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AstraZeneca Project Faces Potential State Aid Cuts in Merseyside

by DD Desk

August 14, 2024

AstraZeneca Project Faces Potential State Aid Cuts in Merseyside

key takeaways

AstraZeneca Faces State Aid Cuts in Merseyside

The government's intention to reduce financing for a £450 million plan to expand an AstraZeneca vaccine manufacturing site in Merseyside has been met with resistance.

It is claimed that after her predecessor, Jeremy Hunt, had promised the pharmaceutical giant £65 million, chancellor Rachel Reeves is thinking of cutting the state money allocated for the programme by more than £20 million.

According to the Financial Times, the funding reduction is a component of an extensive examination of all investment choices made by the previous government.

Cutting government spending is part of Rachel Reeves' plan to close a £22 billion budget deficit that she claims the Conservative administration "covered up."

Almost half of the shortfall, £9.4bn, was a result of her decision to fund above-inflation public-sector pay recommendations in full, which reversed years of declining wages and saw off the threat of industrial action.

Hunt initially announced plans to provide government support to expand the Speke facility, near Liverpool, as part of his budget in March.

AstraZeneca already runs a facility on the site, which employs 400 people, focusing on childhood vaccinations.

The decision to cut funding by a third would come as a blow to AstraZeneca, whose chief executive, Pascal Soriot – the highest-paid boss in the FTSE 100 – announced last month that it was “absolutely ready to go” with the scheme and hoped the investment could be concluded quickly.

The FT reported that the decision by the government could even mean the project being relocated to France.

A Treasury spokesperson said: “We are committed to making the UK one of the best places in the world to develop and manufacture new and innovative medicines.

“The chancellor receives regular updates on this planned investment in Speke, and we are in positive discussions with AstraZeneca to support its delivery.”

AstraZeneca has made a bigger push into the vaccine market in recent years after developing a Covid vaccine in collaboration with the University of Oxford, of which 3bn doses were administered globally.

In May, it withdrew the vaccine from the market due to a “surplus of available updated vaccines” that target new variants of the virus.

On Tuesday, its stock market value hit £200bn for the first time, after its shares rose by 1%.

AstraZeneca declined to comment.