(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the bid from Pfizer for AstraZeneca and the resulting effect on the economy, employment and skills in the United Kingdom.
The life sciences industry is of paramount importance to the UK as part of the Government’s industrial strategy, which is securing long-term investment in key sectors where we are global leaders. We are committed to ensuring that we are at the forefront of life sciences research and development, with high-quality jobs, manufacturing and decision making in the UK.
There has been much comment and debate in the press recently on this important issue. I stress, however, that Pfizer has not yet made a formal bid to take over AstraZeneca. The Government must, and will, approach it from the position of even-handed neutrality and recognise that it is ultimately a matter for the shareholders of both companies. I assure the House that I and my colleagues across Government engaged early with both companies to ensure that the outcome is positive for the UK, precisely to avoid the failures of previous Governments in such situations.
The Opposition are calling for changes to the law, but we are operating within the framework that they introduced in 2002, when they removed Ministers from decision making about mergers, apart from in a few specified public interest areas. I note that they chose not to reform the regime in response to the Cadbury-Kraft merger. One of the Government’s options would be to consider using our public interest test powers. That would be a serious step, and not one that should be taken lightly. I am open-minded about that, while stressing that we are operating within serious European legal constraints.
In conclusion, I want to assure the House that we are alive to the national interest considerations in this regard. We see the future of the UK as a knowledge economy, not a tax haven. Our focus is on what is best for the UK: securing great British science, research and manufacturing jobs and decision making in the life sciences sector.
I thank my right hon. Friend for his response. This would be the biggest ever takeover of a British firm and deserves careful scrutiny. Will he tell us what has been learned from the failures of the Kraft-Cadbury takeover, which did not safeguard UK jobs? What powers does he have under current legislation to intervene in this area?
The Pfizer proposals are driven largely by tax law. What certainty does my right hon. Friend have that the USA would not simply change its tax code and that Pfizer would return to the US, jeopardising any benefit to the UK? Has Pfizer asked for any changes to our tax laws, including the patent box? What representations have the Government received from other countries, such as China, the US and Sweden? What international hurdles does he anticipate for a deal such as this, including at European Union and global level?
Pfizer’s board has given a written assurance that it will keep some research and development and advanced manufacturing in the UK, with an opt-out should circumstances significantly change. How broad is that opt-out and what consequences would Pfizer face if it broke its assurances? Given Pfizer’s history in Sandwich, what confidence does my right hon. Friend have in its commitment to the UK?
Both Pfizer and AstraZeneca currently have sites in the Cambridge cluster owing to our excellent research environment. AstraZeneca has announced plans to concentrate its R and D in Cambridge and to move its global headquarters to our successful cluster, bringing 2,000 jobs. People are already transferring to a site in the constituency of the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). What does the Secretary of State think would happen to those proposals if the takeover happened? Many other parts of the country would also be affected. I have been contacted by my hon. Friends the Members for Cheadle (Mark Hunter) and for Macclesfield (David Rutley), and the right hon. Member for Leicester East (Keith Vaz), among others. What does the Secretary of State think will be the consequences of these proposals for the UK’s science and skill base? Does he share my concern about the uncertainty for the industry and people’s jobs? What assessment has he made of Pfizer’s and AstraZeneca’s relative investment in R and D?
What assessment has my right hon. Friend made of the increased risk to the UK of there being fewer pharmaceutical companies here? What discussions has he had with the Secretary of State for Health about the medical consequences of the merger and potential delays in life-saving drugs? Finally, does he agree that companies can become too big to innovate?
I congratulate my colleague, who is representing Cambridge very effectively on this issue, as indeed is the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). I recognise my hon. Friend’s expertise and his pioneering work on cancer drugs in the life sciences industry. I will deal specifically with the Cambridge question because it has obviously been at the centre of the discussion.
It may be useful to read the relevant sentence from the open letter that Pfizer sent to the Prime Minister, bearing in mind that this is a proposal and has not been agreed with the Government—we have not accepted the terms of the letter. The issue of binding obligations remains to be addressed. The letter states:
“Pfizer commits to complete the construction of the currently planned AstraZeneca Cambridge campus, creating a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions.”
My hon. Friend is concerned about decision making, not just research, and the letter continued:
“Pfizer will base key scientific leadership in the UK who will lead all European and certain global R&D functions based in Cambridge.”
We have had similar conversations with AstraZeneca to ensure that it is similarly committed.
On my hon. Friend’s wider concerns, he made a perfectly valid point about the United States tax regime. Of course, we have no certainty about how the US would respond, which is why I stressed in my introduction that we must view the issue from the point of view of industry strategy rather than tax. Having said that, the fact that Britain has a competitive and attractive tax environment is a positive good, and we should celebrate that.
My hon. Friend mentioned three anti-trust jurisdictions, but there are almost certainly others. This proposal involves two big, complex international companies and a variety of jurisdictions will have to assess it.
On the relative merits of the two companies, I do not propose to treat this as a beauty parade, but it is fair to say that there have been very substantial redundancies from both companies in recent years, of roughly the same order of magnitude. On the positive side, they are very considerable investors and collaborators.
On the NHS points, I have established from the Health Secretary that there are no urgent life-threatening issues in relation to drugs. On competition, there is potentially an issue for the new Competition and Markets Authority and the European competition authorities, and that is where plurality would need to be addressed.
Let us be clear: the issue is not whether this prospective takeover is a foreign one but whether the transaction will be good for jobs and growth in the UK; will protect Britain’s knowledge, research and skills base; and represents a long-term investment in the UK. With that in mind, may I ask the Secretary of State four questions?
First, Pfizer has said that it is committed to making a long-term investment in the UK through this purchase. Similar assurances were given to other companies acquired by Pfizer in the US and Sweden, yet subsequently research facilities were shut down and thousands of high-skilled jobs lost. Why should we believe that the same fate will not befall AstraZeneca?
Secondly, Pfizer says it is committed to investing in R and D, but John LaMattina, who served for over 30 years as Pfizer’s president of global R and D, is clear: this transaction will lead to “dramatic cuts” in R and D. Surely this supports the case for the immediate independent assessment of the deal that the Leader of the Opposition has called for.
Thirdly, the main rationale for this transaction appears to be tax. Sir David Barnes, former chief executive officer of AstraZeneca, wrote to us both—the Secretary of State and me—last night. He said that while companies should manage their tax affairs efficiently, the use of tax inversion proposed by Pfizer is a
“narrow basis on which to build an enduring and constructive business partnership.”
What guarantees has the Secretary of State received that if the tax position changes in the US, investment here will not be withdrawn?
Fourthly, the Secretary of State said that the Government have a neutral view. Why, then, on Friday, just hours after the AstraZeneca board rejected Pfizer’s advances for a third time, was he going round saying that Pfizer’s commitments were “welcome and encouraging”? Why was the Conservative party chairman talking of the deal being a
“great Anglo-American tie-up”?
The fact is that over the past week the Government have compromised the AstraZeneca board, leading the chairman to urge the Prime Minister to adopt a neutral position.
The bottom line is this: the assurances the Government have extracted from Pfizer are simply not worth the paper they are written on, are they? If I am wrong, why, less than three days after giving them, did Pfizer’s CEO say yesterday that following the completion of the AstraZeneca takeover, the company could be split into three parts, all of which could subsequently be flogged off?
I have already dealt with some of the hon. Gentleman’s points, particularly in relation to the tax regime.
Specifically on neutrality, I made it very clear in any comments I made to the media that of course, as a result of conversations that we had with both companies, assurances given in writing were welcome. It would have been absurd to reject them; of course they were welcome. However, I also made it very clear that we needed to study the small print and that there was an issue about how these obligations were made binding. Of course, those issues now need very clearly to be addressed.
I am perfectly happy to take advice and lectures from anybody about how to handle this very difficult and sensitive issue, but the one example that we have in front of us of what to avoid is what happened in the Kraft-Cadbury merger. First, the then Government made no attempt at neutrality and said from the outset that there was going to be huge opposition to the takeover. Secondly, they failed to stop it, having said they were going to do so, and they sought no assurances of any kind, in writing or verbal; indeed, my predecessor has acknowledged that. We are trying to learn from their experiences.
We have taken up a position of neutrality. We acknowledge that there are very serious legal constraints, but I am keeping all options open on that front. We are seeking to locate this whole debate within our industrial future rather than in terms of tax advantage, and I made that very clear in my introduction.
I am well aware of the very constructive role the hon. Lady played when the original redundancies were announced. Indeed, despite the very large job losses, there is still a significant presence on the site to which she refers. The securing of that continued presence, which is substantial, and decision making would be a key part of any future discussion we have with the company.
I agree with the Secretary of State that we must learn the lessons of the Kraft-Cadbury takeover. Does he agree that one of those lessons is that we cannot necessarily take the assurances of the takeover company literally? If the evidence from the Select Committee investigations demonstrates that we may not be able to do that, will the Secretary of State undertake to ensure that the Government will intervene?
I am not making any assurances at this stage; I am merely keeping the options open. I am surprised to hear the hon. Gentleman say that the Government received assurances on Kraft-Cadbury, because our study of the record suggests that the then Secretary of State acknowledged that no such assurances were ever given.
I am grateful to my right hon. Friend the Secretary of State for his statement, for which I also called. AstraZeneca is Macclesfield’s largest employer, with 2,000 highly skilled workers based at the site, so I recognise the concerns of local residents about the potential implications of Pfizer’s bid. With that in mind, what steps are being taken fully to determine the impact the bid could have on the UK’s life sciences sector? In particular, what steps are being taken to safeguard those highly skilled advanced manufacturing and packaging jobs in Macclesfield?
I acknowledge the strong representation the hon. Gentleman has made to me before today, and that of my hon. Friend the Member for Cheadle (Mark Hunter) on the exact same issue. I will quote again from Pfizer’s letter to the Prime Minister, with all the provisos and conditions I suggested before. It says:
“Pfizer will actively look to locate manufacturing operations of the combined company in the UK, subject to the timing of the UK Patent Box proposals, and will retain substantial commercial manufacturing facilities in Macclesfield.”
I will not say anything to prejudge the inquiries the Science and Technology Committee intends to make on this matter, but may I tell the Secretary of State that that quote from the letter to the Prime Minister differs from what the chairman said to me over the telephone? I do not doubt the Secretary of State’s word, but the situation is moving very fast and we need to recognise that. In the light of that, does he agree with me and the noble Lord Heseltine that he ought to apply a national interest test?
I have tried to answer that question already. There is a public interest test. The hon. Gentleman uses the phrase “national interest test,” but the Opposition spokesman, the hon. Member for Streatham (Mr Umunna), was quite right to stress in his introduction that this is not a nationalism issue. I think we are all agreed on that. There are some excellent overseas companies in this country, such as Tata, Nissan and BMW, and they make a massive contribution. It is not an issue of nationality. Of course, both the companies under discussion are international companies in their different ways.
On applying the test, there is a question about whether it would be desirable to extend a public interest test in that way. My predecessor made it very clear in his comments to the Business, Innovation and Skills Committee that he rejected it on principle. I am not doing that, but it is worth recalling the practical problems involved, as set out by the hon. Member for Wrexham (Ian Lucas) when he held the key post in the Department. He said that
“it would need clearance by the European Commission. They would have to be satisfied that the consideration was legitimate and compatible with the objectives of the European Treaty, in particular in relation to the free movement of capital.”
We have to bear that in mind.
I would like the Secretary of State to clarify the legal position, because it seems to me that, under the law the previous Government introduced, Ministers were going to stay out of all these decisions, which would be trusted to an independent body; and that, under the 2004 European Union merger regulation that they signed up to, this is clearly a concentration that falls to be determined by Brussels regulation, not by this elected House of Commons. I therefore find it very surprising that the Opposition are demanding the Secretary of State intervene, when he might end up in an illegal position if he tried to do so.
It is precisely because of the legal position that I have been studiously neutral on this matter. It is fair to say that there are elements of ambiguity—it is not absolutely clear—but the main position is exactly as the right hon. Gentleman described it: under the legislation we inherited from the Labour party, Ministers do not engage with decisions except in three very specific areas of public interest.
May I first say to the Secretary of State that whatever the defects of the 2002 legislation, which we have learned from experience, this Government have done absolutely nothing in four years to change that legislation, so I assume that they consent to it? Secondly, there is nothing in the legislation that, in the words of the Daily Mail today, requires the British Government or certainly the Prime Minister to go
“grovelling to an overseas corporation”.
Does the Secretary of State not accept that there has been a very sharp contrast between the neutral stand that he has tried to take and that of his fellow Ministers, including the Prime Minister, who have been supine in their approach to Pfizer?
They have not been supine at all. My senior colleagues in government have been engaged in discussions with both companies, making the points about the national interest that I have stressed today.
I want to counter the point that the Government did absolutely nothing in response to the history of Kraft-Cadbury. One of the first things I did when I came into this job was to initiate a process that led the Takeover Panel to introduce very substantial reforms—the put up, shut up provision, which is the reason why we now have a 26 May deadline; the requirements for consultation; the requirements that directors have to take a long-term view in making decisions of this kind; and, crucially, the requirements of transparency. My opposite number has called in the press for transparency to be introduced, but it is already there: it was one of the changes introduced when this Government came into power.
I am sure that my right hon. Friend the Secretary of State is aware that, in 2013, British companies were the second largest foreign investor in the US, with $36.5 billion of institutional investment. What message would it send to institutional investors from all over the world if, despite appropriate assurances from a company, the UK Government found a way to scupper a deal of this magnitude against the wishes of the shareholders?
That is why I have stressed—it is fair to say that the Opposition spokesman has also stressed it—that we must not approach this matter in a nationalistic way, let alone in an anti-American way. One of the most difficult tasks I have undertaken in this Government was talking to General Motors to try to persuade it to invest heavily in the British car industry. We have no wish whatever to compromise our reputation for being open to good foreign investors.
The Secretary of State may not have concerns about the impact of the proposed takeover on Britain’s science base, but many others do, including the chancellor of Cambridge university, Lord Sainsbury, and some prominent AstraZeneca investors. Will the Secretary of State say a bit more about why he does not agree with them?
I do not know the basis on which the hon. Lady invented that question. From the outset of my statement and in all my subsequent comments, I have made it very clear that the interests of British science—R and D and the jobs associated with it—are absolutely at the centre of our concerns. As it happens, I have spoken to Lord Sainsbury, and I am aware of his concerns. I have spoken to other leading members of the scientific community—we are also aware of their concerns—and they acknowledge that we are working as best we can within the constraints we have to secure a good outcome for British science.
The life sciences and biopharma industry is in a period of transformation or restructuring worldwide, which is why there has been such strong support for the UK’s life science strategy and its groundbreaking steps to invest in genomics, the patent box, the catalyst fund and early access to innovative medicines. All those measures helped to ensure that Pfizer and AstraZeneca, when they closed their old plants, moved to Cambridge, England, not Cambridge, Massachusetts. May I suggest that rather than embrace the Opposition’s opportunistic calls for protectionist emergency legislation—the shadow Business Secretary dismissed such a step in 2012—we should instead seek to enter into a long-term, 10-year, R and D agreement with Pfizer-AstraZeneca based on accelerating the measures that we have put in place, which will show that we are in favour of business coming to the UK through incentives, not penal legislation?
I think that is a very good statement of where we are. We are indeed trying to encourage business. We are looking 10 years ahead—that is the whole point of the industrial strategy and indeed why it is successful and why business welcomes it. To use my hon. Friend’s word, there is no question of protectionism in this area.
Will the Secretary of State emphasise that the Government can and should intervene under the Enterprise Act 2002 in order to protect the public interest, given that AstraZeneca is a key national champion in the key pharmaceutical sector in which Britain is a world leader? Does he accept that this issue should be settled not on the basis of the tax inversion interests of a US multinational or an indiscriminate open market ideology, but solely on the basis of preserving and strengthening the UK’s scientific base and highly skilled British jobs—promises to preserve which have often been dishonoured by previous predators?
There is nothing in the Enterprise Act 2002 —in retrospect, this is probably regrettable—that refers in any way to the issues that the right hon. Gentleman has described. I was part of those debates; I think he probably was, too. The only areas in which a public interest intervention is allowed under that legislation relate to national security and media plurality. Subsequently, banks were added; as they were overwhelmingly domiciled in the UK, that fell outside European legislation. Those are the very narrow grounds on which the existing legislation allows intervention.
Does my right hon. Friend agree that Britain benefits enormously from the free movement of investment and ideas? It is why all that R and D is happening in Cambridge and elsewhere in the first place. Will he therefore rule out any of the economic nativism being called for by some in this House and rule out any attempt to frustrate this deal on protectionist grounds?
I agree with the Secretary of State when he says that this issue should not be decided on the basis of whether the proposed takeover comes from a foreign company. There is enough narrow nationalism in British politics without our adding to it here. However, there is a question of whether companies keep their promises. The right hon. Gentleman has referred several times to Kraft and Cadbury. Kraft broke its word when it said that it would keep open the Somerdale factory and then announced, after the bid had gone through, that it was going to close it. The question now is how does the right hon. Gentleman know and how can he ensure that, if the takeover goes through, Pfizer will keep its promises on R and D and the British science base?
Should this proceed—as I said at the outset, we have not yet had a formal bid—it will obviously be a matter for negotiation. I am sure that the right hon. Gentleman would not want me to go into exactly what is being said in the discussions at the moment. Negotiations will clearly happen to make sure that any obligation is binding. I am sure that Pfizer itself would want to ensure that any obligations are clear and binding. Just to reinforce the point about nationality, which the right hon. Gentleman rightly stressed at the outset, we are talking about two international companies. I think we all acknowledge that AstraZeneca is an admirable company. It is Anglo-Swedish, with a Swedish chairman, a French chief executive and an international shareholder base. Pfizer is predominantly an American company and has a British chief executive. We are talking about international companies.
The Secretary of State is absolutely right to keep his options open—certainly at this stage. He is right, too, to learn the lessons from the appalling way in which the Kraft-Cadbury deal was handled. Following on from the remarks of my hon. Friend the Member for Mid Norfolk (George Freeman) about research and development, will my right hon. Friend give us some assurance that using purchasing power as part of a long-term industrial strategy is the intelligent way not to pick winners but to make sure that we have the key base of skills that we need for the future?
That is an interesting new angle. I believe my hon. Friend is talking about NHS purchasing, which we have not considered in this context. We have always made it very clear—there are, of course, European rules on this matter—that public procurement cannot be used in a protectionist manner. We need to be very careful of that, but we are aware that public procurement can be used to secure strategic long-term investment. We are already seeing that on the railways, for example.
If the Secretary of State reaches the view that it is not in the strategic and economic interests of the UK for the takeover to go ahead, but he believes the existing legislation to be inadequate, will he bring forward legislation to stop the takeover taking place?
My constituents’ experience of Pfizer from hosting the development and occupation of its award-winning headquarters at Walton Oaks is that it is a model corporate citizen. What is energising some people in the House is that this is a fantastic vote of confidence in the United Kingdom, which gives us the possibility of hosting the world’s leading research-based pharmaceutical company.
The Secretary of State refers to Pfizer’s assurances, but he must remember that Pfizer has pulled jobs and investment out of Sandwich not once, but twice: first in manufacturing and now in R and D. The chief executive of Pfizer has said on the record that he views the UK as
“an attractive place to do science and manufacturing.”
However, after the way that it has treated the workers in Sandwich, is that not a bit like Dracula saying, “I like the look of that blood bank”?
I am aware that there were very sore feelings about the redundancies at Sandwich. The Government had to mobilise a taskforce to rescue the situation on the ground and it is now quite a successful part of the UK. We accept that there was hurt, but that is not unique to Pfizer. As I said in an earlier answer, a roughly equal number of redundancies has been made by both companies. That is not because of their corporate philosophies, but because their patents have run out and they have not developed the pipeline of new projects that is necessary to sustain growing employment.
I was interviewed on “The World at One” this afternoon and was asked whether there would be a political gain for the Chairs of the Select Committees. I said that I serve on two Select Committees, both of which have Labour Chairs who are excellent. What disturbs me is that the Leader of the Opposition has gone on the record to say that we must look into the matter. Why has he suddenly said that about this particular company, when takeovers happen all the time in the City?
I was slightly puzzled as to why the Leader of the Opposition made it a party political point that there would be a Select Committee inquiry. As I understand it, Select Committees are the property of the House. I am very happy to engage with either or both of the Committees. Indeed, we have already had extensive discussions with the Business, Innovation and Skills Committee about the legacies of Kraft-Cadbury and the takeover legislation. Those matters were thoroughly inquired into.
That is a bizarre criticism. We have talked to Pfizer and AstraZeneca on a neutral basis. Those conversations have been conducted by Ministers. The Prime Minister, the Deputy Prime Minister, the Chancellor, the Minister for Universities and Science and I have all been involved. Of course the Government have civil servants to carry out their instructions. I am baffled as to why the hon. Lady regards that as a problem.
I commend the Secretary of State for his level-headed scrutiny of the proposed takeover. The Opposition lose their credibility when they play politics with such matters. May I ask him about his conversations with AstraZeneca? It claims that there are a number of gems in the company, which might mean that the business has been undervalued. Valuations are, of course, up to the shareholders, but those gems in the portfolio hold the prospect of R and D and jobs. What conversations has he had about those new products and what would happen to them?
If the bid proceeds, I guess that we will need to have detailed discussions with both companies about the specifics, which would go beyond the broad commitments that Pfizer has offered in its open letter. I recognise that there is an awful lot more detail to be confronted.
I know it is not a matter of nationality, but I remind the Secretary of State of the adage, “Beware of a Scotsman on the make”—even if Ian Read left Scotland in 1978. Pfizer is in trouble. Its profits have dropped by 15% to £1.3 billion, and every time it takes over a company it is to seize a product. It was Lipitor—an anti-cholesterol drug—from Warner-Lambert; with Wyeth it was Enbrel, an arthritis drug, and then it shut Wyeth’s research. It shut its own research. There can be no guarantees that this company is after anything other than a tax haven. What can and will the Secretary of State do to stop that?
I am obviously not going to give a running commentary on share prices today and tomorrow, but I repeat that throughout the industry, the big pharmaceutical companies have all been retrenching and creating redundancies because of the way technology has evolved. In fact, much of the dynamism in that industry—which I see frequently on my visits to universities—is through small spin-out companies. The nature of the industry is changing, and it is not just Pfizer that has been responsible for redundancies.
Will the Business Secretary confirm that both European competition authorities and the British authority will test this process against the consumer interest? It cannot be in the consumer interest for research to be limited or for existing production lines in this country to be closed down.
I am always happy to meet trade union representatives. I have already made this point briefly, but changes introduced to the takeover panel operations in 2010, when I came into the Government, include additional provision for consultation with the work force. I hope that the parties concerned recognise and act on that.
If this takeover were to go ahead, what steps can and will my right hon. Friend take with his colleagues to ensure that members of AstraZeneca pension funds and their entitlements are properly protected?
That is a new one and I will reflect on it. It is probably an issue for my colleagues in the Department for Work and Pensions and for the Pension Protection Fund, but I thank my hon. and learned Friend for raising the issue and I will certainly follow it up.
AstraZeneca has pointed out today that its profits could double over the next decade as a result of new drugs resulting from its investment in research and development. In contrast, Pfizer has a strategy of cutting dramatically its investment in research and development. What impact does the Secretary of State think that the takeover could have on UK research capacity?
The hon. Gentleman is making an exaggerated contrast between the two companies, but he is right to say that AstraZeneca has an ambitious and attractive long-term investment plan. We have encouraged that as part of the industrial strategy, and we want to see it fulfilled.
My constituents may be a bit perplexed at the inability of people to move on. The Cadbury parent company, Mondelez, has a pretty good track record in investment in R and D, and it will probably not thank us for dragging it into a debate four years later. Surely the real question about the Cadbury takeover is whether, if the price hits the right level, shareholders will sell. There is little any Government can do about that.
Of course, that is the mechanics of a takeover in the market, and I acknowledge that, at the end of the day, shareholders have to make that choice. It is also fair to point out to the hon. Gentleman, as a Birmingham MP, that I think the Kraft-Cadbury story as it has evolved is not as simple as has often been portrayed. Kraft has committed itself to R and D work, although the takeover itself was not very satisfactory from a national interest point of view.
Two years ago, the incoming management of AstraZeneca announced the closure of the science park in Cheshire with the loss of 2,000 science-based jobs. The majority of those jobs will not transfer to Cambridge, resulting in a reduction in the UK’s capability. Can the Secretary of State confirm that he does not consider the completion of the botched move to Cambridge to be a prerequisite for this deal?
My hon. Friend is right that among the redundancies that had been announced in AstraZeneca a substantial number were from the Cheshire site, with more from the campus in Loughborough. As I understand it, a substantial number of staff are moving to Cambridge as part of the commitment made to the Cambridge development, and everybody concerned sees the success of the Cambridge campus as critical to the future of that company.
Since Pfizer took over rival company Wyeth in 2009, investment in research and development has halved. Without credible assurances from the Secretary of State, what will prevent the same from happening here, weakening our science base and putting at risk the long-term future of the British economy?
As I have said many times before, we are primarily concerned about the need to protect jobs, investment and the life sciences sector, and we will do everything we can to make sure that happens, within the constraints under which I operate. We are well aware of the history of that company, but not only of that company.
The public interest in the potential AstraZeneca takeover is rightly being looked at by my right hon. Friend, as one of the parties is a UK entity. Will the Government take a similar interest in the potential takeover of a multinational such as Alstom, which has substantial operations of vital public interest in the UK, but neither the bidder nor the multinational target is based in the UK?
I have asked about the potential implications of the General Electric takeover for Alstom in the west midlands and—as far as we can establish—it has no negative implications. The GE-Alstom takeover is an interesting example. My French opposite number took strong exception to it, but has accepted that in reality the French Government had no alternative but to go along with it.
In answer to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), the Secretary of State said that any assurances given by Pfizer, were this deal to go ahead, would have to be binding. Can he clarify for the House in exactly what way he would be able to make them legally binding?
I am a small, but long-term shareholder in AstraZeneca. Today’s questions have been focused on the effects on AstraZeneca and Pfizer itself. What has not been considered is that the takeover represents a £60 billion investment in the UK economy, and that money will then be reused to create new companies, jobs, investment and growth. Has my right hon. Friend made any assessment of the overall effect on the economy of this big cash injection?
Of course, we will take that into account as part of our assessment in the national interest. Our starting point is the strength of the UK science base and our manufacturing industry, but there are positive potential implications for tax and for the flow of capital.
I understand the constraints on the Secretary of State, but is he not concerned about the track record of Pfizer in this area—significantly less research and development than AstraZeneca, recent cuts and the closure of the Sandwich plant, with all the broken promises that that entailed? Does that not lead him to think that the Government should have a role in this matter, and will he invoke a public interest test to achieve that?
Many might think that this is a difficult blue pill to swallow from Pfizer, but two of the biggest companies in Northumberland are overseas-owned and brilliantly run. Does the Secretary of State agree that we do not want to go back to the dark ages of protectionism? The reality is that if this were a British company taking over an overseas company, none of us would be complaining.
I am sure that is right. As a country, we have made great advances in taking a mature approach to foreign ownership, and a key turning point was when I was an adviser in my Department—I do not claim cause and effect—in the late 1970s and the issue of Japanese investment first arose. The Government of the time decided it was in the national interest. It broke a taboo, and foreign investment has been of great benefit to this country.
It is odd that the Secretary of State questions the sustainability of the favourable tax regime in the UK, because it is precisely down to this Government’s progressive tax reform that overseas businesses want to invest and innovate in the UK. Glaxo is not the only player, although it is investing £140 million in my constituency, which is a sign of confidence. When assessing the bid and its impact on Pfizer jobs, will the Secretary of State look more widely at the impact of the UK pharmaceutical sector as a whole on the skills base and the supply chain?
I went out of my way in several of my answers to stress the positive and important role played by our tax regime, both in respect of corporation tax and the patent box. The hon. Gentleman is right that in terms of industrial strategy we are concerned about the supply chain. That is being looked at in considerable detail, as it is in several other manufacturing industries. It is highly relevant in this context.
Individual takeovers such as this one are extremely important and should be looked at and questioned, but does the Secretary of State agree that the bigger picture is that a large number of very important companies are queuing up to come to the UK and provide good, quality jobs and growth? Is that not the key issue today?