Concerns are mounting that the United Kingdom’s official appraisal framework is systematically underestimating the economic and social value of investments in life sciences manufacturing. Industry bodies and independent analysts warn that the methods used to evaluate capital grants and incentives may be misaligned with the realities of modern manufacturing. The consequence is that the UK risks losing out to global competitors with stronger investment propositions.
The appraisal challenge
The core issue centres on the way the HM Treasury Green Book is applied to life sciences manufacturing projects. The Green Book is the standard guidance used by government departments and public bodies to appraise policies, programmes and major investments. According to analysis by Cambridge Economic Policy Associates on behalf of the Association of the British Pharmaceutical Industry, the current framework places disproportionate weight on benefits that can be easily monetised such as short term job creation, while neglecting broader and harder to quantify gains such as improvements in productivity, exports or regional growth.
This approach can lead to the undervaluation of investments in innovative life sciences manufacturing when judged solely through benefit cost ratios. Many of the major benefits of manufacturing investments, such as supply chain resilience, clustering effects, global competitiveness and high wage employment, do not easily translate into the monetary metrics favoured by public sector appraisals.
Why this matters
The implications are significant. The UK government has designated life sciences and advanced manufacturing as strategic growth sectors, supported by programmes such as the Life Sciences Innovative Manufacturing Fund, which aims to attract globally mobile investments and strengthen domestic supply chain resilience. If appraisal methods undervalue such projects, the UK’s ability to compete for new plants, equipment and international investment is compromised.
International competitors increasingly target these high value plants using incentive regimes that capture a broader valuation of social and economic benefits. Analysts warn that the UK’s rigid appraisal methods may undermine its ability to compete on equal terms, creating an uneven playing field in favour of countries that recognise a wider range of benefits.
What is being overlooked
Among the key value drivers that current appraisals struggle to capture are:
- Clustering and agglomeration effects: when major manufacturing sites co locate with research and innovation hubs, there are spill over gains to firms and regions in terms of knowledge exchange and productivity.
- Export growth and international competitiveness: globally mobile manufacturing delivers higher value exports and strengthens the trade balance.
- Supply chain resilience and national health security: domestic manufacturing capacity helps protect against global disruptions, yet this resilience rarely features in traditional business case models.
- Regional economic rebalancing and high skilled employment: manufacturing investment can bring high wage jobs to regions outside major cities and raise productivity in lagging areas.
- Long term productivity gains: locating innovative manufacturing domestically anchors research, development and technical roles that boost national productivity, but such benefits are difficult to monetise at the appraisal stage.
Because existing frameworks focus heavily on short term, directly monetisable outcomes, a large portion of the transformational value offered by life sciences manufacturing investments is often excluded from official assessments.
Policy responses and next steps
Industry leaders have urged the government to use the 2025 review of the Green Book as an opportunity to modernise how public investments are appraised. Recommendations include placing less reliance on benefit cost ratios, introducing greater transparency in capital grant assessments, factoring in non monetary and place based impacts, and improving decision making timelines within programmes such as the Life Sciences Innovative Manufacturing Fund.
The UK’s Life Sciences Sector Plan outlines ambitions to make the country an outstanding place to start, scale and invest in the sector, with commitments of up to £520 million to support manufacturing. However, analysts caution that unless appraisal frameworks reflect the full range of benefits, financial commitments alone may not secure new global investment.
Risks of inaction
Failing to reform the appraisal process risks more than just lost manufacturing projects. It could undermine the broader strategy for life sciences growth. There are already signs of reduced foreign direct investment and slower project approvals, with some major global pharmaceutical firms scaling back UK operations, citing concerns about valuation and policy consistency.
If investors believe that the UK does not recognise the full value of manufacturing to the economy and society, they may opt for locations where policy frameworks account for a wider range of outcomes, weakening the UK’s position in a highly competitive global market for innovation led manufacturing.
The UK’s ambition to become a global leader in life sciences innovation is clear, but the way it appraises investment may be standing in the way. By continuing to rely on narrow, monetised measures of benefit, the UK risks underestimating the broader economic, social and strategic value of life sciences manufacturing.
Reforming the appraisal process to recognise long term impacts such as regional growth, supply chain resilience, and global competitiveness will be essential if the UK is to attract and retain high value manufacturing projects. Without such change, the country’s potential to anchor research, create skilled jobs and reinforce its scientific leadership could be diminished, just as other nations move ahead in securing the industries of the future.
