Lord Callanan

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That the Bill be read a second time.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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My Lords, the Advanced Research and Invention Agency Bill creates a new funding agency, ARIA. ARIA will support ambitious programmes of research and innovation, seeking the scientific and technological breakthroughs that transform the lives of people across the UK and around the world. It will further diversify and strengthen our UK funding landscape, which is appropriate at a time when public investment in R&D is increasing to £20 billion in 2024-25 and concerted action is being taken across Government to reinforce the position of the UK as a science superpower.

Our science system already benefits from a variety of funding streams: government spending through UKRI programmes such as the Strategic Priorities Fund, investment from businesses small and large, and charitable sources such as the new Wellcome Leap. That plurality is a strength that we are seeking to build on with ARIA. I therefore emphasise at the start that the motivation for ARIA’s creation is to innovate how research is funded, rather than any specific topics or areas which need investment. It is about enabling a new programme-led approach to public R&D funding, optimised for high-risk research—new for the UK, that is, as we have learned from the tremendous successes of this funding model around the world, mostly from the United States, which many noble Lords will of course be familiar with.

I emphasise the two core features of this approach: first, the expectation that the full benefits will be felt only over the long term, which therefore requires patience; and secondly, that for every programme that produces transformational benefits many will not, which requires a fairly unique attitude towards failure. The research community has been clear, in providing evidence and through engagement, that it wants to see these realities of the research process reflected in the new funding body. I hope that these issues similarly resonate with many noble Lords who are concerned with research and its funding. These features are central to the approach that we are seeking to take with ARIA.

Before expanding further on the role that ARIA will play, I must emphasise the existing excellence of the UK’s R&D system. Although the Government have engaged with and sought to learn from similar agencies in other countries, ARIA must be designed sensitively to the UK’s unique context. That means not copying wholesale from elsewhere, or blindly replicating features that might in some places be successful, without carefully considering the fit with the UK system. It also means remaining conscious of the scale of this new agency. ARIA’s £800 million budget is significantly less than 2% of overall UK R&D spending.

Looking at that total spending, ARIA represents a small addition at the high-risk end of the spectrum and is equipped to take a unique approach to supporting that type of research and development. Viewed through that lens, one important point should be clear: ARIA will complement rather than compete with the system-wide responsibilities of UKRI—the steward of our overall research landscape. Indeed, those responsibilities remaining firmly outside of ARIA’s remit goes hand in hand with the autonomy and freedom that we expect it to have.

ARIA is not an institution for responding to the day-to-day priorities of government, whether specific strategic challenges, or the Government’s desired balance of research, development and commercialisation activities. ARIA’s clear remit will be to pursue programmes of research focused on realising specific objectives that have the potential to produce transformative, long-term benefits. These objectives must be set by programme managers with deep technical expertise and brilliant ideas, who are empowered to pursue those objectives with a variety of tools and a single-minded focus and to fund research and innovation projects through contracting and granting in businesses, universities and elsewhere, drawing those contributors and their outputs together to realise their objectives. They must be free to do so, in the expectation that a small proportion of projects will in time lead to things that are truly extraordinary.

Taking this approach requires trust in the good that comes from investment in this type of R&D—the high-risk, long-term and difficult to measure, which we have clearly and repeatedly heard could be better provided for. But it is not only a matter of trust; the evidence for this R&D investment and its spillover benefits is compelling. Research suggests that while the annual private rate of return from R&D and innovation averages 20% to 30%, the social returns are two to three times higher.

Although ARIA will be specialised and—by taking a new approach—something of an experiment in how we fund UK R&D, it should be one that the whole system learns from. Aspects of ARIA’s unique approach might successfully be applied to other UK R&D funders, and I expect the potential benefits of that to act as an incentive for close integration with the wider research system, which will be so advantageous both for ARIA and other actors.

This Bill—and the creation of ARIA—aligns us with many other countries using the funding model that I have outlined. From the US to Japan and Germany, this programmatic approach to supporting the most ambitious research goals has been deployed, in some cases with extraordinary success, and it is entirely appropriate that at this point we seek to apply it through ARIA to benefit UK science, research and innovation.

I will now move on to the specific provisions of the Bill and set out how the key clauses relate to the ambition and approach that I have just described. I will first address ARIA’s functions, as detailed in Clause 2. ARIA is expected to primarily operate as a funder of others, which is reflected in its functions to

“do, or commission or support others to do”.

It is not restricted to operate at a particular point on the technology readiness level spectrum; indeed, individual programmes may require a mixture of projects that seek to solve fundamental science challenges alongside work to develop and apply existing knowledge in new contexts. This is reflected in Clause 2(1), which places development and exploitation alongside the conducting of scientific research. The range of financial support that ARIA can provide is expressly broad. This equips programme managers to tailor the funding that they provide so that it is appropriate to the specific recipient and project. This is essential in supporting a broad—even unexpected—coalition of researchers and organisations, and ensuring the diverse input that is known to be so beneficial in solving difficult scientific problems. The unexpected collaborations and high degree of interdisciplinary work that we expect this to support is one of the most compelling features of the programme-led ARIA model.

Clause 3 gets to the very heart of ARIA’s approach. Implicit in pursuing high-risk research and ambitious programme goals must be recognition that many projects and programmes will not fulfil their stated aims. The risk of failure is high, and that must be accepted from the outset if ARIA is truly to be equipped to tackle the most difficult challenges, with ground-breaking implications. Clause 3 states that ARIA may give particular weight to those ground-breaking benefits when supporting R&D activities which, almost by definition, carry a high risk of failure.

This is a valuable approach for two reasons: first, because of the transformational benefits of success in this arena—the scale of impact of technologies such as the internet, GPS or mRNA vaccines, all supported by the US DARPA, is difficult to overstate; and secondly, because of the spillover benefits that can accrue even from unsuccessful projects, such as collaborations and approaches that would not otherwise have existed, or progress that later proves vital for fields or problems unrelated to the original programme.

I turn now to the role of the Secretary of State, which is addressed in Clauses 4 and 5 and in Schedule 1. It is also notable by the provisions that the Bill does not contain. I have already spoken about ARIA’s need for autonomy, and on that basis, the role for the Government in its ongoing affairs must be limited. The provisions in Clauses 4 and 5 of the Bill represent a baseline to ensure ARIA’s operation, allowing funding to be provided and issues of national security to be addressed. The public money provided to ARIA requires an appropriate level of oversight and, accordingly, there are provisions to ensure core tenets of good governance in Schedule 1. This includes the Secretary of State’s power to appoint non-executive directors and the reserve power to introduce conflict of interest procedures should it prove necessary in future. However, there is no power for the Secretary of State to require a strategy, no specific power of direction over ARIA’s allocation of expenditure, and the Secretary of State’s information rights are deliberately limited to the exercise of their functions with respect to ARIA.

In these matters we have sought to strike a balance between protecting ARIA’s strategic and operational autonomy, which is essential to its remit, and providing sufficient assurances for the important role with which it is to be entrusted. This difficult-to-strike balance has been a theme of much debate on the Bill so far, and I have no doubt that that will continue to be the case in our House.

Continuing this theme, I will speak briefly on the exemptions the Bill affords ARIA from standard public sector obligations around procurement and freedom of information. There are practical and operational reasons for both. Exempting ARIA from the Public Contracts Regulations’ contracting authority obligations is a result of its fundamentally different way of operating compared to our other core public R&D funders. We expect ARIA not only to give grants but to commission and contract others to carry out research. The exemption ensures that ARIA can procure services, goods and works related to its research goals at speed in a similar way to a private sector organisation. This mirrors the successful approach taken by DARPA, which benefits from other transactions authority, giving it the flexibility to operate outside US government contracting standards.

On FoI, the pertinent question to me is where we want ARIA’s staff to direct their focus. Earlier, I spoke about people with deep technical expertise and brilliant ideas who are empowered to pursue their objectives. I believe that of course that should apply to all ARIA staff and that this ambition is the last thing we should move away from if we want this organisation to succeed. In this unique case, I do not think those people should be employed to administrate FoI requests. This approach should be viewed in the light of ARIA’s other statutory commitments to transparency through its reporting and accounts, subject to scrutiny by the NAO, and with the natural incentives towards openness of having an identity to build and collaborators to attract.

Returning finally to the purpose of the Bill before us, it is right that we recognise the existing excellence of our R&D system and that we add to it only in a considered way. However, I believe we should also allow ourselves to consider the possibilities in doing so and challenge ourselves on whether we could do more, or better, in the ways we support UK science and innovation. The creation of ARIA, through this Bill, is an exciting addition to our research landscape, but it is also a judicious one, rooted in historic successes, drawing on international best practice and responding to the current needs of UK researchers. I beg to move.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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I thank all noble Lords who contributed for their engaging and, I thought, in general, very constructive contributions to the debate today. Many noble Lords made excellent points, and I will attempt to answer as many of their questions as possible.

Today’s debate, on a tripartite basis, demonstrates a shared passion to foster the UK’s world-class research base. Ensuring that the UK is the best place in the world for scientists, researchers and entrepreneurs to live and work is at the heart of the R&D road map. Despite the small criticisms raised by the Opposition Front Bench, there was generally commitment from all three main parties and from the Cross Benches to those objectives. It is central to the Government’s plan to build back better, and an integral commitment which last week’s spending review and Budget showed.

It is thanks to our dynamic research landscape that we have responded so robustly to the Covid pandemic, as my noble friend Lord Bethell so helpfully reminded us. The challenges that we have faced show just how important it is that we always remain on the front foot of research and development. And, as set out in the UK Innovation Strategy this summer, this can only be achieved through a rich and diverse research and innovation ecosystem.

I now turn to the specific points raised by noble Lords in some of their very good speeches. My noble friend Lord Bethell, and the noble Lord, Lord Ravensdale, asked good questions about why the Government will not be setting a research focus for ARIA’s activities. At her appearance during this Bill’s Committee stage in the other place, the chief executive officer of UKRI, Professor Dame Ottoline Leyser, spoke about how

“the priorities that the Government and Ministers set to solve particular challenges for the nation … fall very much within the UKRI remit”.—[Official Report, Commons, Advanced Research and Invention Agency Bill, 14/4/21; col. 8]

The Government’s innovation strategy also set out our commitment to establish a new missions programme to tackle some of the most pressing challenges confronting the UK in the coming years. These will be decided by the National Science and Technology Council, chaired by the Prime Minister, in due course. Through these new mechanisms, this Government are taking a revised, strategic approach to assessing and funding our national scientific priorities. It would clearly be inappropriate to create another new body to do essentially the same thing. To reach new, brilliant people and ideas, we must diversify our ways of funding research, and I welcome the support of my noble friend Lady Neville-Rolfe on this point. Clause 2 sets out how ARIA could achieve this, offering a broad range of support to R&D and—in response to my noble friend Lord Borwick—we do not expect it to offer prizes as understood in a common sense. What “prizes” refers to in this context is better termed as research competition, where multiple teams of scientists attempt to solve essentially the same problem.

The noble Lords, Lord Patel and Lord Davies of Brixton, asked about ARIA’s scope and objective. The noble Lords, Lord Clement-Jones and Lord Ravensdale, also asked about the technologies which ARIA would fund. The Bill sets out ARIA’s functions, and in the policy statement we have also set out its design principles. But to uphold the autonomy which is at the heart of this new agency, only ARIA’s leadership itself can be responsible for specifically setting out its strategy and its funding priorities. It is not a blank cheque, as the noble Lord, Lord Fox, has suggested.

The noble Lord, Lord Rees of Ludlow, in his contribution asked whether what we are trying to achieve through ARIA could be delivered through UKRI. I reassure the noble Lord that, in designing ARIA, we carefully considered all delivery options to optimise its chances of success. The noble Lords, Lord Clement-Jones, Lord Kakkar and Lord Broers, also asked about how we make sure that ARIA will work hand in hand with UKRI and the wider research landscape. Of course, while we are diversifying our system, it will only work if it is cohesive. It is not always necessary to legislate for these sorts of relationships. Communication, openness and trust are things which ARIA’s leaders will need to have not just with UKRI but with other stakeholders across the entire ecosystem. We have been looking for exactly these qualities in our recruitment of ARIA’s CEO. I pay tribute to the creation of UKRI and the bringing together of the research councils and Innovate UK under one umbrella, a point that was noted by the noble Viscount, Lord Stansgate. His was an excellent contribution, and I hope we can look forward to further from him on this subject.

Lord Callanan (Con)

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I am sure it was equally as good as the first half of his speech and that the Whip has taken careful note. It is a principle of our Committees that we try not to have the same speeches we got at Second Reading made again—a point most Members tend to ignore—so the noble Lord is well positioned to make a new contribution in Committee. Most other Members could perhaps take note of the excellent example that he will be setting them.

I also recognise the sentiment of the noble Lord, Lord Rees of Ludlow, that the setting up of UKRI was not that long ago in the grand scheme of things. With an £8 billion budget, UKRI has system-wide responsibilities and with this comes a certain operating model. I refer the noble Lord, Lord Fox, to Professor Leyser’s other comments, where she said at her select committee appearance that UKRI’s responsibility to make the whole system work sometimes makes it harder to do the wild experimental things.

In contrast, as enabled by Clause 3 of the Bill, which has been the focus of a number of contributions from noble Lords, it is ARIA’s mandate to do the experimental things and push the frontiers of science. To achieve this, it must have a streamlined structure and minimal bureaucracy. In response to the noble Lord, Lord Rees, this goes beyond what is possible or desirable under the legislative framework and governance arrangements in place for UKRI as the system’s core funding agency.

In reply to the question put by the noble Lord, Lord Fox, as part of any Parliament it is usual to review our partner organisations to ensure that they are successfully fulfilling objectives on the Government’s behalf. The independent review of UKRI to which the noble Lord referred began yesterday under the leadership of Sir David Grant, and it will be reporting to Ministers in due course.

The noble Lord, Lord Rees, also mentioned a very important point about how ARIA’s success will be measured without constraining creativity. There are is a key point I would like to put to the noble Lord here. One of the key features of the ARIA model is its hands-on approach to project management, with projects constantly being re-evaluated and reassessed. ARIA’s agility means that programmes can not only start quickly, but they can also be halted quickly too. ARIA should not be judged on projects that fail in the short term because that is the nature of high-risk research.

The noble Lord, Lord Kakkar, in one of his typically excellent contributions, asked about how ARIA can truly be risk taking as a government arm’s-length body. We will have both legislative and non-legislative mechanisms to enable ARIA to operate boldly and autonomously. Clause 3 in the Bill equips ARIA to give particular weight to the potential benefits of high-risk research in carrying out its functions—not just what research it funds, but how it funds it. We will also set out in a future framework document and other agreements, a unique and specific set of financial and non-financial arrangements to cut unnecessary bureaucracy and ministerial control from ARIA’s operations. I hope that will also allay the concerns raised by the noble Lords, Lord Patel and Lord Broers, on protecting ARIA from day-to-day political pressure. The independent review of research bureaucracy being led by Professor Adam Tickell will also consider bureaucracy from a system-wide perspective. Interim findings will be produced this autumn, and we are expecting a final report to follow in early 2022.

In terms of governance, the noble Lord, Lord Patel, asked who the senior Minister with responsibility for ARIA will be. As my noble friend Lord Patten helpfully reminded us, as a manifesto commitment ARIA is a priority for the Prime Minister and the Cabinet. The Bill provides a specific role for the Secretary of State and any delegation of ministerial responsibility would be at the Secretary of State’s discretion.

I move on to the decision to exempt ARIA from freedom of information requests, which was raised by a number of noble Lords: the noble Lords, Lord Clement-Jones, Lord Davies of Brixton and Lord Fox, and the noble Viscount, Lord Stansgate. I reassure the House that the decision to omit ARIA from the FoI Act has not been taken lightly. To create the extraordinarily lean operating system that I have spoken about, we have had to consider what the most appropriate mechanisms to assure transparency and accountability are within ARIA. I thank my noble friend Lady Noakes for her support on this. Together, robust arrangements are in place that will provide a clear picture to Parliament and taxpayers about how ARIA’s activities are funded and where it spends its money. So I politely refute the views of the noble Lord, Lord Fox, on this.

First, the Bill requires ARIA to submit an annual report and a statement of accounts, which will be laid before Parliament. Secondly, ARIA will be audited by the National Audit Office and will be the subject of value-for-money assessments. Thirdly, ARIA will interact with Select Committees of this House and the other place in the normal way. Finally, we will draw up a framework document, detailing ARIA’s relationship with BEIS and further reporting requirements, such as details of what is published in the annual report. It is also an important fact that other bodies subject to the FoI Act, such as universities and government departments —including my own, BEIS—will still process requests about their activities with ARIA in the usual way.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests in DARPA. It is an interesting fact that, when making an FoI request in the US, requesters are required to consider paying applicable fees of up to $25—I think that that is an excellent idea. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, there is not a like-for-like comparison to the FoI process in the UK, where, as I am sure the noble Lord will be aware, we get hundreds of what I call “sweeping requests” from people fishing for information when they are not really sure what they want but think that there might be something there, so they pour in FoI requests. Therefore, it is not right to assume that ARIA will receive a similar amount of FoI requests to DARPA.

The noble Lords, Lord Clement-Jones and Lord Fox, and my noble friend Lord Borwick asked about whether the Government will publish the framework document during the passage of the Bill. I should be clear that the framework document will not set a vision or strategy for ARIA—as I have said, that is for the organisation itself. It is a governance document that will follow the Treasury’s standard template and set out the role of BEIS as ARIA’s sponsoring department, its accountability, decision-making and financial management. Given the nature of its content, the framework document must be agreed with ARIA’s senior leadership, for which we are still recruiting. We are therefore not able to publish a draft framework document at this stage, but I would like to reassure the House that I will do so as soon as I am able to.

I thank the noble Baroness, Lady Chapman, for her general support, from the Opposition’s point of view, for the Bill. She rightly asked about the provisions in the Bill to exempt ARIA from public contract regulations and how we assure the appropriate propriety. We have provided a non-legislative commitment for an independent internal auditor to report on ARIA’s procurement activities, demonstrating transparency and good governance. ARIA’s framework document, which I just referred to, will also set out the expectations for conflict-of-interest procedures, in line with practice across government. I thank my noble friend Lord Borwick for his thoughtful comments on this. However, as a further safeguard, Schedule 1 provides the Secretary of State with the power to set out a procedure in legislation should it be required in the future. We will bring forward draft regulations for this power, for illustrative purposes, as the Bill goes through the House.

The noble Lord, Lord Davies of Brixton, and my noble friends Lady Noakes and Lord Patten asked about how we attract these high-risk ideas and the exceptional people who will pursue them, or, as the noble Viscount, Lord Stansgate, eloquently put it: today’s Alan Turing or Barnes Wallis. The recruitment campaign for the CEO launched on 1 June and will aim to conclude in the coming weeks. We are looking for the ability to provide inspiring leadership to high-performing teams.

In response to my noble friend Lord Borwick, we will soon be launching campaigns for the chairman and other non-executive members through an open and fair ministerial appointments process so that we are able to recruit the right talent to work alongside the CEO as a complementary leadership team. We recognise the need to ensure a competitive salary for this position and are in discussions with the Treasury. I will update the House as appropriate.

I welcome the considered contributions from my noble friend Lord Lansley, the noble Lord, Lord Kakkar, and the noble Viscount, Lord Stansgate, on the Haldane principle and ARIA’s use of peer review. It is right that at its core this is about scientists judging ideas on their merits, and that is at the heart of ARIA’s approach. However, the concept that funding proposals should be assessed by peer review is embedded within the Haldane principle, and I agree that that will not always be appropriate for ARIA, which will have an innovative approach to funding and will seek to empower exceptional scientists to start—and stop—projects quickly.

The noble Lord, Lord Patel, asked about research cost sharing, by which I assume he means with universities. We are considering the appropriate arrangements for funding research projects in universities to ensure both that they are properly costed and that those costs are met to enable transformative scientific research. Details on expectations for ARIA in that regard will be set out at a later date.

My noble friend Lord Borwick queried the definition of “property” in Clause 2. The Bill uses the definition “that which a person owns”. In exercising its functions, ARIA may acquire and own both physical property and intangible property, such as intellectual property. “Restoration” means “to return”, so ARIA can own a piece of research equipment that it can loan out on the condition that it is returned to ARIA within a specific timeframe. I hope this clarifies the issue for my noble friend and that he agrees that an amendment is therefore unnecessary.

Lord Callanan (Con)

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It can fund the purchase of a piece of research equipment, which ARIA then owns, and it can loan it out on the condition that it is then returned within a specific timeframe. I am not quite sure why the noble Lord is confused but perhaps we can return to this issue in Committee.

I have tried my best to address most if not all of the points that have been made today. I am sorry to detain the House at such a late hour but I am deeply encouraged by its general support, albeit with some reservations, for the dedicated funding of high-risk research. I look forward to continued engagement with all sides as we progress the Bill through the House. I therefore commend the Bill to the House and beg to move.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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I thank the noble Viscount, Lord Stansgate, for his intervention. When he was unable to complete his remarks at Second Reading, he said that he would come back in Committee and add to what he had said—which makes a change from what normally happens, with people coming back to repeat their Second Reading speeches. It is good to hear from the noble Viscount.

I am also delighted to hear the unequivocal support from the Opposition Benches for that great neo-conservative, Donald Rumsfeld—quoted by both Cross-Benchers and the Liberal Democrats. A great man indeed.

Amendments 1, 21, 25 and 26 create requirements that seek to narrow, or to have the Government direct, ARIA’s funding. Amendment 1 would require ARIA to pursue projects that contribute to a sustainable and resilient society, planet and economy. Amendment 25 seeks to specify a relationship with UKRI. Amendments 21 and 26 would set ARIA’s core mission as to support achieving the target established in Section 1 of the Climate Change Act. Once achieved, ARIA’s mission would then be set every five years by government by an affirmative SI. Of course, I thank noble Lords for tabling these timely and topical amendments, particularly given the partial success at COP 26 last week.

Starting with Amendment 1 from the noble Lord, Lord Ravensdale, let me point him to Clause 2(6), where, in exercising its functions, ARIA must have regard to contributing to economic growth, promoting scientific innovation and invention, or improving the quality of life. These considerations ensure that ARIA’s activities are geared towards beneficial outcomes, which will of course include sustainability and resilience. Of course, this broad characterisation of the benefits of ARIA’s activities does not represent the limits of ambition for individual ARIA programmes, or substitute for ARIA’s unique tolerance to failure as set out in Clause 3.

That brings me on to Amendment 27 from my noble friend Lord Lansley. I have heard consistently from the scientific community that ARIA must have high risk tolerance to succeed, and indeed that gets to the heart of what ARIA is all about. It is therefore important, in my view, that we express that idea precisely. My noble friend’s alternative articulation of risk tolerance, for which I thank him, does not specify the particular weight that ARIA may give to this type of activity, and I think that is crucial, particularly for the NAO’s assessment of whether ARIA’s activities are in line with its stated functions.

Lord Callanan (Con)

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This group of amendments relates to the balance that we need to strike between ARIA’s independence from and accountability to government, which is a difficult balance to draw. I shall begin with the amendments relating to the composition of ARIA’s board.

Amendment 2 from my noble friend Lady Noakes would limit the executives on ARIA’s board to just the CEO and the CFO. I appreciate the spirit of her amendments, trying to ensure that ARIA is an agile body with a streamlined board, but we have decided that the number of executives should be at least four. We have said that in the interests of representing the different executive functions within the organisations. Similarly, we have imposed a maximum number to try to keep it as efficient as possible.

As the majority of the board members need to be non-executives, in our view, that means that the minimum total number of board members will be nine, to ensure a majority of non-executives, and our expected maximum is 15. We believe that this is very much in line with standard practice. It is not usual for legislation to specify quoracy arrangements, and the Bill’s current provisions mirror some of the procedural arrangements that are in the Higher Education and Research Act. I am also happy to confirm that it is not our intention to offer non-executive members pensions or gratuities—I do not want to get into a definition of gratuities—but it is commonplace to ensure that the provision is available.

The drafting that we have used is also found in the Higher Education and Research Act 2017 for UKRI non-executives under paragraph 7(2) of Schedule 9, and indeed in the Energy Act 2013 for the Office for Nuclear Regulation’s non-executives under paragraph 11(3) of Schedule 7. I therefore do not see that Amendment 8 in the name of my noble friend Lady Noakes is necessary.

I turn to Amendment 3. In our view, the Government’s Chief Scientific Adviser will bring a somewhat unique perspective to the ARIA board in their independent advisory capacity, with awareness of science and technology across government. It is important to emphasise that he or she will be on the board in their capacity as an independent adviser, not in their science and technology strategy capacity. Indeed, it is perfectly possible for there to be two different people in those roles. It is also important to emphasise that they will not do so on a privileged basis. Other non-executives will have been appointed for their expertise, their wide experience and their special knowledge of different facets of the research and development system, and they will equally provide ARIA with independent advice in the best interests of the organisation and its objectives, as the Chief Scientific Adviser will.

Lord Callanan (Con)

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That is the exact point. At the moment they are occupied by the same person, but at some point in the future there might be other arrangements. It is just to ensure that the Secretary of State has the maximum flexibility.

I turn to the recruitment and appointment of ARIA’s board members. I am happy to confirm to the noble Lord, Lord Davies, that we will of course follow the normal and usual procedures for the appointment of directors and non-executive directors of public bodies. Amendment 6 seeks to disqualify a non-executive member if the individual has been a Minister of the Crown or a person employed by a government department. While I understand that the likely intention of this amendment—which will perhaps make my noble friend Lady Noakes and some of the contributors on this grouping unpopular—is to ensure that we have the highest calibre of individuals represented on ARIA’s board, I believe it could have the opposite effect. It would undermine the Secretary of State’s ability to run an open and fair recruitment process, as it would narrow the search field on a somewhat arbitrary basis. It could also prevent the appointment of an individual with demonstrable scientific or technical experience—some of whom may well be in this Room today—just because that individual had served in public office or as a civil servant. That seems very unfair to me, and I see no obvious logical reason for depriving ARIA of such expertise.

Amendments 5 and 7 would require the Secretary of State to inform the Commons Science and Technology Committee before appointing ARIA’s first CEO and chair, and to make arrangements should the committee wish to call them for evidence. As noble Lords are aware, we are currently recruiting for the CEO role. We will launch the chairman recruitment following the conclusion of that process, so that we are able to recruit the right person to work alongside the CEO as a complementary leadership team. I can confirm that we will of course write to the committee on the announcement of both positions; it may then choose to invite the appointee to give evidence to it on their vision and functions in ARIA. I strongly submit that it is not for the Government or Parliament to specify in legislation what a Select Committee should or should not do. It is perfectly capable of deciding for itself whether it wishes to summon individuals to give evidence—or not, as the case may be. Given the robust appointment process and the committee’s standing powers to invite witnesses to give evidence, I really believe that a special provision in legislation for a pre-appointment hearing is not necessary.

I acknowledge that the balance between giving ARIA the autonomy that I think everybody here is agreed it should have and ensuring a certain amount of accountability to government, the National Audit Office, et cetera, is an issue on which noble Lords will hold different views. It is a difficult balance to strike, but I hope that I have been able to convey to the Committee why we believe we have the correct balance as it stands. On that basis, I hope noble Lords will not press their amendments.

Lord Callanan (Con)

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I will write to the noble Lord with the legal details he requires.

Lord Callanan (Con)

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I thank noble Lords who have contributed. These amendments relate to ARIA’s annual report and to other information to be provided to Parliament. As set out in Schedule 1, ARIA’s accounts must be prepared annually, alongside an annual report, which it will send to the Secretary of State, who must lay the report in Parliament.

Addressing Amendment 11 first, I am happy to assure the noble Baroness that ARIA will be audited by the National Audit Office—and I reassure the noble Viscount, Lord Stansgate, on that as well. The point was also well made by my noble friend Lady Noakes that the National Audit Office will be able to conduct value-for-money examinations of ARIA; the National Audit Office never shows any reticence to do precisely that. Indeed, it is able to do that as per the National Audit Act 1983 in the usual way, and the same controls apply to many other public organisations. As some of my spending schemes, within my responsibility, have been subject to National Audit Office examinations, I can assure noble Lords that it is extremely rigorous, as indeed it should be.

Other amendments relate to the specific contents of ARIA’s annual report. I agree on the importance of robust transparency and reporting arrangements in this regard. That is why ARIA’s annual report will align with the Government Financial Reporting Manual, which, for example, could require ARIA to publish information on its aims and achievements, performance, organisational structure, corporate governance and accountability.

On the list of projects that was asked for in Amendment 12 by the noble Baroness, Lady Chapman, publishing a list of delivery partners is not one, in my view, for primary legislation. The details of the annual report will be part of the framework document and, of course, the annual accounts will provide details of exactly where ARIA spends its money.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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My Lords, I thank the noble Viscount, Lord Stansgate, for tabling these amendments and for the discussions so far. I will not comment at length, given the discussions that we had last week about ARIA’s research focus and relationship with other research organisations, but I will respond to noble Lords who have spoken today.

To take up the point of my noble friend Lord Willetts, ARIA needs to be as complementary as possible in its functions to other research and innovation organisations. This of course includes UKRI, which retains its system-wide responsibilities and also funds high-risk research. However, ARIA’s fit within this system goes beyond just having regard to the work of other players; it is about actively engaging and making the most of the system. We are currently looking to recruit a brilliant CEO who will form a collaborative and open network of partners right across the UK’s R&D landscape as part of embedding ARIA as a high-functioning organisation for years to come.

Amendment 49 is on a new subject, ARIA’s title. I agree that the focus should be on what the agency does, but let me say a few words about why we decided to call it the Advanced Research and Invention Agency. The noble Viscount, Lord Stansgate, will be aware that ARPA was the title of the US agency originally established in 1958; ARPA subsequently evolved into DARPA and the model was then developed, as my noble friend Lord Vaizey reminded us, in forming ARPA-E, IARPA and ARPA-H—somebody has been having great fun with the acronyms. It is also the inspiration for the agency that we are discussing today.

However, I stress that ARPA is only the inspiration. ARIA will learn many lessons from the original ARPA, but it is not a carbon copy. It takes into account what we think to be the distinct UK R&D landscape. As we have discussed, given the levers that the Government already have to gear R&D funding to national and strategic priorities, one key departure is that we are not mandating a specific area, such as defence, that ARIA must focus on. There may be other areas and ways in which ARIA’s incoming leadership wish to adapt the original ARPA model, given what we think is a fairly unique context. Calling this new agency ARPA could give a somewhat confusing message about its functions and easily result in it being mistaken for a purely defence-focused research funding agency. I strongly believe that ARIA must have its own brand and identity; that will be integral and crucial to its success.

I also believe that “invention” is a useful element of the agency’s title, which has been well received during the passage of the Bill in the other place and, so far, in our House, as well as by many in the research community. Together, “advanced”, “research” and “invention” signify that ARIA will be focused on high-risk research and clear, soluble challenges in the development and deployment of what we hope will be breakthrough technology. I completely recognise that the agency could be called many things—we could probably get 20 or 30 different examples in this Room alone—but I assure noble Lords that we have thought carefully about all the many options and come to the position, across government and with contributions from all departments, that the Advanced Research and Invention Agency is a clear, bold title, which clearly signifies what we want the agency to do and how we want its functions to evolve. With that explanation, I hope that the noble Viscount, Lord Stansgate, will not feel the need to press his amendments.

Lord Callanan (Con)

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I start with Amendment 24 from the noble Baroness, Lady Chapman, Amendment 32A from the noble Viscount, Lord Stansgate, and Amendment 39 from the noble Lord, Lord Clement-Jones, which all deal with the Freedom of Information Act. As I said at Second Reading, our decision not to subject ARIA to FoI was made after much consideration. As on so many of these things, I find myself in full agreement with my noble friend Lady Noakes and I thank my noble friend Lord Patten for his support during the Second Reading debate.

I was hoping that some of my noble friends who have been in government would comment on how they found the Freedom of Information Act in government. From my point of view, it is a truly malign piece of legislation. At the risk of trashing his reputation even further in the Labour Party, I agree with Tony Blair on this matter. I agree with the noble Lord, Lord Fox, that all information on government contracts et cetera should be published, even if it is embarrassing for the Government. However, I think he will find that all the contracts to which he refers were not released under freedom of information but under normal government contract transparency.

In my experience, not much is ever released under freedom of information that causes any problems for government; it is normally stuff that is released in the normal transparency of contract negotiations and government transparency returns. I am fully in favour of decisions, and information about them, being released, but I fail to see how the processology of government benefits at all from FoI disclosures. I find that people just modify their behaviour and communication to take account of the fact that private conversations may be released in the future. I genuinely do not think that it achieves anything at all, but that is my personal perspective and not necessarily a matter for this debate. It was also new to me to discover at Second Reading that the US charges a fee for freedom of information disclosures. I think that is an excellent idea, even if it is only a nominal amount to get rid of some of the somewhat spurious fishing expeditions that many go people in for. Anyway, that is a separate matter for different discussions.

In contrast to UKRI, which comprises the seven research councils, ARIA is a new, unique organisation that we anticipate will attract a disproportionate number of FoI requests for its size. On the point made by the noble Lord, Lord Browne, I would reiterate, as I did at Second Reading, that comparisons between ARIA and DARPA do not hold, precisely because, as I said, DARPA adds a standard fee to the requester, which is not comparable to the situation in the UK, although we should certainly consider it.

Lord Callanan (Con)

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Because it is a fairly new and exciting agency doing new things. I suppose we will have to disagree on that. There is no point and nothing to be gained by doing otherwise. In designing ARIA, we are envisaging a lean agency that will employ people in the tens. I do not know how many people across government are currently employed to respond to the hundreds if not thousands of FoI requests that we get, but given the bundles of documentation that sometimes pass my desk, there must be many hundreds of civil servants engaged in doing nothing other than responding to these fishing expeditions. As I said, ARIA will be an agency employing people in the tens, with around 1% of the R&D budget.

Lord Callanan (Con)

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I can assure the noble Lord that people need no invitation from me to table FoI requests to my department. They are well capable of doing it. I think some people already have forms set up on their word processors to submit some of these things with gay abandon.

Anyway, in designing ARIA we are envisaging an agency that will be lean and streamlined. It will employ people in the tens, and we strongly believe that it needs to be agile and efficient. “Lean”, “streamlined” and “efficient” are not always words that are used to describe nominal usual public bodies. However, as my noble friend Lady Noakes has attested to, this context has always been at the forefront of our minds in bringing forward this Bill.

We have carefully considered which procedures are conducive to ARIA’s success. I recognise here that part of ARIA’s success depends on it gaining public trust and being transparent and accountable for its activities, as the noble Lord, Lord Fox, called for. I believe that we have found the right balance in freeing this small agency to fund high-risk, critical research but to do it differently, with appropriate visibility to Parliament and taxpayers.

The noble Lord, Lord Broers, raised some concerns about the protection of technological gains in sensitive projects. I note at this point that there are, of course, existing commercial confidentiality exemptions to the FoI Act, as referenced by the noble Lord, Lord Clement-Jones. All requests still require processing and we are conscious of this in making the decisions to exclude ARIA.

Much has also been said on transparency today in the contributions from the noble Baroness, Lady Chapman, and the noble Viscount, Lord Stansgate. I maintain that the right provisions to hold ARIA to account are the ones that I outlined at Second Reading. They are the publishing of an annual report and statement of accounts, which will be laid before Parliament, as set out in the Bill; being subject to annual audits by the National Audit Office; and being accountable to Parliament through the CEO, who will be the agency’s accounting officer.

In addition, as the noble Lord, Lord Browne, has pointed out, ARIA will remain a BEIS arm’s-length body, and my department will work with ARIA’s leadership to agree the appropriate arrangements for its scrutiny and oversight in the interests of good governance.

We expect ARIA, as far as possible, to have a culture of transparency, and we hope that will be championed by its incoming leadership. Working across the R&D community, and indeed with Parliament and the public, to communicate ARIA’s activities will be critical to ARIA’s commercial and research success. Given that, I hope the Committee will understand that I cannot accept or agree with this amendment. I am sure the noble Lord, Lord Clement-Jones, has a different opinion.

I turn now to the exemption the Bill affords ARIA from the Public Contracts Regulations 2015, and to Amendments 24 and 42 in the name of the noble Baroness, Lady Chapman. I think she omitted to speak in favour of her amendment, but I will respond to it anyway.

Our decision to exempt ARIA from the contracting authority obligations in the Public Contracts Regulations hinges on two critical expectations: first, that ARIA will be commissioning and contracting others to do research for it; and, secondly, that ARIA’s programme managers should be acting and investing with agility and speed. When ARIA is commissioning and contracting others to do research for it, it will be operating in a fundamentally different way from traditional R&D grant-making where procurement rules do not apply.

In my view, it is therefore appropriate for ARIA to be given freedom from procurement rules to ensure that the agency has greater flexibility in its contractual arrangements. However, to counterbalance that and to provide the assurance that this freedom will be used properly, we have provided a non-legislative commitment for an independent auditor to report annually on ARIA’s procurement activity. This measure, alongside ARIA’s robust conflict of interest procedures, the wider accountability I just talked about, and governance provisions, are an appropriate set of arrangements. I hope that reassures the Committee that we have taken all these matters into consideration and that this exemption is both essential to ARIA’s effective function and proportionate to the tasks it faces. Therefore, I invite noble Lords not to press their amendments.

Lord Callanan (Con)

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Well, it may surprise the noble Baroness, Lady Chapman, to know that I largely agree with what she had to say on this. I agree with the sentiments that Select Committees should continue to scrutinise the work of arm’s-length bodies. However, as the noble Lord, Lord Fox, said, interactions with Select Committees are governed by a different set of rules. They are governed by a long-standing convention set out in the Osmotherly rules, which indicate that members of arm’s-length bodies

“should be as helpful as possible in providing accurate, truthful and full information when giving evidence”

to Select Committees. Furthermore, under the House’s Standing Orders, Select Committees have the power to

“send for persons, papers and records”

relevant to their terms of reference, and for anyone to refuse such a request would be considered contempt of the House.

Finally, as I have said separately, ARIA’s CEO will be personally responsible to the Public Accounts Committee, as the accounting officer. So I do really believe that Select Committees do not need our help in legislation, and probably would not want it, to be able to do their job properly and efficiently. Such guidance is sufficient for ensuring a co-operative relationship between other public bodies and the relevant committees across both Houses. We have not set these things out in legislation before, and I do not believe it should be any different for ARIA.

I hope, therefore, that, with the assurances I have been able to set out—that ARIA will work with Select Committees in the normal way, as other arm’s-length bodies do—it will not be necessary to include any specific provisions in the Bill to enable it to happen.

Lord Callanan (Con)

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My Lords, the Government have brought forward Amendments 35, 36, 44, 45, 46 and 48 in response to your Lordships’ Delegated Powers and Regulatory Reform Committee’s report on the Bill. I take this opportunity to thank the committee very much for its careful consideration of the Bill and the important scrutiny it has provided. One of its recommendations was that the power to make consequential provision currently contained in Clause 10 is too broad and should be omitted. I have reflected on the committee’s position and consequently given notice of my intention to oppose the Question that Clause 10 stand part of the Bill. Amendment 36 would introduce a much narrower and more specific power to make consequential amendments into Clause 8—the only remaining place it would be required.

So I will start by saying that the power to dissolve ARIA through draft affirmative regulations made under Clause 8 is, I believe, an important part of the Bill. Although the DPRRC also raised concerns about this power, there is a strong policy rationale and a clear precedent for this particular delegation of power. As the power can be exercised only 10 years after the Bill receives Royal Assent, I hope that that will give your Lordships sufficient indication of our long-term commitment to ARIA. We have clearly heard that patience will be essential if ARIA is to successfully pursue its most ambitious research and innovation. It must therefore have the opportunity to prove itself before it is judged. I therefore welcome the Commons Science and Technology Committee’s recognition in its report into ARIA that

“these projects will take a long time, potentially 10-15 years, to ‘bear fruit’”.

In terms of precedent, under powers set out in the Public Bodies Act 2011, several bodies established by primary legislation have been dissolved using secondary legislation. The Administrative Justice and Tribunals Council, for example, was created by the Tribunals, Courts and Enforcement Act 2007 and abolished using powers in the Public Bodies Act in 2013. I of course recognise that the super-affirmative procedure was applied in such instances, but in that particular case this was appropriate in the context of much broader powers. The Public Bodies Act gave Ministers delegated powers not just to abolish bodies but to merge them or change their governance structure and functions. This was also in the context of widespread public body reform, and it was therefore appropriate that the use of the powers was subject to a higher level of scrutiny.

In contrast, the power in Clause 8 is narrow, such that ARIA can only be dissolved. It cannot be merged or have its functions or governance changed in any way, as set out in my response to the DPRRC last week. I hope I have therefore provided sufficient reassurances that this power is justified.

I turn to the revised power to make consequential provision that Amendment 36 introduces. The first thing to say is that consequential provision could now be made in consequence of regulations made only under Clause 8, rather than any provision of the Bill, which represents a substantial narrowing of the previous power contained in Clause 10, which I will oppose.

The second point to emphasise is that, as a result, the power could be exercised only on one occasion, obviously. ARIA can be dissolved only once, and there would be a single opportunity to make consequential amendments in this way. However, ARIA could not be dissolved for at least 10 years, so at least 10 years’ worth of legislation will be passed or made before the power to make consequential amendments could be exercised. It is likely that there will be references to ARIA in those 10 years of future legislation. This amendment extends the power to make consequential amendments to legislation whenever passed or made, so references to ARIA that might appear in future can be removed, leaving a tidy and orderly statute book. I hope that all noble Lords agree that this is a sensible approach.

The final point to make here is that, as a result of this change to the power to make consequential provision, minor and technical changes to other parts of the Bill are required. Amendments 35, 44, 45, 46 and 48 to Clauses 8(4)(e), 11, 12 and 14 fall into that category. These correct the Clause 8 provisions and those on regulations, interpretation and commencement to reflect the replacement of Clause 10. They are consequential on that substantive change and are therefore necessary.

I hope that noble Lords will take a similar view and recognise that, in bringing forward these amendments, we are both taking the right approach and demonstrating the Government’s commitment to engage with and act on the DPRRC’s recommendations. I therefore beg to move.

Lord Callanan (Con)

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I can be very brief, because I do not have a lot to add to what I said earlier, beyond acknowledging to the noble Lord, Lord Fox, that it might have been helpful for me to write a “Dear colleagues” letter informing him and other Members that we had tabled these amendments. They did have the information in advance, but it may have been more helpful specifically to draw noble Lords’ attention to it.

In response to the noble Baroness, Lady Chapman, I have set out why we think the power is justified. In terms of asking us to set out further thoughts on how we might wind it down, we have not even established it yet. Beyond taking the power potentially to do this in 10 years’ time, on the specific circumstances in which this might arise and what might happen in consequence, Parliament will clearly be kept informed through the normal statutory instrument process—

Lord Callanan (Con)

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Certainly I apologise to the noble Baroness if she interpreted my remarks as mocking: I was not at all implying that. I was just pointing out that we are still in the process of setting up the agency and recruiting the senior leadership team. I am justifying why the power is in the Bill. The noble Baroness asked me to set out further thoughts on how we might write down something that might happen in 10 years’ time. I will write to her if there is any further information, but I think I am correct in saying that not a great deal of thought has been given to how we might abolish something that we have not yet set up. I did not intend a mocking tone: it was just a point of fact.

I do not have anything to add to what I said earlier. We think the power is justified and there is a precedent for this—but I totally accept that this might be a point of difference between us.

Lord Callanan (Con)

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I thank the noble Baroness, Lady Noakes, for her comments and for stepping so ably into the breach to represent my noble friend Lady Neville-Rolfe in her amendment. It is perfectly right that we have returned once again to the central issue of ARIA’s independence, because it is a core part of equipping it for its unique funding approach and for the distinct contribution that we expect it to make to the UK’s R&D landscape.

I support the ambition for the Secretary of State to be mindful of protecting ARIA’s independence in all its interactions with the organisations, where such interactions are required by the Secretary of State’s very limited functions. However, I differ with my noble friend on how we protect its independence in a practical way. I submit that it would be the accumulation of many small things—perhaps creeping influence over strategy, new mechanisms of oversight, or ever-increasing reporting demands on issues of political priority—that would be the arena in which ARIA’s independence would be compromised or lost.

My noble friend Lord Willetts, who is not in his place, spoke eloquently on Wednesday about the challenges he has experienced in trying to carve out space for new approaches in the current R&D system. At that stage, we also had a fairly extensive debate on the accumulated obligations placed on ARIA. We considered how those obligations might be balanced with this vital principle of independence, in the context of amendments which, I believe, would have diminished ARIA’s autonomy in a way that would have been entirely counterproductive. If we truly wish to safeguard ARIA’s independence, it is on those issues that we must look to do it, and there is no easy alternative.

I do not suggest that this is a moment to reopen that debate, but I submit that we cannot have this conversation on independence in an abstract way, divorced from consideration of the practical and operational ways in which it will or will not be given to ARIA. I am sure that there will be plentiful opportunities to discuss this important issue in future. I hope, on the basis of the reassurances I have been able to provide, that my noble friend will, on behalf of my noble friend Lady Neville-Rolfe, feel able to withdraw the amendment today.

Lord Callanan (Con)

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My Lords, the Bill as introduced to the House added ARIA to the lists of reserved bodies within the three devolution Acts. That approach would have conferred on ARIA the same constitutional status as UKRI, which is the UK’s primary public R&D funder. More importantly, it would also have ensured ARIA’s independence by placing it outside the competence of the devolved legislatures.

Since then, my ministerial colleagues and officials have been in close discussions with all three devolved Administrations throughout the passage of the Bill, on the need for legislative consent Motions to be passed in the Scottish Parliament, the Senedd and the Northern Ireland Assembly. During those discussions, principled objections were raised to the creation of ARIA as a reserved body. As a result, we have worked—as I am sure the Committee would expect us to do—to develop an alternative way of guaranteeing ARIA’s independence, through something called the “agreement on the independence of ARIA”, which all four Administrations of the UK have said that they will abide by, and which will sit beneath the overarching memorandum of understanding on devolution.

I am delighted that the text of this document has now been agreed by all four Administrations of the UK and that we have been able to share it with noble Lords in advance of this discussion. I apologise for the fact that we were not able to provide the opportunity for noble Lords to consider this document at greater length before the Committee. However, I wanted to share it as soon as possible, albeit fairly shortly in advance, rather than not sharing it at all. I am confident that this agreement will allow ARIA’s important characteristics to be protected. On that basis, I am content to remove, through Amendments 37 and 40, the reservations that we originally placed in the Bill.

ARIA will remain a single UK-wide organisation able to find and fund the most exciting projects in all regions and nations of the UK. Through the agreement, all four Administrations of the UK have committed to upholding the important principles of ARIA’s strategic autonomy, operational autonomy and minimal bureaucracy.

Lord Callanan (Con)

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My apologies—we shared it with those who had contributed to the debate on the subject previously. In retrospect, we should perhaps have shared it more widely; we will now do so.

As my noble friend Lady Bloomfield set out last week, all four Administrations are equally committed to facilitating ARIA’s seamless operation throughout the UK. I hope that this will provide some comfort, in particular to the noble Baroness, Lady Randerson, who raised some important points on this issue at the time. My department will remain as ARIA’s sponsoring department to reflect the power of the UK Secretary of State, who alone has the power to fund ARIA through Clause 4 of the Bill. In our view, the accountability for that use of public money must therefore flow through the UK Government.

In addition to these protections for ARIA’s autonomy, the agreement provides an input mechanism from a new forum of science advisers to the four Administrations of the UK, directly to ARIA’s executive leadership. While there will be no obligation for ARIA specifically to respond to this input, the scientific challenges relevant to the policy priorities of all four Governments will be jointly communicated.

I appreciate that noble Lords have raised questions on how this will work in detail. At the moment this is necessarily a high-level document and clearly there is more work to do, at a working level, to flesh out this agreement between the UK Government and the devolved Administrations. This work is ongoing and will be the subject of further work in the months to come. However, as a result of it, Ministers in Scotland, Wales and Northern Ireland have all now given in-principle consent for the Bill on the basis of this approach. On that basis, I hope that noble Lords will similarly be able to support it. I beg to move.

Lord Callanan (Con)

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I thank noble Lords for their comments. First, on the agreement, the text has been agreed by Ministers in Scotland, Wales and Northern Ireland. I thought it best to share it as soon as possible; I wanted to share it in advance—it was not far in advance but it was slightly in advance—rather than not share it at all. We originally committed to sharing it ahead of Report; I will ensure that all noble Lords have the opportunity properly to scrutinise it ahead of that and we can return to the issue then. Once noble Lords have had an opportunity to discuss it, I would be very happy to arrange a further briefing with officials for anyone interested in this subject.

Lord Callanan (Con)

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Amendments 38, 41 and 43 are consequential on the omission of Clause 10 from the Bill and the narrowing of the power we talked about earlier to make consequential amendments through regulations. The Delegated Powers and Regulatory Reform Committee suggested that any necessary consequential amendments should be added to Schedule 3, so we are responding to that recommendation here. The amendments apply to ARIA a set of relevant obligations that would usually apply to “public authorities”, which are sometimes defined in reference to Schedule 1 to the Freedom of Information Act 2000, which, of course, ARIA is not listed in. Bespoke provisions therefore are required.

I will briefly summarise the obligations that will apply to ARIA as a result of these amendments. The first relate to the Income Tax (Earnings and Pensions) Act 2003 and the Social Security Contributions (Intermediaries) Regulations 2000, with which I am sure all noble Lords are intimately familiar. This legislation includes the off-payroll working rules, which are designed to ensure that individuals working like employees but through their own company—usually a personal service company—pay broadly the same income tax and national insurance contributions as those who are directly employed. These rules have been reformed over the past five years to improve compliance by moving the responsibility for determining whether the off-payroll working rules apply from the individual’s personal service company to the client engaging them. That reform came into effect in the public sector in April 2017, and in the private and voluntary sectors on 6 April this year. I do not believe that there is a justification for ARIA to be treated differently from any other public bodies here.

The second element is the Data Protection Act 2018, which gives the GDPR effect in UK law. Through the Bill as it was introduced, ARIA would already be subject to the normal requirements of the GDPR, but the obligations on public authorities are different, in terms of the bases for data processing and governance and oversight arrangements. Similarly, in this case, I do not believe that there is a justification for ARIA to be treated differently from other comparable bodies in this important area.

Finally, the amendments to the Enterprise Act 2016 and Small Business, Enterprise and Employment Act 2015 allow us to avoid a situation where ARIA is considered part of the private sector for the purposes of business impact assessments of regulatory activities. Again, I do not believe that it is appropriate for impacts to ARIA, as a public sector body, to be included in any such considerations. I also do not believe that it would be appropriate for ARIA to avail itself of the support available through the office of the Small Business Commissioner, which is intended for private sector entities. So, while public authority obligations in other legislation have been considered, they were not assessed to be sufficiently relevant to ARIA to make further amendments here. I beg to move.

Lord Callanan (Con)

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I thank Members who have contributed to this brief debate. I am disappointed that the noble Lord, Lord Browne, did not exercise us again with his Daily Telegraph subscription, which I was very impressed by. I congratulate the noble Lord, Lord Fox, on saving the best to last with his bravura amendment. He has obviously been searching his thesaurus over the weekend for appropriate analogies. It was well moved and I do understand the seriousness of the issue and the noble Lord’s intention, which relates to the desire, as we have heard, to understand more details of how ARIA will work in practice.

As I mentioned at Second Reading, ARIA’s framework document is a governance document. It is a standard requirement for public bodies—which, of course, ARIA will be. As suggested in the noble Lord’s amendment, it will set the parameters for ARIA’s relationship with BEIS, as its sponsoring department. That is indeed its very purpose.

The noble Lord, Lord Clement-Jones, referred to the guidance published by Her Majesty’s Treasury, and I reassure him that, by drawing on the Treasury’s guidance, ARIA’s framework document will ensure that the agency and BEIS work effectively together. It will outline ARIA’s accountability, its decision-making and its financial management structures, along with some broader reporting requirements. However, it is not the appropriate place to codify ARIA’s relationship with other government departments. Other departments have no accountability relationship with ARIA, so its terms of engagement with them are a question of strategy rather than governance. The framework document will not contain any information relating to ARIA’s strategy in terms of collaboration, its project portfolio or indeed, its areas of research interest, all of which, I know, are of great interest to noble Lords.

On the sequencing of publication and commencement, given that both ARIA and the department need to be in agreement on the framework document, I reiterate, as I said at Second Reading, that it is therefore not possible to finalise it before ARIA’s senior leadership is in place, as my noble friend Lady Noakes, pointed out. It is not possible for the framework document to be published in advance of ARIA coming into legal existence. Similarly, the framework document for UKRI, for example, was finalised and published after that body came into legal existence.

Finally, it is worth noting that framework documents are live publications and are amended regularly to reflect any changes in the sponsor department or indeed the arm’s-length body itself, and they are all thoroughly reviewed every three years.

On the point raised by the noble Viscount, Lord Stansgate, on whether the framework document will outline the role of the Government’s Chief Scientific Adviser on ARIA, it is likely to. I will be happy to write to the noble Viscount with any more detail that I can on that.

I hope therefore that noble Lords understand that, in our view, there is a logical process to follow in the establishment of a public body and therefore that they will accept my assurance that we will publish the finalised framework document as soon as practicably possible.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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I thank noble Lords for what has been an excellent and very well thought-through debate. While the noble Baroness, Lady Chapman, was lucky enough to be scratching bits from her contribution, I found that I was adding lots more to mine to take account of some of the excellent contributions. The debate showed the House at its finest, even if I do not necessarily agree with all the points raised, as I will outline.

Amendment 1, introduced by the noble Lord, Lord Browne, imposes a number of conditions on ARIA’s financial support. He made his case well, raising a number of important issues regarding the UK’s approach to capturing value from public investment in R&D, the role of public IP retention within that, the Government’s powers to intervene in acquisitions and our approach in so doing. I have listened carefully to all the contributions made by noble Lords on this matter, and I think that there is some measure of common agreement. We are all agreed that public investment in R&D should indeed drive long-term socioeconomic benefit and ultimately drive value to UK taxpayers who are funding it. We are clear across this House that exploitation of IP will play an integral role in creating these benefits, and that our paramount concern should therefore be generating the maximum public value from that exploitation; I will return to that specific issue shortly.

The debate that we have had today on the benefits derived from public investment in R&D speaks to a much wider issue, which extends beyond intellectual property, ARIA and this piece of legislation. I respectfully say that I do not think that Report on the Bill is the most effective forum for setting precedents to this very expansive and wide-ranging area of government policy. While I will do my best to address the range of points raised this evening, the Government’s approach to foreign investment and how IP rights are treated within the public funding disbursed across the entirety of our considerable R&D system are indeed extensive areas of policy.

I recognise that there is some common ground, as the noble Lord, Lord Browne, has set out—although perhaps not as much as he might have indicated. As he said, I offered to facilitate a meeting with the Minister for Science, Research and Innovation, who came along to our all-Peers meetings to discuss these issues in the round. I still believe that this is the correct forum to discuss this issue in sufficient breadth—something that I do not think could be provided through this amendment to the proposed arrangements for ARIA alone. I suspect that the noble Lord will not be satisfied with my offer but nevertheless I repeat it here.

I have welcomed the insightful contributions of noble Lords in the scrutiny of the Bill so far, and I recognise the importance of Amendment 1 in providing a vehicle for this debate, but I hope that the noble Lord, Lord Browne, will recognise that this represents an unusual and strong restriction and we would have serious concerns as to its proposed workability.

To respond directly to the noble Lord’s amendment, let me set out the Government’s current position. The UK is a premier destination for foreign direct investment. I recognise the concerns the noble Lord has expressed about the current context and the issue of leveraged loans highlighted by the Bank of England, but, in general, I think we all have to recognise that this investment brings tangible economic benefits and the Government are rightly cautious about introducing wider powers to act on the grounds of public or economic interest, as such an approach could destabilise investment into the UK, reduce economic growth and ultimately, therefore, risk jobs and prosperity.

Lord Callanan (Con)

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My Lords, I thank the noble Lord, Lord Ravensdale, for his productive engagement on the amendments in his name, as well as others for contributing to this important debate. Clearly, this issue matters to us all. I will start by exploring the intention behind the amendment. If it is to signal the importance of climate action, of course there is no disagreement between us on that. It is clearly an issue of the utmost strategic importance to this country, and that is reflected in the Climate Change Act, which marks the UK as the first major economy to pass laws to end our contribution to global warming by 2050. Our statutory obligations and ambition on this issue could not be clearer, and they do not need to be marked elsewhere. I do not believe that we should add to this legislation to signal our general intent. It is not appropriate for any provision to be added to a Bill unless it has an actual effect.

The alternative is a statutory duty that seeks to influence—and therefore constrain—ARIA’s activity in some way and, as drafted, the amendment would do so in a very sharp sense. I am grateful to the noble Lord, Lord Ravensdale, for his willingness to engage with the concerns that I put to him and explore alternative ways to achieve his objectives. I have raised these points with him directly, so for the benefit of others I will outline my position—with apologies to the noble Lord, who has heard all this before.

There are well-rehearsed arguments that I have put forward against a defined climate mission. I remind noble Lords that UKRI, through which the overwhelming majority of our public R&D funding is delivered, funds a full portfolio of projects focused on tackling climate change. Where there are specific research and innovation needs to support the Government’s strategic priorities in this area, UKRI delivers across: adaptation and resilience; clean energy; and sustainable industry, agriculture and transport. I think we are all aligned behind the idea that ARIA should complement, not duplicate, our existing capabilities. That is why this amendment is rightly presented now as a more general obligation. The excitement and support that ARIA has generated within the research community has been based on its different model of funding, with agility and risk appetite absolutely central to all the recommendations of how and why ARIA should be created.

ARIA should not be focusing on the scale-up and exploitation of known technologies, for climate change or indeed any other government priorities; noble Lords with expertise in this area will know well that the extent of its funding, at £800 million over five years, makes it completely unsuitable to play such a role. ARIA will contribute by focusing its programmes on the most ambitious objectives, and funding high-risk research and innovation to achieve them. When ARIA finds solutions to these hard problems or gathers learnings along the way, they will be adapted and applied to other fields in different contexts: that is where the benefits to our climate ambitions are likely to be felt.

Breakthroughs in materials science led to huge progress in what is possible in terms of battery storage or fusion. Those technologies are now critical to the energy transition, but much of the original research was not done with that goal in mind. Being prescriptive limits the scope to take completely novel approaches, as we hope and expect ARIA will do. Placing this obligation on ARIA requires us to answer the question: who will assess whether the radical breakthrough targeted by an ARIA programme might—in future, in some way—contribute to our climate goals?

The National Audit Office will assess the regularity of ARIA’s spending each year, which would include this addition to its funding. Is it well placed to make this assessment? That is not intended as any slight at all on the NAO—I am sure the noble Lord, Lord Morse, will be glad to hear that. However, I submit that even the researchers and innovators steeped in a technology cannot predict how it might evolve or be applied in the years to come. That is the nature of innovation and high-risk research. Essentially, it is unknowable. Adding this provision to the Bill asks us to make that essential assessment not only knowable but justiciable. Whoever performed the assessment of whether ARIA’s activities fell within the scope of this obligation would have their judgment subject to judicial review.

I strongly suggest that the actual effect of this amendment would be to push ARIA towards objectives where the assessment would be clear cut. It would disincentivise risk-taking, new approaches or exploring the application of technologies in unusual or unprecedented contexts. I submit that it would work against the grain of everything we are seeking to achieve with this organisation—

Lord Callanan (Con)

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I thank the noble Lord for his contribution. I am not 100% sure of the point that he is making. I agree with him that we have concrete commitments, but we have a well-defined track of a number of strategies heading towards those commitments. In the Bill we are talking about funnelling one small part of our R&D funding into a separate agency, while seeking to take novel, innovative approaches to research and development.

I have cautioned against placing this obligation in the Bill but that does not mean that it is unimportant for ARIA to have an awareness of these issues, as the noble Lord, Lord Ravensdale, articulated so forcefully. I am pleased that many noble Lords attended the briefing we held where my colleague George Freeman, the Minister for Science, Research and Innovation, discussed this. It is not plausible that any appropriate CEO candidate for ARIA would be ignorant of the opportunities connected to net zero within research and innovation. There is a similar situation with regard to Amendment 5 and the sustainable development goals, raised by the noble Baroness, Lady Bennett of Manor Castle.

As a result of the ongoing discussions that we have had on this issue during the passage of the Bill, I am able to commit now that, as an alternative, ARIA will evaluate itself against the pillar of the 2021-25 greening government commitments most relevant to this amendment on mitigating climate change by working towards achieving our net-zero environmental goal. This would be included within the framework document; ARIA would therefore be required to consider this objective from its very first cycle of reporting and evaluation.

I also agree that it is through its projects, and its funding, that ARIA’s greatest contribution to our net-zero objectives will be made. I can therefore also commit that ARIA would have regard to its projects contributing to our climate change targets and environmental goals. This is distinct from the sustainability reporting framework and should sit alongside it as a broader obligation, rather than being part of that evaluation process. That consideration would again be included in ARIA’s framework document. In my view, that is the appropriate place for such requirements, which relate to the effective governance of the organisation and its alignment to wider public sector objectives, as it can be more readily updated to reflect changing circumstances or priorities.

Lord Callanan (Con)

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Regarding the noble Baroness’s question on the definition of the quality of life—we are getting into a very esoteric debate for this time of night—I do not think there is a technical definition specific to her suggestions that I can point towards. It is not in such common usage but, if I can find an appropriate definition, I will of course send it to her.

Lord Callanan (Con)

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I thank noble Lords who have contributed on this group of amendments. Turning to Amendment 6 in the names of the noble Lords, Lord Clement-Jones and Lord Fox, the noble Baroness, Lady Chapman, and the noble Viscount, Lord Stansgate, I start by thanking my noble friends Lady Noakes and Lord Patten for their supportive statements in general as the Bill has progressed through this House.

ARIA will be a lean, streamlined agency which we expect to employ people in the tens. It will recruit a small team of exceptional individuals with both technical expertise and scientific vision. I contend that it is appropriate that we consider how their time, focus and energy is best applied.

We have designed this new, unique agency to operate and behave in a way we do not usually see in the public sector—with leanness, agility and efficiency being core to its function. We have also tasked it with embracing risk and failure. As noted by my noble friend Lady Noakes during consideration in Grand Committee and again this evening, these exceptional scientists should not be fearful of or driven to risk-aversion by the prospect of FoI disclosures, nor should they be distracted or bogged down by the bureaucracy of fulfilling such requests.

The issue of the volume of FoI requests we expect ARIA to be subject to has been raised throughout the passage of this Bill, and comparisons have been drawn between the number of requests received by smaller public bodies such as parish councils, and other research organisations such as UKRI. Pursuing this exemption reflects our expectation that, given ARIA’s profile, its focus on high-risk research and the speculation on its activity so far, it would indeed be subject to a disproportionately high number of FoI requests. It is not accurate to suggest that ARIA would get the same number as a single UKRI research council or other small organisations. It is already clear that its activities will generate a much higher degree of interest and, therefore, corresponding requests.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests to DARPA. Let me remind the noble Lord that when making an FoI request in the US, requesters are required to consider paying applicable fees up to $25. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, it is not a like-for-like comparison to the FoI process in the UK. Therefore, in my view it is not right to assume that ARIA will receive a similar number of FoI requests to DARPA.

I also reassure noble Lords that our reasons for placing ARIA outside FoI legislation are specific and do not extend to other new public bodies, which will not have the same requirement for flexibility and agility and therefore will not require the same exemption.

However, to suggest that the agency will therefore be operating under a veil of secrecy is, in my view, not accurate. We expect ARIA to be an outward-facing and transparent body, which will proactively provide information about its activities to encourage collaboration around its programme goals, increase public understanding of its work and build public trust. Alongside this, it will be held to account by robust transparency arrangements. Let me remind noble Lords about them. It will publish its annual report and a statement of accounts, which will be laid before Parliament. It will be subject to annual audits by the National Audit Office. It will appear before and be accountable to Parliament through its chief executive officer and it will remain, of course, an arm’s-length body of my department in BEIS.

That said, I have also taken into account the opinions of noble Lords on this matter. To reflect the considered debate in Grand Committee on the balance of ARIA’s transparency and accountability arrangements with this unique freedom, I am happy to provide further assurances to noble Lords on ARIA’s reporting requirements. Annually, ARIA will proactively publish information on its regional funding and will make information publicly available on all delivery partners supported through the full range of its funding mechanisms. Taken alongside and together with ARIA’s annual report and accounts, these are significant and robust transparency arrangements which will ensure Parliament and the general public are informed of ARIA’s activities, the projects it funds and where it funds them.

I hope that, given these reassurances, noble Lords are satisfied that the FoI exemption serves an important function for ARIA and that we have struck the right balance here. I thank them for their input.

Lord Callanan (Con)

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I think the noble Lord will find, if he looks at my remarks, that I did not say that every applicant will pay fees but that there is a general expectation that a fee of $25 will be charged, or even more in some cases if more information is required. However, there are exemptions to that, which can be exercised. If the noble Lord looks back at Hansard, he will see that I did not say that everyone would be charged a fee. In most cases, a fee would be applicable, but there are certain exemptions.

I turn to Amendment 7, in the names of the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Baroness, Lady Chapman, which relates to procurement regulations. I note that the noble Lords did not address this, but it is worth while setting out the Government’s position on that amendment. I believe there are clear reasons why this exemption is beneficial to ARIA and why it will be integral to the agency’s effective operation. First, unlike other R&D funders, ARIA will be commissioning and contracting others to do research for it in pursuit of its own technological visions or research goals. The process of contracting and commissioning means ARIA will be operating in fundamentally different ways from traditional R&D grant making, where procurement rules already do not apply. Placing ARIA outside the existing public procurement rules will mean that the agency can freely procure expert investment and consultancy advice, which will be important given the highly varied and technical nature of the agency’s work.

While we imagine that the bulk of ARIA’s research activities will be carried out by its partners and funders, it remains possible that ARIA may wish to procure and own a piece of research equipment to crowd-in interest from other research partners, or to accelerate the progress of a project. Freedom from traditional procurement rules will facilitate ARIA making those investments quickly and with ease. In my view, it is appropriate for ARIA to have greater flexibility than the R&D exemption would afford it so that it can design and tailor its contractual arrangements to precisely suit its research endeavour.

Secondly, in designing ARIA, we have put a premium on the agency investing and acting quickly. In our view, this agility would be incompatible with the public tendering process mandated in the Public Contracts Regulations 2015, which can require contracting authorities to put contracts out to open tender for up to two to three months. Such a delay could prevent critical investments being made with sufficient speed or, indeed, at all. In choosing to exempt ARIA from standard procurement rules, we have learnt from the successful approach taken by DARPA, which benefits from “other transactions” authority, giving the agency the flexibility to operate outside traditional US government contracting standards. It is our belief that ARIA should benefit from similar flexibilities.

I also dispute the notion that taking ARIA outside traditional procurement rules will leave the agency vulnerable to cronyism. I think this was a point made by the noble Baroness, Lady Chapman, in Committee. This exemption will ensure ARIA’s leadership and programme managers—who have been recruited for their technical expertise and scientific vision—can take decisions on ARIA’s procurement with autonomy, as they will have the freedom to procure at arm’s length from government and Ministers.

As I have already detailed, ARIA has clear lines of accountability, transparency and scrutiny in the preparation of its an annual report, scrutiny by the NAO and an annual independent audit to report on its procurement activities. As I have already alluded to, to reflect the constructive and considered debate in Grand Committee, ARIA will publish information on its delivery partners, and this expectation will be detailed in ARIA’s framework document. I thank the noble Baroness, Lady Chapman of Darlington, for tabling an amendment to that effect previously. I hope she and other noble Lords welcome this principled commitment to transparency, which would extend to delivery partners supported through the full range of ARIA’s funding mechanism.

In conclusion, I hope noble Lords have been assured that exempting ARIA from traditional procurement rules will be integral to the agency’s effective operation. The package of accountability, conflict of interest procedures and governance provisions that sit within this Bill are an appropriate counterbalance to that. Taken in the round, this represents an essential, proportionate and balanced freedom, placed in the hands of ARIA’s incoming leadership and programme managers. Taken together, I hope that the assurances and explanations I have been able to provide for noble Lords will allow the noble Lord to withdraw his amendment.

Lord Callanan (Con)

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Before I start, I will deal directly with the comments of the noble Baroness, Lady Chapman, which I thought were a little unfair. We have responded to a number of the points she has made, and we have adopted some of her suggestions on transparency, delivery partners and regional funding. We obviously have not gone as far as she would like in some respects, but it is slightly unfair to say that we have not listened at all to many of the reasonable suggestions that have been put forward from all sides. I will come on to another suggestion that we will adopt shortly.

I start by responding to the amendments put forward my noble friend Lady Noakes. I thank her once again for her considered contributions, which, together, aim to ensure that ARIA is a well-governed and effective agency. I certainly echo the comments of the noble Baroness, Lady Chapman, about her great knowledge of corporate governance. My noble friend’s Amendment 16 would remove the Secretary of State’s power to determine a pension or gratuity for non-executive members. As I said in Committee, it is in fact not our intention to offer these for ARIA’s non-executive members. In consequence of the helpful suggestions and debates we had on that occasion, I have reflected further on the functions of ARIA and the duties and responsibilities we expect of its non-executive members, and I am pleased to be able to confirm to my noble friend that we do not see circumstances in which this power will be required. I am therefore able to say that the Government will support this amendment, and I thank my noble friend again for bringing it forward.

I turn to Amendment 15, also tabled by my noble friend Lady Noakes, who spoke about reducing the maximum possible number of executive members from five to four. The chair of the agency will have responsibility for appointing ARIA’s executive members. Following government guidance for corporate governance, we will set out the responsibilities for ARIA’s chair to review the performance of ARIA’s board and its members in the framework document. This will include evaluating the composition of the board and considering its size, diversity and balance of experience and skills. We expect that, in the initial phases of ARIA, this will tend towards a small board structure. However, I believe that it is important to retain at least some flexibility in the legislation to account for ARIA’s future needs as appropriate, and to allow for a slightly larger board if necessary.

As ARIA will be working across the public and private sectors, using a range of funding mechanisms and funding research at various stages of technological development, I do not think we should rule out a slightly larger arrangement so that ARIA can bring knowledge from a range of backgrounds and ensure that this is represented at board level. I thank my noble friend for her thoughtful remarks on groupthink; it is this diversity of thought and experience that would be the best antidote to such an outcome.

Lord Callanan (Con)

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Once again, I thank my noble friend Lady Noakes for her thoughtful and constructive contributions throughout the progress of the Bill so far. However, she will be disappointed to know, I am sure, that on the substance of her Amendment 20, I am not convinced that adding a legislative requirement for the Secretary of State to approve how these supplementary powers are exercised would be beneficial to ARIA’s effective function or enhance its accountability measures that are already in place.

On ARIA’s ability to borrow money, I recognise that this has been consistently raised throughout the passage of the Bill by my noble friend. I thank her for her previous probing amendments on this matter, which prompted an important conversation on the balance between ARIA’s activities and the appropriate government oversight. As I outlined in correspondence with my noble friend, any borrowing would be contingent on ARIA complying with the rules of Managing Public Money and subject to approval by Her Majesty’s Treasury.

ARIA’s allocation and delegation letters, which the CEO of ARIA will be duty-bound to adhere to, will confirm that ARIA will be subject to, and comply with, all Managing Public Money rules that relate to borrowing. Managing Public Money sets robust conditions on borrowing, and states:

“Public sector organisations may borrow from private sector sources only if the transaction delivers better value for money for the Exchequer as a whole.”


Ensuring that ARIA’s expenditure is made in accordance with Managing Public Money guidance, except for in certain agreed circumstances, will be a condition of the budget ARIA receives from BEIS in its allocation and delegation letters from the BEIS Permanent Secretary to ARIA’s CEO.

There is an expectation of a level of faith between the Government and their arm’s-length bodies. This understanding of trust, and all of ARIA’s freedoms and powers, will be balanced with a number of core accountability principles. The CEO will be ARIA’s delegated accounting officer and will be personally accountable to Parliament for the stewardship of ARIA’s resources, decision-making and financial management. This includes the Public Accounts Select Committee, which will, I am sure, take an interest in such matters. The BEIS Permanent Secretary, as principal accounting officer, will retain an important oversight role, and has the power to make arrangements to ensure they are satisfied that ARIA’s systems are adequate and its finances soundly managed. The Permanent Secretary may intervene if ARIA is significantly off track, and in the unlikely scenario that serious concerns are raised, or there is financial mismanagement, the CEO’s delegated accounting officer authority can be revoked. I hope my noble friend is reassured that the mechanisms here are well established and robust and that they will be enforced.

Moving on to ARIA’s ability to form partnerships, I believe that adding a Secretary of State approval to ARIA’s activities in this area would significantly hinder its effective operations. In designing ARIA, we have put emphasis on the agency operating with significant autonomy from government, and with freedom from standard bureaucracy. Forming partnerships, such as providing grant funding to a project with a university or a business, will be an essential part of ARIA’s daily operations. We expect the agency to contract with, commission and collaborate with a range of different actors for each of its research projects—indeed, that will be one of its core functions.

We have designed this agency to be led and run by experts with technological vision. It is vital that these individuals are free from arduous processes so that they can act quickly, decisively, with autonomy and with clear authority. We should trust ARIA to have discretion over how it forms those partnerships, and I believe that requiring it to engage in a central government approval process for each partnership sits squarely contrary to its aims and purpose.

Moving to ARIA’s ability to form companies and to form and participate in joint ventures, my department is currently in negotiations with Her Majesty’s Treasury about the exact clearance processes ARIA will undertake for each of these transactions. The detail will be set out in ARIA’s allocation and delegation letters, the conditions of which the CEO, as accounting officer, will be duty-bound to comply with. However, I assure my noble friend that all iterations of this delegation letter will include sufficient assurances that ARIA’s internal assessment processes and capability are sufficiently robust. Given that these arrangements may need to evolve in the future, it would not be appropriate for this to be mandated at this stage in the Bill.

On ARIA’s ability to accept gifts, there are already stringent conditions on this in Her Majesty’s Treasury’s Managing Public Money that ARIA would need to comply with. ARIA would consult BEIS about gifts, and HMT’s approval is explicitly required for any gift over £300,000. Gifts made would be recorded in ARIA’s accounts and gifts received would be recorded in a register. These rules will also be confirmed in ARIA’s allocations and delegations letter from the BEIS Permanent Secretary.

ARIA’s power to acquire and sell land would be exercised only in compliance with the Managing Public Money guidance, which sets controls on the below-market sale of land, will compel ARIA to take professional advice when disposing of land and property assets, and will mandate ARIA to include land in its asset register.

Furthermore, introducing a blanket statutory requirement for Secretary of State approval would leave ARIA with less freedom than comparable arm’s-length bodies such as UKRI, which is able to exercise supplementary powers related to accepting gifts and the buying and selling of land without a legislated approval from the Secretary of State.

I appreciate that my noble friend has significant expertise and interest in the areas of financial management and propriety, and we welcome that. However, adding a statutory requirement here would not add value or challenge beyond what is already well established and enforced through Managing Public Money. Furthermore, as I have set out, adding the requirement to the forming of partnerships would, I believe, be genuinely detrimental to ARIA’s agile, autonomous operations, which I know my noble friend is keen not to prejudice.

Before I conclude on this final group of amendments, I once again thank all noble Lords who have taken an interest in this Bill for their excellent and constructive contributions throughout our scrutiny. ARIA provides us with enormous opportunities. I have been delighted to take the Bill through this House and engage with colleagues on all sides, who have focused on the task of providing appropriate scrutiny with enthusiasm, ability and great skill.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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My Lords, Amendment 1 is minor and technical and is consequential to the amendment made on Report in the name of my noble friend Lady Noakes.

My noble friend’s amendment removed the power for the Secretary of State to determine a pension or gratuity for non-executive members. This government amendment is needed to remove a reference to that power, which no longer exists, in paragraph 7(4) of Schedule 1. This paragraph disapplies the power for the Secretary of State to determine a pension or gratuity for the Government Chief Scientific Adviser, who will sit as a non-executive member on ARIA’s board ex officio. The power is of course not relevant in this case due to the Chief Scientific Adviser’s existing employment and pension entitlement as a civil servant. As the original power no longer exists, I am sure that noble Lords will agree that this reference needs to be removed to tidy up the Bill before it returns to the Commons for consideration of the amendments made in this House.

Lord Callanan

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That the Bill do now pass.

Lord Callanan (Con)

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My Lords, it is my great pleasure to thank all those who have supported the progress of this Bill. I first thank my Whip, my noble friend Lady Bloomfield, who is currently demonstrating just how good she is at multi-tasking because she is in Grand Committee supervising another piece of legislation going through. It is always a joy to work alongside her with her support, capability and good humour.

As we have debated this Bill, I am of course grateful to have witnessed the shared ambition across the House for our nation to cement its role as a science superpower and for recognition of the important role that additional funding for high-risk research can play within that, through the ARIA model. While this is a relatively short Bill, the debate has none the less been thorough, as is right and proper in this House—from the role of ARIA in the R&D landscape to the definition of gratuities. It has demonstrated once again the important function of this House.

To that end, I join the noble Viscount, Lord Stansgate, in thanking my noble friend Lady Noakes for her efforts in sharpening the governance arrangements set out in the Bill, and my other noble friends Lord Willetts, Lord Lansley and Lady Neville-Rolfe, among others, for contributing their considerable experience.

I thank, on the part of the Opposition, the noble Baroness, Lady Chapman, for her constructive challenge on many parts of the Bill. I think we worked well together, and I look forward to continuing to work with her on future Bills. I also pay tribute to the noble Lords, Lord Ravensdale, Lord Fox and Lord Clement-Jones, the noble Viscount, Lord Stansgate, and members of the Science and Technology Committee for their very thoughtful contributions. I particularly welcome the thoughtful debate we have had on, for instance, intellectual property and the importance of retaining its benefits. I thank all noble Lords who spoke on these important issues. I am sure that the noble Lord, Lord Browne of Ladyton, especially, will closely follow the words of the Science Minister as the Bill returns to the other place.

It would be remiss of me not to also thank, once again, the excellent team of officials who have been behind me on this Bill. As always, I am just the front guy, as it were. Their support has been invaluable and a tribute once again to the finest traditions of the Civil Service. I particularly single out my private secretary, Hannah Cowie, for her support; the Bill manager, Andrew Crawford, and his deputy, Salisa Kaur; and Katie Reardon, Alex Prior, Robert Magowan and Charles Norris for their work over the last 18 months—a considerable time—to take this Bill forward and, hopefully in the near future, get it on the statute book. I also thank the broader ARIA team and colleagues across government who are undertaking the programme of work to make it a brilliant and realistic success.

Finally, let me recognise the exemplary work of the parliamentary counsel in both drafting this Bill and supporting its progress at so many points during its passage so far, and, of course, the House authorities, parliamentary staff, clerks and doorkeepers. As I mentioned, this is a relatively short Bill, but I really do believe its potential impact is profound. I know I am not alone in this House in looking forward in anticipation to all that will come out of ARIA and the benefits it will create for the research community, businesses and the everyday lives of people across this country.

Lord Callanan

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That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

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My Lords, before turning to the substance of the amendment, I thought it would be a good time to address briefly the other major milestone in the creation of ARIA that we have reached since the Bill was last before this House. On 1 February, Dr Peter Highnam was announced as ARIA’s first CEO. I know that Peers had significant interest in this appointment during our previous debate on the Bill, given the critical role the CEO will play in leading the formation of the agency and directing its initial funding.

I hope noble Lords are reassured by Dr Highnam’s wealth of experience, as he joins from DARPA where he has served as deputy director since February 2018. I hope noble Lords will agree that he is uniquely capable of stepping into what will be a very important role at such a critical stage of its development. He will take up his post in May, starting discussions with stakeholders in the UK R&D system across academia, business, government and, of course, here in Parliament.

Amendment 1 deals with the conditions that ARIA may attach to its financial support, in response to the considerable concerns that have been so carefully and expertly championed by the noble Lord, Lord Browne of Ladyton. In his concluding remarks on Report, the noble Lord set out his desire, following more informal discussions, to hear my colleague, the Minster for Science, Research and Innovation, outline the Government’s position on this issue in the House of Commons. I certainly hope that, having heard the Minister’s remarks last Monday, he will have been pleased to hear him go slightly further than I was able to go when we last discussed the Bill in this House.

The Minister gave further assurances on two aspects, which I will quickly repeat here. The first is the seriousness with which he is taking the security of our academic and research communities, and new activities to identify and address risks from overseas collaborations while supporting institutional independence. He confirmed that obligations would be placed on ARIA to work closely with our national security apparatus, to maintain internal expertise to advise ARIA’s board and programme managers, and to work with the recipients of ARIA’s funding in universities and businesses on research-specific security issues. This will ensure that ARIA’s research and innovation is protected from hostile actors, and, most importantly, connected to the Government’s wider agenda on strategic technological advantage.

Secondly, and more broadly, the Minister addressed the benefits created by ARIA and our approach to maximising and retaining them. Specific businesses, often in important and emerging areas of technology, have been mentioned many times during our debate on this amendment, and the lack of consistent guiding principles behind the engagement and support that they have received from government has been held up for particular criticism. On this, I hope that noble Lords noted the Science Minister’s identification of the serious new machinery of government coming together to drive the agenda of strategic industrial advantage of UK science and technology as a fundamental priority for the Government and for him personally.

The office for science and technology strategy, the national technology adviser and national science and technology council together represent a new and significant architecture to support a new strategic government approach. Clearly, some patience will be needed while this beds in, but the ambition which the Science Minister outlined behind this change should go at least some way towards addressing the concerns that have been raised previously by the noble Lord, Lord Browne.

Similarly, questions have been raised in both Houses about ARIA’s obligations to create wider public benefit, and I should reiterate that public investment in research and development, including through ARIA, must drive long-term socioeconomic benefit and deliver value to UK taxpayers. This obligation will be felt by ARIA on several levels: first, through the Bill and ARIA’s statutory duty in Clause 2(6) to consider economic growth or economic benefit to the UK, among other considerations. This is the right degree of specificity for primary legislation. Secondly, mechanisms for assessing how effectively ARIA carries out its functions, including this duty towards UK benefit, will be detailed in ARIA’s framework document. This was the other set of commitments which the Science Minister provided in the House of Commons.

These mechanisms will enable the action that ARIA takes to respond to its statutory duty towards UK benefit to be evaluated. As the Minister set out, this will include obligations for ARIA to put in place a programme evaluation framework, considering its strategic objectives as well as detailing the contents of its reporting, which the Government and Parliament will use to hold ARIA to account for the value it provides in all the usual ways. Again, it is right that these more specific obligations are included in the framework document, as they must reflect the structure of ARIA’s programmes and require greater flexibility. These obligations will be set as ARIA’s overall governance and evaluation framework is finalised over the coming months, but I should like to echo the Science Minister’s comments that we will take seriously the concerns raised in the context of this amendment when doing so, as we share many of them.

The third and final aspect concerns the ways in which ARIA implements the obligations imposed on it—the statutory duty in the Bill and the obligations within the framework agreement that will help to give effect to it. As I have stated previously, we might expect ARIA to do so through its contracting and granting arrangements by requiring financial support to be repaid if recipients do not make an effort to exploit the outcomes within the UK—or, in some cases, by taking equity or retaining IP rights and seeking to maximise the value of these assets within the public sector. The Bill enables ARIA to do these things, but it is an arm’s-length body; we have placed a premium on its operational independence, and government should not intervene in its decision-making on these issues.

The questions for us here should be these. Does ARIA have all the powers and tools it needs to choose independently from a full suite of ways in which to deliver these obligations? I would submit that it does. Have we got the balance right in the first place with the obligations to produce and evidence benefit placed on ARIA through the Bill and in the framework document, which we then use to hold it to account? On the second point, I recognise that noble Lords have been pressing for us to go further, and I should reflect that in response to the questions posed in this House, and by the noble Lord, Lord Browne, in particular, we have now made concrete commitments to Parliament about the obligations on ARIA and greatly refined our thinking on the work that it is still to do.

I hope the Science Minister’s assurances were useful in demonstrating the seriousness with which these concerns are being taken and our commitment to reflecting a mindset focused on public benefit in ARIA’s governance framework, as that document is finalised. I therefore strongly hope that noble Lords will be content with the progress that has been made on this issue and I look forward to reaching further milestones in the creation of this important new public body. I beg to move.

Lord Callanan (Con)

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I thank the noble Lord, Lord Browne, in particular, and all noble Lords who participated in this brief debate. I do not think there is a huge disagreement between us on this. The noble Lord, Lord Browne, wanted us to be more specific; our point is that ARIA already has the power and ability to do all the things he mentioned, but we want it to retain its operational independence and flexibility.

I will address a number of the points the noble Lord raised. He will have carefully noted, and from his ministerial experience will know, that in the National Security and Investment Act we deliberately did not define what national security is, following the practice of all previous Governments, to give ourselves the flexibility to adapt to changing circumstances.

The noble Lord also asked for further details on what the Science Minister said in the other place. We have published guidance to the sector on trusted research and supported it in publishing that guidance. We have broadened the scope of the academic technology access scheme and defined the rules on export controls as they apply to research activity. The terms and conditions for government research grants were also amended last September to require due diligence and checks for any overseas collaboration.

As expected, a number of noble Lords raised the framework document. The noble Lord, Lord Fox, is right: I have not seen a final version of the framework document precisely because it has not been finished yet. It will be negotiated between BEIS and ARIA’s leadership team, including the new chief executive and chairman when he or she is appointed, for which we are currently recruiting. I assure the House that as soon as it has been agreed, we will share it with the House as soon as possible.

My noble friend Lord Lansley asked a very good question about the retention of any possible revenues within ARIA. He will know from his government experience that the Treasury will wish to negotiate these matters directly with the agency, so I will not step on the Chancellor’s toes and get myself into trouble by overcommitting him on that. I am sure that ARIA and the Treasury will want to have a full and frank discussion on these matters.

On the questions from the noble Lord, Lord Fox, I assure him that we expect ARIA to work with all partners across the research and development landscape, including on the commercialisation of products. He asked for a meeting with me. I suggest that I am not the right person to meet on that issue; it would be more appropriate for him to meet the Science Minister, who has responsibility for pursuing this support for the agency, and I will certainly put that question to him.

The ARIA team has met UKRI and its sponsors. We are learning lessons from this and other mindsets and models for how ARIA can ensure the successful translation and commercialisation of its technologies. I hope that that provides the appropriate assurances for the noble Lord, Lord Fox.

I think I have dealt with all the questions that were asked. With that, I beg to move.