EU Report: Effectiveness of EU Research and Innovation Proposals

Earl of Liverpool Excerpts

Thursday 21st November 2013 Lords Chamber

[The Earl of Liverpool (Con)]

My Lords, I should also like to express my gratitude to the noble Lord, Lord Kakkar, for giving us the opportunity to consider this report today. I congratulate him on giving an excellent tour d’horizon of its contents, which means that I can make a much shorter speech than I had originally planned. I have no interests to declare, other than that I am a member of the EU sub-committee that compiled this report. I take this opportunity to associate myself with remarks that were made earlier. I thank our parliamentary clerk, our policy analyst, the secretariat and others for all the diligent work and help that they gave us during the whole process. We received wise counsels and guidance from many quarters, not least from our chairman, my noble friend Lady O’Cathain. I am sorry that she cannot be with us today.

The very nature of research and innovation means that it seeks to break new frontiers in technology. This inevitably means that it is a keenly fought battleground for new ideas, and as noble lords will be aware, we live in a very competitive world. We have heard that the Horizon 2020 budget, which is to be rolled out next year and which will run until 2020, will be €71 billion—although as the noble Lord, Lord Brooke, mentioned, another €8 billion may be added, which would make it €79. That sounds like a lot of money until—as the noble Lord, Lord Kakkar, said—you look at countries such as China, which are set to increase their spending on R&I to €181 billion by 2015.

If we in Europe are to try to compete with the likes of China on a much smaller grant base, it is essential that we give as much encouragement as we can to involve small and medium-sized businesses in the process. They employ some 70% of our entire workforce, but up to now they have applied for only less than a quarter of all available funding.

Therefore the main point of the report that I will focus on this afternoon is the perceived urgent need to make it easier and more attractive for our SMEs to apply for R&I grants from the EU. One of the reasons for their reluctance to apply for funds in the past is that they see the whole application process as labyrinthine and too bureaucratic. Add to that the fact that they may have to wait up to 499 days—as a worst-case scenario—for their application to be accepted, and then factor in the possibility of late payment, which further exacerbates the time to receiving the grant, and you can see the problem all too clearly. Indeed, my right honourable friend David Willetts, during a very helpful session with the committee, cited a company that was advised that it had been awarded a grant and was so excited and enthused at being told this that it recruited extra staff, but the money was so slow in arriving that it went bust. Paragraphs 100 and 101 on page 35 of the report draw particular attention to that problem.

The committee was also concerned at the lack of flexibility in funding at the end of a given project. By its very nature, innovation is not an exact science and there can often be a time overrun in bringing new ideas to fruition. When that happens, it will inevitably incur extra costs, but there is currently no provision for this in the Horizon 2020 funding package. We believe that the process should be more flexible and that follow-on funding should be made available to help to ensure that projects are completed and achieve full commercial benefit.

The only other point on which I would briefly like to comment concerns the duplication of impact assessments. While they are very important, as noble Lords have said, having them carried out by the European Commission and the European Parliament separately is one level too many. Surely, time and money can be saved by having just one impact assessment board.

I very much look forward to hearing what my noble friend the Minister has to say. Of course, we keenly await hearing from the EU Commission when it responds to the report that we have submitted. I end by expressing the hope that, by 2020, our horizons will be broader, and we will all have benefited from this exciting funding initiative.