Advanced Research and Invention Agency Bill

Baroness Noakes Excerpts

Committee stage
Monday 22nd November 2021 Grand Committee

[Viscount Stansgate (Lab)]

My Lords, first, I apologise for being late. I do not know whether amendments can be moved by Thameslink.

[Baroness Noakes (Con)]

Perhaps I might say to the noble Viscount that it is customary, if a noble Lord is not here for the commencement of a debate, for them to take no part in it at all. In the noble Viscount’s absence, the noble Baroness on his Front Bench formally moved his amendment so that a debate could take place—but that does not mean that he can take part in the debate.

[Viscount Stansgate (Lab)]

I found the noble Baroness’s comments in our last session very helpful and I learned a great deal—and now I have learned some more.

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[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.

[Baroness Noakes (Con)]

My Lords, I spoke on this at Second Reading and quoted Tony Blair. Just to remind the Committee, he said that the Freedom of Information Act was

“utterly undermining of sensible government.”

I do not think it is, but I think anybody in the public sector will attest that it is often very burdensome and extremely costly to operate. It was looked at relatively recently by a group, led I think by the noble Lord, Lord Burns, and the conclusion was that on balance the law should remain as it is. But that does not mean that for every new body we should automatically apply the Freedom of Information Act requirements. The noble Baroness, Lady Chapman, was clear that if there was a case, the Opposition would support it.

It is worth looking at why an organisation such as ARIA might well be worthy of special consideration. Let us look further at what Tony Blair said:

“If you are trying to take a difficult decision and you’re weighing up the pros and cons, you have frank conversations … And if those conversations then are put out in a published form that afterwards are liable to be highlighted in particular ways, you are going to be very cautious.”


We do not want an organisation that is dragged into caution and risk aversion. We want one that is fully open internally to grappling with some very difficult issues.

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[Lord Browne of Ladyton (Lab)]

My Lords, Amendment 30 seeks to ensure that any grant made by ARIA is subject to the condition that the entity or asset supported may not be subject to a takeover for five years. I confess that, on reflection, this may more felicitously have been an amendment to Clause 2, which deals with the conditions of grants made by ARIA. As its tabling is for exploratory purposes, at least today, I do not think that matters, but if it comes back it will probably come back in a different form and as an amendment to a different clause.

On the first day of Grand Committee, the debate on the group of amendments led by Amendment 18 in the name of and moved by the noble Lord, Lord Lansley, took about 20 minutes, and the phrase “intellectual property” was used 37 times. Introducing the debate, the noble Lord described the group as being

“about the way in which ARIA acquires, creates, disposes of, retains and shares intellectual property”,—[Official Report, 17/11/21; col. GC 127.]

so it is not really a surprise that the phrase was picked up.

In some senses, it is a pity that this amendment was not grouped with the noble Lord’s amendments, because the concerns that have given rise to the need for this amendment were to some extent aired in that debate. The noble Lord, Lord Lansley, shared with us the extent to which there was concern in the United States that

“some of the public funding which has led to”

DARPA

“research has led to private as opposed to public gain.”—[Official Report, 17/11/21; col. GC 128.]

I share his concern about the extent to which we are creating such an opportunity, but more so about the extent to which such publicly funded research may lead to foreign, mainly US, private as opposed to British private or public gain.

Refinitiv data shows that, in the first half of 2021, buyout groups spent $45 billion snapping up companies in Britain—more than double the next-best first six months on record and almost 10% of the total $547 billion spent across the world. Am I to understand that British stocks’ discount to global peers is the deepest in more than three decades and that Brexit is one reason? I do not want to divert us into another debate, but Brexit is for good, not just for Christmas, so that situation may persist for a period.

On 17 November, reporting the Culture Secretary’s decision to announce a competition and national security investigation into the planned takeover of the British chip business Arm Holdings by the American multinational tech giant Nvidia, and coupling this with the recent news that Kwasi Kwarteng is investigating the proposed sales of defence suppliers Ultra Electronics and Meggitt to American suppliers on similar grounds, Ben Marlow, the chief City commentator of the Telegraph, wrote:

“For too long Britain has adopted a naive and unquestioning ‘help yourself’ approach to foreign takeovers. For a while it looked as though the … government would take an even more extreme laissez-faire approach as it sought to live up to its ‘Global Britain’ credentials but perhaps the penny has dropped in Westminster … It is a welcome shift in tone. Ministers routinely greet the sale of British companies to overseas buyers as a vote of confidence in this country’s prospects when it is nothing of the sort. It simply means foreign firms see the UK as easy pickings and an opportunity to make a quick buck. Hoisting a giant ‘for sale’ sign over your best and brightest companies is not sound industrial policy, it is an act of … self-harm.”


It will not be a surprise to anybody in your Lordships’ Committee that I am not used to quoting the Telegraph in debates or in support of my arguments. I do so because, in a sense, it may be a bit of an instruction to the Minister as to the attitude he ought to adopt to this issue. I do it because it may have more impact on the Minister.

I have tried twice now, in supplementaries to Questions in your Lordships’ House on these issues, to engage the Minister on what is actually happening in the United Kingdom to some of our best and brightest businesses and the effect it is having. I even quoted on one occasion the concerns of the Bank of England about the way these businesses are funded and the damage that this leveraged debt potentially poses to the economy of the United Kingdom in the long term, but he did not respond.

On another occasion, in relation to both the companies referred to in addition to Arm—Ultra Electronics and Meggitt—I pointed out that 85% of R&D in the defence industries in the United Kingdom is public money, and that the intellectual property of these businesses was in danger of leaving the United Kingdom, having been paid for by public money. That is exactly the issue that the noble Lord, Lord Lansley, raised, although he did so in a slightly different context, and exactly the concern I have.

On none of these previous occasions did the Minister bite. With respect to him, he deployed a slightly less complacent version of the words the Telegraph’s city correspondent pointed out, but he deployed them nevertheless.

I close my remarks in support of this amendment by thanking the Minister for his gracious invitation to me over the last few days to indicate to him what lay behind it so that he could, if possible, give me the reassurance I sought. I responded with an even shorter version of what I have said to your Lordships’ Committee today. I hope he has the reassurance that I and others seek about how we will protect the product of this new initiative from being raided by the predators of venture capital funds in particular. I conclude with the words the Telegraph uses, that

“the Americans wouldn’t allow it to happen so why should we?”

[Baroness Noakes (Con)]

My Lords, I am not as opposed to foreign takeovers as the noble Lord, Lord Browne, but I accept that there are some instances where this country is not well served by the ability of organisations outside the UK to cherry pick some of our best assets. The broad thrust is that foreign investment in the UK has been good for our economy—indeed, large amounts of our productive economy are owned by foreign businesses and they are an important part of the success of the UK economy—but I concede that there is a potential issue, especially when we deal with the kind of things we expect ARIA to fund.

However, I do not think the amendment works. It says that if ARIA gives a grant to an entity, it has to be subject to the condition that that entity cannot be taken over. That entity cannot give an undertaking that it cannot be taken over, because the people who will control who takes over an entity are the people who own the entity, which is not the same as the entity itself. While in some cases it might be a private company with two or three shareholders, which would probably be quite easy to deal with, if the shareholdings were much more dispersed it would probably be impossible to operationalise that sort of requirement. If there is a case, it needs another solution.

I also note that this is a bit of a sledgehammer. There could be very good reasons for an entity having the control over it changed. It could need greater access to capital to scale up whatever it has been looking at; it could have liquidity issues in taking its research and development to the next stage, before it even gets to scale up, and need the involvement of other partners; or it could just be that it makes sense to continue with whatever it has been looking at only if it is part of a larger organisation and subject to a merger or joint venture, where control would be ceded. If there is a problem, I do not think it can be met by this amendment.

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Moved by

[Baroness Noakes]

36A: After Clause 8, insert the following new Clause—
“Protection of ARIA’s independence
In exercising functions in respect of ARIA, the Secretary of State must have regard to the need to protect its independence.”Member’s explanatory statement
This new Clause would require the Secretary of State to have regard for the need to protect ARIA’s autonomy.

[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 Callanan (Con)]

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

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

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

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

[Baroness Noakes (Con)]

My Lords, let me thank all noble Lords who have spoken. I agree with the noble Baroness, Lady Chapman, that independence is not incompatible with the Freedom of Information Act and other aspects that are included in the proposition for ARIA in this Bill. However, I do not think that independence is compatible with prescribing that it should focus only on climate change. We will have to agree to differ on that point.

The point of this amendment was that the Secretary of State had to respect the independence of ARIA, not that everybody else had to respect that independence, and I am not sure that I got the ringing endorsement of the Secretary of State not interfering in ARIA. However, we have had a good debate, and I am sure that my noble friend Lady Neville-Rolfe will enjoy reading it in Hansard. With that, I beg leave to withdraw the amendment.

Amendment 36A withdrawn.

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[Lord Lansley (Con)]

My noble friend referred to the agreement having been shared with us, but I am not aware of having seen it or where it was shared with me.

[Baroness Noakes (Con)]

My noble friend also sent a letter to me following last week’s Committee; that was shared only with the noble Lord, Lord Browne of Ladyton. My noble friend’s department has form on not sharing widely with those in Committee when things are circulated. Can he go back to his department to ensure that all active members of the Committee get access to all the information circulated in response to its deliberations?

[Lord Callanan (Con)]

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

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

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

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

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[Lord Fox (LD)]

My Lords, this is the last group of amendments in Committee, and it is probably just as well, because if the Minister has any more jelly babies I suspect he will go into a coma. We have established through both our useful meetings with him and Second Reading that the framework agreement is a crucial document to point the way to how ARIA will operate and its future relationships. Without knowledge of that document, we are being asked to approve all manner of clauses, as we just have, that set ARIA in motion before we know how it will operate—actually, before we know what it is.

With Amendment 47, my noble friend Lord Clement-Jones and I are offering the Minister an alternative to the Government’s magical mystery tour approach. Remember that this tour comes with a ticket price of £800 million of taxpayers’ money—and that is just the start. The Minister is loading us on to his metaphorical charabanc, ready to go who knows where, flat cap in place. The amendment is intended to remove some of that mystery. Thanks to it, before the vehicle can be put in gear, we must at least be told where we are going.

I have perhaps laboured that image a little much but, as I said, it is the last group. More prosaically, the amendment would require the Secretary of State to publish a copy of ARIA’s framework agreement before regulations can be made to commence the substantive parts of the Bill. It continues our theme of ensuring that Parliament has sight of, and an appropriate say in, the progress of this important institute, and it would do so without impeding ARIA’s progress or meddling with its future. In this way, the Minister can remove the mystery without harming the magic, so I beg to move.

[Baroness Noakes (Con)]

If ARIA does not exist until the Act is commenced, how can there be a framework agreement that involves ARIA being a party to the agreement to be tabled before the commencement of the Act?

[Lord Clement-Jones (LD)]

My Lords, I do not need to do very much more. My noble friend is finishing this symphony of a Bill Committee con brio, with metaphorical charabancs, mystery and magic. What more do we need at the end of a Bill stage?

I point out that the equivalent UKRI document of 2018 runs to 60 pages and 16 chapters. It covers a huge range of information: the purpose of UK research and innovation, its powers and duties, its aims, the partnership principles, and the responsibilities of the CEO. It then goes on to deal with devolution and relationships with other bodies, public appointments to UKRI, reviews of boards and committees, and so on. There is some really important content in the UKRI framework document, and I am sure that the ARIA document will not be very different. I very much hope that the Minister will reconsider the decision. On the arrival of the CEO, the Minister said that it followed the Treasury’s standard template. Even something in draft, which does not have to be agreed by the CEO, would seem fundamental to our understanding of what ARIA is going to do.