Higher Education and Research Bill

Lord Mendelsohn Excerpts

Committee: 7th sitting (Hansard): House of Lords
Monday 30th January 2017 Lords Chamber

Moved by

[Lord Mendelsohn]

471A: Schedule 9, page 100, line 26, at end insert—
“( ) at least one member of the OfS Board with at least observer status.”

[Lord Mendelsohn (Lab)]

My Lords, I start by declaring my personal interest as an investor in the UK research base and in some of the institutions that came out of science and other research councils. I am also an investor in the science base overseas.

Before we get into the meat of all the groups that we have—which I hope will go at some pace because we have a fair degree of agreement—it may be helpful if I just set out the view of these Benches on Part 3 of the Bill. According to the OECD, in tracking the change in government spending on R&D as a percentage of total government spending, between 2002 and 2015 there has been a very strong correlation with the investments that have been made that have created new and emerging tech pioneers, including across eastern Europe in Israel and in other places.

Korea, Germany and Japan have powered ahead with increases. Most countries have reduced, but of the major economies it appears that only France exceeded our almost 30% decline. In this context, the Government’s recent announcement of funding has had two major impacts. On the one hand, it has certainly helped to address the changes that we have witnessed over some time; there has now been some redress, and I hope we can get to the position where we were previously in short order. On the other hand, it has laid a comforting blanket over the measures in this part of the Bill and provided an emollient soothing of concerns about where research is going.

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

My Lords, I thank the noble Lord, Lord Mendelsohn, for his opening address, which was helpful in setting the context for this debate. The noble Lord is right: the context is partly Brexit and partly that many overseas countries are spending a lot more per capita on research than we do. It is also the fact that the British Government have committed to spending an extra £2 billion a year on research by 2020.

The noble Lord also raised the important issue of the evaluation of UKRI—this will come up later in the debate. One of the first things that the UKRI board will do after it is appointed is put together a strategic plan, which will be discussed in more detail in this House and government circles.

I welcome the opportunity to debate further the issue of joint working between UKRI and the OfS, which the Government—and the three noble Lords who have contributed to the debate so far—recognise as crucial to the success of both organisations. It was recently announced that the Government will be investing an extra £2 billion a year in R&D by the end of this Parliament. This investment is a clear vote of confidence in the new structures created by UKRI. It will play a key role in delivering the industrial strategy and in the success of our future knowledge economy.

On the issue of joint working, I sincerely appreciate the concerns raised by the noble Lord, Lord Mendelsohn, the noble Baroness, Lady Garden, my noble and learned friend Lord Mackay and others. However, an absolute requirement for UKRI and the OfS to work together in exercising their functions could well be counterproductive. For the areas where they should be working together, Clause 106 offers a mechanism for the Secretary of State to require the two organisations to do so, should they fail to co-operate of their own accord.

However, this is not the sole, nor the most important, means to drive joint working. There will be regular engagement and communication between the two government departments involved and both organisations at all levels of operation. Guidance will also be issued through a variety of means, including the Secretary of State’s annual grant letters. Furthermore, in addition to regular meetings between the Government and senior representatives from the OfS and UKRI, the Secretary of State will have the power, through the Bill, to send representatives to attend the board meetings of both organisations. In combination with the expectation that each organisation’s annual report will address areas where they work jointly, this will allow the Government to perform an ongoing assessment of the effectiveness of co-operation between the two organisations, and to respond quickly if this is not satisfactory.

On Amendment 509, as my noble friend Lord Younger said previously, UKRI will work closely with the OfS on matters related to research degree-awarding powers. Likewise, UKRI will work with the OfS at all levels to ensure there is a coherent approach to the research talent pipeline. While I agree that they should certainly take a joined-up approach on these two matters, joint decisions would not always be effective or efficient. For example, each year thousands of research students in the UK are supported by research council funding. It would not be practical or useful for the OfS to be involved in these funding decisions, just as HEFCE is not involved now.

On Amendment 508C, I do not believe that legislation is the right place to specify the particular areas that UKRI and the OfS should co-operate on. It is likely that such areas will change in the future, and there must be a degree of discretion to accommodate this. I hope noble Lords will agree that guidance is a better, more flexible mechanism, and this is what the Government intend to use.

On Amendment 471A, the noble Lord, Lord Mendelsohn, echoed by a number of other noble Lords, made the case for a shared board member between UKRI and the OfS. I can reassure the House that the Government have given this matter significant thought. Following in-depth consideration, the Government have concluded that a shared board member would not best serve its purpose. The responsibility laid on this member would be to encourage and facilitate effective communication between both organisations. However, this will need to happen at all levels, and covering the breadth of their remits. I do not believe that it is possible for a single individual to fulfil this role effectively. Responsibility for joint working and effective communication will be shared by all members of the UKRI and OfS boards, and involve many officials spread throughout the organisations.

Joint working and effective communication will be of the utmost importance, and I hope that I have provided reassurance that this Bill will put in place the appropriate measures to ensure this. Therefore, I ask the noble Lord to withdraw his amendment.

[Lord Mendelsohn]

I thank the Minister for that reply but wish to make a couple of points. Certainly, there is always a place for guidance. The question here is: what are we trying to achieve? There needs to be a level of not just mechanics but of culture where these organisations work together. My fear is that the Bill could have unintended consequences. When we met senior administrators of universities, they asked how the organisation and running of their operations would change and about the interface with the OfS and UKRI. For example, the once-a-year evaluation with HEFCE will now take place with two separate organisations. Will that change the way the leadership works or the way that institutions report? A series of potential unintended consequences could occur unless we specify and knit together the way in which these institutions will work. That is the nature of the problem we are talking about.

There are some very specific measures, such as the one raised by the noble and learned Lord, Lord Mackay of Clashfern, which is one that could be reasonably accommodated. However, in general, we need to establish the right culture and circumstances to ensure that these two institutions do not just have a sense of working together but see themselves as partners in a very important endeavour.

Finally, as regards the shared board member that I proposed, we are not placing a colossal, herculean task on one individual. For institutions that are meant to work together, it is important to have someone who is able to tell the temperature or the context of the debate, and be able to ensure that at the very top level both institutions are aware of the atmospherics and the sense of how an issue is approached. That level of understanding is important. Whatever the mechanics at the bottom, and whatever arrangements we have in place, if there is a dissonance in understanding at the very top, that is a major consideration. I hope that the Minister will provide some more developed thoughts on that at a later stage. I beg leave to withdraw the amendment.

Amendment 471A withdrawn.

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[Lord Sharkey]

My Lords, I shall speak briefly to Amendments 480 and 481 in my name and that of my noble friend Lord Willis. The Bill proposes what is really quite a radical reduction in the size of the existing research councils, which are to have between six and 10 members. The existing councils have between 10 and 17 members, with an average of 15, of whom four or five are lay members. It would be good to hear from the Minister an explanation of the rationale for this reduction in the size of the research councils. In particular, could he point to evidence that their current size has led to inefficiencies or undesirable outcomes? If that is not possible, can he say what the evidence base is for suggesting how a reduction in the membership would actually improve their performance?

I note here in passing that the membership of UKRI itself is proposed to be at least 12 and at most 15. Why is it desirable that the membership of the research councils should be smaller than that of UKRI itself? I am not arguing that it is not, but I would just like to hear the reason the Government think it is.

Of course, it is not just the numbers that matter but the experience and the mix of the members. The practice of having lay members is an important part of our current councils. As I say, each of them has four or five lay members, except for the STFC which has three or four, depending on whether you count people as lay or not. We know from experience in other fields, especially financial services, how important it is to avoid groupthink and to have outsiders challenge established or entrenched views. Can the Minister set out what approach UKRI will take to the appointment of lay members to the research councils? Is it the intention that the present balance should continue?

[Lord Mendelsohn]

My Lords, I rise to speak to Amendments 500B, 507ZB and 507B, but first I will echo the support of these Benches for the amendments proposed. It is important to understand that they share the objective of trying to maximise the effectiveness of UKRI and the councils themselves. I hope that the Minister will be able to provide reasonable assurances on these matters.

The case made by the noble Lord, Lord Sharkey, about their size is very important. In all the evidence we have received there has been no suggestion that their size has been a disadvantage—quite the opposite: it has been a huge advantage. I will be interested to hear the justification for the reduction in number and whether there has been any assessment as to whether this diminishes capacity.

We strongly support the call for independent chairs. That case was extremely well made by the noble Baroness, Lady Brown of Cambridge. Not only do they have a good record of governance thus far, but it has been good governance. The noble Lord, Lord Broers, made the essential point that in any circumstances where there is a board, corporate governance has got to the position it has because a board needs a chair to deal with the issues incumbent on dealing with a chief executive. To eliminate that would be a strongly mistaken act.

It is imperative that councils remain the prestigious and capable institutions that they are. Their role should not be usurped or superseded. They require independence and authority. They should not be the plaything of Ministers. There should be a real, consistent quality to the recruitment of staff, the board and lay people. The Minister should accept that this should be a measure of whether they are still meeting that test. In ensuring that the councils can work effectively, especially in a new framework, they cannot have the notion that they will change quickly and rapidly from their original brief, because that would unsettle these arrangements.

There is real power to the weight of the arguments presented. I hope that the Minister will reflect on them. It reminds me of Confucius’s saying that there are three methods by which we may learn wisdom. The first is by reflection, which is the noblest. The second is by imitation, which is the easiest—I am sure that noble Lords would be more than happy if the Government were to imitate the amendments. But the third is by experience, which is the bitterest. I hope that the Minister will consider that, in this area, the weight of the arguments would help the Government to learn how they would have to rectify this from bitter experience. It is important that governance is absolutely right.

In Amendment 507B we suggest, because there is no real stated role for councils in UKRI, that the executive committee should have a role in the innovation strategy. We think that it is important that those who work on it are specifically defined as having that role.

The amendment that stands out slightly is the one that proposes that the royal charters should remain in existence but not in force. The crucial question is whether this would work or whether leaving them would create its own problems. There are two reasons for keeping them. First, in the circumstances that we are unable to establish that this system will work better, or that the mechanisms will reach a critical mass of working better, it is important that there is some useful architecture to revert to in this area, where we cannot afford to get things wrong. Our current method has not been shown to have any poor performance; it is just that we believe that there are better ways. Secondly, the system should accord a level of prestige.

There is not really a case for removal. The discussions that many noble Lords have had with the Privy Council suggested that the royal charters do not necessarily need to be eliminated. There is an argument to say that having the safety net of keeping them in place would mean that some might use it to undermine the current arrangements. This is not a reasonable concern, although it would be if we did not have such a great degree of unanimity about the importance of trying to move on and reach a new stage.

Motivation is more likely. If this is properly managed by Ministers and incentivised, there would be a quicker desire to remove the stabilisers. There may even be the opportunity for it to be a more liberating mechanism to ensure that other inventive, creative mechanisms are used. It is important that we do not throw everything out and that we do not eliminate things that we do not have to.

Finally, I would be grateful to clarify one element in this section that has not been fully covered: the position of government departments’ areas of research. Some government departments have their own research facilities, such as the Department of Health, the Ministry of Defence, Defra and others. Some would say that these are fiefdoms but I would say that they are just areas that fall under the government departments. How will they relate to the new arrangements? Of course, as we look at the Nurse review, there was consideration that these should be considered under the ambit of Research Councils UK. Indeed, the section that included Innovate UK and HEFCE—not that I wish to reopen the discussion we had earlier—also said that consideration should be given to the place of other government departments’ research within Research Councils UK. I would be very interested to hear how the Government view their interrelationship with this new set up.

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Moved by

[Lord Mendelsohn]

482BA: Schedule 9, page 104, line 19, leave out “any” and insert “some”

[Lord Mendelsohn]

My Lords, I was very tempted to rise during the Minister’s previous comments, but that would have undermined the next part of my address, looking at this group. I hope he does not mind if I touch on some of the other issues very briefly. In moving Amendment 482BA, I will speak also to the other amendments in my name and address some of the issues raised in the amendments in the name of my noble friend Lord Stevenson.

The first point we want to make about the functions of UKRI is that because there is a very important and complex series of relationships with the councils, the function of UKRI needs to be defined and the right assurances given. There are already considerably confused lines of accountability in how this is established. You have only to look at the different functions that are laid out for UKRI to perform and for councils to perform and where the determination rests on those. The obvious issue is who is responsible for hiring and firing an executive chair. In Schedule 9 this is the Secretary of State, for any reason that they see fit—for example, if the chair misses certain meetings—or if they feel that there is no appropriate mechanism for that to be effectively dealt with.

The main issue comes down to: what is the separation of functions? UKRI is meant to be a strategic brain. It is meant to facilitate the overall development of cross-disciplinary funds and activity. It is also meant to be responsible for the back-office functions across the organisation, although when you try to determine what those back-office functions are, many of them are core to the operations but are outsourced rather than having one organisation dealing with them. Even within the administration of an organisation, there is a series of issues which will impinge upon the other functions that the councils will have to undertake. When you identify the areas that are delegated to the councils, they lend themselves not just to an independent chair but to understanding that the lines of accountability are pretty clear, based on the definitions of the different roles, as specified by the Government.

However, I have gone a bit too far; that was not really my purpose. I wanted to raise that point but I have gone way beyond what I intended. I am keen to get some sense of how the guidance on the functions that UKRI will retain will work, particularly with regard to the back-office functions—that area where the Government believe there are such considerable savings to be made. I would be grateful if the Minister could give me some sense of how that would work. I appreciate that the detailed guidance is not published yet but I would like some idea of how the Government came to the conclusion that there was such a great bonanza to be gained from merging those activities, and how that could be effectively managed.

Many of our amendments are probing in nature but they also look at some drafting issues. We have considerable concerns about inconsistencies and areas where we believe that the wording requires some degree of change. It is more than just occasions when we feel that a “may” should be a “must”, which very often is more than just a drafting issue. There are amendments which tidy up inconsistencies—for example, social sciences are mentioned in one place but missed out in another—which I hope the Minister will address and will understand are beneficial. Amendment 482BA suggests that UKRI should be able to delegate “some” of its functions, rather than “any”, as the Bill currently states, to ensure some degree of consistency. Many of the others are in the same vein.

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However, we must not tie the hands of the research councils or prevent them increasing the collaborative work they already undertake with Innovate UK. I understand the concerns of noble Lords that the research councils should be able to operate widely, and we will look carefully to see whether any further additions to the functions of UKRI could be beneficial. On that basis, I ask the noble Lord to withdraw the amendment.

[Lord Mendelsohn]

I thank the noble Lord for that reply. This has been an excellent debate, with some outstanding contributions from across the Committee. In particular, given my detour into some of the issues about matrices and responsibility, I thank those noble Lords who made a better case for my amendments than I did.

I am grateful for the support, particularly around the social sciences. I am keen to observe that the point made by the noble and learned Lord, Lord Mackay of Clashfern, about definitions is absolutely right and true. However, there is the inconsistency when referring to different places. For example, the Natural Environment Research Council means environmental and related sciences, and at that point the definition is inoperable. Therefore, the issue of consistency is important and speaks to the outstanding contribution of the noble Lord, Lord Willetts, about the language used, and the unnecessary anxiety that some of the drafting has caused across the Committee.

There is great merit to many of the amendments and I hope that the Minister will reflect on these. It reminds me of John Locke’s observation that,

“education begins the gentleman, but reading, good company and reflection must finish him”.

I hope the Minister realises that he is in good company here, and that he will reflect wisely on these amendments and bring something forward on Report. I beg leave to withdraw the amendment.

Amendment 482BA withdrawn.