Hunt bats away calls for early cuts after AZ snubs UK for new plant

Chancellor admits he is ‘disappointed’ by AstraZeneca building new £330million plant in Ireland because taxes are lower… but bats away Tory calls for early cuts warning it would mean more government borrowing

• AstraZeneca criticised the high cost of doing business in the United Kingdom
• Pascal Soriot called for lower corporate taxes and measures to boost growth 

Jeremy Hunt admitted he is ‘disappointed’ today after AstraZeneca announced it is building a new £330million plant in Ireland because taxes are lower.

The Chancellor insisted he agreed with the ‘fundamental case’ the pharma giant is making that UK business tax should be ‘more competitive’.

But he again poured cold water on Tory calls for action in the Budget next month, cautioning that a reduction in the burden cannot be funded by more government borrowing.

AZ chief Pascal Soriot joined the chorus calling for lower corporate taxes and other measures to boost growth.

He said his firm had planned a state-of-the-art factory in north-west England but had switched to Dublin as a result of the ‘discouraging’ tax regime. 

The corporation tax rate is scheduled to rise to 25 per cent from 19 per cent in April while a generous tax relief scheme for businesses is expected to end.

Jeremy Hunt admitted he is ‘disappointed’ today after AstraZeneca announced it is building a new £330million plant in Ireland because taxes are lower 

AZ chief Pascal Soriot joined the chorus calling for lower corporate taxes and other measures to boost growth 

A government source said ministers had offered AstraZeneca £50million to build the plant in the UK but conceded this ‘didn’t compensate’ for a much lower Irish corporation tax rate of 15 per cent.

Internal company issues had also played a role in the decision, the source said.

Speaking to broadcasters at a science facility in central London, Mr Hunt said: ‘We’re disappointed that we lost out this time and we agree with the fundamental case they’re making which is that we need our business taxation to be more competitive and we want to bring business taxes down.

‘But the only tax cuts we won’t consider are ones that are funded by borrowing because they’re not a real tax cut. They’re just passing on the bill to future generations.’

With a valuation of nearly £167billion, Cambridge-based AZ is the second-largest firm on the London Stock Exchange’s FTSE 100 index. It employs 83,100 staff globally, more than 8,000 of whom are in the UK.

The firm won plaudits during the Covid-19 pandemic for manufacturing its life-saving vaccine and selling it on a not-for-profit basis to ensure wider protection from the virus.

Business lobby calls for tax breaks that could deliver £52billion annual boost

 

Sir Pascal said: ‘We want to invest in the UK but we need to see supporting policies for the whole industry. You need an environment that gives you good returns and incentive to invest.’

He added that ‘a lower corporate tax rate’ was needed but the levy was ‘unfortunately going up’.

AZ had planned to construct the £329million factory near its manufacturing hub in Macclesfield, Cheshire.

But while Britain had world-class research capabilities, Sir Pascal said it lacked regulatory experts and access to green energy to encourage further investment. He also noted that clinical trials for medicines had become more difficult as the NHS struggled with a staffing crisis and a surge in costs following the pandemic.

Both Sir Pascal and Dame Emma Walmsley, chief executive of AZ’s rival GSK, have written to Rishi Sunak warning that government policy is hitting investment decisions.

Liz Truss and Kwasi Kwarteng initially scrapped the planned rise in corporation tax in the ‘mini-budget’ in September. 

But this was reversed when Mr Hunt took over as Chancellor and sought to calm financial markets.

Tony Danker, head of the Confederation of British Industry, has said he understands why corporation tax is rising.

But he raised concerns that is happening at the same time as tax break on investment are scrapped.

He called on the Government to drop the ‘tax double whammy’ and prevent the economy ‘stagnating’ in 2023.

Sir John Redwood, a Tory former trade secretary, said: ‘Our corporation tax rate is not competitive with the Republic of Ireland to start with and we’re going to make it a lot worse. It’s a very competitive market for big investments. Britain is a great place to come to but we must not tax ourselves out of the game.’

Tory ex-leader Sir Iain Duncan Smith said AstraZeneca’s decision was ‘a serious reminder to the Government about the risks of high tax rates’.

A Government source denied that AZ’s move undermined the bid to make the UK a global hub for the life sciences.

They pointed to £3.4billion of recent investments in the UK, including a £1billion vaccine research and manufacturing site for Moderna.

AZ had planned a state-of-the-art factory in north-west England but had switched to Dublin as a result of the ‘discouraging’ tax regime

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