£0.5mn is about USD 830,000 according to current foreign exchange rates. In other words, John Todd, the interviewee, indicated that a sufficiently good researcher was worth that much. Now, the question was framed in terms of additional funding, rather than reallocation of existing funds. But assuming that the existing funding for the biomedical research lab is at least one order of magnitude greater than the amount (£0.5mn) under discussion, I don't think it matters whether we're talking of using additional funding or reallocating existing funds.

This could be a framing issue. Did you ask "Would you pay $500k annual salary (which probably comes out to about $800k fully loaded for the employer) to a qualified candidate?" I'd be surprised if this didn't give him a pause.