Life Sciences Industrial Strategy
Debate between Lord Fox and Lord Prior of Brampton(7 years, 1 month ago)
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Lord Prior of Brampton
My Lords, there is a strong case for increasing the amount of resources that go into R&D in the UK. It is true that about 1.7% of GDP goes into research at the moment, whereas the OECD average is 2.4% and many countries are aiming at 3%—Germany is looking at 3.5%. We share that aspiration. As the noble Lord will know, we are increasing the amount of money that the Government spend on research by £2 billion a year from 2020-21 and an extra £4.7 billion over the lifetime of this Parliament, which is a very big increase. This is one of those areas where we can almost never spend enough.
Lord Fox (LD)
My Lords, the life sciences industrial strategy is a clear and comprehensive review of the biomedical and pharma sectors, but it misses out large swathes of the industry—namely, animal health and plant science. Was that narrow interpretation by the deliverers of the industrial strategy on the advice of the Government, or was it the interpretation of those making it? Can the Minister give us assurances that plant science and animal health will also be included in the industrial strategy sector deal when it emerges?
Lord Prior of Brampton
My Lords, it is true that the life sciences industrial strategy was largely based on humans rather than plants or animals. That does not mean to say that we will not be having a strategy for other sectors of the economy as well, including plants and animal science.
International Investment
Debate between Lord Fox and Lord Prior of Brampton(7 years, 1 month ago)
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Lord Fox (LD)
My Lords, I draw your Lordships’ attention to the interests registered in my name. I, too, thank the Minister for repeating the Statement in this House. He is of course right to declare that the UK economy should be open. All of us on these Benches earnestly hope that that is the way the Government continue to play it and that we do not start to close down and become a little England.
The Minister also rightly highlighted the need for changes in appropriate safeguards. The world is changing very quickly, national security needs are changing and the Government are right to keep those under review, so this is a timely process.
The noble Lord, Lord Mendelsohn, asked for a holistic approach to the whole issue of mergers and acquisitions. En passant, I add pensions to that list, which he did not include, because increasingly pensions and the rights of pensioners are becoming a driver within the mergers and acquisitions section.
On the Statement, there is a powerful case for strengthening the public interest in takeovers, as, indeed our leader Vince Cable has argued regularly, most recently, I think, on the AstraZeneca case. However, while lowering the threshold is a welcome step, the Government’s proposals are narrow and do not add a great deal to the overall public interest element, which should be covered in a more holistic approach. In recent months we have seen several of the UK’s high-tech companies snapped up by foreign competitors. This has been exacerbated by the fall in the value of the pound. That is a regrettable outcome. Therefore, today’s inclusion of computer chips in the list of new technologies singled out is somewhat interesting given that it follows the much publicised acquisition of ARM, arguably the world’s best chip designer. That, again, was driven by the weakness of the pound. Perhaps the Minister agrees that there is an element of closing the stable door here. We wish that some of the measures we are discussing were in place at that time.
The addition of quantum technology raises the question: why only that? Again, the noble Lord, Lord Mendelsohn, opened up a list of other technologies. I had biosciences and some aspects of IT and encryption on my list. It seems to me a rather narrow list when you consider the potential threats to a range of technologies. In some technologies, the threats have not been thought of yet but they exist. In our view the scope should be widened to defend not just the science base from a security point of view but also the overall knowledge base of this country. Knowledge can leak out from this country through a variety of means, of which mergers and acquisitions is but one. Joint research projects are another. In many cases you often have competing aims where inward development exercises try to draw foreign investors into research projects where the IP driver in this country would be to exclude some of those investors. In many cases, therefore, we are creating a situation that is leaking out valuable information —whether it is for security interests or economically valuable—through actions that the Government or local government are driving. Perhaps this is something that the Minister could look at. At the heart of this is the narrow look at security needs. These Benches would widen that to cover more economic interests of this country, and we hope the Government will take that on board.
Turning to Bombardier, I am sure the whole House welcomes the announcement of this deal, which should protect the future of the plane-maker. Clearly, only a few days ago, we were discussing a very bleak future for the 4,000-plus workers and all of those indirectly involved in the economic area that it has created in Belfast, so this is good news. I said at the time that even though this is not a case that would, in the end, be won by Boeing, time was the issue that would kill off and affect Bombardier. This is a very effective way of trying to bridge that time and of negating that problem. We should all congratulate everybody who has been involved in expediting this so swiftly and effectively. I am sure there are “i”s to be dotted and “t”s to be crossed, and I hope the Minister will give assistance to all those who require it to make sure that happens. In that regard, will the Minister tell us what anti-trust hoops he expects this deal to have to jump through?
We would also welcome some clarity from the Minister on what assurances have been forthcoming, both on investment and on the public statement made by the CEO, Tom Enders, on the notion that operations will be more efficient. What will be the job implications in both Belfast and perhaps in Broughton? What assurances have been given, and how will he be able to uphold them? In many ways, the US Administration and Boeing might feel that they have got off the hook somewhat by this, but there are still huge tariffs outstanding on this aircraft. The actions of the US remain a salutary warning to this country that its relationship with the Trump Administration is, at best, strained and poses something of a black cloud.
In conclusion, today’s announcement on takeovers and mergers sets out steps in the right direction. We welcome greater breadth in scrutiny and the requirement for notification. I am sure that, as the consultation process goes through, the Government will look at the technologies, and at which elements of which technologies we should be concerned about. I hope they will also take on board the public interest aspect in mergers and acquisitions.
Lord Prior of Brampton
I thank both noble Lords for their broad welcome for the news on Bombardier and the Green Paper. Turning first to Bombardier, both noble Lords would like further information about jobs, growth and possible anti-trust implications, but it is too early to say at the moment. This joint venture has only just been announced. It is still subject to negotiations between the two parties. Rather than hazard a guess at where they will come out, perhaps we should report back to the House when further details become clear.
Turning to the Green Paper, both noble Lords would like a more holistic approach. The noble Lord was referring particularly to the takeover context, and he is absolutely right. Pensions are absolutely essential in that context, as are environmental obligations and the like. The noble Lord, Lord Mendelsohn, referred more to a holistic approach in the context of industrial strategy more generally, rather than specifically on takeovers. He will have to wait until later in November, when we will announce our industrial strategy. I hope he will agree, when that strategy is before him, that it is a holistic, joined-up approach to industrial strategy.
I will deal with some of the other issues that both noble Lords raised. Of course foreign direct investment is essential. There is a balance; we want to be open to foreign direct investment—the last thing we want to create is a chill, as the noble Lord put it, on investment coming into this country. Although it is absolutely true that a number of high-tech British companies have been sold over the last two or three years, particularly to American buyers, in the vast majority of cases those American companies have brought capital and support. I refer, for example, to Google’s acquisition of DeepMind; it has put huge resources behind that company which might not have been there had it remained a private British business. SoftBank’s acquisition of ARM falls into that category as well; it gave a number of important undertakings about research and keeping that research in the UK. Therefore, there is a balance to be struck in these areas and the last thing we want to do in this country is shut ourselves off from investment from the US and elsewhere. If one looks at how we support small tech companies, it raises a much broader issue about patient capital, spin-outs from universities and the like. I hope we will deal with those issues when we come to our industrial strategy in a few weeks’ time.
Both noble Lords raised whether the definitions of quantum computing chips and dual-use defence were too narrow. They will, no doubt, want to comment on that issue in the consultation. We have gone for quantum computing and chips in particular because they are often embedded into infrastructure and safety-critical areas. Quantum computing is precisely the area where cybersecurity is so important; we can use it to break complex encryption codes and the like. We felt, having done a lot of consultation, that those areas of chips and quantum computing were the critical ones. I understand the noble Lord’s point about life sciences; there may be other areas that he would like us to consider as part of the consultation. In general, however, this is a question of balance and where we draw the line. We can always argue about the balance, but I am reassured that we have not got it too far wrong when both noble Lords broadly support what we are doing.
Industrial Strategy
Debate between Lord Fox and Lord Prior of Brampton(7 years, 4 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, the responses to the consultation are broadly supportive of the proposals in the Green Paper and endorse the challenge of developing an ambitious and enduring industrial strategy that sets a clear long-term vision and works for all parts of the country. The responses will inform the development of the White Paper to be published later this year.
Lord Fox (LD)
I thank the noble Lord for his response and for the fact that the consultation is being heeded. I understand that sector discussions are under way and that the metaphor has moved from referring to 10 pillars down to four. Quite apart from that giving the department more time to spend on Brexit chaos, what is the rationale behind this change and which of the pillars have been jettisoned?
Lord Prior of Brampton
I think that the noble Lord is confusing two things. This is a question about how the White Paper is to be structured. It is clear from the feedback received during the consultation period that technical skills is probably the most important area we need to focus on, along with universities and science and innovation, infrastructure, and what we all call “place”. We cannot have an industrial strategy that does not reach out to other parts of the country beyond London.
Taylor Review of Modern Working Practices
Debate between Lord Fox and Lord Prior of Brampton(7 years, 4 months ago)
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Lord Fox (LD)
My Lords, this report is welcome as it frames the need to reconsider working conditions in a clear manner. I should like to quote from it that,
“while having employment is itself vital to people’s health and well-being, the quality of people’s work is also a major factor in helping people to stay healthy and happy, something which benefits them and serves the wider public interest”.
This is an important and true statement that we should bear in mind when considering not only this report but the wider realm of employment and industrial strategy. We are living in a time of huge change in the world of work, so the Prime Minister was right to ask Matthew Taylor to carry out an independent review and produce a report. As noble Lords will have noted when I dropped it just now, the resulting document is comprehensive and hard to absorb in the short time we have had to do so.
The Government’s Statement points out that the report highlights the need to deliver additional protection to the increasing number of people we describe as platform-based, or rather, what we know as the gig economy. The most important distinction to make is between the creation of a new group of workers or dependent contractors and those who are truly self-employed. While this may seem to be tame to some, it is starting to move down the road of classifying people in a way that enables them to have the rights they deserve. So it should be no surprise that the Liberal Democrats broadly welcome the recommendations in the Taylor review. The right to request fixed hours and employment rights for those who are now classified as dependent contractors was set out in the Lib Dem manifesto, so obviously we support that. If enacted, it will provide additional protections for this group as well as strong incentives for firms to treat these workers fairly. It is clear that these rules will have to be backed up by policing. That will improve workers’ rights in the gig economy while maintaining flexibility for those who want it, and that is the key. Some people want flexibility, but others have it thrust upon them. Noble Lords may remember that the Government opposed these proposals during the coalition Government.
We should also remember of course that workers’ rights are ultimately underpinned by EU law. This is backed up by the UK’s ability to create and protect high-quality jobs, which in itself is dependent on the UK being part of the single market. As noble Lords would expect me to say, under Theresa May’s Brexit plans we will continue to see falling real wages and slowing economic growth, and jobs will begin to fall back. This is bad for all workers but it is worse for these workers. Furthermore, there are some people—including on the Benches opposite—who will seek to use Brexit not to strengthen workers’ rights, but to weaken or even abolish some of them.
That is why it is important for the Government not to get bogged down in this report and to move swiftly. The Minister has pledged to respond by the end of the year. We look forward to the industrial strategy and how that will play into this. We believe it is important that the Government proceed rapidly to a conclusion that accepts the clear direction of this report and brings forward proposals that will enact its substance. The longer the Government delay, the longer this important and growing band of workers will be deprived of justified employment rights. The longer the Government delay, the more suspicions will be raised that Brexit will be used to water down people’s rights. As the report says:
“All work in the UK economy should be fair and decent with realistic scope for development and fulfilment”.
We hope the Government accept that point and bring forward rules and laws that help to bring it about.
Lord Prior of Brampton
My Lords, I shall first respond to the two asks from the noble Baroness, Lady Hayter, the first of which was that we should take into account the consumer. She is absolutely right. I read the report fairly rapidly myself and she is right about that. Thinking about it, it is very much focused on workers and businesses. We ought to look at it through the eyes of the consumer, such as the lady waiting for her Uber late at night who wants to know that the driver is indeed safe, healthy and wide awake. That is certainly something we will feed back into the consultation over the next few months.
Secondly, the noble Baroness raised the involvement of trade unions. They have been fully involved in this whole process. Matthew Taylor has been exemplary in reaching out to all kinds of people, not least the trade unions. As she knows, trade unions these days are very much focused on public services. Their representation not just in the gig economy but in the private sector as a whole is much diminished. In part that is because many companies in the private sector have exemplary employee relations and have done an extremely fine job. There is much the public sector can learn from the private sector in some of these areas. Nevertheless, I assure the noble Baroness that Matthew Taylor has indeed reached out to the trade unions.
The noble Baroness also raised employee tribunals. I have a note on that, but maybe, since it is a fairly narrow area, I will write to her about it. She knows we are consulting on this to reduce the threshold to enable help for industrial tribunal fees, but I will write on that point.
The noble Baroness ended by saying that she thought this was a slightly tame report—I think that is the word she used. I argue, as I think the noble Lord, Lord Fox, would, that it is a balanced and fair report. It is not sensational, in part because the system is working quite well. The statistic that really surprised me on reading the report was that there has not been nearly as much change in the labour market over the last 20 years as I thought. Actually, 63% of people in full-time employment are on a conventional employment contract, and 20 years ago the figure was 64.6%. I thought a bigger change had happened. Nevertheless, as the noble Lord, Lord Fox, commented, this is an important and growing part of the economy. It is quite right that we should look at this issue now and get the balance right between flexibility on the one hand and proper job security on the other. It is an extremely important balance to get right.
I assure the noble Lord that the Conservative Party and the Prime Minister are not using Brexit as any excuse for watering down employee rights. The Prime Minister has been absolutely clear that she wishes to maintain and even enhance employee rights, and this is an area where maybe we can enhance employee rights.
The noble Lord asked for a rapid response. Of course, that is tempting, because I think we all agree with the spirit of the report. It is easy to talk in generalisations today, but it may take a little longer to get some of the distinctions right between employee, self-employed, worker and dependent contractor, and nail them down so they have legal validity.
I think we all agree with the noble Lord that all employment should be fair and decent, with scope for fulfilment. It is easy to say that that is just motherhood and apple pie, but there is no doubt that companies that treat their employees fairly and decently and as proper colleagues have much better results.
Industrial Strategy
Debate between Lord Fox and Lord Prior of Brampton(7 years, 4 months ago)
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Lord Prior of Brampton
I am very happy to give that assurance. As the noble Lord will know, UKRI will receive an additional £4.9 billion over the period to 2021. Much of that resource will go through UK Innovate into a number of productivity schemes. I hope that will be, as he says, a creative alternative to austerity.
Lord Fox (LD)
My Lords, the Minister is very well aware of the importance of catapult centres in the industrial strategy. Will he now say what his plans are for maintaining funding for the current level of catapult centres and for opening new centres?
Lord Prior of Brampton
My Lords, the catapult programme has, on the whole, been a huge success, but not all catapults are performing as well as others, so we are now undertaking a review of the catapults to identify those that have been performing well and those that have not. There is no intention that I am aware of to reduce the funding of all the catapults.
Nuclear Energy: Small Modular Reactors
Debate between Lord Fox and Lord Prior of Brampton(7 years, 7 months ago)
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Lord Prior of Brampton
My Lords, the honest answer is that we simply do not yet know whether small modular reactors will represent a cheap source of low-carbon energy for the future. We just do not know what the economics are, which is why in due course we will be publishing a technical and economic evaluation, based on assessing the 32 proposals that have been put to us for SMRs. The only truthful answer at the moment is that the jury is still out.
Lord Fox (LD)
My Lords, the Minister will be aware that different designs of SMR require different levels of fuel enrichment, and that that brings into play proliferation issues. Can he explain what thoughts and conversations are going on about proliferation and how the UK will continue to pursue non-proliferation issues when we summarily remove ourselves from Euratom?
Industrial Strategy Consultation
Debate between Lord Fox and Lord Prior of Brampton(7 years, 10 months ago)
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Lord Fox (LD)
My Lords, the Prime Minister’s decision to adopt a new active role for Government in industry is welcomed on these Benches. The Green Paper’s 10 pillars have most of the right words, and they identify many of the areas of concern that have been voiced in many debates over the past few years. I trust that we will have an opportunity to debate some of those aspects in more detail. I shall focus on just two of those elements—skills and cultivating world-leading sectors. I remind your Lordships of my published interests.
First, the Green Paper is right to identify skills as a central issue to future prosperity and productivity for the country, and a cash boost for technical and STEM education is, of course, welcome. However, it should be put into the context of a 7.5% reduction in schools’ per-pupil funding by 2020 and the cash-freezing of the adult skills budget until 2020—a £30 million real-terms cut next year. Thus, £170 million for new institutes of technology is all very fine but irrelevant given some of the wider cuts affecting all our young people. Therefore, can the Minister please tell us whether the Government plan to reverse their cuts to the education budgets for four to 19 year-olds? Also on skills, the Government continue to ignore the benefit and value that we gain from workers and scientists from the European Union working in this country. They continue to treat these people and their families as a bargaining chip. Could the Minister at least acknowledge the personal anguish being caused to these people, many of whom are already contributing greatly to the success of the industrial sectors that he seeks to bolster?
Secondly, the Green Paper’s support for the coalition’s sector strategy is very welcome. Here I disagree with the noble Lord, Lord Mendelsohn, in that a bit of cut and paste is actually a good thing as these strategies have to span more than one Parliament to be successful and take root. Therefore, they depend on a long-term approach. It is good news that the Government are continuing to run those strategies through. However, the idea that any Government can have a reasonable strategy for British industry while recklessly withdrawing from the single market is not credible.
Last week, the Prime Minister confirmed her intention to exit the single market, yet, extraordinarily, the Green Paper fails to refer to either the single market or the customs union, although a few euphemisms such as “turbulent times” creep in. The Government’s idea seems to be to negotiate individual sectoral agreements for “frictionless trade”—their term. Not every sector can benefit from this, or we would still be in the single market, and not every sector can expect the negotiations to succeed. Therefore, as these negotiations start, the Government will have to decide which sectors will be top of their list for trade deals. Conversely, some will be at the bottom. The Prime Minister has said that the industrial strategy is not about picking winners, but the Brexit negotiations will inevitably pick losers. Can the Minister please tell the House which sectors will win and which will lose?
Lord Prior of Brampton
I thank both noble Lords for their interesting comments. I agree with the noble Lord, Lord Fox, that if this industrial strategy is to have real strength, it will have to be spread across Parliaments. As part of the consultation process it will be interesting to hear whether noble Lords have any ideas on how we can do that and how we can institutionalise some cross-party agreement around productivity. I do not know whether anyone else read the speech given by Andy Haldane from the Bank of England in the north-east a month or so ago, which I think was entitled Red Car, Blue Car. He reminded us that the US economist, Paul Krugman, noted:
“Productivity isn’t everything, but in the long run it is almost everything”.
I think that most people would agree with that. Particularly in an economy such as ours with high levels of employment, if you want to increase wealth, you have to increase productivity.
It is true that we are building on the past. I pay tribute to the work done by previous Governments in this field. But despite what has been done in the past we have to accept that productivity levels in this country are low; worse than that, they are much lower in some parts of the country than in others. Although productivity may be just an economic concept, the consequence of that is that wage levels are much lower in some parts of the country than in others. In the East Midlands, for example, the average wage is £480 a week, whereas in the south-east it is £670 a week. No one, on either side of the House, can be happy with that degree of inequality. If we are to address that, we have to address productivity. Therefore, if there is a familiar feel to our Green Paper, I make no apologies for that. We are building on the past but we must do a lot better.
I think that both noble Lords support the very significant growth in R&D spending, and that there will be broad support across the House for the two horizontal parts of this industrial strategy: R&D and innovation spending, and the focus on technical skills. That is not to say that we are not doing anything now but we could do a lot more. We have huge strengths in our university sector, but we are less strong on how we commercialise some of that research. I was horrified to learn that 14 to 16 year-olds today are no more literate or numerate than people aged between 45 and 55. There has been no real improvement in teaching basic literacy and numeracy for 20 or 30 years, which is quite an indictment of our education system. Therefore, putting more resource into education at all levels—primary school as well as later on—particularly into the STEM subjects, is extremely important. Skills are very important.
Reference was made to coming out of the single market. I do not think that is a debate we can usefully have at this point. Of course, we will do everything we can to retain as much frictionless access to the single market as possible. It is a very important market for many industries. However, other markets are important as well and we need to develop them. That is very much a part of the industrial strategy.
The noble Lord, Lord Mendelsohn, referred to life sciences. I absolutely confirm that they are important. The pharmaceutical, med tech and biotech industries are extremely important. British research is absolutely at the forefront of world research in cell and gene therapy. As far as Japanese investment is concerned, we will do everything we can to encourage inward investment from Japan and other parts of the world. The automotive industry would be only a pale shadow, were it not for the big Japanese investments that came here in the 1980s. We fully recognise that and are working very closely with Toyota, Nissan and Honda to ensure that they remain and continue to invest in the UK. The advanced manufacturing unit at Warwick is doing extraordinary work in automotive and advanced manufacturing, and the Green Paper contains a commitment to develop an institute for battery technology. Finding a way to store energy economically and efficiently would give us a huge competitive advantage as we develop the industrial strategy. However, this is a Green Paper; it is out for discussion for the next three months. I was asked about the timing. The consultation period will last for three months. The plan is to produce a White Paper by September, which will feed into the Autumn Statement. That is the broad timing. I look forward to engaging with many noble Lords as we develop the Green Paper into a White Paper over the next six months.