CPTPP (International Agreements Committee Report)

Baroness Chapman of Darlington Excerpts

Tuesday 1st February 2022 Grand Committee

[Baroness Chapman of Darlington (Lab)]

My Lords, it is a real pleasure to follow an excellent speech from the noble Lord, Lord Purvis, and to acknowledge the work of the committee. This is the second of these debates in which I have taken part since my noble friend Lady Hayter took over the chairmanship of the committee, and I have found both occasions incredibly enlightening and helpful. The principal demands of the committee in this case centre on a desire for clarity in how we intend to deal with joining an existing agreement. Our priorities and concerns will need to be accommodated in an already complex set of arrangements.

Can the Minister say something about how our food standards are to be protected? There are different approaches to animal welfare, environmental protections and the use of antibiotics and pesticides across the CPTPP, and there is already considerable concern here about the UK Government’s intentions. Perhaps it is not their intentions we should doubt, but we are concerned about how steadfast they are in their determination not to bend on these issues. Ministers have often repeated promises that we will not see any reduction in our food standards and animal welfare provisions in particular, yet there remains doubt. That doubt arises because there can be a tension between the promise to keep our standards and the desire to open up our market in return for access to other markets, although the two are not incompatible. The more that Ministers can say now on the record to reassure producers and consumers on these points, the better.

Particular concern comes from the devolved Administrations, as responsibility for many of the issues is devolved. The picture is complex and requires the fullest engagement with decision-makers in Scotland, Wales and Northern Ireland. That has not always been forthcoming from the Government. What will be done differently in future to make sure that we can move on with unity and confidence?

How future trade arrangements interact with the Northern Ireland protocol will be complicated but vitally important. In the Government’s own admission, we have seen what happens when they sign up to agreements without fully understanding them. The noble Lord, Lord Frost, says now that he recommended the protocol almost under duress given the political tensions at the time. There is clearly political pressure to move forward with our membership of the CPTPP, but we cannot have another situation where an agreement is entered into by the British Government, only for them to seek some sort of renegotiation a number of months later because consequences occur that we had not foreseen. We will lose all credibility as a trusted negotiating partner, and we cannot afford that.

I would welcome the Minister’s thoughts on how to improve the involvement not just of the devolved Administrations but of relevant sector bodies. In their response to the report from the IAC, the Government say:

“The negotiation of FTAs is conducted by the Executive under the Royal Prerogative. Full disclosure for some of our most sensitive positions would lead to worse negotiated outcomes.”


I agree with my noble friend Lady Hayter on the use of that phrase. It might help if the Minister could give us an example—just hypothetical, obviously—of how this might happen and what the huge disadvantage would be. In not being transparent and inclusive, there is clearly a danger that detrimental impacts can be overlooked in the negotiations, so the Government need to balance their desire for confidentiality with the benefits of involving others. Does the Minister think that at the moment the Government are getting this approach right?

How are the devolved Administrations being involved, as well as consulted, as negotiations progress? The committee suggests that this needs to be timely, detailed and transparent, and I agree. Ministers need to consider how obligations we may enter into as part of the CPTPP ease or make more difficult our trade with our nearest neighbours or even within the United Kingdom, particularly in the case of Northern Ireland.

The committee correctly draws our attention to the impact on and potential benefit to our motor manufacturing industry that could be achieved by coming to a specific arrangement with Japan. Can the Minister indicate whether this is his intention?

We welcome commitments from the Government that alignment with the European Patent Convention is a priority. The Government also confirm that they will not join the CPTPP on terms that make medicines more expensive or less accessible. This is reassuring. Can the Minister guarantee a blanket exception for our NHS and other essential public services?

On food standards, the Government say they will not sign deals that compromise our high environmental protections, animal welfare or food standards. This is reassuring, but it is also slightly confusing. An SPS agreement with the EU would do so much to alleviate friction at our ports, especially in trade between Great Britain and Northern Ireland, but the Government turn their face away from that option, saying they want the freedom to alter their standards. Why seek this freedom, at considerable cost to our producers and retailers, when the Government say they do not intend to use it and, given their statement about the CPTPP, do not need it for this trade agreement?

The Government repeatedly say that they will accede to the CPTPP only on terms beneficial to the UK—I should hope so—but are they seriously asking us to believe that there will not be winners and losers? Welsh Minister Vaughan Gething said of the deal with Australia that

“we continue to have significant concerns around the increased market access included in this agreement, the impact this may have on our producers and the precedent it may set for future deals. I am disappointed that my views on this element of the deal appear to have not been taken on board. My officials and I made this point very clear to UK Government during negotiations.”

The devolved Administrations are concerned—with some justification, given what we have seen so far—that the UK Government are not sufficiently mindful of the impact of deals across all sectors and all regions and nations. The detrimental impact of the Australia deal on British farmers has been discussed at great length and has clearly frustrated the Welsh Government and the farming community. This approach of signing up without listening to those directly affected will not end well.

Given where the UK now sits, we are keen to ensure that our membership of the CPTPP is seen as strengthening the agreement. It is a major agreement, and our membership should strengthen us and the existing 11 participants. This is an opportunity to use our economic power and influence, through this agreement, to make progress on workers’ rights and climate change, but whether the Government are going to be ambitious enough in their negotiations to deliver on these important priorities is still to be seen.

Economic Crime: Planned Government Bill

Baroness Chapman of Darlington Excerpts

Monday 31st January 2022 Lords Chamber

[Lord Callanan (Con)]

My Lords, as the noble Lord is aware, I cannot give him a timescale for this. As the Prime Minister said last week, we remain committed to this legislation. We have already carried out pre-legislative scrutiny on it and we will legislate when parliamentary time allows.

[Baroness Chapman of Darlington (Lab)]

My Lords, the Government have long promised a full public register of beneficial ownership, alongside a comprehensive set of reforms to Companies House. Reforms are being made, but the pace is slow and the level of ambition is low. If the Government truly want to crack down on fraud and other forms of economic crime, why have these work streams been allowed to move at such glacial pace? If the noble Lord, Lord Agnew, was not able to secure progress from within, why should we believe other Ministers when they say that this issue is being treated with urgency?

[Lord Callanan (Con)]

Well, the issue is being treated with urgency. The Treasury is undertaking a number of different anti-money laundering pieces of work. We have already commenced the reforms required in Companies House. We will spend £12 million in 2023-24 and 2024-25 on economic crime reforms and £63 million in a spending review for Companies House reform. As the Prime Minister said, we are committed to making progress on this urgent and essential legislation, and we will do so when parliamentary time allows.

Vaccine Patents Waiver

Baroness Chapman of Darlington Excerpts

Monday 24th January 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, my noble friend Lady Chakrabarti is right to raise this matter, and I agree with what she said. Less than 10% of the population in the world’s poorest countries are vaccinated; the efforts that have been made so far have failed. The Minister said that the current proposal before the WTO was too broadly drawn. If that is the case, and he does not want to back that which has been supported by more than 100 countries, including South Africa and India, perhaps he would consider proposing his own solution on patent waivers. Most people seem to think that it would help the situation.

[Lord Grimstone of Boscobel (Con)]

My Lords, the UK remains open to all initiatives that will have a demonstrable impact on vaccine production and distribution, and we will continue to engage constructively in discussions at the WTO to that end and bring forward our own proposals as necessary.

Advanced Research and Invention Agency Bill

Baroness Chapman of Darlington Excerpts

3rd reading
Monday 10th January 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, first I should apologise for not being here to participate in the Report stage of this Bill. My disappointment was alleviated by the knowledge that my colleague and noble friend Lord Clement-Jones would more than compensate for my absence. I thank him for that and for his assistance throughout consideration of the Bill, and my noble friends Lady Randerson and Lord Oates for their work. I also thank the Minister, the noble Baroness, Lady Bloomfield, and the departmental team that has seen this Bill through; and the noble Baroness, Lady Chapman, the Labour Party and their team for working with us and the Cross-Benchers in a collegiate way. This was an example of good scrutiny coming to the fore. Finally, a big thank you to Sarah Pughe in our office for her support.

We still do not really know what ARIA is. Until it is decided who is leading ARIA, we will not know what its purpose is or how it will interact with the rest of the research environment. During the debate the Minister undertook to keep us informed—while enshrining secrecy in the Bill, of course, at the same time. So, I hope he will be able to keep us well informed as this effort unfolds —indeed, perhaps in advance of things happening. Without wishing to rain on the parade, we should keep a sense of proportion about what this is. This primary legislation has put in place a research effort worth about £200 million to 300 million per year. Meanwhile, the UK’s participation in Horizon Europe has more or less evaporated. During the debate, there were many discussions about the effectiveness of UKRI. In accepting this Bill and moving forward with ARIA, we would be grateful if the Minister also addressed these two elephants in the room: the continued participation of the United Kingdom in Horizon Europe and making sure that UKRI is as effective as it really can be, in order to make a big difference to the research effort in this country.

[Baroness Chapman of Darlington (Lab)]

My Lords, we are pleased to see ARIA move to its next stage and we look forward to the inventions and innovations that will come from it. I was particularly pleased to see the amendment from my noble friend Lord Browne, which will secure the intellectual property that comes about as a result of investment by taxpayers via ARIA. I hope that Ministers in the other place see the benefit of it and feel able to support it. We will, of course, be listening very carefully to what is said about that.

As the Minister well knows, we are concerned by the rejection of the amendments on transparency and accountability. As the noble Lord, Lord Fox, rightly reminded us, the research environment has changed dramatically since our departure from the EU, and we would encourage Ministers to resolve their outstanding differences and make sure that Horizon participation is secured for the future.

However, for today, I would just like to thank the Minister and his team. He is correct in what he said about the nature of the discussions we had. This is my first Bill in this place and I have learned an awful lot and made some new friends, I think, through the process of the Bill, particularly my noble friend Lord Stansgate, and the noble Lords, Lord Morse, Lord Ravensdale, Lord Fox and Lord Clement-Jones—I have already mentioned my noble friend Lord Browne. I also thank the officers of the House and all other noble Lords who contributed. I should put on record, too, my thanks to Dan Stevens, our political and legislative adviser, who has been enormously helpful to me, as a new Member, in being prepared for the process of seeing through a Bill in this place. I thank all noble Lords who contributed.

Bill passed and returned to the Commons with amendments.

UK-Ukraine Credit Support Agreement

Baroness Chapman of Darlington Excerpts

Wednesday 5th January 2022 Grand Committee

[Baroness Chapman of Darlington (Lab)]

I begin by paying tribute to my noble friend Lady Hayter for the work that she and her colleagues on the committee have undertaken in considering the new agreement with Ukraine, and for bringing their report to the Committee’s attention. As others have said, it is helpful to have this opportunity to hear from the Minister on issues relating to Ukraine that are clearly of deep concern.

The agreement is of course welcome. However, nobody believes that it is sufficient to meet the pressing and immediate needs that we have heard outlined so well this afternoon. Can the Minister therefore provide us with some milestones for this agreement specifically? It would be useful for the Committee to have an understanding of the answers to the many questions asked by the noble Lord, Lord Purvis of Tweed, specifically on the issue of local content. It is important that we secure public support for the measures that the Government are taking now and as we move into the future because we do not know what is going to happen. Obviously, defence industries are a key employer in this country so it would be interesting to know how local content will be assessed. We have seen many instances in the past, not so much in defence but perhaps in the energy sector, of local content being agreed at the time of procurement but then being found, when the situation is subsequently examined, not to have been delivered.

The build-up of Russian troops on the border is deeply alarming. Like many others—including, I am sure, the Government—we are gravely concerned about the risks of conflict and the risk of miscalculation. Despite what is being suggested by the Russian Government about our intentions and desires for Ukraine, we are absolutely clear and steadfast in our support for Ukraine’s sovereignty, independence and territorial integrity. It is for the people of Ukraine to determine their own political destiny, not Europe, not the US, not NATO and certainly not Russia.

We need to be crystal clear that any attempt to undermine Ukraine’s territorial integrity any further will be met with a strong, consistent and resolute response. At this stage, can the Minister say anything more about what measures are being considered and whether the Government are minded to signal any specific steps imminently? Diplomatic and economic measures are clearly most effective when undertaken multilaterally. With this in mind, it is worth restating that the Labour Party has an unshakeable commitment to NATO. We support steps taken with our NATO allies to strengthen their security and pursue defence co-operation with wider allies in response to growing threats.

Can I take this opportunity to press the Minister on the implementation of the Russia report? As I said on procurement, the Government may need public support for further steps in future. Money laundering and illicit finance cannot be tolerated in the UK or our overseas territories. If we do not deal with this, we will be seen as a soft touch for corrupt elites sustaining the Putin regime.

It does not befit the tone of this debate to start throwing around accusations about political donations but, while we have this opportunity, can the Minister comment on the Aquind interconnector between France and Portsmouth, which is funded by Russian money—I appreciate that it is not Russian state money—and could potentially be a critical part of our infrastructure? It is a cable that will transfer electricity from France to the UK and will, I believe, also be a data cable. There will be significant concern about this, not least among the people of Portsmouth. I believe that a decision about it is imminent, so it would be useful if the Minister could comment on it if he is able to. If not, it is perfectly fine for him to write to me.

We cannot consider these issues without mentioning the Nord Stream 2 pipeline. We should guard against energy dependency in Europe that could disrupt the unity that we need when we consider Ukraine. Can the Minister update us on any discussions that he is having on that topic with our European neighbours?

My noble friend Lady Hayter reminded us— powerfully—of the historical context. Many noble Lords have spoken of their deep concern about the potential for conflict in Ukraine. This is a dangerous flashpoint moment requiring forceful and skilful diplomacy, remembering that that is most effective when achieved with our international friends and allies. It is clearly in the UK’s best interests to play our part. The Government have our support in this agreement, and we would be interested in hearing what they intend to do next on this issue that is of such great concern across all sides of the House.

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

My Lords, I think I would like to rest on saying that a whole range of sanctions and other options are under consideration.

I was also asked about co-ordination with allies. I think the noble Baroness, Lady Hayter, referred to how important it is to have full co-ordination with our allies. I can confirm that the UK, the US and our European partners, with which we are in constant dialogue, share a common assessment and are deeply concerned. We are unwavering in our support for Ukraine’s territorial integrity, and we will continue to support it in the face of Russian hostility. I will write to the noble Lord, Lord Purvis, and my noble friend Lady McIntosh in more detail about our contact with allies and on other matters that have come up; for example, my noble friend’s point about cybersecurity.

Noble Lords will have seen that the primary focus of the agreement is on the UK’s provision of support for the Ukrainian naval capabilities enhancement programme—UNCEP. This programme will enable the UK and our industry partners to provide extensive and valuable support to bolster Ukraine’s defensive naval capabilities. As my noble friend Lord Risby recognises, this is important—in passing, I want to thank my noble friend for his services as a trade envoy and for his kind comments about Her Majesty’s ambassador in Kiev. The framework agreement represents a continuation of previous discussions between the UK and Ukraine on its naval development, including the memorandum of intent signed aboard HMS “Prince of Wales” in October 2020 and the memorandum of implementation signed aboard HMS “Defender” in June 2021.

Let me be clear—I think it is important to make this point—that the benefits from the framework agreement are not just for Ukraine and are not solely about regional security, hugely important though that is. The UK’s contribution to UNCEP is consistent with and supportive of some of our key objectives at home. One of the components of UNCEP support will be the design and construction of eight new P50U missile craft, some of which will be built by Babcock in its sites at Rosyth on the Firth of Forth, an area which is well-known to the noble Baroness, Lady Liddell. This work will secure highly skilled engineering and shipbuilding jobs, supporting one of our key industrial sectors as well as contributing to the Government’s levelling-up agenda.

I assure noble Lords that our support for Ukraine as an independent state should not be interpreted as the UK being adversarial towards Russia. While we are providing a range of support to Ukraine, that support is essentially defensive in nature, as the noble Baroness, Lady Hayter, recognised. As the noble Lord, Lord Foulkes of Cumnock, said so perceptively, it is a deterrent; we should emphasise that important aspect. We do not want to undermine Russia, far less attempt to encircle or threaten it. What we want is for Russia to reverse its long-term build-up of forces on or near the Ukrainian border. In doing so, we are not challenging Russia’s sovereignty, which of course does not extend to Ukraine, but supporting that of Ukraine. I emphasise that point to noble Lords.

I note that the committee considered that the provision of UKEF support for the UNCEP represents a “step change” in government policy, given previous statements about not providing “lethal aid” to Ukraine. I should point out—this is more than just a technicality—that the framework is not about the provision of aid to Ukraine; it is about facilitating commercial arrangements. Although it is true that UKEF will itself lend some of the funds to the Government of Ukraine to finance the contracts with UK suppliers, the premium will be charged commensurate with the risks being taken on and the OECD’s commercial interest reference rate will also be charged on the loan. I believe that UKEF support for defence contracts should not be considered a step change but more a continuation of our long-standing approach to support Ukraine.

Our support for Ukraine is important because Ukraine matters, not just as an independent country wanting to enhance its defence capabilities but because of the opportunities it offers. As my noble friend Lord Astor of Hever noted, the UK was the first EU member state to recognise Ukraine’s independence, on 30 December 1991. It was on 10 January 1992, nearly 30 years ago, that UK-Ukrainian diplomatic relations were established. Since its independence, Ukraine has achieved huge advances in freedom and democracy, and our relationship has never been stronger. If we can support Ukraine to become a democratic, free-market success story, we will not just have strengthened international security, we will also have created valuable opportunities for UK businesses. Although much progress has been made on reform, further action is needed for Ukraine to continue along its Euro-Atlantic path and attract further foreign investment. I assure noble Lords that the UK continues to work with Ukraine on the necessary reforms to help it fully realise its potential.

As the Foreign Secretary said last month, we believe that trade is the key to unlocking countries’ potential through new opportunities for investment and job creation—in this case, those advantages accrue both to Ukraine and across the United Kingdom. It was with that in mind that HM Government agreed to increase the amount of support available through UK Export Finance for projects in Ukraine to £3.5 billion. If I may, I will let the noble Lord, Lord Purvis, know the full details of that and some of the other points he raised on the UKEF agreement.

UKEF, a great organisation and the oldest export credit agency in the world, has a mission to ensure that no viable UK export fails for lack of finance or insurance, while operating at no net cost to the taxpayer. I clarify, again for the noble Lord, Lord Purvis, that it is not insurance to exporters; it is government-supported lending to Ukraine. I can also confirm that the defence sector does not get any special treatment within the facilities given by UKEF.

Over the last five years, UKEF has provided almost £29 billion-worth of support for UK exports and exporters. I should also add—I know that noble Lords may be concerned about the safety of taxpayers’ money—that UKEF employs a robust risk management framework, as evidenced by the low number of claims on which it has had to pay out in recent years, despite the challenges recently posed by the pandemic and other shifts in the global economy. I can assure noble Lords that UKEF rigorously follows OECD standards and takes all reasonable precautions to avoid supporting transactions that might be tainted by corruption. How important it is to make sure that these standards are maintained and strengthened.

The importance of the framework agreement in this context is that it resolves what had appeared to be an impasse. Before the framework agreement was signed, Ukraine’s national rules governing procurement precluded it from requiring a specified portion of the goods or services that are the subject of a contract to originate from a certain country. Meanwhile, understandably, UKEF’s own rules require that a minimum level of such goods or services be identifiable as UK content before it can provide financing support to a contract. However, Ukrainian law permits for exceptions to its general rule to be granted, but this must be documented through a legally binding government-to-government agreement that is subject to regulation by international law. Hence the framework agreement that we are discussing today enables UKEF to consider the prospective support for the UNCEP, with its mutual benefits for both parties.

Although the effect of this framework agreement will be to enable UKEF to support the UNCEP, which is so important—I stress that again—to enhancing Ukraine’s defence, it is also expected to be the first of a number of framework agreements that will help British exporters access opportunities to trade in Ukraine across trade sectors in addition to defence procurement. I can confirm to the noble Baroness, Lady Liddell of Coatdyke, that this is the first agreement of this sort to be entered into by UKEF.

We know that there are good opportunities in the energy infrastructure sectors for UK exporters. There are opportunities in the field of nuclear energy, which could be worth up to £250 million over four years. Let me say that without the support of UKEF contracts like this will not be able to proceed.

In conclusion, I hope that noble Lords agree that, taking all these factors into account, the framework agreement represents a valuable addition to our range of international agreements, and one that will be of significant benefit to both parties. I thank again the noble Baroness, Lady Hayter of Kentish Town, and the International Agreements Committee for giving us the opportunity to debate this important agreement in advance of its—

[Baroness Chapman of Darlington (Lab)]

Before the Minister resumes his seat, I wanted to press him on the Russian-backed interconnector across the channel. He has not mentioned it. Maybe he intends to write to me; I just wanted to be clear about that.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Baroness for that intervention. I was going to conclude by saying that I would write to her on that. I hope that she finds that acceptable.

I thank your Lordships again for this debate. I think that we should all look forward to the likely ratification of this agreement later this month.

Maldives: Tariffs

Baroness Chapman of Darlington Excerpts

Tuesday 14th December 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, my noble friend makes another good point. The UK currently has a busy and ambitious FTA negotiation programme with a full pipeline of negotiations. Sadly, we therefore have limited capacity to consider new FTA or EPA negotiations in the immediate term. However, the Maldives is an important trading partner to the UK and officials are exploring pragmatic options to enhance bilateral trade relationships in areas of mutual interest. I am sure that noble Lords will applaud that.

[Baroness Chapman of Darlington (Lab)]

My Lords, the Government talk a lot about wanting to be a champion for the Commonwealth—and so they should—and about sustainability. We have a nation here with small island development status that, as far as we know, is fishing sustainably on a global basis, so it seems extraordinary that the Government are being so cool on the prospect of having some kind of bilateral agreement with the Maldives. Will they perhaps warm up a little and try to progress this a bit more quickly?

[Lord Grimstone of Boscobel (Con)]

My Lords, no one could feel warmer towards the Maldives than I do. In a sense, it is a matter of congratulation for the Maldives that it is now an upper-middle-income country. We should congratulate it on that, but the downside is that it is no longer classified as a developing country.

Advanced Research and Invention Agency Bill

Baroness Chapman of Darlington Excerpts

Report stage
Tuesday 14th December 2021 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I am largely going to speak to and support Amendment 1. I commend the noble Lord, Lord Browne, for raising these important issues on the question of ARIA’s ability to impose investment conditions. Unlike the noble Baroness, Lady Neville-Rolfe, I do not see those as bureaucratic constraints.

One key issue in delivering technology into the market in this country is the commercialisation and translation of that technology. We have seen report after report telling us about that. The UK is a top nation for the global impact of its R&D but not so effective at innovation, where it ranks 11th in the world for knowledge diffusion and 27th for knowledge absorption, according to an October 2021 report by our own BEIS department. The greater risk averseness of the VC and private equity market for technology start-ups in the UK compared to that of the US is common ground in the investment community itself; we need to hang on to our unicorns. As a result, outside fintech, we have seen too many high-technology companies sold to overseas companies at too early a stage. We have heard examples from the noble Lords, Lord Broers and Lord Morse—and, in Committee, the noble Lord, Lord Browne, took the risk of quoting the Daily Telegraph.

The National Security and Investment Act will impact on that to some extent, but in a limited number of sectors involving national security. Without this kind of scale-up support we cannot become—to coin the phrase so often used by this Government—a science and tech superpower by 2030. This excellent amendment will, I hope, ensure that those making decisions about future financing at least have some friction in the system to ensure that they have to think twice about where and how to raise capital for the future; at the same time, it gives ARIA skin in the game to help it do so. The Minister has said in correspondence that he shares the objectives of this amendment, so I hope that he will agree at the last stage to accept it.

As regards the other amendments by the noble Lord, Lord Lansley, in this group, I agree in principle with many of the issues that he has raised and the support for intellectual property rights that should be retained by ARIA in certain circumstances. He had powerful support from the noble Lord, Lord Broers, whose expertise we are certainly going to miss when he retires from the House.

As the noble Lord, Lord Browne, says, we have only this Bill today. We cannot solve all the problems relating to the taking of stakes by companies or our research institutions, but we can put this into ARIA’s terms; I very much hope that we will do so today.

[Baroness Chapman of Darlington (Lab)]

My Lords, I find myself listening to some excellent speeches and frantically scratching sections from my own contribution as I do not see the point in repeating the points that have already been made. I put on record my thanks to my noble friend Lord Browne, in particular, for his generosity with his expertise and time in working so collaboratively on this issue, which has support on all sides. The principle is very simple: the state is taking a big risk by granting funds to speculative research projects. In cases where that risk pays off—we hope that is not an infrequent event, but we understand that this is about high-risk ventures—ARIA should have the ability to protect the potentially significant benefits that will arise from initial taxpayer support. It seems equally appropriate that ARIA has a say in potential takeovers or transfers of intellectual property. We know that there is a big market for speculative purchases of new technology. While ARIA may decide that there is no public interest in preventing certain events from taking place, there might be other investments that should be safeguarded.

It is clear from the debates that we have had in Committee and this evening that there is a shared desire on all sides—including, to be fair, from the Minister—to deal with this issue. He has correctly observed previously that the problem we are trying to fix is not limited to ARIA; that is understood and agreed with. However, while the amendment by the noble Lord, Lord Browne, does not fix everything, that does not mean we should not try to fix the thing that is in front of us now. It moves us in the right direction and is appropriate given the specific activity of ARIA; the Opposition are solidly in support of Amendment 1.

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

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.

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[Lord Clement-Jones (LD)]

My Lords, the noble Lord, Lord Ravensdale, the noble Baroness, Lady Bennett, and my noble friend have made a compelling case for supporting this amendment, based on the climate and ecological emergency that we face. Tackling those challenges will require massive innovation and ingenuity and the development of practical applications from that. If ARIA has the bold, independent, innovative culture that the Minister emphasised throughout Committee, then it must be the ideal vehicle for this research, and we should spell it out. We should make ARIA an essential component of the net-zero strategy.

[Baroness Chapman of Darlington (Lab)]

My Lords, I am grateful to the noble Lord, Lord Ravensdale, for bringing back his amendment on these important issues. It has been a real pleasure working with him and hearing from him throughout the debates on this Bill. In Grand Committee, Labour proposed making addressing climate change a core purpose for the first two years of ARIA’s existence. It is, after all, one of the greatest challenges, if not the greatest, that we face, and it is science and technology that we look to for new tools and solutions. We were disappointed by the Minister’s response to that suggestion and to the proposals put forward by other noble Lords. We feel this is of critical importance, so we would be prepared to support Amendment 4—depending, of course, on what the Minister has to say.

The noble Baroness, Lady Bennett of Manor Castle, has tabled Amendment 5, which seeks to promote three of the UN sustainable development goals, which Labour supports. My noble friend Lord Collins of Highbury looks for any opportunity to press the Government to secure progress on them, domestically and overseas. Without wanting to soften the Minister’s cough—as I think we say where we are both from—I am sure he will say that the Bill is not the correct vehicle. However, whether or not there is a vote, the Government should understand that amendments such as this, which embed climate as a golden thread in legislation, will be put forward by noble Lords and Members in the other place at every opportunity.

[Lord Callanan (Con)]

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—

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[Baroness Noakes (Con)]

My Lords, I spoke about the freedom of information aspects of these two amendments in Committee, and I repeat that I think it is reasonable to exclude ARIA from the freedom of information requirements.

I do not regard the Freedom of Information Act as malign, and I am sure my noble friend does not either. It is appropriate in many cases that our public bodies are opened up, but it is true that it is burdensome. That has been a constant complaint, and certain kinds of organisations attract lots of fishing expeditions which increase the burden, and this goes beyond what would be regarded as being reasonable.

In Committee, I quoted both Tony Blair—who, having introduced the Freedom of Information Act, had a Damascene conversion and did not regard it as a helpful thing in the end—and Professor Philip Bond, the Professor of Creativity and Innovation at the University of Manchester. Both of them highlighted the fundamental reason why ARIA should be free from the Freedom of Information Act: because the last thing our scientists need when looking at the next internet, or whatever it is, is to be overcome with excessive caution because they are worried about what would happen if their conversations had to be revealed through Freedom of Information Act requests. Creativity thrives in an environment where it is not subject to ex-post analysis.

The other reason why I wanted to speak this evening is that I do not understand why Amendments 6 and 7 have been positioned as they are in Clause 2. They seem to set up a conflict with the provisions of Schedule 3, which is introduced by Clause 9. I have not followed through the detailed drafting in respect of freedom of information, but I have followed it through in respect of the Public Contracts Regulations. Basically, Amendment 7 says that the regulations will apply to ARIA, while paragraph 17 of Schedule 3 says that the requirements do not apply to ARIA.

So, the effect of these amendments—and I believe the same is true of the freedom of information amendment, but I have not completely followed that through—is that one part of the Bill would say that the requirements do not apply, but the next part would say that they do apply. That does not seem to me a very clever way to write amendments or legislation, so I suggest that the amendments themselves are defective. Also, I think they are defective in drafting terms—in particular, the public contracts amendment does not mention the separate Scottish regulations, which are included in paragraph 17 of Schedule 3. Paragraphs 13 to 15 are much more complex than Amendment 6, so that may well not be as effective as noble Lords seem to suggest.

[Baroness Chapman of Darlington (Lab)]

My Lords, Labour tabled a combined version of Amendments 6 and 7 in Committee, and we welcome the re-tabling of the text by the noble Lord, Lord Clement-Jones. We debated FoI extensively at Second Reading, in Grand Committee and in private meetings with the Minister and his officials. Despite the strong feelings expressed, the Government have offered us absolutely nothing—not just on FoI but on transparency more generally.

The Government’s determination to keep ARIA’s projects and decision-making secret is worrying. This is a matter of principle: do they believe in transparency, or not? If they do, such a measure should be put in the Bill. If they do not, they have not really given us a sufficiently good explanation for their reluctance to do this. We believe that it is in ARIA’s best interests to have the benefit of engagement of the public through the use of FoI. Failing to do that is not going to stop ARIA’s activities becoming known; it will just happen in a less controlled manner and create more suspicion.

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[Viscount Stansgate (Lab)]

My Lords, I will speak to Amendment 11, which is in my name. Of course, the idea behind it also applies to Amendment 10, as just outlined by my noble friend Lord Davies of Brixton, who has probably halved my speech because there is no need to repeat everything.

This amendment is very straightforward. It seeks to ensure that, at an appropriate time—I have suggested half way through its allotted 10 years—Parliament has the chance to be sure that ARIA is fulfilling its broad mission. After all, as we all agree, we are doing something new, and, while it is scheduled to receive only a small amount of funding compared with the wider scientific landscape, the fact is that we are still talking about £800 million of public money. So I ask the House: is it that unreasonable to want to ascertain how it is getting on after five years?

In looking ahead, Parliament will want to be sure that, for example, ARIA has not begun to duplicate work that can or could be done elsewhere—by UKRI, for example. Parliament will want to be satisfied that it has not been captured in some way by a scientific cabal or that it has not become involved in dealing with what you might call the “known unknowns”—because other parts of the scientific world are in charge of that—when we want it to focus on the “unknown unknowns”. We are all hoping—at least, I hope that we are—that ARIA will continue to focus on exciting and potentially disruptive new areas and inventions.

The purpose of this amendment is not—I repeat, not—to enable a future Government or Parliament to require a report into every single programme with which ARIA is engaged, or to burden ARIA with what we might call “excessive accountability”. We have already agreed to give the programme managers a huge degree of freedom, including the freedom to fail. However, we must remember that ARIA’s initial lifespan of 10 years will span at least one Parliament and maybe more, and it seems reasonable, without placing too great a burden on it, to enable a future Parliament to have the chance to satisfy itself that it is fulfilling its strategic mission. I look forward to the Minister’s reply and commend this amendment to the House.

[Baroness Chapman of Darlington (Lab)]

My Lords, we remain disappointed that the Government failed to accept the Delegated Powers and Regulatory Reform Committee’s recommendation to omit Clause 8, which provides a very broad power to be carried out with minimal parliamentary scrutiny. I am not surprised that the noble Lord, Lord Clement-Jones, has retabled the amendment, although I suspect that the Government will not change their approach this evening.

I am grateful to my noble friends Lord Davies of Brixton and Lord Stansgate for tabling their Amendments 10 and 11, which would ensure that there is better understanding of ARIA’s work as it progresses toward the magic 10-year mark. We agree with the thrust of both those amendments. On Amendment 10, it is important that lessons can be learned and any required changes enacted to ensure that ARIA’s funds are continually put to the best possible use. Amendment 11 would give Parliament a loose oversight role, which feels incredibly important, given its almost complete lack of involvement once the body has been established. I noted that when he was in his place earlier, the Minister described the arrangements that the Government are proposing as “robust”. I gently say that they are anything but.

We hope that the Government see some merit in these proposals. It is not clear that the provision needs to be statutory—I accept that—but can the Minister give a clear commitment about interim or periodic reviews beyond the publication of annual reports, which are the absolute minimum that we should expect, and opportunities for Members of this House and the other place to discuss and debate them?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I want to start by addressing the comments on the Delegated Powers and Regulatory Reform Committee’s report on this Bill. As noble Lords will know, the Government made significant changes to the Bill in Committee to respond to the DPRRC’s recommendations. We have taken its report extremely seriously and shown that we are willing to engage with, and act on, its recommendations.

Regarding the committee’s other recent report, on the delegation of power more generally, we would submit that the changes we have made to this Bill are a clear demonstration of the relationship between the legislature and the Executive operating as it should and of legislative proposals submitted and amended in response to scrutiny. Certainly, what we are proposing for ARIA is a world away from some legislation made in the context of Brexit or the pandemic, which is the focus of the committee’s concern in its report.

We have carefully considered the committee’s recommendation with regard to Clause 8. In our view, the power to dissolve ARIA through regulations made under this clause, which would be omitted by Amendment 9 in the name of noble Lord, Lord Fox, remains an important part of the Bill. We have decided not to accept the recommendation in this instance because there is both a strong policy rationale and a clear precedent for this delegation of power.

As was said in Committee, the power can be exercised only 10 years after the Bill receives Royal Assent, and it is therefore an indication of the Government’s long-term commitment to ARIA. I think there is broad agreement that this patience will be essential if ARIA is to pursue successfully the most ambitious research and innovation. It goes to the heart of what ARIA is about. It must have the opportunity to prove itself before it is judged, and this has been recognised by many R&D stakeholders.

In Committee, my noble friend Lord Callanan referred to the precedent for this delegation of power. Under powers contained in the Public Bodies Act, several bodies established in primary legislation have been dissolved by statutory instrument. Again, if noble Lords will permit me, I will refer to the Administrative Justice and Tribunals Council, which was created by the Tribunals, Courts and Enforcement Act 2007 and was abolished using powers from the Public Bodies Act in 2013. The Public Bodies Act gave Ministers broad delegated powers not just to abolish bodies but also to merge them and change their governance structure and functions. That goes far beyond the power in Clause 8. As we do not know the context in 10 or more years’ time, when this power might be exercised, it is right that it is applicable in a range of scenarios.

On consultation, there is a broad requirement for the Secretary of State to consult those they think appropriate. I suggest that Parliament and Select Committees will be included among these stakeholders, and that the Secretary of State will think it appropriate and necessary to consult them. We do not believe that there is no opportunity for parliamentarians to be involved in those discussions. I hope I have managed to convince noble Lords of the seriousness with which we take the DPPRC’s recommendations, the careful consideration we have given to its view of Clause 8 and the very good reasons I think there are for departing from its recommendation in this instance, and retaining it. I hope noble Lords are convinced and that the noble Lord, Lord Clement-Jones, feels able to withdraw his amendment.

The power in Clause 8 shares with Amendments 10 and 11 a recognition of the experimental nature of ARIA, which has been highlighted by many in the R&D community. These amendments speak to our desire to extract the greatest possible benefit from our £800 million investment in this new agency. We hope those will be both direct benefits from the research and innovation it funds and indirect benefits in terms of learning that can be applied to R&D funding in the UK more generally. I hope that learning will be a dynamic process, and while I sympathise completely with the intent behind these amendments, I hope I can reassure noble Lords that there are already more than adequate arrangements in place for public bodies such as ARIA to be formally reviewed. I do not think anything further is necessary.

Amendment 11 in the name of the noble Viscount, Lord Stansgate, introduces a review of various aspects of ARIA’s operations, including whether it has fulfilled its functions and achieved value for money. Both of these are core considerations of the National Audit Office. The regularity of ARIA’s spending—whether it is in line with its functions—will be part of the annual assessment and certification of ARIA’s accounts, and the NAO will be able to conduct value-for-money examinations of ARIA as per the National Audit Act in the usual way. I hope the noble Viscount will agree that a further review mechanism on these points is not needed.

I turn to the second two elements of this amendment, which deal with the geographical spread of grants and ARIA’s transparency arrangements. I stand by my noble friend’s earlier commitment that ARIA will proactively publish information on its regional funding annually and, in the interests of transparency, make information publicly available on all delivery partners, supported through the full range of its funding mechanisms. I hope this reassures the noble Viscount, Lord Stansgate, that there are already arrangements in place to cover all these important points he has raised and that he does not feel it necessary to press his amendment further.

Amendment 10 is very specific to ARIA. As I have said before, I do not think a one-off formal report is the right way to envisage these lessons being learned. It should be a dynamic process: some important points may become apparent relatively quickly while some advantages or disadvantages of the ARIA model may not emerge even within the six years outlined in this amendment. We have discussed the need for patience, and I believe that means we must resist, as far as possible, the temptation to poke and prod and investigate this new organisation. Clearly, there is a balance to strike here, but it is my contention that the default position must be to let it be and gather these learnings in the most light-touch way we can.

In his amendment, the noble Lord, Lord Davies of Brixton, has allowed an entire year for the review to be conducted and published. That indicates a significant intervention in ARIA’s activities and a degree of close scrutiny that I do not think is a natural companion to risk-taking and high ambition. I note that the noble Baroness, Lady Chapman, also expressed concern about 10 years being a long time without scrutiny. There are a number of avenues for scrutiny—as a public body, ARIA will be subject to tailored reviews of its governance and effectiveness. It will need to bid for new funding in coming years and evidence its effectiveness and impact at that point. I hope the noble Lord will accept my assurances that it is absolutely our intention to learn from ARIA to the benefit of the wider R&D system, and that he will not press his amendment, on the grounds that such a structured and formalised obligation may not be the most appropriate way to do so.

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[Lord Browne of Ladyton (Lab)]

I speak principally to support Amendment 17 in the name of the noble Lord, Lord Morse, to which I added my name, but having heard the noble Baroness, Lady Noakes, twice—in Committee and today—on Amendments 15, 16 and 18, I am persuaded by her simple, accessible and convincing explanation that changing the Bill in this way would be to its benefit. Hearing from the noble Lord, Lord Morse, that the amendments reflect current practice, I am even more convinced, so I have corroboration and I support them.

I have had the benefit of having had the noble Lord, Lord Morse, explain his amendment to me on a number of occasions. If I was going to be partisan about this, I could think of a lot of contemporary examples of behaviour which the existing ACOBA system has manifestly failed to deal with. Apart from anything else, recent history has damaged significantly the reputation of politics and politicians as a group, and it has bled into civil servants because of the apparent practice of senior civil servants taking positions in private industry while continuing to work in the Civil Service. I have no intention of going through all of them. I am just convinced by the argument made by the noble Lord, whom I have known for a long period, that if we do not recognise that this could become a problem, and if it does become a problem, it will seriously damage ARIA and we should protect it—at the very least by including these provisions in the Bill and indicating that Parliament decided that people who have had those experiences should not move to other positions where it looks as though they are exploiting the information that they had for their own personal gain, and therefore operating in a way that most people in the country would think unethical. If in these circumstances we do not have a narrative that says, “We in Parliament are concerned that this may happen and took the steps that we could to prevent it from happening”, we will be complicit in the damage that will inevitably be done not only to ARIA but, yet again, to those who work in the public service as officials, civil servants, Ministers or just politicians.

[Baroness Chapman of Darlington (Lab)]

My Lords, I recognise the expertise of noble Baroness, Lady Noakes, on issues of corporate governance and, like my noble friend Lord Browne, I have enjoyed listening to her in Committee and again today. I will be interested to hear what assurances the Minister is able to give as a consequence of her amendments. I have learned a lot from her through this process and I look forward to learning more in the future.

I welcome Amendment 17 from the noble Lord, Lord Morse, whose case is no doubt bolstered by his experience over many years. It is a real joy to me that we have come to this House at more or less the same time. This is our first Bill together, and I am very pleased to add my name to his amendment.

There have long been concerns about “revolving doors” in politics—it is not something that started with this Government—but my noble friend Lord Browne was correct to observe that concern about issues such as those dealt with by Amendment 17 is growing, and frankly the Government have brought it on themselves. There is deep concern in the public mind about these issues and we shall see on Thursday what the people of North Shropshire make of it all.

I am struck by the fact that the Minister has taken the amendment from the noble Lord, Lord Morse—a very good amendment which we support—and has directed us to look at paragraph 11 of Schedule 1, which states:

“The Secretary of State may by regulations make provision about the procedures to be adopted for dealing with conflicts of interest.”


They may, but “may” is doing a lot of lifting there, and obviously they may not as well, so there is nothing to give us any assurance that the danger of which the noble Lord, Lord Morse, is correct to warn us could be averted by that provision. We are just not buying it. Although the Minister has, for illustrative purposes, provided a suggestion of how the regulations might look, that does not provide us any assurance whatever.

Given the Minister’s reluctance to accept any of the suggestions that we have made—none of the suggestions, from FoI to reporting, have been taken up by the Government—he is somewhat leaving ARIA exposed, in the way that the noble Lord, Lord Morse, explained so well. We want this organisation to succeed, but because of the Government’s rigidity on these issues, the fear is that we are setting it up with a weakness: this lack of transparency and ability to challenge.

The Minister is kidding himself if he thinks that these issues will not be scrutinised and that some of the problems that may emerge will not somehow get out. I am sure that the Public Accounts Committee will enjoy crawling all over this when it gets the opportunity to do so. We want this to work, but I am afraid that the Government’s approach is not doing ARIA any favours.

I want to hear what the Minister has to say and whether something can be done to provide us with the assurance we are looking for that ARIA will not be characterised—or mischaracterised, I hope—as some sort of secret agency. That would only cause this fascination and determination to probe into its activities to grow.

[Lord Callanan (Con)]

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.

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[Baroness Noakes (Con)]

My Lords, we will all be relieved that we are on the final amendment of this Report stage.

Amendment 20 would have the effect of requiring the consent of the Secretary of State if ARIA seeks to use the powers in paragraph 17(2) of Schedule 1. These powers allow ARIA to borrow money, to acquire and dispose of land, to accept gifts, to form and participate in partnerships and joint ventures, and to form companies. I have no problem with these powers existing; they are useful techniques which are commonly used in research and development activities and scale-ups. I am, however, against public bodies taking on liabilities which are counted as public sector liabilities and which will end up being footed by taxpayers if they go wrong, without any controls. I am also wary of private sector counterparties, who may well be queuing up for a free ride on the public sector’s credit lines, knowing that they will be rewarded for success and may not have to pick up the tab for failure.

My noble friend the Minister replied to my amendment in Committee, saying that conditions would be attached to grant funding given under Clause 4 of the Bill, and that borrowing would have to meet stringent requirements set out in Managing Public Money. The Minister also said that any borrowing would have to be agreed with HM Treasury in advance. I accept that it is possible that this will work perfectly well, with ARIA agreeing to abide completely by whatever the Treasury and BEIS say. It is certainly likely to toe the line all the time that it is dependent on grant funding from BEIS.

My question to the Minister is based on a different scenario. Let us assume that BEIS has handed over the £500 million committed for this Parliament and that the Chancellor has said that there is no more money. We know that the power to wind up ARIA will kick in only after 10 years, so what does the Minister think will happen in the years between, say, 2024 and 2032, with no more grant money arriving? My guess is that borrowing money would become irresistible. Moreover, the value-for-money test in Managing Public Money will be very easy to satisfy, because the counterfactual of using public money will not exist. Complex structures that look like partnerships or joint ventures could actually be borrowing by another name—I have seen that all before.

That is why I believe it would be safer if this Bill embedded a consent requirement. A consent requirement might look rather heavy-handed at first sight, but it could easily be tempered by delegation arrangements which did not require all transactions to have to be sent to the Secretary of State for approval.

I look forward to hearing how the Government think they can keep control of an organisation which has unconstrained statutory powers once the Government have lost the lever of grant payments. If they are not certain that they can deal with all eventualities, I respectfully suggest to my noble friend that an amendment such as this one, or something similar, is needed. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, this is a very interesting discussion initiated by the noble Baroness, Lady Noakes. At first, I thought she was suddenly getting into big state interference, but that is obviously not the case. It is curious why ARIA would need to be able to borrow money when it is being given a budget from the Government. Presumably the intention is not to give it the Government’s credit card also, because we will be underwriting the borrowing that takes place—I think. I am not quite sure on this; perhaps the Minister could explain some circumstances in which the borrowing of money would be needed and how that would be beneficial to ARIA.

On gifts, we are not quite clear what that is about. If the noble Baroness wanted to test the will of the House—I suspect that she does not want to, this evening—we would be interested in supporting that.

We really need to get some assurance from the Government, particularly on this issue of borrowing money.

Advanced Research and Invention Agency Bill

Baroness Chapman of Darlington Excerpts

Committee stage
Monday 22nd November 2021 Grand Committee

Moved by

[Baroness Chapman of Darlington]

20A: Clause 2, page 1, line 11, at end insert—
“(d) support the UK Government’s obligations under the Climate Change Act 2008.”Member’s explanatory statement
This amendment would require ARIA to have regard to climate change by ensuring that ARIA had an obligation to support the Climate Change Act 2008 and the obligations flowing from that Act.

[Lord Clement-Jones (LD)]

My Lords, since nobody else is speaking and I had prepared a response to the noble Viscount, Lord Stansgate, I might as well briefly respond. I was going to say—indeed, I am saying—that this is a slightly random collection of amendments to say the least. As the noble Lord is not here, I can perhaps adopt a slightly more doubtful tone. As my noble friend Lord Oates made plain in the very good debate on Amendment 1:

“If the purpose of DARPA was to protect the national security of the United States by retaining its scientific edge against the threat of the Soviet Union, today, the threat from climate change, although very different, is some orders of magnitude greater.”—[Official Report, 17/11/21; col. GC 86.]


He went on to say that he agreed that it should be part of ARIA’s objectives. I very much agree with him.

On Amendment 26A, many of us asked this question at Second Reading; indeed, that is why we have tabled, and will be discussing, Amendment 47 regarding the framework for ARIA. It is extraordinary that we do not yet know what the arrangements will be with UKRI, research bodies and so forth, particularly in view of what the Minister said last week in Committee:

“UKRI has a broad portfolio of projects that it funds to tackle climate change across 12 different areas”.—[Official Report, 17/11/21; col. GC 96.]


He set out what all those areas are, but the risk of overlap seems considerable. Therefore, it seems important that we get to know what the relationships are between ARIA and other research bodies.

I am rather lukewarm about the renaming of ARIA. The noble Lord, Lord Ravensdale, quoted the Science and Technology Committee saying that ARIA was a

“brand in search of a product”.

The problem is not the brand; we want to look under the bonnet and see what it is actually going to do. The name is not what many of us are concerned about.

[Baroness Chapman of Darlington (Lab)]

My Lords, in the absence of my noble friend Lord Stansgate, I should say a couple of words about his amendments. We tackled the issue of climate in some depth when we met last week; I thought that it was a useful discussion. On the name, I think that he was trying to get at why the change had been proposed. Perhaps the Minister, when he responds, can talk us through the Government’s thinking. I do not think that it amounts to a hill of beans, but it was something that my noble friend wanted to explore, to find out what was behind the change of thinking.

[Lord Willetts (Con)]

My Lords, I will be brief and will refer particularly to Amendment 26A. I repeat that I am a member of the board of UKRI and so have a particular interest in this. The more the Minister can say about ARIA alongside UKRI, the better—it would be very helpful. I do not mind if there is overlap; I am not a purist on this. Indeed, some overlap may be an inevitable result of having ARIA and UKRI. In fact, I would prefer overlap to the alternatives, which are either that UKRI is seen to be unable to do high-risk, high-reward research or that it is somehow seen as second best to ARIA. I hope that the Minister will assure us that UKRI will be able to carry on doing the wide range of activities that it does—including through Innovate UK, in particular—with the application and successful commercialisation of technologies. I see ARIA as supplementing that rather than displacing it, so anything that the Minister can say about that relationship here or in answer to subsequent amendments would be very helpful.

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

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.

[Baroness Chapman of Darlington (Lab)]

I beg leave to withdraw the amendment.

Amendment 20A withdrawn.

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Moved by

[Baroness Chapman of Darlington]

24: Clause 2, page 2, line 15, at end insert—
“(7) ARIA is— (a) a public authority within the meaning of section 3 of the Freedom of Information Act 2000, and Schedule 1 to that Act is amended accordingly, and (b) a central government authority within the meaning of regulation 2(1) of the Public Contracts Regulations 2015, and Schedule 1 of those Regulations is amended accordingly.”Member’s explanatory statement
This amendment would subject ARIA to Freedom of Information requests.

[Baroness Chapman of Darlington (Lab)]

I want to talk about the issue of FoI. We all knew that this was coming in our discussions; it came up at Second Reading, and it has come up in much of the commentary about this Bill. As the Minister will know, there is serious concern about the Government’s decision not to include ARIA in the freedom of information legislation.

To put it bluntly, we think that ARIA should be subject to freedom of information, and we do not think that the Government have given any good reason or argument to justify the exemption. We think it is unlikely that ARIA would be overwhelmed with requests, as the Government seemed to indicate at Second Reading. As the Minister knows, that is not the situation with the equivalent agency in the United States. There is no reason that we can see why ARIA would be incapable of dealing with FoI requests that came its way.

At this stage, I know that we are all very familiar with the arguments about FoI, and I expect that we have all been in many debates not dissimilar to this, but it is helpful to remind ourselves why freedom of information was introduced 21 years ago. It gives us the right to know about the activities of public authorities, unless there is a good reason for them not to disclose them. This is called a presumption in favour of disclosure, and it is something that we very much support. It means that everybody has the right to access official information, and that disclosure of information should be the default—so information should be kept private only when there is a very good reason. As I say, the Government have not given a good reason to exempt ARIA.

At Second Reading, the Minister said that he was concerned about ARIA being overwhelmed. I do not know why that would be the case. Even if there were sufficient interest to make the burden of FoI substantial, I do not imagine that that will happen. The Minister has not given a reason why that would be a particular problem for ARIA and not for other agencies. It is just not a good enough reason to exempt ARIA from the scheme—the fact that you might get asked a lot of things is no reason to allow yourself not to answer them. If FoI was a burden for ARIA, I am sure that every local authority up and down the country would like to make the same argument for exempting itself. Why should ARIA be treated differently? That is something that the Minister so far has not explained.

I cannot remember who said this at Second Reading; it may have been the Minister who prayed in aid Tony Blair, which is usually not a bad thing to do. But I part company with Tony on this particular issue. As we all know, Tony Blair decided after leaving office that he regretted introducing FoI because, I think he said, it was a nuisance and it disrupts ease of communication between officials. I do not think there is a Prime Minister now or in the past who would not agree with him. I am sure it is a complete nuisance, but it is important; it is about the balance of power between Governments and their citizens. Tony Blair might feel that way, but that does not mean that the Government are right to keep agencies away from scrutiny. If the Government want to get rid of FoI or change the way in which it works, they should make the case, they should win the argument, and then they should change the law. They should not be attempting to undermine FoI slowly over time by excluding new agencies, which is what I think is happening here. They do not want to have the argument, so they are just leaving out new entities as they emerge.

I should have thought, after everything the Government have experienced in recent weeks, that they would be falling over themselves to show the country that they welcome scrutiny and want to be transparent. Last week, the Minister accused me of being opportunistic in making that argument. I stand by my assurance to him that that is not the case. This is done out of a will to see ARIA succeed. I could stand here and make a very long speech about all the problems the Government have had through lack of transparency, but I will not do that. I want ARIA to succeed, but I think that without some measure—whether it is FoI or some of the other measures that the Minister dismissed last week—there needs to be some measure by which that transparency, scrutiny, oversight or whatever you want to call it can take place, either via Parliament or via FoI.

I am sure that we will come back to this at Report. The Government have declined every suggestion that we have made on this issue so far. That is a shame, and I just hope that they reconsider their stance on this.

[Viscount Stansgate (Lab)]

My Lords, I support my noble friend Lady Chapman and shall speak also to Amendment 32A, which, ironically, was the first amendment that I drafted. If there is any benefit to a signal failure on Thameslink, it is that by accident I turn out to be speaking to the very first amendment that I drafted. I pay tribute to the noble Baroness, Lady Noakes, because it was her who pointed out last week that the former Prime Minister had said that he regretted the Freedom of Information Act. Next time I see him, I shall gladly discuss that subject, but I think it tells you more about Prime Ministers than it does about the principle of freedom of information.

There are two and a half arguments in favour of this amendment. The first is the principle. We live in a parliamentary democracy—we live, incidentally, in a world in which we learn less and less about the Government, who can know more and more about us—and it is a good principle of public life that any new body should be subject to freedom of information. The half argument is that, if it is suggested by the Government that this will cause practical difficulties for ARIA, I am perfectly happy for them to bring forward their own amendment saying that at a later stage they can review the operation of the Freedom of Information Act to see whether it has turned out to be very difficult.

The other argument in favour of making it subject to freedom of information is this. This is a new body. It will be given a not insubstantial sum of public money. It will be doing things the nature of which none of us around this Committee Room knows. If it is thought to be too secretive about what it is doing and in no shape or form accountable to Parliament, apart from the odd appearance by the chair or chief executive in front of the Select Committee in another place, there is a risk that ARIA’s work and reputation could be damaged. Freedom of information would protect ARIA against that risk. That is the other argument I put to the Committee in favour of the amendment.

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[Baroness Chapman of Darlington (Lab)]

I thank the Minister for responding to my amendment and speaking to Amendment 42, which I did not move; I am grateful to him for responding to something I did not say.

As he explained, the point of Amendment 42 was to include ARIA as subject to public contract regulations. I do not understand why it is not. These debates are all connected. We are constantly trying to push the Government to give us a bit more transparency and give ARIA more accountability, but they keep pushing us back. The Minister says that he wants a culture of transparency, but I do not see how that will come about as we are currently progressing.

As my noble friend Lord Browne said, ARIA is not unique and, as several noble Lords have said, it needs protecting from reputational damage. I make a plea to the Government not to allow ARIA to end up being called some sort of secret research agency, which is a real danger. When that kind of pressure starts, this agency will not stand a chance. Never mind the measures in the Bill about protecting it from being disbanded for 10 years; they will count for nothing. It would be very easy for a Secretary of State to get rid of this agency should the political pressure mount. That is what we are trying to avoid here.

The noble Lord, Lord Clement-Jones, talked about the exemptions from FoI, which I hope reassures other noble Lords who talked about commercial interests and national security. Of course we would not want FoI to be used in a way that would harm ARIA, but that is already taken care of by the exemptions from FoI that already exist.

The Minister tried to say, “I don’t know why you’re so fussy about FoI. It never really tells us anything we wouldn’t already know.” I just had a quick look at what has been out in the past few weeks thanks to FoI. FoI revealed that 52% of councils spent nothing on electric vehicle charging, and the scale of data breaches at local authorities. FoI told us about the funding drop in early years in different regions of the country over the past quarter and about the number of operations cancelled by trusts. These are all things that we would not have been able to discover, except perhaps by a Parliamentary Question, if FoI were not available. It is important. It provides something that is unavailable by any other mechanism. Given the failure of the Government to take us up on any of our other suggestions for transparency, I am pretty confident that, as the noble Lord, Lord Fox, said, we will return to this and push the Government hard on this issue at Report. I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

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[Lord Broers (CB)]

My Lords, I rise to give the amendment moved by the noble Lord, Lord Browne, the very strongest support. We have talked around the issue of how we can solve the problem of losing our brilliant companies, because it is stunningly serious—and it is not just Arm and Nvidia. I am very pleased because I wrote to the Government about six months to a year ago to plead that the competitive agency should look at that, and it is at least looking at it now. The company Solexa was taken over by Illumina, having pioneered the successful way to decode DNA, and Illumina’s revenue flowed into the many billions—after the key technology had come entirely from the UK. These things should not have happened.

I ask whether we can add to the requirements on ARIA that incentives should somehow be given to our City, which has an appalling record of missing opportunities to invest in UK industries—creative industries in particular. It is all very well to talk about the scale of American venture capital: that is a very good point, but we can be very selective. Then perhaps we would not need a very big scale to look after companies such as Arm and Solexa—there was Verata before them, and several others that have left here almost with the certainty of being successful, and yet somehow we could not find our own funds to support them.

[Baroness Chapman of Darlington (Lab)]

My Lords, I will speak briefly to Amendment 31 in my name. It is a probing amendment to find whether the Minister would say a few words about how ARIA grants will interact with national security and our established defence industry. We have a very well-developed defence research capability in the UK. It is successful and world leading. I would like to understand how ARIA will relate to it.

I also fully support the amendment from my noble friend Lord Browne. I do not know anywhere near as much as he or many other noble Lords in this Committee do about the topic, but I was familiar with Cobham, which was based very close to Darlington: most people who worked there seemed to live in Darlington. Its substantial contribution in this field stretched over decades. I agree that we need to do whatever the Government think would work to deal with this problem. It seems to be a concern on all sides. If the amendment from my noble friend Lord Browne, is not the right one, or it this not the right clause, or perhaps not even the right Bill, there remains a concern that has been expressed that the Government would do well to respond to and let us know, if this is not the way they will deal with it, how they intend to tackle something that is clearly a concern of many noble Lords.

[Viscount Stansgate (Lab)]

My Lords, I rise briefly to support my noble friends Lady Chapman and Lord Browne. Amendment 31A is in my name. The Government saw fit to put Clause 5 in the Bill for a reason and I am sure the Minister, when he comes to reply, will refer to the reason why it is so important. Similarly, some of us on this side of the Committee feel that it is particularly important that, when those powers are exercised by the Secretary of State, Parliament knows about it at the time—not just in an annual report produced later. Also, with others, I think that there may be further scope to consider whether in this legislation or the National Security and Investment Act, which has already been referred to, there could be ways of furthering the arguments of my noble friend Lord Browne, if the Government are prepared to consider constructive ways forward.

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[Lord Fox (LD)]

My Lords, this amendment is in my name and that of my noble friend Lord Clement-Jones. I will try to change gear and be very brief. The amendment would allow the chair of the House of Commons Science and Technology Committee to request information from ARIA on its operation. It would place a role for the committee in the Bill. In our view, it is another way to protect ARIA’s reputation.

I am sure the Minister will say that this is unnecessary, as the Science and Technology Committee can always have an inquiry, so we need not bother. This is true, and I agree that ARIA representatives can be questioned, but we should remember the culture of secrecy that the Government are unnecessarily cloaking this organisation with. There is no guarantee that ARIA will feel compelled to respond in full, and it might use this narrative that the Bill is creating around its specialness.

I recall the debate that many of us had when we discussed the National Security and Investment Bill. Several of us were there. There, too, we discussed the need for oversight of issues that might need to remain secret. At the time, the Minister—this Minister, the noble Lord, Lord Callanan—was adamant that the appropriate Select Committee, the BEIS Select Committee, could be empowered to receive secret and confidential information. There was much debate and the Minister was strident in his view that this committee could do that job. The National Security and Investment Bill envisaged the handling of vastly more secret secrets than we are talking about here.

So the idea of trusting the Science and Technology Select Committee to scrutinise ARIA and maintain genuine secrets is consistent with how the Government have already said they want to work elsewhere. For that reason, I expect the Minister to welcome this tidying amendment, which would bring the Bill into line with his thinking on other legislation. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, I rise briefly to support the amendment from the noble Lord, Lord Fox. It seems entirely appropriate that this committee should involve itself in asking for information from ARIA. I am fairly confident, given the Minister’s responses so far, that he would not share that view. This is the same theme that we have been on throughout all our deliberations. Whether it is this specific proposal, or one of the others that we have been trying to tempt the Government with, I am sure that we will be back at this in a couple of weeks’ time.

[Lord Clement-Jones (LD)]

This has been such a short debate that it is barely worth winding up. I will just reinforce the point that this is a cultural issue, in the sense that we are trying to get over here. It was interesting that the Minister made the rather runic comment that ARIA will interact with Select Committees of this House and the other place in the normal way. I think what we are trying to do is underline the fact that we need rather more than that; we need disclosure as well—otherwise, we are worried that we will not get that. Good heavens, the committee might even look at the framework document when it eventually sees the light of day. How about that? That would be quite novel.

One has seen the benefit of committee reports. The Science and Technology Committee has made extremely constructive comments around ARIA and UKRI. It has demonstrated the benefit of parliamentary scrutiny. Why do the Government think that parliamentary oversight is such a bad thing?

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[Lord Fox (LD)]

My Lords, I am grateful for the Minister’s comments. Without sounding whiny, this would have benefited from a “Dear colleagues” letter in advance. It caused me a little head scratching over the weekend when I was trying to fathom the purpose of these amendments, which the Minister has now told us. I guess it kept me busy.

We are delighted that the Government have accepted one of the two recommendations of the Delegated Powers and Regulatory Reform Committee. I am speaking to oppose the Question that Clause 8 stand part of the Bill. As the Minister referred to, this is the other recommendation of the DPRRC. That committee was clear in its assessment of the Bill:

“Although ARIA is to be created by Act of Parliament, clause 8 allows Ministers to dissolve it by an affirmative statutory instrument. They cannot do so for another ten years and they must consult ARIA before doing so. They do not have to offer any reasons.”


The DPRRC continues:

“We object to this on principle. If Parliament creates a body, it should be for Parliament to dissolve the body. It should not be for Ministers to dissolve it by statutory instrument, even an affirmative instrument.”


The DPRRC could not be clearer. The Minister’s response to that was simply that he did not agree. We knew he would not agree, but this is a very influential committee and what it says matters.

Although I am calling for Clause 8 not to stand part of the Bill, there are parts of that clause that the Government might want to salvage. This gives the Government an opportunity to come back, perhaps with another lengthy set of amendments on Report. It is a chance for the Minister to accept the view of this influential committee, just as he has on Clause 10.

The Minister will point to the fact that this statutory instrument is affirmative, but he will do so knowing that this is a poor alternative. The dissolution of ARIA will throw up issues—not the sort of issues faced by the organisation that the Minister chose to use as an example of one which a statutory instrument has been used to dissolve in the past. For example, when and if ARIA comes to be dissolved, the fate of assets will be crucial. By then, the taxpayer will probably have poured billions of pounds into creating those assets. Parliament needs a say on how they will be allocated in future yet, as we know, statutory instruments are unamendable—take it or leave it. As I have often rehearsed on other Bills, your Lordships’ House virtually always takes them, sometimes with a touch of regret, but takes them none the less. Primary legislation, however, is amendable. It gives Parliament a role in deciding the fate of the organisation and these assets, which, I remind the Government, the taxpayers have created through their investment. That is just one of the recommendations of the DPRRC. It should be honoured. I beg to move.

[Baroness Chapman of Darlington (Lab)]

It is a pleasure to follow the noble Lord, Lord Fox. I have a lot of sympathy with what he has to say. We welcome the government amendments, which act on the concerns of the Delegated Powers and Regulatory Reform Committee and remove Clause 10 from the Bill. We can only hope that this is something of a sign of good habits to come and that the Government will prove attentive to the committee’s concerns about other legislation.

On Clause 8, where the Government have chosen not to act on the committee’s objection, rather than repeat everything that the noble Lord, Lord Fox, just said, I look forward to the Minister’s reply. I think the best way to sum up the DPRRC’s concern over the clause is that the Government were designing the law for convenience rather than necessity. It also made the point that, after 10 years or longer of ARIA’s operation, the agency would be well established and dissolving it might be a bit more complicated than Clause 8 suggests. Let us hope that ARIA makes it to 10 years.

We are content with the changes made by this group, but it would be helpful to the Committee for the Minister to respond in a bit more detail to some of the concerns. Can he outline how the Government envisage the winding down of ARIA would be managed? In particular, how would parliamentarians be kept informed and, aside from ARIA, who does he think it might be a good idea to consult before bringing forward regulations under Clause 8?

[Lord Callanan (Con)]

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—

[Baroness Chapman of Darlington (Lab)]

I have to respond because of the mocking tone of the Minister. He said I should not be asking how he would be winding this up—but it was he who put in the clause about winding up the agency that he is trying to create, so I do not think it is unreasonable to press him on exactly how that might be implemented.

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[Baroness Noakes (Con)]

My Lords, at the request of my noble friend Lady Neville-Rolfe and with the agreement of the Committee, I will move her amendment. My noble friend had hoped we would have a third Committee day and would go slowly today so that she could move it herself on Wednesday. However, she realised earlier this afternoon that that was not going to be the case, so I agreed to move it. I will be as brief as possible, because this is a relatively small point. The intention of the amendment is to underline the Government’s commitment to the independence of ARIA, and it requires the Secretary of State to protect the independence of ARIA.

My noble friend tabled the amendment because she heard the discussions on our first day in Committee about the purpose of ARIA and its mission, including whether it should be directed to act only in certain areas, particularly in relation to climate change. She was very concerned to ensure that the spirit of ARIA—that it should be unencumbered and able to think the unthinkable wherever it wants to pursue its issues—should be preserved.

Obviously, huge amounts of money are spent on research and development overall by the Government and by other organisations in the economy, all of which are subject to lots of different kinds of checks and balances, and controls and directions. But ARIA is supposed to be very different, and it would be easy to start altering the way in which it worked: for example, by attaching conditions to grants that are made to it, and by constraining or confining what it did, using the powers in the Bill. But ARIA is going to be a success only if it is genuinely independent of government, if it is not dancing to the Government’s tune in any sense, and if it is allowed to go wherever it wants in seeking new areas for research and innovation. I think the Committee understands that ARIA’s independence from government should be preserved.

So this very small amendment underlines the concepts that we believe underlie the creation of ARIA, and I hope that it will be helpful to the Government in enshrining its independence from government. I beg to move.

[Baroness Chapman of Darlington (Lab)]

I just want to make a quick observation about this. Obviously, we have argued to have climate as ARIA’s overriding priority, and we stand by that—but should that not be the case, this amendment would not cause any problems were it not for the fact that the Government were declining amendments on oversight and scrutiny. I do not think that the two are incompatible. You can have an independent agency, and we would not wish to have government interference, but there is no compromising of independence by allowing for freedom of information or some of the other measures that we have suggested.

[Lord Fox (LD)]

My Lords, I took the time to discuss this amendment with the noble Baroness, Lady Neville-Rolfe, and I congratulate the noble Baroness, Lady Noakes, on completely representing her views on it—but, strangely, we approach this from opposite directions and land in the same place, similarly to the noble Baroness, Lady Chapman. There is a false dichotomy here. Just because an organisation has a purpose does not mean to say that it cannot be independent. On that basis, it is important for it to be independent, and it is equally important for it to have a purpose—and that purpose should be climate change.

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[Baroness Randerson (LD)]

My Lords, I am pleased to follow the noble Lord, because he shares some of my concerns. I thank the Minister for communicating the information earlier today. Obviously I will read the actual agreement with great interest, but of course one accepts the noble Lord’s assurance that this agreement stands and will operate effectively.

The noble Lord, Lord Lansley, raises a good point about the previous objections of the devolved Administrations, which now appear to have been withdrawn. At what date can we expect legislative consent Motions to come forward from the devolved Administrations?

I also have a detailed question. In an earlier debate, my noble friend Lord Fox made the point that having a purpose is not at war with the concept of independence for an organisation. I was thinking of that point as I read the paragraph in the Minister’s communication that says the agreement

“allows for the UK Government Chief Scientific Advisor, and scientific advisors or equivalent representatives on behalf of Scotland, Wales and Northern Ireland to jointly communicate to ARIA the scientific challenges relevant to the policy priorities of their respective administrations. In keeping with ARIA’S autonomy, there will be no obligation for it to direct funding towards these issues.”

That worries me slightly. I am not arguing that ARIA should follow the separate views of the four nations, but if all four nations, via their scientific advisers, were to say to ARIA that one of the most important government priorities should be the road to zero carbon—I very much hope they would say that—would the Government really be happy for ARIA to invest in and champion a technology that increases CO₂ emissions? There are serious, fundamental points, rather than points of detail, that we still need to take into account on ARIA’s purpose and it working with the grain of government policy—not dotting every “i” and crossing every “t” but working with the grain of public policy.

Finally, I underline the concerns and questions about Barnett consequentials. I will not repeat the point; it is absolutely clear that this will have implications. I look forward to the expressed views of the devolved Administrations and the detail of the agreement when it becomes public. Given the information we have been given today, I am sure it will be possible for us to scrutinise it before Report.

[Baroness Chapman of Darlington (Lab)]

It was slightly surprising to get this agreement so late in the day. Although I have seen that it exists, I cannot pretend that I have properly digested it or discussed it with colleagues in, for example, the Welsh Assembly. I would have been very keen to do that. It is very clear that a legislative consent Motion was not going to be forthcoming as things stood and that if the Government wanted ARIA to embark with support from the devolved Administrations they had to do something. There is now this agreement.

I would accept the Minister’s assurance, but can he clearly confirm that this agreement is not just his but has been reached with the devolved Administrations and that they are all fully signed up to it, before we allow this to go through? My life will not be worth living if I go back to my office and find that we have agreed to something that has not secured the full support of—to pick one at random—the Welsh Assembly. I would really appreciate it if the Minister could confirm that. Can he also speak to this issue of Barnett consequentials, which I had not considered would be part of the debate? How do the Government think this would or would not have any consequentials for funding for the devolved Administrations?

[Lord Browne of Ladyton (Lab)]

My Lords, I rise to be genuinely helpful to the Minister. It appears that I am the most privileged Member of this Committee; everyone’s correspondence seems to be copied to me, although I am not sure if in this case it was a privilege, as I got it exactly one hour and five minutes before the Committee was due to sit. It has a draft agreement of 19 clauses, one of which refers to other agreements—too many for me to count in the small print I have on my phone—so I have not given it any serious consideration.

I think it was copied to me because I raised a question in an intervention to seek assurance that all aspects of this legislation that engaged with devolution issues had been agreed with the devolved Administrations. It turns out that there were at least aspects still under discussion. I understand that that can happen. I suggest that, because of the complexity of this, the Government arrange a meeting, between now and the next time most of us meet again at the next stage of this Bill, with interested parties to explain the situation with devolution. If the Government agree that there are Barnett consequentials—even if they do not, but can be persuaded that, in not agreeing, they are wrong—they can then say how they will deal with that significant complexity.

We must thank the noble Baroness, Lady Randerson, and the noble Lord, Lord Fox, for raising in some detail last time we met where we stand on all these issues. None of us was comfortable with any of this and none of us was as sited as the Government were of everything that is going on. At the very least, there should be the offer of some engagement with Members of this Committee who are interested in these issues and would raise them in some context on Report. This should happen in sufficient time before Report for it to be meaningful, so that some of these matters, which may lend themselves to simple enough explanations, can be put to bed.

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[Lord Clement-Jones (LD)]

My Lords, there is a splendid irony in what the Minister has just said as he trotted through the contortions of these amendments. I think he had a former life as a contortionist: it was quite extraordinary, really.

I do not think that these amendments are consequential; I think they are “Oops, we forgot something, actually”, as far as the Bill is concerned. Because of the way they treated the FoIA, suddenly everybody woke up to the fact that, for the purposes of that, ARIA was not a public body, because the Government had been so keen not to define it as a public body and therefore it had to be defined as a public body for the purposes of other legislation in a rather different way. So I do not think that this is consequential—except that it is something that probably should have been thought about when the original FoIA omission decision was made. No doubt everything will be clear after Report: the Minister will have his definition of a public body, everything will be logical and clear, and we will not have to have contortions such as this.

[Baroness Chapman of Darlington (Lab)]

I thank the noble Lord for his explanation, which I find rather more digestible than the Minister’s. It would be very inconsistent of me not to make this one point: we would not need to be going through all of this had the Government done what they ought and subjected ARIA to FoI. It shows what a strange decision it was that the Government have had to do all this. I just wanted to make that point, really. I do not think there is much more to say about all of this except that, should the Government change their mind, or have their mind changed, on Report, we might have to have this kind of carry-on again as a consequence. Let us hope that we do.

Amendment 38 agreed.

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[Viscount Stansgate (Lab)]

My Lords, I support Amendment 47, tabled by the noble Lords, Lord Fox and Lord Clement-Jones. I feel at a bit of a disadvantage, if I can say to my noble friend Lord Browne, that I have no Daily Telegraph article that I can quote in support of what I am about to say. Perhaps he has one in his pocket and he can pass it along.

The relationships between different parts of the scientific landscape do matter. One interesting thing about the period that we have lived through in the past year and a half has been the changing nature of the role and influence of the Government’s Chief Scientific Adviser. We had a brief mention of that in Committee last week. Amendment 47 refers to the types of relationships that ARIA might have with UKRI, but in particular I would be interested in anything that the Minister might have to say about the relationships between ARIA and the new science and technology council established by the Prime Minister, in which the Chief Scientific Adviser is of course a major figure. Then there is the existing Council for Science and Technology, in which the Chief Scientific Adviser is also involved, and the new Office for Science and Technology Strategy, which has been set up only recently, in which again the Chief Scientific Adviser is involved. Indeed, he is not only the Government’s Chief Scientific Adviser—he is now the Government’s Chief Technology Adviser.

We discussed last week why it had been put in the Bill that the Chief Scientific Adviser should be a member of the board of ARIA. I shall not rehash an old debate, but it is an important role. Undoubtedly, any Member of this Committee or anyone who chairs a Select Committee in this House or another place will want to examine the framework document in detail at a hearing, and I would welcome what the Minister has to say about how that document and how relationships between ARIA and others will focus on the Chief Scientific Adviser.

[Baroness Chapman of Darlington (Lab)]

Committees go in cycles: they can get very serious, but we are now getting towards the end, where consideration can descend into banter, if we are not careful. That is not something that I thought I would experience at this end of the building, but it is quite welcome.

I understand exactly where the noble Lords, Lord Fox and Lord Clement-Jones, are coming from with this, taking into account what the noble Baroness said. The framework document has been referred to so many times during our consideration; it has done a lot of heavy lifting, yet we have not been able to see a draft of it. That is something that I regret, because it would have been useful to know about it. We got lots of assurances about what it will and will not do, but we have not seen a draft that will enable us to test that or tease it out. That is a shame, and I think that is what is behind the amendment.

It is not great when the Government do this and ask a Committee to take these things on trust, or to take the intention. It is not how it is best for us to work. We take these things and our role in this process seriously, and we want to know how ARIA will operate in relation to the departments and bodies outlined in the amendment.

[Lord Browne of Ladyton (Lab)]

I remind the Minister that, not so long ago, he secured Amendments 37 and 40 on the basis of the sight, by a limited number of us, of a draft agreement. It is not unreasonable to ask him to at least consider reciprocating.

Advanced Research and Invention Agency Bill

Baroness Chapman of Darlington Excerpts

Committee stage
Wednesday 17th November 2021 Grand Committee

[Lord Broers (CB)]

My Lords, I shall make just a few comments. I declare my interests, as I did on Second Reading. I spent most of my active life, 40 or 50 years, doing things that ARPA was doing—that we were doing in IBM in the United States—and I have spent more recent years working with the Queen Elizabeth prize and now with the Draper Prize of the National Academy of Engineering of the United States. I declare my membership of that academy, the Chinese academy and the Australian academy, as well as the royal academy here.

The noble Lord, Lord Willetts, raised a lot of cogent points, but the mission of ARIA—I wish “Invention” was replaced by “Innovation”, but that is a small point —must be, to distinguish it from UKRI, to take projects all the way through until they are fully implemented, fully available for people to use, commercially sensible and affordable, and to solve an important problem. A lot of what UKRI does is the essential discovery and understanding of how the world works, and these things should be different.

One thing is very much in common: you need creative people. In ARIA you probably need creative engineers—there will be scientists as well; most of these things are mixed—and creative engineers are no different to creative musicians or creative artists. They do not like being told what to paint, what to compose, how to compose or how to paint. That would turn them all away.

I test my credibility by quoting Donald Rumsfeld. ARIA is all about “unknown unknowns”. I have been sitting down for the last two hours reading all these amendments; we are trying to tie down ARIA so that we understand what it will do, when it will do it, how often it will report on doing it and everything else. That is not what we are trying to create. We will destroy the thing before we ever give birth to it.

I support these amendments, because the challenge that the noble Lord, Lord Ravensdale, has come up with, and others have supported, is the climate problem. That is huge and wide. I do not think it is a constraint that will really trouble creative people at the moment. In fact, I have met a lot of people who are very successful in one field of research and have abandoned that and moved into the field of climate and what they can do about it, because they feel that is the best place to apply their creativity and intellect. I urge the Minister and everybody who will take this through: let us not strangle the poor thing before it begins.

[Baroness Chapman of Darlington (Lab)]

My Lords, it is a pleasure to follow the noble Lord. He is completely right when he says that climate is a broad enough canvas on which people can paint. Broadly speaking, I do not mind painters and artists painting whatever they like, whenever they like, on whatever they like—if I am not paying for it. But we are paying for this, and it is not unreasonable for us to say that we would like ARIA to turn its attention primarily to the climate emergency, the very thing that is threatening our existence on this planet. That is a sufficiently exciting challenge to set ARIA.

The noble Lord, Lord Lansley, was very persuasive and I understand the attraction of allowing maximum freedom, but the risk is that it becomes directionless. For a quite small organisation, as ARIA is, that is a risk, so my view is that ARIA needs a core mission.

The Government want ARIA to have maximum flexibility and be able to back projects as it sees fit, free of any political interference or unnecessary bureaucracy. The noble Lord, Lord Willetts, explained very well how deadening that could be. We certainly have no wish to enter into the kind of situation he described, but a research focus or a mission could be achieved without that risk. He said that no one could have set out to achieve the moon landings without being able to look back and build on existing technology. That is completely right, but we do not have the luxury of that at this moment. We have a very real, immediate risk that we need to address, which is why we favour making the mission one of climate.

We all want ARIA to succeed. This is quite a good Bill from a cross-party working point of view because we all want it to work, but asking the board to come up with its own mission—or, even worse, not having a mission at all—would not assist ARIA and could set it up with a weakness, or even to fail. We all need direction, purpose and a sense that what we are doing is contributing to a greater good, so telling ARIA to back any scientific research and to do what it sees fit would be a mistake. The board will anyway spend its first few months deciding how it is going to make decisions. We are not attempting to tell it how to do that, but it would have no framework or sense of the UK’s priorities, and I just do not think that is necessary. It would be a mistake and, if we corrected it, that would not diminish ARIA in any way; in fact, it would be strengthened.

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[Lord Fox (LD)]

My Lords, I am now going to indulge in some groupthink by agreeing with the last speaker and the noble Baroness, Lady Noakes. The Government fail to take her advice on corporate governance at their peril. All her amendments are sensible and ones that I hope the Minister, who clearly will not endorse them today, will be able to take away, think about and maybe amend a little to put the Government’s thumbprint on them. I suggest that it would be helpful to look at them seriously.

Amendments 5 and 7, as we have heard from the noble Lord, Lord Lansley, seek to inculcate the House of Commons Select Committee into the appointments process, at least at some point within it. Noble Lords will see, later on in the Bill, that Amendment 32 also seeks to carve out an ongoing role for that Select Committee. Clearly, if I were to stand by Amendment 32, Amendments 5 and 7 would also make a lot of sense, in that they will be there at the beginning.

It may be out of kilter or otherwise, but this set of amendments really looks at the membership and members of the board. I have a quick query, which may just be me getting things confused. The Minister kindly sent around the draft of the SI on conflicts of interests. Of course, this may come in when we come to talk about the fourth group of amendments. It refers to “members” throughout, and I am not clear what a member of this organisation is, which made me think that I am not actually clear what the legal structure of this organisation is. I think there is some work to do to help me—if no one else—through. Is this an incorporated association? Is it a company limited by guarantee? What is it? Until we know that, some of the other things that we need to discuss will become very difficult.

[Baroness Chapman of Darlington (Lab)]

My Lords, I will quickly put on record our position on this. I am also fascinated to find out why this issue of the Chief Scientific Adviser is there. I can imagine why, and I am speculating as to why, but I would like to know what the Minister had in his head in proposing that.

I put on record our support for Amendments 5 and 7 in particular. One of the themes from us on this Bill is about trying to enhance democratic engagement with ARIA—not control or oversight, but we think that there is space for some engagement there.

[Lord Davies of Brixton (Lab)]

At Second Reading I raised the appointment of the chair and the chief executive by the Government. Can the Minister make clear that these appointments will be subject to the normal code of practice, or whatever exactly it is called, for public appointments? Will it be subject to the same process as the majority of public appointments?

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I accept that the Government have tabled amendments later which relate to this, but noble Lords will be aware that they have been laid rather later than the amendments in this group. The contents of the promised MoU—although the promise is extremely welcome—are so far unknown. I will listen to the Minister with great interest. I hope that either now or on another day, she will explain to us in some detail what the government amendments are intended to do. I hope they will cover many of my concerns. I beg to move.

[Baroness Chapman of Darlington (Lab)]

It is a pleasure to follow the noble Baroness. I have a lot of sympathy for what she says and would be very happy to support her proposal. I will speak briefly to Amendments 9, 23, 29, 33 and 34 in my name. Trying to make sure that efforts to address regional inequality run through everything the Government do is a bit of an obsession for us. We know that investment in science brings prestige to local areas and supports quality jobs when projects succeed. It is a source of immense local pride.

Amendment 4, moved by the noble Baroness, Lady Randerson, requires representation from the devolved Administrations of Wales, Scotland and Northern Ireland. I completely understand where she is coming from. We are very keen to nail down in some way through the Bill a commitment to ensure that there is representation and fairness across regions. ARIA should be mindful of regional inequality when making its decisions, including, importantly—the Minister might comment on this—where it chooses to base itself. When she sums up at the end, can the noble Baroness indicate whether she has had any discussions with the Welsh Government or in Scotland about how they feel about taking part in the way she proposes? Are they seeking to do that? Has she thought about including some of the English regional mayors, who might also have a role to play?

I can sense the Minister thinking, “Oh my goodness, what are you trying to do to my new agency?”, in involving all these people, but the point we are trying to make is that this cannot have an ivory tower attitude. It needs to take its responsibility to the prosperity of the entire UK, as all government agencies should, very seriously. One way or another, we need to do everything we can to make sure that what the Government would call levelling up runs through everything they do, including ARIA. This is not just about special projects which can be promised and then quite easily taken away; this needs to be a golden thread that runs through this agency and others.

This is not just about the north-east, although it is certainly very important for the north-east. Every region ought to expect that it will benefit from the creation of ARIA. Where I come from, in the Tees Valley, we have a particular talent for oil, gas and energy, and we are starting to specialise in renewables. The benefits of ARIA’s activity could support not just existing ventures but the development of skills in those fields.

My Amendment 9 would allow ARIA to establish committees in specific regions of the UK. I have tabled it to reflect the importance of considering the benefits to regions of ARIA’s activities. Amendment 23 adds to the list of ARIA’s functions so that, as well as

“contributing to economic growth, or an economic benefit, in the United Kingdom,”

as it says in Clause 2(6)(a), it should

“have regard to the desirability of … increasing prosperity across each region of England, Scotland, Wales and Northern Ireland”.

I do not really understand why the Minister would not want to include that.

Amendment 29 would allow the Secretary of State to stipulate that certain grants must be used to support activity in particular regions. I am aware that that would definitely fall into the category of interference from politicians but sometimes, unless we tease this out and put on the record how important these issues are to us, they can become less important and be missed.

Amendment 33 would establish an advisory board to ensure that ARIA supports the reduction of inequalities between each region and nation of the UK. The point I really to make through Amendment 34 is that ARIA should measure and report on what it is spending by region, which is not an unusual request. I accept that this does not have to be in the Bill, but I would like to know what the Minister thinks about it and whether he would be prepared to agree that ARIA should share information in this format. When the annual report is published, readers could obviously do their own analysis and work out what has been spent in which region. However, I think we have learned from reporting on gender and other issues that if something is measured and required to be reported on, it is seen as important and as a priority, and that then flows through into decision-making. I just want to test what the Minister thinks about these proposals in general, if not any of the specific amendments. This is an issue that we will want to return to on this Bill and others as well.

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Moved by

[Baroness Chapman of Darlington]

11: Schedule 1, page 9, line 35, at end insert—
“(aa) produce a value for money study, and”Member’s explanatory statement
This amendment would ensure that the National Audit Office produces a value for money study of ARIA.

[Baroness Chapman of Darlington (Lab)]

I think this set of amendments really gets to the meat of our concerns. These amendments are all about transparency and the ability to scrutinise what ARIA does. I am pretty confident that we will return to this as the Bill progresses.

I will quickly run through the six amendments in my name in this group. Amendment 11 requires the NAO to produce

“a value for money study of ARIA.”

Since tabling this, I have spoken to the noble Lord, Lord Morse, who unfortunately has had to leave us. He says that this can be incorporated into the usual audit. Can the Minister confirm this? In that case, I would be very happy to agree that this amendment would not be necessary.

Amendment 12 would ensure that the annual report includes

“a list of all projects supported in the financial year.”

This is the least we should be asking for. I thank the Minister for providing a draft SI that would require members of ARIA to disclose any relevant interests. That is helpful and welcome, but I am not quite sure what his sending it means. I note that he said in the email accompanying it that it is for illustrative purposes, so I do not quite understand what he is saying. Will members of ARIA be required to register their interests or not? Either way, without a published list of supported projects it is not possible to tell whether any published interest—if that is what the Minister is proposing; I am not sure that is what he is saying—conflicts with a decision of ARIA. We need to be able to make sure that it does not.

Amendment 13

“would ensure that the annual report includes whether any funds have been given by ARIA to companies which list members of Parliament in their company registers.”

Given recent events, it is probably obvious to noble Lords why this amendment has been tabled. We are keen to ensure that parliamentarians do not lobby for companies in which they have an interest and which then become beneficiaries of grants from ARIA. It is very obvious why we want to do that at this point. I accept that the register could be cross-checked with the list of grants awarded but it is far more transparent and straightforward if the existence of any recorded interest could be highlighted in the report that ARIA makes itself. I assume it would be helpful to the board of ARIA too to be aware of any such interests so that it can take them into account and assure itself that the proper processes are being followed.

Amendment 14 would ensure that the annual report includes whether any funds have been given by ARIA to companies listed in the Electoral Commission’s register of donations and loans to political parties. Similarly to the last amendment, this one would help ARIA to assure itself that no lobbying or purchasing of influence could possibly have taken place.

Amendment 15 would ensure that a Minister of the Crown must make a Statement to both Houses of Parliament on its annual report. This is important because, as we said on the first group of amendments, MPs and Peers would be interested in a project supported by the public purse. Ministers should see this as an opportunity to promote the work of ARIA and to celebrate the inventions and research projects made possible by the agency. Of course, there are bound to be awkward questions—when are there not?—arising from projects that have not worked. But Ministers should not worry about that, as they can argue that the risk is built in, that Parliament has agreed and understood, that many ideas will fail, at least initially, and that we have supported that approach. We want adventurous research, but many of us want to know what is being done. That is because we are curious, supportive and interested in this area of activity, and we want a chance to discuss it.

I shall leave the noble Lord, Lord Ravensdale, to speak on his Amendment 16, but I indicate our support for that as well. Developing an environmental and social governance strategy is a really good idea and may address many of the concerns that I have had previously about regional inequality. ARIA is in any case going to have to devise a decision-making process and criteria to help it make its decisions, so an environmental and social governance strategy could be very helpful, I imagine, in teasing out a means by which ARIA can ensure maximum benefits in relation to our desire to combat climate change and reduce regional inequality. We would be very happy to support that.

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendment 16 in my name. I thank the noble Lord, Lord Browne, for his support with this amendment and the noble Baroness, Lady Chapman, for the support she indicated.

This amendment is closely related to the sustainability amendments that I discussed in the first group. The arguments made there on alignment of ARIA with these objectives apply, so I shall not repeat them here. It simply calls for ARIA to develop its own environmental, social and governance strategy to consider the impacts of the exercise of its functions and the projects that it funds. It is another means of embedding climate and sustainability considerations in the organisation, alongside my Amendments 1 and 26 and Amendment 21. It would allow the board of ARIA to consider its own strategy for alignment with environmental and climate goals, so it is consistent with the other amendments.

Embedding sustainability goals in the governance structures of organisations is increasingly important to ensure that organisations consider the impact of their operations and set clear and measurable goals. That ties into a point that I made earlier about considering environment and net zero as a system: there is a need to embed climate considerations across all companies and all public bodies to ensure that our overall goals are met.

ESG strategies are increasingly common across public and private companies, as noble Lords will be aware. I note that other government-created bodies are developing ESG strategies. For example, the Financial Conduct Authority has recently published an ESG strategy, and the national infrastructure bank has a requirement to develop an ESG strategy in its framework documents. Bringing ARIA in line with other government organisations would again ensure consistency and its playing its part in the principal strategic goal of the nation.

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Combined, these reporting and accountability measures provide Parliament with the opportunity to appropriately discuss and scrutinise ARIA’s use of public funds. I hope, therefore, that I have provided sufficient reassurance to noble Lords that it is not necessary to pursue these amendments.

[Baroness Chapman of Darlington (Lab)]

I thank the Minister for what he said, but if he thinks that this is some short-lived political campaign on my part, he is mistaken. The issues of the potential for conflict of interest and the need to protect ARIA from accusations of cronyism were raised in the other place before the Summer Recess and they are certainly not a reaction to the current crisis in which the Government find themselves, but we cannot pretend that that is not happening. I fear that the Government have not shown themselves in the best light this in recent days or weeks, and we feel that these protections are needed for the benefit of ARIA. This is not about making a political point or having a go at the Minister or the Government at all; it is about protecting something that we all sincerely hope works and changes lives in this country. That is what we are about here. If I thought that the assurances that the Minister just gave were sufficient, I would certainly be happy not to return to this. Of course, I withdraw the amendment for today, but we will be coming back to this.

Amendment 11 withdrawn.

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[Baroness Noakes (Con)]

My Lords, I beg to move Amendment 17 and shall speak also to Amendment 20 in this group. These are probing amendments designed to explore the extent of the powers given to ARIA by virtue of paragraph 17 of Schedule 1. Sub-paragraph (1) of paragraph 17 says that ARIA can pretty well do what it likes, and this is expanded by some particular powers in sub-paragraph (2). The two I have focused on in my amendment are sub-paragraph (2)(a), which says that ARIA may borrow money, and sub-paragraph (2)(d), which allows ARIA to form and participate in partnerships and joint ventures.

My concern is that these powers will be used to create liabilities for the state and hence, ultimately, for taxpayers, beyond the resources that we were led to believe would be devoted to ARIA. As I remarked on Second Reading, there is a world of difference between placing a bet of £500 million or £800 million and underwriting someone else’s credit card. In the former case, there is the hope of winning very much more than the initial £500 million or £800 million, although, obviously, the possibility of losing the lot. In the latter case, there is the possibility of an unlimited amount of additional money being needed if the funds raised by the borrower failed to produce any return.

ARIA will be a public sector body in every sense of the term. It gets its money from the Treasury, it is subject to public sector audit and accountability arrangements and its key personnel are appointed by and paid in accordance with the directions of the Secretary of State. It is always accepted that the state stands behind public sector bodies. That has been the case for as long as I can remember. If they fail, their liabilities are underwritten by the state. That is why there is usually a raft of controls placed on those bodies, including restrictions on the power to borrow money. The Treasury has an obvious interest in ensuring that public sector bodies do not create uncontrolled demands on public finances and, as a public sector body, ARIA’s borrowing will, I believe, automatically score as public sector borrowing. Will the Treasury really allow that to happen without controls?

I have focused on the borrowing power in sub-paragraph (2)(a), but my comments apply also to the ability to participate in partnerships and joint ventures, which are often structured in a way that means liabilities can be left with one of the parties to the venture. Private-sector counterparties would be queueing up to enter into arrangements which could possibly leave the state with the requirement to pick up the bill for failure. Similar dangers also apply in relation to companies which are allowed to be formed under sub-paragraph (2)(e), but I failed to table its deletion for today’s debate. I am not against partnerships, companies or joint ventures; they all have a part to play in working with private sector organisations. What I am against is the ability of ARIA to enter into arrangements that impose potential financial burdens on government finances without any controls or consents being required.

As it stands, Schedule 1 might allow some ex post interventions once the Secretary of State became aware of things that cause financial concerns beyond the initial amounts of money committed to ARIA—£500 million by the end of this Parliament—but the main tool he has is an extremely blunt instrument because it is related to replacing the members of the board. Even here he is restricted, as under paragraph 6(3) he can sack non-executive members of the board on any grounds he “considers appropriate” but, to get rid of an executive member, his power under paragraph 5(2) is restricted to grounds of “national security”. The real villains are more likely to be the executives than the non-executives, but the Secretary of State’s powers to deal with those individuals are, perversely, concentrated on the non-executives.

The notes given to noble Lords on this side of the Committee for today’s groupings said that my amendments would limit ARIA’s novel funding mechanisms. That gives an insight into what these powers are about. They are positively designed to allow ARIA to go beyond the resource envelope that has been announced for it. Calling funding “novel” might sound progressive, innovative and all those good things that ARIA is said to be focused on, but to those of us who have been around financing for rather a long time, it just sounds like another way of doing things to get around rules and restrictions. That would be okay if there were not ultimately recourse to public funds, but the Bill does not require borrowing to be on a non-recourse basis. It leaves public finances at risk to an unspecified degree.

I look forward to hearing from my noble friend how she thinks this very real risk will be managed in practice and how the Government have concluded that ARIA’s powers are compatible with sound public finances. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, I support the noble Baroness, Lady Noakes. I had not had the pleasure of hearing from her at such length as we have today, and I am very impressed by her contributions. The issue of borrowing money is a concern. There is clearly the potential for financial risk but also significant reputational risk when a level of borrowing might emerge that may seem unduly risky. I am concerned about that and interested in what the Minister will say to prevent that concern doing any damage to ARIA.

[Lord Fox (LD)]

My Lords, rarely have I got to the end of a speech by the noble Baroness, Lady Noakes, and been crying out for more. On her second amendment, I wanted to know what she had against partnerships and joint ventures. I do not think there was a clear under -standing as to why that is a particular concern, given that many research processes go ahead collaboratively as joint ventures, partnerships or co-projects. I am interested to know, because I am sure there is a good reason; I just do not know what it is. While we are talking about that amendment, I would be pleased if the Minister could confirm that, whatever relationship ARIA is putting together, the National Security and Investment Act applies. I assume that to be the case.

Advanced Research and Invention Agency Bill

Baroness Chapman of Darlington Excerpts

2nd reading
Tuesday 2nd November 2021 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Fox, and encouraging that there is broad support for this initiative, albeit with some concerns raised by noble Lords on all sides of the Chamber.

As the noble Viscount, Lord Stansgate, said, in his informative and well-informed speech, ARIA needs a licence to fail. I need look no further than some relatives of mine to learn the lesson that repeated failure is often a necessary part of the process. I am distantly related to Orville and Wilbur Wright. They would not have succeeded without years of crushing failure. These self-taught engineers took years and countless attempts to get anywhere close to powered flight, but get there they did. At times, they thought it would never happen, and yet here we are, in 2021, discussing whether there is now too much air travel.

The Wright brothers were, of course, American, but the UK is also a nation with a proud scientific tradition. Alexander Fleming, Dorothy Crowfoot Hodgkin, Francis Crick and Tim Berners-Lee are just some of the names we can look to for inspiration. For a nation with such a proud tradition as ours, it has been disappointing that, for the past decade, the Government have neglected investment in education and our future scientists. Also missing has been sufficient long-term, high-ambition research and development, so it could be that this Bill marks a turning point.

These Benches support the creation of the Advanced Research and Invention Agency, and for that reason we do not intend to oppose the Bill. We will, however, seek to amend it because, in its present form, we do not believe that it properly prepares the agency to succeed in the way that we all want it to do. It is disappointing that the Bill does not offer direction, purpose or mission—as we have been calling it today—for the agency, despite the expectation that it would do so. Various schedules and accompanying framework documents have been referred to but have not yet been made available to noble Lords to assist us in our consideration of the Bill. Without any real accountability or defined strategy, there are obvious concerns that ARIA could end up pursuing vanity or pet projects, rather than the public interest.

We want the agency to work for and invest in all regions and nations, to unlock potential across the UK. We view this somewhat differently from the noble Lord, Lord Patten. Science and innovation have enormous capacity to help address regional inequality and bring opportunities to towns and cities across the four nations of the UK. After all, investment in research means investment in jobs. This will happen if ARIA is given a duty to make it happen. We make no apologies for asking the Government to explain how every region benefits from the £800 million spend, because, as things stand, they are leaving too much of this to chance.

On climate, we meet today as COP takes place in Glasgow, as the noble Lord, Lord Ravensdale, said. ARIA presents an opportunity to enable scientists to do more to find solutions to the threat of climate change. The agency must contribute to action on climate and help in the mission to net zero. That is why the Opposition Front Bench in the other place called for the environmental emergency to be the driving mission of ARIA’s first decade. At that stage, the Government did not want to make climate the priority—and did not want to make anything else the priority either. The danger is that, if we do not prioritise, everything becomes important and less is achieved.

Many noble Lords have made the point that letting a thousand flowers bloom is a lovely idea but if we want to make impact we need to make choices. Labour believes that the prioritisation of climate research is essential. We will continue to put this case to the Government, who may be more receptive to the idea, given the benefits of investment in technology they will have seen at COP. Only through well-defined ambitions such as these can the agency fulfil its potential.

On the issue of governance, as we have heard, ARIA has, in principle, cross-party support, but to stand the test of time the agency does not need a clause in a Bill guaranteeing its survival—as it currently has—as my noble friend Lord Davies explained. I refer noble Lords to the Fixed-term Parliaments Act 2011 as evidence of how to get around attempts of predecessor Governments to bind the hands of their successors. As the noble Lord, Lord Patel, said, the key to ARIA’s survival is that it must act, and be seen to act, in a way that is solely for the benefit of scientific discovery—not following the passions of the chief executive, not benefitting the business associates of any of the board, and with a clear idea of what success looks like, especially given that ultimate success may take years to realise.

Helpfully, in July 2020 the NAO published a paper for the Science and Technology Committee designed to assist the Government in establishing what was then known as the Advanced Research Projects Agency. The report looked carefully at how to balance the independence of what is now ARIA with the assurance that is needed for it to be secure politically. Without this assurance, ARIA will always be vulnerable to attack on the basis of value for money, cronyism or whatever else. I invite noble Lords to imagine the pressure upon Ministers to intervene should it emerge that grants had been given to a company in which a board member, say, or a member of their family, has an interest. We must ensure, therefore, that the public have absolute confidence, not that every venture will result in a scientific breakthrough but that decisions are made in the interests of science alone. It is in ARIA’s own interests to get this right.

The NAO report refers to what it calls the six principles of effective oversight of new bodies that it would like to see ARIA adopt. These are: clarity of purpose; clear alignment of objectives between departmental plans and the new body; a balanced approach to financial risk; a proportionate and transparent approach to oversight; streamlined processes that avoid overlap with other bodies, which was a point raised by the noble Lord, Lord Rees; and taking opportunities to provide greater value by involving the body in policy development. So far, the information available from the Government is insufficient to enable us to assess whether ARIA will meet any of these principles; indeed, some of it has made clear that it will not meet some of these principles. For instance, it has to stop large sums of money being spent on operating costs as opposed to research. What is to prevent ARIA spending large sums of money on projects that benefit close friends or associates?

When I raised this concern with the Minister at the meeting he helpfully organised for us last week, I was advised by officials that, in essence, I did not need to worry about these issues, as Schedule 3 to the Bill would answer my concerns. Following the briefing, I read Schedule 3 and, from my reading, it seems that paragraph 11 amends the definition of “contracting authority” in the Public Contracts Regulations 2015 to exclude ARIA. This means that the obligations in these regulations that apply to a “contracting authority” will not apply to ARIA. It will not be subject to FOI, as we have heard, and it will not be subject to public contracts regulations. This is an issue that we need to return to as the Bill proceeds.

What about ethical issues? What about animal experimentation, publication obligations, intellectual property and conflicts of interest? We will be asking the Government to come up with answers to these questions too.

Often, failure is all part of the long process of discovery. As the Wright brothers show us, it is perseverance, not a quick win, that changes the world. Inventors and scientists need to be allowed to fail, but ARIA does not need to fail. We will challenge the Government on the Bill, not because we want it to fail but because we want it to succeed.