Higher Education and Research Bill

Lord Prior of Brampton Excerpts

Report: 4th sitting (Hansard): House of Lords
Wednesday 15th March 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

159: Schedule 9, page 104, line 38, after “matters” insert “, the charitable sector”

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

My Lords, this is the first Bill that I have brought through the House of Lords to this stage, it having been through Committee, and I have to say that it has been a good experience. Everyone who has contributed can take some credit for having improved it considerably. For me, it is a good example of the value this House can bring to a Bill of this kind. Therefore, I thank all noble Lords who have contributed to improving the Bill.

I should like to start with the governance structures of UKRI and its councils. The issue of co-operation with the charitable sector was debated widely in Committee. Following the compelling argument put forward by a number of noble Lords—including the chair of the Association of Medical Research Charities, the noble Lord, Lord Sharkey—I am pleased to have tabled Amendments 159 and 164, which are also kindly supported by the noble Lord, Lord Mendelsohn.

These amendments will require the Secretary of State also to consider experience of the charitable sector on the equivalent basis to those other criteria in Schedule 9 when making appointments to the UKRI board. In doing so, we are recognising the vital contributions of charities to research in the UK, and ensuring that UKRI will be fully equipped to work effectively with this important sector.

In Committee, the noble Lord, Lord Krebs, and the noble Baroness, Lady Brown, tabled an amendment calling for an executive committee for UKRI. On that occasion, I was able to offer my reassurance that such a committee would be established. Now going a step further, we have tabled Amendments 168 to 171, which will include that in the Bill. Amendment 168 will also further empower the executive committee by enabling it to establish sub-committees, should it deem it necessary.

Also in Committee, a number of noble Lords made the case for increasing the maximum number of ordinary members on each council; including the noble Baroness, Lady Neville-Jones, and the noble Lord, Lord Willis, who drew on their own experiences as research council board members. Having listened to their concerns, we have now tabled Amendment 165 which will increase the maximum number of ordinary council members from nine to 12, thereby allowing individual councils greater flexibility for managing their breadth of activity, while still being mindful of best practice guidance on governance structures and board effectiveness.

While discussing the councils, allow me to introduce Amendment 167. In Committee, the Secretary of State’s power to make one appointment to each of the councils was questioned. This is an important power; in particular, it provides the mechanism to appoint an innovation champion who will sit on both the UKRI board and Innovate UK council. However, it is right that such appointments should be made in consultation with UKRI. This amendment seeks to address concerns by requiring the Secretary of State to consult the UKRI chair before making such an appointment.

Amendments 179 to 181 seek to address the concern, raised in Committee by noble Lords, including the noble Lord, Lord Sharkey, that UKRI may steer away from the pursuit of knowledge for knowledge’s sake, with the Bill being too narrowly focused on economic growth. As I did in Committee, I reassure noble Lords that UKRI will fund the full range of basic and applied research and will create opportunities to make serendipitous discoveries. I have tabled these amendments to make this absolutely clear. Amendment 181 explicitly recognises that the advancement of knowledge is an objective of the research councils. Meanwhile, Amendments 179 and 180 clarify that when councils have regard for economic growth in the UK, this may result in both indirect as well as direct economic benefit.

[Lord Sharkey (LD)]

My Lords, I declare an interest as chair of the Association of Medical Research Charities. Government Amendments 159 and 164 mirror amendments that we put down in Committee. As the Minister said, they rectify the omission of the desirability of experience of the charitable sector in those appointed to UKRI. The charity sector plays a vital role in UK research. Medical charities alone spend £1.4 billion each year, 93% of which goes through our British universities. It is clear that UKRI needed to recognise the importance of engaging with and understanding the sector. Sir John Kingman and the Minister were quick to accept that. These amendments put that acceptance on the face of the Bill. We thank the Minister for that and enthusiastically support the amendments.

Amendment 165 responds to a Committee amendment from my noble friend Lord Willis and me. It increases the maximum number of members of research councils from nine to 12. In Committee, my noble friend Lord Willis confessed that in our proposal to increase membership we had chosen a completely arbitrary number. We simply wanted to tease out from the Minister the reasoning behind their proposal for what was then a truly radical reduction in the size of the councils to nine from an average today of around 15. I am not sure we really got an explanation then in Committee, and I am not sure we have had a rigorously defended explanation today of this new figure of 12. Perhaps it is simply an application of the Goldilocks principle. However, nine seems to us to be too few and much too radical a reduction. Twelve is better than nine and likely to cause less disruption to the working of the councils themselves, and we welcome the amendment.

Amendment 165A is in my name and those of my noble friend Lord Willis of Knaresborough and the noble Lord, Lord Mendelsohn, whose support I am grateful for. As in Committee, the amendment would preserve the position of lay members on the research councils. As I pointed out, at the moment the existing councils have between 10 and 17 members, with an average of 15, of whom four or five are lay members, depending on how one defines “lay”. I am sure the Minister would readily acknowledge the importance of having lay members on the council and the valuable contributions they make, not least in combating magic circle groupthink. Our amendment would simply include in the Bill the requirement that councils have lay members. At a time when the membership size and constitutional and governance arrangements of councils are all being rewritten, we believe it is important that the Bill preserve lay membership. I hope the Minister can confirm the Government’s commitment to lay membership of councils, preferably by accepting Amendment 165A, but I am sure there are other means of doing that.

Finally, we welcome Amendments 179, 180 and 181, which helpfully clarify the areas to which the councils must have regard when exercising their functions. Amendment 181 is particularly useful. Its inclusion avoids imposing on councils what may be seen as exclusively economic obligations.

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[Lord Mendelsohn (Lab)]

My Lords, in Committee certain clear governance gaps were identified which the Government have addressed in some measure, and we thank them for their positive response. Indeed, we have signed the government amendments and we are pleased that such a positive response has been forthcoming. We would like again to associate ourselves with Amendment 165A tabled in the name of the noble Lord, Lord Sharkey, which addresses the important point about the valuable contribution which can be made by lay members.

Amendments 164A and 166A tabled in my name propose that each council should comprise a senior independent member alongside an executive chair and the other council members. This would ensure an element of independence and balance in the governance of the council, complementing the role of ministerial appointees. We believe that there is still a weakness in the governance of the research councils with the establishment of executive chairs and the UKRI governance structure. We also feel that without a proper governance role, the membership of research council boards will be denuded of talent if they believe that they are not part of an effective operating board. In Committee we discussed whether appointing chairs to research councils might address this weakness, and Amendments 164A and 166A, as the noble Lord, Lord Broers, has just pointed out, mark an evolution in the debate.

We believe that this is a sympathetic and effective change which is consistent with the Government’s objectives and is likely to benefit the governance of research councils. The senior independent member is modelled on the practice in public companies of having a senior independent director. The title in this case is “member” specifically to ensure that the role is not confused with the duties of a director, which would raise structural issues that are not appropriate to the Bill. In the private sector, appreciation of the important role played by the senior independent director has grown in recent years. It was introduced in 2003 at the time of the Higgs review of the combined code, and the idea was that the senior independent director should be available to shareholders if they had reasons for concern that contact through the normal channels of the chairman and the chief executive had failed to resolve. Over time that remit has changed and the senior independent director is seen as a versatile intermediary who is in part ambassador, conciliator, counsellor, senior prefect and kingmaker. Most importantly, it establishes an address that stakeholders are able to go to and takes away the sometimes divisive politics of trying to find an appropriate address.

It is in this area that the role would be most useful in the context of UKRI. The senior independent member would ensure that there is a recognised channel to use from the level of the board of the research council to the board of UKRI to make sure that matters can be solved and conflicts and issues resolved. It is about not establishing new lines of management but creating a governance structure which is flexible enough to resolve issues as they arise. We have not set out a detailed role or job description, and certainly the latter is not appropriate for legislation, but there is flexible scope to ensure that such an individual can play a useful role in many different circumstances, from deputising in situations to leading aspects of succession processes to reviews of board effectiveness and other such matters. I hope that the Minister will see this amendment as a useful and flexible suggestion.

[Lord Prior of Brampton]

My Lords, first, I thank the noble Lord, Lord Mendelsohn, for not pressing his amendment requiring a shared OfS and UKRI board member with at least observer status. While I do not think that such arrangements need to be put on the face of the Bill, I recognise absolutely the value of establishing such a link between the OfS and UKRI boards. As such, I am pleased to be able to confirm that the chairs of both the OfS and UKRI would welcome an observer of each other’s organisations at their respective board meetings.

I turn now to Amendment 165A. The noble Lord, Lord Mendelsohn, and the noble Lord, Lord Willis, drawing on his experience as a member of the Natural Environment Research Council, have previously outlined the value of lay members, and they have been supported today by the noble Lords, Lord Sharkey and Lord Krebs. Although in the future appointments to councils will be a matter for UKRI, I should like to take this opportunity to make it clear that the Government have the full expectation that the current practice regarding lay member representation will continue and we will commit to reflecting this in guidance to UKRI. Perhaps I should add in passing that the number of 12—the Goldilocks solution—reflects best practice advice from the Cabinet Office. I cannot recall what the code says on numbers, but 12 is a manageable figure. If a board is much larger than 12 members, it becomes much more difficult for it to be effective.

The idea of a senior independent member was raised in Committee by the noble Lord, Lord Broers, and described just now by the noble Lord, Lord Mendelsohn. I really cannot add to his description of the sometimes critical role in acting as a very important channel, in this case to UKRI from council members. That could be extremely important. I have some words here about the senior independent council member, but given the way the noble Lord has set out the role, I feel that I no longer have to do so; I will simply agree with what he said.

Having discussed the issue with the chair and chief executive of the future UKRI, I am pleased to be able to confirm that a member of each council will be appointed as the senior independent council member. This does not need to be set out in the legislation, not least because the amendment would result in an additional member of each council beyond what I believe to be a reasonable and workable number. Instead, I can commit to making this a permanent feature of the organisation through setting the role out clearly in the governance documentation for UKRI. I therefore ask the noble Lord not to press his amendment.

Amendment 159 agreed.

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[Lord Prior of Brampton]

My Lords, I thank all noble Lords who have spoken in favour of the amendments. I think we all share the sentiments that lie behind them.

Perhaps I may first deal with the interesting, rather technical point raised by the noble and learned Lord, Lord Wallace, about the scope of the matters in the Science and Technology Act 1965 that are reserved under the Scotland Act 1998. He raised it with me earlier in the week and I agreed to write to him on it if I can, as it is of a fairly technical, legal nature, and to put the letter in the Library for others to see if they are interested.

I acknowledge that I and the Government appreciate the sentiment of the amendments and the underlying concerns from those working in the devolved nations. It is essential that we continue to work together to secure for the long term the UK’s global reputation for excellence in research and innovation. This joint working happens on a number of levels, from regular informal discussions to formal partnership arrangements. Where appropriate, it can include the development of an MoU between the bodies, the devolved Administrations and their agencies and institutions.

There are many such arrangements at present, from ESRC’s MoU with the Scottish Government on the What Works programme to the MoU between HEFCE and the devolved funding bodies, which ensures the operation of the UK Research Partnership Investment Fund across the whole UK. There is even an MoU between BBSRC and the Scottish Government for the horticulture and potato initiative. These arrangements will continue and I can commit to new MoUs being put in place where appropriate. I know from my own experience that MoUs can be window dressing, but they can be of great substance—it varies, entirely depending on the intent behind them of both parties. I sometimes think that we are beguiled by an MoU, when it is the informal relationships that lie behind them which are often much more important.

As we have debated at length and agreed on a number of occasions, it is vital that UKRI, a body which will operate UK-wide, is empowered to work for the whole of the UK. Noble Lords do not need to take my word for this. Duties for it are built into the Bill—hardwired, if you like—in multiple clauses.

Let me make it clear that these reforms will not affect current funding access for institutions in Wales, Scotland or Northern Ireland. As part of UKRI, the research councils and Innovate UK will continue to operate across the UK, funding projects through open competition on the basis of excellence wherever it is found.

On the UKRI board, the Bill as amended in the other place recognises that the Secretary of State has a duty to consider appointing at least one person with relevant experience of the devolved nations. This change means that the Bill already goes further than the current legislation, which makes no such requirement. Of course, this should not be taken to mean just one person. The search for UKRI board members now under way actively seeks suitable applicants with experience from across all nations of the UK. We want and are actively working to recruit a board that will have this broad experience. However, requiring experience of all four countries at all times could have potentially unintended consequences. If a member of UKRI’s board were to step down from their position, we would not want only to be able to recruit a like-for-like successor with the same background as their predecessor. Equally, we would not want to limit experience of each nation to just one individual on the board if the quality of applications is high. Such flexibility is essential to ensuring that the diversity and quality needed to deliver the best outcomes for research and innovation across the UK is present on the UKRI board at all times.

Amendments 193 and 194 ask that UKRI and the Secretary of State have regard to the promotion of research and innovation in Scotland, Wales and Northern Ireland. I agree wholeheartedly with the sentiment of these amendments. In fact, we already provided for UKRI to undertake this in its functions, described in Clause 89(1)(h), which says that UKRI may,

“promote awareness and understanding of its activities”.

However, the proposed drafting of these amendments limits the scope of this additional duty to Scotland, Wales and Northern Ireland. I understand noble Lords’ admirable desire to ensure that the interests of Scotland, Wales and Northern Ireland are suitably protected, but this should not be done at the expense of English institutions. Ministers’ responsibilities are to the whole UK, and the Secretary of State, and UKRI, should be held to account by Parliament on that basis.

I also share noble Lords’ desire that UKRI’s strategy should work for the whole of the UK. The strategy will be the product of consultation and engagement with research and innovation institutions and bodies from across the UK. Let me also assure noble Lords that this consultation will of course incorporate the views of the devolved Governments. However, the development of a full research and innovation strategy for the UK may be an infrequent affair. I have spoken to Sir John Kingman, chairman-designate of UKRI, and he agrees that regular consultation with the devolved Administrations on UKRI’s priorities would be a more appropriate way of ensuring their views are captured and taken account of regularly. This would be consistent with the MoU between the UK Government and the devolved Administrations, in which the principle of good communication with each other is key. The primary aim is not to constrain the discretion of any Administration but to allow them to make representations to each other in sufficient time for those to be fully considered. I commit today to putting this intention regularly to consult on strategy with devolved Administration colleagues into guidance from the department to UKRI.

I have been clear today that there are many areas where we expect UKRI to work with the devolved Administrations, and many areas where we have a common goal. I have committed to capturing this in guidance to UKRI. Therefore, I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

My Lords, I thank all those who spoke in this debate. We learned a great deal from the contribution of the noble and learned Lord, Lord Wallace, whose experience is of course unparalleled in seeing things from the perspective of the devolved Administrations. The noble Earl, Lord Lindsay, has real experience of trying to operate in an institution that is largely based in Scotland but that draws from the strength of UK science and UK contributions to its work. He therefore understands the mechanics of what we are about.

It seems that Goldilocks has been ignored in this process. I agree that “not just one” does not exclude “more than one”, but I think that Goldilocks would have wanted a little more in her porridge than just the promise that over a period of time there would be not one bowl but three bowls and that she could sup from all of them—I think my metaphor is about to run out, but noble Lords get my point. I hear what the Minister said, and he is an honest and good man. I am sure that he is trying to set up an arrangement under which we will achieve what is set out in Amendment 162. I will not press that to a vote on this occasion. We will take his assurances, but I hope he recognises that we are in difficult circumstances here.

Hardwiring may be too hard an approach to this. Underwiring, with support from below, may not be sufficient. I just hope that in some way, in the gap between memoranda of understanding and letters of guidance, we can get to a more settled arrangement over a period of time. I agree that it is difficult and I am not trying to constrain the Minister in any way. However, it is a bit defensive to say that one reason you do not wish to go down this route is so as not to disincentivise or in other ways constrain English institutions. That is exactly the sort of poison that will be used by those north of the border and in Wales and Northern Ireland to complain they are not getting fair treatment. The sensibility is probably right, but the wording must be looked at carefully. I hope that that message will get across.

We seem to be permanently in difficult times in terms of constitutional issues. This is not the time to let any chink through. If we all agree around the House, as I think we do, that this matter cannot be ignored and must be brought forward and foregrounded, then we can make progress together. Our commitment will not be doubted. I beg leave to withdraw the amendment.

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Moved by

[Lord Prior of Brampton]

164: Schedule 9, page 105, line 9, after “matters” insert “, the charitable sector”

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Moved by

[Lord Prior of Brampton]

165: Schedule 9, page 105, line 15, leave out “nine” and insert “twelve”

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[Lord Stevenson of Balmacara]

My Lords, I confirm that we are signed up to Amendment 166 and support the comments made by the noble Baroness, Lady Brown. It is important to get the balance right. There is probably another Goldilocks pun there but I am sure the Minister will pick it up and we will get a response to that.

We have also signed up to government Amendments 173 and 183, which are at the heart of the debate we had earlier. Again, this plays to the argument made by the Minister that there are ways of improving the Bill. We have been able to explore them in Committee and now on Report, and it is good to see that there are movements here that have support right round the House, which we are pleased to be part of.

We also feel that more constraints may emerge from the business consideration than have perhaps been allowed to emerge so far. As my noble friend Lord Bhattacharyya pointed out, given the genesis of all this through the Technology Strategy Board, and now through Innovate UK, it is important that institutions learn from their history and gain from their experience over time. The formation of UKRI and the involvement of Innovate UK in that was not recommended by Sir Paul Nurse, who just felt that the issue should be looked at. But the Government decided to move forward and it is therefore their responsibility to make sure that we get the most out of it.

My noble friend Lord Bhattacharyya was also at pains to point out that we are talking about the creation not of a bank here but of a ginger group. It is an opportunity to create incentives and a ginger group that moves forward with the support of industry will be much better than one which tries to do it on its own. I look forward to hearing what the Minister has to say about that.

[Lord Prior of Brampton]

My Lords, I find myself in complete agreement with the noble Baronesses, Lady Brown and Lady Young, my noble friend Lord Selborne, and the noble Lords, Lord Bhattacharyya, Lord Bilimoria and Lord Stevenson. All our sentiments are the same. To pick up on a phrase from the noble Lord, Lord Bhattacharyya, about the purpose of Innovate UK, if we were to sum it up in three words, which he did, they would be “productivity from research”.

When we discussed the first amendment today, the noble Lord, Lord Krebs, talked about the serendipitous fruits that can sometimes spring from blue-sky basic research. The point of Innovate UK is to ensure that more of those fruits take root in the UK, rather than ending up in Silicon Valley or Israel, or in other countries which are frankly more innovative than we are. The whole purpose of UKRI in bringing together Innovate UK with the research councils is to create more fertile soil for some of the great ideas, technologies and research that come out of our universities.

In creating UKRI we are making something new, greater than the sum of its constituent parts. We are not merely bolting together nine separate bodies. To make this work the governance structures need to change, so we are introducing an overarching board in UKRI and a high-profile chair and chief executive. It is appropriate that the governance of the councils changes too to reflect this. We have been listening to debate on this for some time now, particularly the contributions on the role of the council chairs from the noble Baroness, Lady Brown, the noble Lord, Lord Mair—I know that he cannot be here today for other reasons—the noble Lord, Lord Broers, and my noble friend Lord Selborne. However, introducing a non-executive chair for the councils into these new lines of accountability would risk confusing accountabilities within UKRI and undermine its key strategic role. This would apply just as much to Innovate UK as to the other councils.

Although I can of course see the attraction of having a well-known leading industrialist as a non-executive chair of Innovate UK, it would not sit well within the governance structure of UKRI. I think it would fatally undermine the whole concept of UKRI. However, we acknowledge that chairs can play valuable roles outside direct lines of accountability, for example in giving support to the chief executive and acting as a route for high-level communication. We have already discussed the sensible suggestion by the noble Lord, Lord Broers, that we give one member of each council the role of a senior independent member. We have given assurances that that will be done and we hope that it is adequate to address his concerns. The noble Lord, Lord Mendelsohn, gave a good description of the important role that a senior independent member can play in these circumstances, without undermining the integrity of the governance structure of UKRI.

Amendment 166 also seeks to determine the background of a majority of Innovate UK’s council members. As was discussed in respect of UKRI board members in an earlier group, prescribing the background of members of councils in legislation would encroach on the freedom of UKRI and its councils to manage their own affairs and could be unhelpful in achieving the best possible mix of individuals at any one time. However, we agree with the sentiments expressed. In the case of Innovate UK, government would have a strong expectation, set through guidance, that a substantial proportion of members should have a science-related business background. Indeed, Innovate UK’s current board membership speaks for itself, with most of the council members having science and technology-related business backgrounds. In addition, the board contains much complementary experience of universities, finance, economics, consulting and government.

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Moved by

[Lord Prior of Brampton]

167: Schedule 9, page 105, line 20, at end insert “after consulting the chair of UKRI”

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Moved by

[Lord Prior of Brampton]

174: Schedule 9, page 110, line 14, leave out “paragraph” and insert “paragraphs 8A and”

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Moved by

[Lord Prior of Brampton]

176: Clause 88, page 58, line 12, at end insert—
“(4) Before making regulations under subsection (2), the Secretary of State must consult such persons as the Secretary of State considers appropriate.(5) UKRI must, if requested to do so by the Secretary of State, carry out such a consultation, on behalf of the Secretary of State, of such persons.(6) In such a case, UKRI must carry out the consultation in accordance with such directions as the Secretary of State may give.”

[Lord Prior of Brampton]

My Lords, I start by expressing my gratitude to the noble Lord, Lord Krebs, and the noble Baroness, Lady Brown, who have worked so constructively with me and my colleagues over the past few weeks and months. I am also indebted to my noble friend Lord Willetts, whose written definition of the Haldane principle is, and will continue to be, a beacon for Ministers, setting out in detail this important principle and its practical applications.

The Government have been consistently clear in stating that the spirit of the Haldane principle, through various provisions, is already, to use the word of the noble Lord, Lord Mendelsohn, “hardwired” into the Bill. I am grateful to all noble Lords who spoke on this point at Second Reading and in Committee, many of whom asked for a firmer form of words that directly refer to the principle itself. I offered to reflect on this, and I am delighted to table Amendment 191. I hope noble Lords will be equally delighted to accept it. We have drawn from the first line of my noble friend Lord Willetts’s Written Statement to define the Haldane principle as the principle that decisions on individual research proposals are best taken following an evaluation of the quality and likely impact of the proposals, such as a peer review process. This amendment is hugely symbolic and an important protection for UK research by putting a reference to the Haldane principle in legislation for the first time.

Amendments 176 and 182 place a duty on the Secretary of State to consult formally before laying regulations to alter the names, number or fields of activity of the research councils. I am grateful to the noble Lord, Lord Stevenson, who asked for clarity on the point of prior consultation in Committee. I hope that these amendments overdeliver on my promise to address the noble Lord’s question. While this Government previously committed to consult before altering a council, these amendments will bind future Governments to this commitment.

Likewise, this Government have been consistent in their pledge to allocate separate budgets to each council of UKRI. I listened carefully in Committee to the calls from the noble Lords, Lord Patel and Lord Broers, and the noble Baroness, Lady Brown, for greater protections. I have reflected on their speeches, and in response the Government have tabled Amendment 188, which requires the Secretary of State, when making grants to UKRI, to publish the whole amount and the separate allocations that will go to each council. This will ensure complete transparency, from this Government and future Governments, on all funding allocations to UKRI and to the research councils, Innovate UK and Research England.

In Committee, my noble and learned friend Lord Mackay spoke passionately about the definition of “relevant specialist employees” in Clause 91. This provision is intended to ensure that the research councils may continue to recruit directly certain specialist staff who are employed in relation to a council’s field of activity. My noble and learned friend raised concerns that the current definition could lead to ambiguity for relevant staff who may not be considered by some to be researchers or scientists. I have reflected very carefully on the powerful case that he put forward, and I am very happy indeed to table Amendment 178 to address his points. This amendment draws on the language my noble and learned friend employed in his amendment in Committee and expands the definition to include any person with knowledge, experience or specialist skills that are relevant to the council’s field of activity who is employed by UKRI to work in that field of activity. I sincerely hope that this amendment alleviates the concerns of my noble and learned friend.

I look forward to hearing noble Lords speak on the other matters included in this group, and I will respond after they have had a chance to speak to these amendments.

[Lord Judd (Lab)]

My Lords, I rise simply to make two brief points. In doing so, I hope I will be forgiven for taking the opportunity to pay the warmest tribute to, and to express my admiration for, my noble friends Lord Stevenson and Lord Watson for the sterling work they have put in on the Bill on behalf of this side.

There is a great deal of feeling in the research community about the points covered by these amendments. I am sure there is a recognition that a tremendous amount of work has gone into trying to find an acceptable formula of words. It should be put on record that many of those who are involved in the most outstanding research in our universities remain mystified about why the phrase,

“(such as a peer review process)”

should be in brackets. They believe it should, if anything, be in capital letters because they see peer review as essential to the process.

There is some feeling that the word “excellent” should not have disappeared. Quality is, of course, important, but what ultimately matters in the research record of our universities and in its contribution to Britain’s noble standing in the world community for the quality of our research is its emphasis on excellence. As this goes forward it will be essential to keep those two important concerns of the research community in mind. In saying that, I should emphasise that I am involved with three universities and that I was a governor of the LSE for many years and am now an emeritus governor.

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[Lord Stevenson of Balmacara]

My Lords, it has been a good debate on a wide range of issues broadly around the work of the research councils. It includes the Government’s important and welcome commitment to uphold the Haldane principle—or Willetts principle—and indeed to enshrine it in the Bill and throughout the instructions that will be given to the various bodies that are to subscribe to it.

We are delighted to be able to sign up to a number of government amendments in this group. We are pleased to see the concession made to the point argued strongly in Committee by the noble and learned Lord, Lord Mackay, about including under specialist employees all technical staff where they are involved in research. That contrasts with the attitude taken in Committee and earlier stages of the Bill, when we attempted to broaden the representational elements relating to the Office for Students—or office for higher education, as it should be called. In particular, we raised the lack of engagement with students, which seems perverse given the Government’s willingness at this stage to include others involved in their discussions.

I shall speak briefly to Amendment 177—the one amendment to which no one has spoken—and seek the Government’s response. We all accept that the strength of our higher education and research institutions will be central to the health of our economy and vitality of our society. As we look towards a post-Brexit world, the role of research in driving innovation, investment and well-being will surely assume greater significance. The capacity of research institutions to act with autonomy and independence will be key to their success.

The Government’s amendments, as I have already said, rightly respond to concerns raised about the need to embed the principle of institutional autonomy more firmly within the Bill. Why, therefore, have the Government not accepted Amendment 177 or brought forward their own version of it?

The Government did respond to arguments about autonomy in relation to the OfS. We welcomed their amendments and signed up to them—they are now in the Bill—such as that on,

“the institutional autonomy of English higher education providers”.

Yet as it stands, UKRI has no such duty, despite the extensive influence and engagement—indirect and direct—that it will have with higher education providers under the new system. We accept that UKRI is not a regulator, but its role is instrumental. It is bound to be engaged in discussions with institutions and bodies that are in a different sector from the institutional autonomy provided by the Secretary of State and the OfS.

That is an asymmetry that I regret. Could the noble Lord, when he comes to respond, at least give us some solace by accepting that, although it may be too late to amend the Bill at this stage, the institutional autonomy issue percolates through to research, is important to the institutions that will be working with the research councils and UKRI post-implementation of the Bill, and is something which the Government should address at some point, whether through memorandums of understanding or by guidance?

[Lord Prior of Brampton]

My Lords, first, I echo the words of the noble Lord, Lord Judd, about excellence. I subscribe to the views he expressed on excellence absolutely, 110%. I am pleased as well that my noble and learned friend Lord Mackay is happy with our Amendment 178. I also thank the noble Lord, Lord Krebs, for his comments about the incorporation of the Haldane principle into the Bill. I think he almost called it the Willetts, rather than the Haldane, principle, but in any event, we will amend the Explanatory Notes to the Bill to make clear reference to my noble friend Lord Willetts’s Written Statement, so there is complete clarity about what we mean by the Haldane principle.

I turn to the amendment in the name of the noble Lord, Lord Mendelsohn, introduced today by the noble Lord, Lord Stevenson, regarding institutional autonomy. I agree that this is also a very important principle and I think we are all glad to see it so clearly articulated in Part 1 of the Bill. I assure the noble Lord that UKRI has the necessary protections already built in through existing provisions in the Bill, much enhanced by the Government’s Haldane principle amendments.

Clauses 97 and 98 already protect institutional autonomy, as they mirror the language used in the definition of institutional autonomy that noble Lords have agreed should be added to this Bill, specifically with respect to courses of study, the appointment of staff and the admission of students. In fact, they already go beyond this and extend this protection to cover universities’ research activities, as supported by Research England. Funding from research councils and Innovate UK is competition-led, and I assure the noble Lord that they do not, nor can they, tell institutions and businesses what they may or may not research or develop, or how they may recruit staff.

This amendment would require UKRI to have regard to the need to protect the institutional autonomy of English higher education providers but, unlike the Office for Students, UKRI’s remit is not limited to these institutions. UKRI will have a strategic vision for research and innovation across the whole UK. It will fund and engage with research institutes and facilities outside the university sector as well as with businesses, both domestically and internationally.

This is why the Government have made the provisions I have already described. Combined with our commitment to the dual support system, the Bill already protects the autonomy of institutions in a way that is tailored to UKRI’s mission. This additional amendment is unnecessary and potentially confusing in relation to the scope and responsibilities of UKRI, which are very different from those of the OfS. Again, in sentiment, I think we are fully agreed on this, but I hope in view of what I have said the noble Lord will feel able not to press the amendment.

The noble Lord, Lord Sharkey, made a powerful case regarding the research councils’ ability to strike up partnerships with other funding bodies directly. I have to confess I got a little lost at some point as he was making his speech, and I will take up his offer to write to him when I can read it tomorrow in Hansard, but I will try to be as clear as possible in my response this evening. As part of UKRI, the research councils will be able to form partnerships with other bodies, such as charities, in the same way as they do now.

The noble Lord has rightly identified the need to still abide by prevailing public sector expenditure rules—for instance, those covered in HM Treasury’s Managing Public Money. Although decisions on more routine partnerships such as joint funding research programmes in a particular discipline will still be taken by the councils themselves within delegated limits set by the department, other more complex arrangements—which might involve setting up an SPV or joint venture, for example—would, as now, require explicit prior approval from government. I am grateful to the noble Lord, Lord Sharkey, for raising this important point, and I hope sincerely that my strong assurances are enough to persuade him not to press his amendment.

Amendment 178A would enshrine in legislation a package of spending flexibilities afforded to some research council institutes by Her Majesty’s Treasury in 2015. These flexibilities recognise the important work these institutes undertake and are designed to provide freedom over how much institutes can pay staff, how much they may pay for marketing and how they may carry out procurement, alongside assurances around approval processes for budget exchange activity and exceptional depreciation. I assure noble Lords that these flexibilities are not affected by the creation of UKRI, and there are no plans to alter them.

However, it is absolutely essential that we do not ossify such flexibilities in primary legislation. Not only is it the prerogative of Her Majesty’s Treasury to determine cross-government rules on public expenditure, but it is important that we are able to evolve these flexibilities over time to respond to changing circumstances. I hope noble Lords will acknowledge the irony of solidifying a “package of flexibilities” in primary legislation, rendering the package unalterable, and hence inflexible. These amendments enshrine the Haldane principle in law and further protect the autonomy of UKRI’s councils.

Amendment 176 agreed.

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Moved by

[Lord Prior of Brampton]

178: Clause 91, page 60, line 12, leave out subsection (3) and insert—
“(3) A “relevant specialist employee”, in relation to a Council, means—(a) a researcher or scientist employed by UKRI to work in the Council’s field of activity (see the table in subsection (1)), or (b) a person who has knowledge, experience or specialist skills which is or are relevant to the Council’s field of activity and is employed by UKRI to work in that field of activity.”

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Moved by

[Lord Prior of Brampton]

179: Clause 91, page 60, line 18, after “contributing” insert “(whether directly or indirectly)”

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Moved by

[Lord Prior of Brampton]

183: Clause 92, page 60, line 31, leave out subsection (3) and insert—
“(3) Arrangements under this section must require Innovate UK, when exercising any function to which the arrangements relate, to have regard to—(a) the need to support (directly or indirectly) persons engaged in business activities in the United Kingdom,(b) the need to promote innovation by persons carrying on business in the United Kingdom, and(c) the desirability of improving quality of life in the United Kingdom.”

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Moved by

[Lord Prior of Brampton]

185: Clause 97, page 62, line 39, after “subsection (1)” insert “in respect of those functions”

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Moved by

[Lord Prior of Brampton]

189: Clause 99, page 64, line 7, at end insert—
“(za) the Haldane principle, where the grant or direction mentioned in subsection (1) is in respect of functions exercisable by one or more of the Councils mentioned in section 91 (1) pursuant to arrangements under that section,”

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[Lord Stevenson of Balmacara]

Hush. I wanted to make the point that this is important. It matters to the institutions and cannot be taken away or given just by discretion—it really is about what universities are about. Not to approve the requirement that the Office for Students or office for higher education must work jointly with UKRI is to take away a very valuable part of our community. I support the amendment.

[Lord Prior of Brampton]

My Lords, I rather fear that an irresistible force has met an immovable object on this occasion. That is a shame because we have agreed on so much in this part of the Bill and we all agree that the various amendments that have been made have vastly improved the Bill. I would argue that we have done 98% of the work required. Despite the very eloquent speeches made by the noble Lord, Lord Smith, and my noble and learned friend Lord Mackay, I feel we are somewhat dancing on the head of a pin on this issue. What is the difference between the two cases being put? On the one hand, my noble and learned friend and the noble Lord, Lord Smith, say that research degree-awarding powers should be made jointly by the OfS and UKRI, whereas the Bill says they should be made by the OfS with advice from UKRI. There is clearly a distinction between the two and I understand it, but we are not talking about a huge distinction this evening. It is important to bear that context in mind as we wind our way to the end of this debate.

I start by stating that the Government fully recognise the importance of a co-ordinated approach to supporting the pipeline of undergraduate and postgraduate talent and skills development. Let me explain briefly where responsibilities will lie across the two organisations, UKRI and the OfS. The OfS will be responsible for maintaining the quality of higher education in England, including postgraduate provision, and promoting the interests of students in English higher education providers, including students engaged in postgraduate research and study. In Scotland, Wales and Northern Ireland this is the responsibility of the devolved Administrations.

UKRI will support the cost of postgraduate research degree programmes in English universities through Research England’s dedicated PGR funding stream. Support of this type is also a devolved matter for Scotland, Wales and Northern Ireland. Additionally, the Government made an amendment in the other place that clarified UKRI’s ability not only to support postgraduate provision but to encourage it. At his appearance before the Science and Technology Select Committee last October, Sir John Kingman argued that these reforms would improve oversight of the research talent pipeline.

UKRI will be a major and influential advocate for the importance of maintaining a strong, healthy pipeline of research students. Crucially, it will have a strategic centre that can gather and analyse intelligence on the pipeline from across its councils and can work with the OfS and the devolved funding bodies to develop a more holistic and comprehensive picture of the landscape than is possible under current arrangements.

The Government are backing UKRI to succeed. In the Budget—funnily enough, very little publicity was given to this aspect of it, which is surprising given the importance I know noble Lords attach to it—the Government committed to spend £250 million over the next four years to increase the number of highly skilled researchers and develop the talent needed by British industries for a thriving and innovative economy. We also announced £100 million for global research talent over the next four years to attract the brightest minds to the UK and help maintain the UK’s position as a world leader in R&D. That was a very significant announcement. Let me be clear: UKRI will work closely with the OfS and its equivalents in the devolved Administrations to ensure that this vital part of the university system is protected.

I turn now to the amendment in front of us; there are two distinct proposals within this amendment. First, on the matter of research students, it must be said that the OfS is an England-only regulator, while UKRI is a UK-wide funder. It would be entirely inappropriate to give the OfS a decision-making power in relation to a research council’s doctoral funding for a Scottish, Welsh or Northern Irish university, for example. Secondly, each organisation will make countless decisions that relate to research students. Requiring them to make every one of these decisions jointly would result in a duplication of effort and, in many instances, simply not make sense. For example, the OfS will not be well placed to take decisions on where research funding should be allocated to fund doctoral training for the purpose of enhancing the UK’s research capability where this is outside the university sector—for example, in one of the UK’s world-leading research institutes. Conversely, this amendment would risk giving UKRI unnecessary decision-making responsibilities on regulatory issues which affect all higher education students, but where UKRI will have no particular remit or expertise, such as on ensuring institutions have appropriate student protection plans in place.

As we have been clear throughout the passage of this Bill, the OfS and UKRI can share information and will co-operate at all levels to ensure that the respective decisions they make regarding research students are appropriately informed by the expertise of the other organisation. This is a much more proportionate and effective approach. Clause 108 already enables this and, since both organisations have a duty to have regard to the need to operate in an effective and efficient way through Clauses 3 and 100, the Bill actively encourages such co-operation. In addition, this House has already agreed amendments that require the OfS and UKRI to detail in their annual reports how they have co-operated in the past year. We fully expect evidence of co-operation on matters related to research students to be included in these reports and, through provisions in Clause 108, Ministers can act to require this to happen should the evidence suggest otherwise. However, I put to the House that while co-operation and collaboration is appropriate, asking the OfS and UKRI to make joint decisions in every instance is not.

On research degree-awarding powers, we considered carefully the constructive arguments made in Committee by my noble and learned friend Lord Mackay, the noble Lords, Lord Mendelsohn and Lord Stevenson, and the noble Baroness, Lady O’Neill, that this should be a matter where OfS and UKRI should make decisions jointly. Having given this matter much thought, we do not agree that the decision itself should be a joint one between the two bodies, given that UKRI has no direct regulatory function in relation to higher education providers. Nevertheless, while we believe that the OfS as regulator of the sector is best placed to take the final decisions, we fully agree that it is important that the expertise of UKRI should be fully utilised in ensuring that the OfS makes well-informed decisions. Because of this, we put forward an amendment, which this House has already agreed, requiring the OfS to request advice from the designated quality body or committee on degree-awarding powers. This amendment ensures that the advice must be informed by the views of UKRI when it concerns research degree-awarding powers, and this advice cannot be ignored by the OfS. This gives UKRI a clearly enshrined role, securing its influence in decisions on research degree-awarding powers, which is much stronger than anything that has gone before in securing a guaranteed role for such advice to be given for matters concerning research degree-awarding powers. Through our reforms, we see UKRI having a bigger role than any research organisation currently has, or that HEFCE has now.

The new system that we have designed has clear accountabilities, and instituting joint decision-making in this way could give UKRI a role in matters which have nothing to do with an institution’s research capability. Further, the Government will also commit to giving UKRI an important advisory role when the department is preparing guidance on the criteria by which applications for research degree-awarding powers will be assessed. These are meaningful legislative provisions. The Bill does not prevent UKRI having a role in the appeals process when appropriate. We believe that it is a more practical and reasonable alternative to the amendment, taking into account the real-world operations of the two bodies, while crucially ensuring that any decisions are informed by the relevant expertise. The amendment as drafted would make it a legal requirement for the OfS to jointly take decisions about the number of doctoral training places to be supported by the research councils, about the funding of doctoral research training in research council institutes and facilities, and about the support given by UKRI for doctoral training in universities in the devolved Administrations. These things are the primary responsibility of UKRI and are outside the scope of the OfS’s responsibilities, and I believe it would be wrong to put them into legislation today. It is with those things in mind that I ask the noble Lord, Lord Smith, to withdraw his amendment.

[Lord Smith of Finsbury]

First, briefly to address the point from the noble Lord, Lord Winston, even though UKRI may have no direct funding responsibility in relation to conservatoires, it can none the less play a useful role in making a joint decision, and I do not think that diminishes in any way the research standing of the conservatoires.