeneca bosses have voted with their feet…and their cash.
Britain can’t compete
British capitalism has few things to boast about. But one of its last remaining graces was thought to be pharmaceuticals and life sciences research, where Britain retains a small competitive advantage.
But even this is not enough to keep the capitalists betting on this tired, limping, old racehorse, long-since past its prime.
As we saw with the turmoil in the bond markets last month, confidence in the British economy is plummeting, in the face of marginal or non-existent growth, and no plans to fix things from the Labour frontbench.
Labour were willing to bend over backwards to satisfy their investors. As always, the corporations have government ministers in their back pocket. AstraZeneca said “jump” and Reeves dutifully asked “how high?”. But the atrophied legs of British capitalism could not jump high enough.
British capitalism has long been in decline, and has fallen well behind the big imperialist powers like the USA and China. From green technology to artificial intelligence, Britain simply cannot compete.
It’s no coincidence that AstraZeneca chose to move their plant to the US, where they have recently pledged to invest £2.8 billion over the next two years. Trump, with chest-beating hubris, recently sent a message to “every business in the world”:
“Come make your product in America…We will give you among the lowest taxes of any nation on earth…But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff.”
Trade wars are on the horizon, and investors would much rather seek refuge in a relatively stronger market like the US – where they can also receive bigger grants for research and development – than a battered, rudderless economy like the UK.
Put simply, the US has the carrot and the stick. Britain has neither.
It’s not just potential jobs that have been lost in a region starved of investment, which is maddening enough as it is. What this whole debacle reveals is that private property is holding back the very scientific, medical, and technological progress of society.
Under a rationally planned economy, we could ensure that society’s expertise and resources serve social need, and not the billionaires’ greed.
