Brexit: Aerospace Industry

Lord Prior of Brampton Excerpts

Monday 6th February 2017 Lords Chamber

[Lord Soley]

To ask Her Majesty’s Government what assessment they have made of the impact of Brexit on the aerospace industry.

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

My Lords, we have engaged with the UK aerospace sector and are aware of the potential issues that the UK’s exit from the EU may have. Our aim is to keep the UK the leading aerospace nation in Europe and we will continue our long-standing support for the sector. That includes a matched co-funding of some £3.9 billion for a research and development programme to 2026.

[Lord Soley (Lab)]

Are the Government aware of the cross-border problems with the supply chain in aerospace? I am concerned about the European Aviation Safety Agency—where we play a key role—which certifies the safety of aircraft products. That is a profoundly important area. I am not sure—and this applies to other agencies, too—how the Government plan to move that forward in agencies, particularly where we play the lead role and will no longer be able to do so after Brexit.

[Lord Prior of Brampton]

My Lords, the EASA is indeed extremely important, as are other European agencies. We will negotiate with those agencies over the next two years to come to a sensible arrangement.

[Lord Trimble (Con)]

My Lords, does the Minister agree that it is a shame that the party opposite is so slow in catching up with its leadership?

[Lord Prior of Brampton]

I wonder what leadership my noble friend is referring to. I am sure that the party opposite is wholly united behind its leader.

[Lord Ashdown of Norton-sub-Hamdon (LD)]

My Lords, as the Minister well knows, a defence strategy refresher paper is to be published in the middle of the year. Never mind Brexit; is he aware that if that paper fails, as did the national strategy, to make a clear commitment on behalf of the Government in favour of retaining and preserving Britain’s capacity to design and manufacture its own helicopters, as we have done for 70 years for the benefit of our Armed Forces and our export markets, there is a real danger that that capacity will be lost, together with hundreds of jobs in Yeovil and elsewhere and a crucial part of the national aerospace asset? Why can everybody else see that danger but the Government seem blind to it?

[Lord Prior of Brampton]

My Lords, I do not agree with the last part of the noble Lord’s question. The capacity to manufacture helicopters in the UK is extremely important and the MoD is very much committed to doing that. As the noble Lord says, we will publish a refresh strategy later in the year, which I am sure will make that clear.

[Lord Kinnock (Lab)]

My Lords, will the Minister confirm that the European Aviation Safety Agency plays a crucial role in excluding from European airspace and European airports any aircraft that originates from countries or companies that have poor safety records? By that means it safeguards the security and well-being of people right across this continent. Because of the importance of that, will the Minister give me an undertaking now that, whatever the other outcomes of Brexit, we will retain full participation in the European Aviation Safety Agency?

[Lord Prior of Brampton]

My Lords, I can confirm that safety is absolutely paramount. How that is achieved between the workings of the CAA and the EASA will have to be resolved over the next two years.

[Baroness Hayman (CB)]

My Lords, another European agency of crucial importance to safety, which the Minister will know about from his previous role, is the EMA—the medicines evaluation agency currently located in London. It is important not only for the NHS but for the pharmaceutical industry. When the Minister is looking at future co-operation and arrangements, will he ensure that that agency and our relationships with it are also safeguarded?

[Lord Prior of Brampton]

My Lords, the relationship between the MHRA and the EMA, similar to that between the CAA and the EASA, is absolutely critical. The MHRA, from my memory, does 40% of the work of the EMA—so the relationship between those two organisations will indeed be very important.

[Lord West of Spithead (Lab)]

My Lords, as one of the largest contributors to the European Investment Bank, what influence have we had over the money that it has just given to the European Defence Fund, which was set up in November, and the subsequent allocation by the European Defence Agency for defence and aerospace procurement all around Europe?

[Lord Prior of Brampton]

The noble Lord raises such an interesting question that I cannot actually answer him, so I will have to write to him afterwards.

[Lord Berkeley (Lab)]

My Lords, will the Minister explain why, in the case of the air and the medical agencies that have just been discussed, the Government are looking into how this can be integrated with Brexit, but they have already made a decision to leave Euratom without any debate at all? They are all the same kind of safety regulators: what is the difference?

[Lord Prior of Brampton]

My Lords, I think that the difference is that the Euratom treaty was inextricably linked to the original European Communities treaty. When we exercise Article 50, it will automatically have an effect on the Euratom agreement, whereas the other issues that we are looking at are regulatory issues in which we have a much greater degree of discretion about how we work together in the future.

Energy: Storage

Lord Prior of Brampton Excerpts

Wednesday 1st February 2017 Lords Chamber

[Baroness Featherstone]

To ask Her Majesty’s Government what action they are taking to address regulatory, economic and market barriers to energy storage.

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

My Lords, my department and Ofgem recently held a joint call for evidence on a proposed approach for addressing these barriers. A smart systems plan will be published in the spring setting out specific measures to be taken forward.

[Baroness Featherstone (LD)]

I thank the Minister for that Answer. Can he assure me that in the Government’s response to that call for evidence we will see the introduction of a regulatory definition for energy storage that will, among other benefits, eliminate the double charging that is currently imposed on such facilities?

[Lord Prior of Brampton]

In paragraph 32 on page 34 of the call for evidence there is a suggested definition of storage. That is very much part of the consultation, and we will have a very firm view on that definition. Clearly removing the double charging where people who are operating storage also have to pay the end consumption levies is something for which we will have clear plans when we publish our response to the call for evidence.

[Lord Spicer (Con)]

My Lords, with the exception of pump storage, is it not the case that genuinely commercial storage systems for electricity do not exist, even to compensate for unreliable renewable energy?

[Lord Prior of Brampton]

My Lords, as my noble friend will know, there are developments in new battery technology, such as lithium ion, which is a new technology that holds out huge hopes not just for powering electric vehicles but for storing energy, which could then be fed into the grid. The regulatory system is running behind the new technology, if you like, which is why we have issued the call for evidence.

[Lord Grantchester (Lab)]

My Lords, this is indeed a very complex area. To allow greater deployment, a new definition for storage should be developed to reflect its role in generation, demand and providing network balance. Does the Minister agree that the licensing of storage under the Electricity Act should be a special flexible case to allow these roles to develop?

[Lord Prior of Brampton]

My Lords, battery technology could offer huge benefits to the way that we both generate and store electricity and could provide better capacity to our electricity system in the UK. It could also enable us better to deal with the more intermittent nature of some renewable energy. The work done by Imperial College indicates that the savings per annum for producing electricity in this country could run at between £1 billion and £2 billion a year, so it is very important that we get the regulatory system right.

[Lord Berkeley (Lab)]

My Lord, the Government recently announced a special tariff addition to people’s electricity bills to cover emergency stand-by generation to meet the peaks in—I think this was the wording—“weekday evenings”. Apparently, they are particularly targeting coal-fired power stations and nuclear power stations. How do you switch them on and off just like that for a peak in one evening?

[Lord Prior of Brampton]

My Lords, I do not think that there is any intention to switch nuclear power stations on and off to cover short-term peaks in demand; coal-fired generation, on the other hand, is much more flexible in that regard. The whole point of these new smart systems is to allow much better demand management over the peaks and troughs of energy demand so that, hopefully, we will need less generation capacity in the future than we have done in the past.

[Lord Christopher (Lab)]

My Lords, further to my noble friend’s last question, I believe that we are still using a good deal of nuclear energy—usually electricity—from France. Are we making any contingency arrangements, should there be problems post Brexit over the fact that we rely upon that source of energy?

[Lord Prior of Brampton]

My Lords, if there is any issue about availability of supplies from France, it probably relates more to the fact that a number of France’s nuclear plants are nearing the end of their lives than to anything that comes out of Brexit. In fact, as the noble Lord may know, we are investing in more interconnector capacity, which would increase the capacity from 2,200 megawatts to more than 7,000 megawatts. Again, that should reduce the cost of electricity to our consumers.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I do not hear the Government talking much about microgeneration, which provides a real opportunity to get local people to invest. Is that something that the Minister’s department is looking at?

[Lord Prior of Brampton]

My Lords, again, the development of battery technology and electric vehicles means that every consumer in the country could become a small generator in due course and be able not only to take electricity from the grid during downtimes but also to feed back energy from their electric car or their own battery in their own home during peak times. We are looking at, I think, a revolution in the way that we manage electricity in this country.

Higher Education and Research Bill

Lord Prior of Brampton Excerpts

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

[Lord Bilimoria (CB)]

My Lords, last year I shared a platform with the chief executive of Innovate UK at the International Festival for Business in Liverpool. We have heard from my noble friend Lord Mair about the great work it is doing and how important it is for our economy to encourage innovation and the translation of research from universities to business. Is it not ironic that here we have this Bill about which our greatest worry is its threat to autonomy—the autonomy of our universities, of our research institutions and, now, of Innovate UK? We cannot in any way stifle Innovate UK’s work or its ability to partner with or have joint ventures with organisations or to be innovative in itself. We cannot spoil Innovate UK being innovative. I urge the Government to listen to the amendment in the name of my noble friends Lady Brown, Lord Mair and Lord Broers and enable Innovate UK to be innovative itself.

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

My Lords, I will begin by saying that I agree 100% with the principles behind many of the amendments in this group. It is absolutely right that Innovate UK should have as much autonomy as possible over all matters related to its remit and mission. We are fully agreed on that. However, I disagree with my noble friend Lady Neville-Jones. I fundamentally believe that Innovate UK will be better off within UKRI and that bringing together into one organisation research and the translation of research will create a much stronger one. I also feel that, when it comes to negotiating budgets with the Treasury and the like, again Innovate UK will be much better off within UKRI than if it were a separate body.

[Baroness Neville-Jones]

My Lords, I am not in fact advocating that Innovate UK should be separate—that battle is over. But, if the Government are going to construct the structure that they now wish, my point is that the structure must enable Innovate UK to do its job. I do not think that the present draft allows that to happen.

[Lord Prior of Brampton]

I thank my noble friend for that.

Turning to how autonomous and free Innovate UK is, I fully agree it is important that it is able to provide a broad range of financial support, including the sorts of commercial activity listed in the amendments. I assure noble Lords that paragraph 16 of Schedule 9, which provides detail on UKRI’s supplementary powers, does permit UKRI and its councils to make such investments, but with the consent of the Secretary of State. This is not an unreasonable or overbearing condition. It is a necessary one to comply with cross-government rules set out by the Treasury in Managing Public Money. It is also not a change to current practice—such permissions are already required. For example, the noble Baroness, Lady Brown, mentioned catapults, but as things are set up, they do require consent from the Secretary of State.

It would not be responsible to cut out ministerial oversight entirely, particularly with regard to commercial activity that potentially carries a significant level of financial and/or reputational risk. Absolutely nothing in the Bill curtails the powers of Innovate UK to enter into joint ventures or investments in the way that it does at the moment. I agree fully with the comments of the noble Lord, Lord Mair, that commercialising our science, one of the 10 pillars in the industrial strategy, is critical to improving productivity in the UK more generally. The Government fully understand it is important that UKRI has flexibility in this regard. The Secretary of State will specify conditions for such activities, below which UKRI can act without referring back to its sponsor department.

I turn now to the amendments tabled by the noble Lord, Lord Mendelsohn. I cannot agree with Amendment 495E, which would risk taking the emphasis away from Innovate UK’s mission to support businesses by giving it further duties that are not reflected in its current charter. However, I find myself in complete agreement with the sentiment behind Amendment 495F. Although the Government strongly believe that the current drafting protects Innovate UK’s business-facing focus, let me assure noble Lords that we will carefully reflect on the comments made in this debate.

On Amendment 495G, as a council of UKRI, Innovate UK will continue to undertake detailed evaluation of the economic impact of its business-led innovation projects. It is right that the organisation is given a degree of flexibility to determine how it reports on its activities, rather than entrenching such detail in the Bill. Let me reassure the House that it is not the Government’s intention to place artificial and unjustified limits on what commercial activity UKRI and Innovate UK may undertake. The Government’s position is very clear that Innovate UK must retain its business-facing focus. I hope that with the assurances I have given noble Lords this evening, the noble Baroness will withdraw her amendment.

[Baroness Brown of Cambridge]

My Lords, I thank the Minister for his detailed response and other noble Lords who have contributed fully to the debate. I am pleased that the Minister agrees with the principle behind many of these amendments—I hope I have understood him correctly this time—particularly the need for autonomy for Innovate UK and for it to be able to deliver a broad and innovative range of financial support and commercial activities.

The Minister mentioned that the Secretary of State would be able to specify conditions within which UKRI can act, which is specifically indicated in one of the amendments. Perhaps he can write to us with more information about that as it may further allay some of the concerns.

The issue of the autonomy of Innovate UK, and the opportunity and need to have an enlarged brief to deliver the economic growth which we are all keen to see from our science base, are so important that we would like to hear more about the Government’s thoughts in this area. It is an issue to which we may wish to return on Report. However, in the context of the strong reassurance that we have had on this point, and that we will hear more, I am happy to withdraw the amendment.

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[Lord Mendelsohn]

My Lords, I shall speak to our amendments. The noble Baroness, Lady Garden, has made a very good case. The long and the short of how we see this is that we do not think it was a very good idea in the first place and time has passed on. Many of the comments that have been made will find an echo in our thoughts.

It is worth returning to the original Nurse review. The report states:

“In relation to Innovate UK, as stated earlier, the current delivery landscape is too complex and there should be a smoother pathway to more applied research. Integrating Innovate UK into the Research UK structure alongside the Research Councils could help such issues to be addressed However, Innovate UK has a different customer base as well as differences in delivery mechanisms, which Government needs to bear in mind in considering such an approach and which this review, according to its remit, has not looked at in depth”.


The noble Baroness, Lady Garden, made exactly that point: what evaluations were made when it went in?

I would suggest that both its target audience and the mechanisms that Innovate UK uses are so dramatically different that it is unlikely to be able to perform such an effective function within the context of UKRI. I think that it would be a terrible misfortune if Innovate UK, which has proved itself over some years to be a very effective body doing great things, were to come into UKRI with its current framework. That would not just be restrictive but could possibly be quite damaging for an institution that is following a good path.

I also think that this is a policy that was designed for a pre-Brexit world. In a post-Brexit world—which we are not in at the moment—we know that we are going to have to rely on research an awful lot more, and a great deal will be required of it. I cannot imagine that in such a situation we would ever put one of our most significant levers into this sort of environment; we would leave it to work independently. With the industrial strategy having now been published, it is absolutely clear that there is a massive hole in the delivery of its research objectives that would have been filled by Innovate UK. That is a mistake that the Government would be wise to take note of.

By the way, it is important to understand that Nurse himself recommended:

“At the very least, the Chief Executives of HEFCE and Innovate UK should be represented, on the Executive Committee of Research UK”,


or UKRI. And that was probably a very measured judgment.

My final very brief point is in relation to what it is necessary to do to make the best of our university sector and to be able to commercialise at both ends of the spectrum via big company investments and tracking what research is being done as well as smaller companies emerging as the result of venture capital. An awful lot is going on in this area. Recently I spent time with some of the companies at Cambridge Enterprise Limited. Innovate UK is not the only solution that is required, and I think that it would be a colossal mistake to expect UKRI to perform that role and to forget the other things we may need to do. To restrict UKRI in that situation has the potential to do great harm to the long-term needs of our country, especially in an environment where we need an effective industrial strategy.

[Lord Prior of Brampton]

My Lords, we could debate this issue for two or three hours, but we must restrain ourselves. I turn first to the two points raised by my noble friend Lord Willetts. I will indeed have to write to him about the powers the Secretary of State will be planning to delegate to Innovate UK. In a way that also answers his second question because he referred to “old think”, and indeed some of that could be construed in this Bill when comparing it with the requirements of the industrial strategy. But if the delegation to UKRI and Innovate UK from the Secretary of State is right, I think it will be perfectly possible to reconcile that with the industrial strategy.

I would actually take issue with the noble Lord, Lord Mendelsohn, because I think that Brexit has made the coming together of Innovate UK with the research councils within UKRI even more necessary, but I agree that Innovate UK is only a part of the answer. We have to have a competitive fiscal regime, long-term risk capital and a well-trained technical workforce among many other things. Innovate UK on its own is not going to shift the productivity dial for the country, although we believe that it has an important part to play.

The noble Baroness, Lady Garden, asked about an assessment of Innovate UK. A detailed business plan was made, although I am afraid that I cannot remember when it was published. I shall certainly endeavour to send her a copy of that report. The fact is that this is more of a judgment than something which can be proved with spreadsheets and the like. I think that the right judgment is to bring innovation together with research; that is the right thing to do because the reality is that one of our weaknesses, as other noble Lords have mentioned, is that we have a fantastic research base but have not been able to take maximum commercial advantage of it. That is a space which Innovate UK has filled and will continue to do so.

The extra investment being made by the Government in UKRI is a clear vote of confidence, and our support for the central role of Innovate UK in delivering our future knowledge economy will include a substantial increase in grant funding. The Bill seeks to name Innovate UK in legislation for the first time. It will retain its own individual funding stream and grow its support for business-led technology and innovation as a key part of the industrial strategy. I think it is worth quoting Ruth McKernan, the chief executive of Innovate UK:

“The establishment of UK Research and Innovation, including the research councils and Innovate UK, recognises the vital role innovation plays and further strengthens the UK’s ability to turn scientific excellence into economic impact”.


That is one of the 10 pillars of the industrial strategy referred to earlier by the noble Lord, Lord Mair. It is absolutely fundamental to our future and bringing these organisations together is critically important. Only by bringing Innovate UK into UKRI will we remove the remaining barriers to greater joint working between research and business at all levels. Businesses will be able to identify more readily possible research partners and will benefit from the better alignment of the outputs of research with business needs in, for example, technology and data skills. Researchers will benefit from greater exposure to business and commercialisation expertise so that they can achieve maximum impact. It will be simpler to find and form partnerships and there will be easier movement between academia and business. The UK will benefit from a more strategic, agile and impactful approach across UKRI’s portfolio which can respond to real-world challenges and opportunities.

The critical achievement is reaching the right balance between freedom and autonomy for Innovate UK while recognising at the same time that, ultimately, the Secretary of State has to be held financially accountable in Parliament for the money that is spent. With that, I hope that the noble Baroness will feel able to withdraw her amendment.

[Baroness Garden of Frognal]

My Lords, I thank the Minister for his reply and other noble Lords for their contributions to this short debate. As the Minister said, we could have carried on debating this for rather a long time, but of course we will not.

One of the points made by the noble Lord, Lord Mendelsohn, about Brexit is that it generates an extra degree of uncertainty, and with all the uncertainties already around, this may not be a propitious moment to be creating another uncertainty by combining Innovate UK with the research councils. I look forward to another letter for the dossier, and indeed we are acquiring quite a number of them at the moment. If there is any more clarification, I would also welcome that. In the meantime, I beg leave to withdraw the amendment.

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[Lord Prior of Brampton]

My Lords, the global research and innovation landscape is constantly evolving. It is important that the Government can react to this by making changes to the research councils, just as they have done in the past—for example, with the creation of the Arts and Humanities Research Council in 2005. We are all saying the same thing.

In the other place, the Minister of State, Jo Johnson, was absolutely clear that any future changes would not be undertaken lightly. This is reflected in the fact that this power cannot be exercised without legislative scrutiny and the agreement of Parliament through the affirmative resolution procedure. I can assure noble Lords that this is not a change in approach and reflects existing powers to make changes to the research councils. Secondary legislation strikes the right balance here. Primary legislation would impact on the ability of UKRI to react quickly to changing circumstances. Technology is changing very rapidly, as we all know.

In the other place the Minister of State committed that the Government would seek the views of the stakeholder community through proper consultation prior to putting any proposal forward. I reiterate that commitment. In the hypothetical event that such consultation had not taken place, I am absolutely sure that this would be strongly challenged by noble Lords during the affirmative resolution process. I believe that this is an appropriate and powerful safeguard. However, I understand noble Lords’ concerns and will reflect on today’s debate. I therefore ask noble Lords not to press their amendments.

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Moved by

[Lord Prior of Brampton]

485: Clause 87, page 55, line 26, at end insert—
“( ) facilitate, encourage and support knowledge exchange in relation to science, technology, humanities and new ideas,”

[Lord Prior of Brampton]

My Lords, the Government have brought forward these amendments to clarify the vital importance of knowledge exchange within UKRI. Knowledge exchange is an essential mechanism to support universities in effectively contributing to UK growth, but it is not limited to higher education innovation funding, which is currently administered by HEFCE. The integration of knowledge exchange functions across UKRI is critical to achieving greater strategic co-ordination across the research funding landscape.

Amendment 485 agreed.

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[Baroness Brown of Cambridge]

I shall speak to Amendments 485A, 496 and 499A in my name. I welcome the government amendments to include knowledge exchange in UKRI, but I do not feel that they go far enough. The Minister mentioned the Higher Education Innovation Fund, which is currently distributed to universities by HEFCE on the basis of encouraging interactions with industry and business, which includes knowledge transfer, collaboration support for registration of intellectual property, entrepreneurship and a range of other things.

Historically, HEIF has been assessed as delivering a benefit to the UK of £7.30 for every £1 invested. It is mentioned in the new industrial strategy as one of the routes to address the concern that the UK is excellent in research but not innovation. Indeed, the Green Paper is looking to explore the expansion of HEIF. This news will be celebrated by UK higher education institutions of all kinds, from the highly research-intensive to the more applied and business-focused institutions.

I understand from discussions with the Minister of State and the Bill team that HEIF will continue to be delivered by Research England. This is again good news, except that in Clause 91 Research England can provide financial support only for research or facilities for the purposes of, or in connection with, research. This needs to be addressed at the Research England level in Clause 91 and for UKRI in Clause 87.

The government amendments in this group are very much appreciated as they go some way towards addressing this issue by extending the UKRI and Research England support to knowledge exchange. However, I am not quite sure what the definition of “knowledge exchange” is. I believe that HEIF as currently applied delivers benefit some way beyond what one might assume is included in “knowledge exchange”. It is used to support entrepreneurship activities among undergraduates, postgraduates, researchers and university staff. It helps to support initiatives such as “dragons’ den” competitions for start-up companies in universities. It supports working with local enterprise partnerships on business growth in the regions. I am not sure whether all of these activities can be classified as knowledge exchange, but they are all important in ensuring that our universities play a strong role in stimulating innovation, entrepreneurship and economic growth locally and nationally.

My amendments would go further than the Government’s proposals to ensure that the excellent work done under HEIF can continue—and, indeed, to allow Research England to distribute other such funds in future with equally broad scope for encouraging university-business links and entrepreneurial activities. I do not believe that these amendments have different objectives from those of the Government, but I ask the Minister to reflect on whether the wording of the government amendments could go further to ensure that they cover the quite broad scope of HEIF as it is currently very effectively used.

[Lord Prior of Brampton]

I am very grateful to the noble Baroness, Lady Brown, who described the wide range of activities undertaken by universities under the banner of knowledge exchange—and, beyond that, the contribution that they make to their local communities, to entrepreneurship and to local economic growth.

The Bill makes clear that Research England will retain HEFCE’s research and knowledge exchange functions. This will include distributing higher education innovation funding. This vital block grant for universities in England represents an important source of stability to the sector, allowing maintenance of facilities, core staff, support for postgraduate students and a degree of entrepreneurial research activity. Research England and the new Office for Students will act together to deliver HEIF—an example of the close joint working between the two bodies and their shared remit to support business-university collaboration. The Office for Students will continue to encourage student activities such as entrepreneurship training.

The Bill ensures that UKRI will be equipped to continue to support universities to continue to play a critical role in their communities, including through knowledge exchange.

[Baroness Brown of Cambridge]

I thank the Minister for his reassuring response. I am keen to know how the OfS and Research England will work together to deliver HEIF funding, because, as the Minister will know, there is a very precise formula for delivering HEIF funding relating to things such as the amount of university-business research collaboration undertaken by universities. It is important to understand how work will be done between the two organisations to continue to deliver this funding. Will the Minister include that in one of his letters? In that light, I beg leave to withdraw the amendment.

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[Lord Bilimoria]

My Lords, today I hosted a group of education leaders from India and in our discussion, they asked: “What are your worries about Brexit when it comes to the UK education sector?”. In listing my worries, a list which is too long to talk about now, I stated that one of my biggest concerned research. It is all very well for the Government to say, “We’ll keep giving you the funding for research that we get from the European Union, even if we leave”, but it is much more important than that. That is why I support Amendment 488 in the name of the noble Lord, Lord Hannay.

The key to research is collaboration. Already, we are seeing EU-funded research universities in Europe not partnering with UK universities because they are worried that we will be leaving the European Union. If I may illustrate the power of collaborative research, while I was in India in November, at the same time as the Prime Minister and the Universities Minister, Jo Johnson, the University of Birmingham held a workshop with the Panjab University. There we showed the power of collaborative research: when the University of Birmingham conducts research, our field-weighted citation impact is 1.87. The Panjab University figure is 1.37. Yet when we carry out collaborative research, the impact is 5.64, or three times the Birmingham figure. When we do research with Harvard University—I am an alumnus of the Harvard Business School—while Birmingham’s impact is 1.87 and Harvard’s is 2.4, our combined impact is 5.69. This is serious. We must encourage collaborative research with the European Union and this amendment should be in the Bill.

[Lord Prior of Brampton]

My Lords, I think we are all pretty much in violent agreement about the critical importance of collaboration across countries, but also about being able to attract the best and brightest to the UK. There is no question about that. When one hears the story from the noble Lord, Lord Mendelsohn, about individuals who have decided not to come here for various reasons because of Brexit, it is depressing. On the other hand, only today Novo Nordisk, the big Danish pharmaceutical company and diabetes specialist, announced that it is investing £100 million at Oxford. AstraZeneca is also building its global research facilities at Cambridge. The truth is that anecdotes can be misleading and that the jury is out.

We have to demonstrate to the international community that we are open for business, and persuade it that that is the case. Other countries have similar issues at the moment. I imagine that many scientists in the USA are thinking, “Should we stay in the US or move?”. Scientists in other parts of Europe will be thinking similar things. We have to demonstrate to this increasingly internationally mobile part of the community that Britain is the place to be. I was struck that at the Crick institute, some 34% of all its principal investigators are EU nationals, which illustrates that it is essential that we reassure them of their welcome here.

That is what the Prime Minister has been doing. She said in her Lancaster House speech on 17 January that we will,

“welcome agreement to continue to collaborate with our European partners on major science, research, and technology initiatives”.

She went on to describe her vision of,

“a secure, prosperous, tolerant country—a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead”.

There should be no doubt that the Government are fully apprised of this issue and that we are determined to be, as the Prime Minister said, a magnet for international talent. I do not suppose that the country is going to be glued to reading Hansard tomorrow, but it worth making that point on any opportunities that we get.

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[Lord Hannay of Chiswick]

It does not do anything of the sort. The Minister has told us that the Government agree with the sentiments in the amendment, but he has not said that they accept the amendment. That is what matters. The Minister does not need to worry about whether anybody reads Hansard tomorrow. If the Government accept the amendment, it will be in the Bill, and people will not have to read Hansard. I seriously do not know why the Government cannot simply accept that amendment or, at the very least, why the Minister cannot say that he will go away and study it and reflect upon it before Report, rather than excluding accepting it. It is, quite honestly, absurd. I ask the Minister to think very carefully before he sits down after this short debate.

[Lord Prior of Brampton]

The noble Lord stopped me in full flow. I was just getting to a point raised by the noble Baroness, Lady Brown, regarding visa applications. As the research councils do now, we expect UKRI, as an employer, to have a role in sponsoring visa applications for international staff on its own payroll and, in some circumstances, for particular individuals with agreed posts in universities. However, it would not be practical to make UKRI responsible for visa sponsorship for the whole sector. I think we will probably have to come back later to discuss that issue in more detail. The Government do not agree—this, I am afraid, goes to the point made by the noble Lord, Lord Hannay—that the Bill should be amended as suggested, as UKRI will be an outward-looking organisation and will build on our current excellence. I therefore ask the noble Lord to withdraw the amendment.

[Lord Mendelsohn]

I thank the Minister for his reply. I shall not echo the sentiment of the noble Lord, Lord Hannay. I think more needs to be done, and I shall just make two points. We have to face up to a certain reality. While it is no doubt true that some people in the United States of America are considering their position, there it is a somewhat temporary measure. There it may be four years or eight years, but our exit from Europe will have much longer term implications. That is the issue we have to address.

While it is certainly true that things are coming to us—although some of the stuff that has been announced was being discussed well before Brexit, and people have taken a different view on risks—there is a human dimension here: making sure we are attracting talent. I have a corporate finance business. International companies that used to send people to the UK will now look elsewhere when trying to attract eastern European talent. London is not the only location they will now look at as the right sort of place to locate families.

It is important that we get this talent issue under control, and find a way to make sure that we fully express our ambitions and put the right sort of measures in the Bill. However, given the Minister’s comments—hopefully there will be some form of reflection—I beg leave to withdraw the amendment.

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[Lord Prior of Brampton]

My Lords, I thank the noble Lord, Lord Patel, for a very thoughtful speech at the beginning of the debate. On Amendment 489, I want to make it clear that the Government agree that councils must be able to operate with autonomy and authority over decisions within their fields of activity. For that decision to be made, we must ensure that experts in their fields are involved in allocating grants. I can reassure the noble Lord, Lord Patel, that the objectives of his amendment are already achieved in the Bill.

The Bill ensures that UKRI cannot prevent any of the research councils carrying out their duties in their specialist areas by requiring UKRI to devolve its functions to the councils for these activities. This will give the councils the independence they need to pursue their research agendas while also being able to interact as part of UKRI. Furthermore, by bringing the councils together within UKRI, we introduce the opportunity for a strategic centre, but with responsibility to consider broader issues than any council can alone. This strategic focus is a feature that many noble Lords raised at Second Reading.

Amendment 503ZA examines the Secretary of State’s power of direction. Let me reassure noble Lords that powers of direction are rarely used, but given the very large sums of public money that UKRI will be accountable for—some £6 billion—it is proportionate. The Secretary of State currently has an equivalent power of direction over research councils, and our proposals are intended to mirror that. I can reassure noble Lords that the power will not be used day to day to steer UKRI’s operations, nor as an override to the Government’s long-term commitment to the Haldane principle. However, the Secretary of State must be able to deal swiftly with any financial issues arising, for example, from financial mismanagement.

Turning to Amendments 503A and 505C, I welcome the opportunity to restate the Government’s commitment to the Written Ministerial Statement on the Haldane principle made by my noble friend Lord Willetts in 2010 which will apply to all research funding allocated to UKRI. This Statement is carefully balanced and considers important, interrelated and sometimes conflicting factors. It is, however, a policy statement, not a legal document. Obtaining such a balance in legislation through a legal definition of Haldane is not a simple task. However I will reflect on the helpful comments made here today. I hope that noble Lords will accept that if we could write Haldane into the Bill in a non-equivocal and legal way, we would do so.

On dual support, the Bill sets out in legislation for the first time the dual support system for research referred to here as balanced funding. I hope this clarifies any potential misunderstandings about the relationship between the two. Some noble Lords have asked, not unreasonably, why a different description is used. It is because the protection of the two funding streams and the balance between them are both important, and both must be carefully considered by the Secretary of State when making grants to UKRI. I agree with noble Lords that the nature of dual support is anchored in the complementary allocation and evaluation mechanisms of the two funding streams. Amendment 505ZA would replace the need for the Secretary of State to consider both halves of the dual support with a need to consider only one part—the block grant.

Let me reassure noble Lords that Clauses 95 and 96 already put considerable conditions on the Secretary of State’s powers which protect the unhypothecated nature of quality-related funding and ensure that this will continue through Research England. These restrictions are consistent with Section 68 of the Further and Higher Education Act 1992. They protect academic freedom by ensuring that terms and conditions of grants cannot be framed in terms of particular courses of study, programmes of research, appointment of academic staff or admission of students.

The system of dual support sustains a dynamic balance between research that is strategically relevant and internationally peer reviewed, and research that is directed from within institutions. However, the precise modes of operation of the two streams have changed over time, for example through the evolution of the RAE into the REF. Similarly, we should not try to permanently fix what the balance should be between the two parts of dual support. Funding flows are dynamic, and there is no formula or set proportion for the balance of funding across the two parts of dual support. When considering what the balance of funding should be, as now, the Secretary of State will take advice from UKRI and consider issues such as the strategic priorities of the research base and the sustainability of higher education, research capability, and other research facilities supported through the UKRI budget.

I turn to the proposal in Amendment 495J, tabled by the noble Lord, Lord Mendelsohn, that the remit of Research England be extended to cover independent research organisations. At present, research councils accredit organisations to compete for funding if they possess the capacity to carry out research that enhances the national research base. These organisations include hospitals, museums and other public sector research establishments. Those organisations currently receive their underpinning capability funding, similar to the QR block grant from other parts of Government, and there are no plans to change this arrangement.

This debate has covered some of the most fundamental matters about how we undertake research in the UK. I have listened very carefully, seeking to draw on the experience here in this House. With the hope of further constructive dialogue, I ask the noble Lord, Lord Patel, to withdraw his amendment.

[Lord Patel]

My Lords, I thank the Minister for his comments. I was encouraged by his reassurances about maintaining the autonomy of research councils. Putting that on record is satisfactory to me. I am grateful to other noble Lords, and I hope that they have found that their amendments were responded to. On that basis, I beg leave to withdraw the amendment.

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[Baroness Morgan of Drefelin]

My Lords, I remind the House of my interests as declared in the register as chief executive of a medical research charity and chair of the NCRI, as I mentioned earlier.

This is a probing amendment. I apologise that I was unable to attend Second Reading, when I would have flagged up this issue. I took a tumble over the handlebars of my bicycle, so I was not able to be here. I am recovering, although I now have a little lisp.

My amendment probes whether UK Research and Innovation could have a role in ensuring that a particular avenue of research in which I am concerned—research into new indications for off-patent drugs—is fully exploited for public benefit, for patients and the NHS where appropriate.

Research into new indications for off-patent drugs can be funded by medical research charities, research councils or the National Institute for Health Research. It is often driven forward by clinical academics. There is rarely a commercial incentive for pharmaceutical companies to support such investment once a patent has expired on a drug. There is then little commercial incentive for a pharmaceutical company to fund the regulatory activities needed to promote the availability of off-patent drugs in new indications, such as licensing them to be sold and advertised for such a new purpose. Therefore, the new indication, if identified, can remain off-label—or even unlicensed.

Where a treatment is off-label or unlicensed, a number of barriers prevent it being used routinely, and prevent the public investment in that research being exploited. Clinicians can prescribe for this new indication without a licence, but, if they do, they will take on more personal responsibility and, potentially, a greater administrative burden. This can create disincentives to prescribing, even where there is evidence to support the new indication.

There is no timely system in any of the UK nations for these repurposed drugs to find their way, if appropriate, into baseline commissioning. This results in confusion and patchy access across the UK. There are a number of examples, but I will pick up only two. The first example is bisphosphonates. They were originally licensed for the prevention of bone fractures in adults with advanced breast cancer, and subsequently licensed for osteoporosis. This class of drug is now off patent. However, bisphosphonates have been shown to be effective in reducing the risk in postmenopausal women with primary breast cancer of developing metastatic breast cancer, which is incurable.

Because bisphosphonates are off patent, they have not been licensed for this use and there is no clear national commissioning policy. We are all worrying about the really expensive drugs out there but, when used to prevent metastatic breast cancer, these cost about 43p a day. The treatment could save around 1,100 lives if given to the entire eligible population of about 35,000 women a year. If this treatment was commissioned routinely, as has been suggested, it could save the NHS about £5 million per annual cohort of patients.

Another good example of this would be simvastatin, a drug which may represent a real breakthrough for patients with secondary progressive multiple sclerosis. It is a type of statin which was originally licensed for treating high cholesterol and preventing cardiovascular disease, and the patent ran out in 2004. In a recent phase 2 clinical trial it was shown to be effective in slowing brain atrophy in secondary progressive multiple sclerosis by over 40%. More evidence is needed, but phase 3 clinical trials of this drug could show that this is the first treatment able to slow or stop the deterioration seen in that condition. There are estimated to be about 65,000 people living with this form of MS in the UK. The first patented disease-modifying therapies for progressive forms of MS are likely to carry significant price tags, but this off-patent drug would cost the NHS pennies.

So there is clearly a gap—one could say a market failure—here. There could be a role for UKRI to fill this and promote the public interest by the exploitation of publicly funded research into new indications for old drugs. Studying repurposed drugs with public funding is an area of great interest. If we do not get it right it is a double waste of taxpayers’ money: once because of the public expenditure on research and twice because the benefits of that research do not reach the patients, resulting in an opportunity cost for the NHS. I am interested in probing whether there is an opportunity for the new institution to take forward this publicly funded research which would not otherwise be exploited commercially. I beg to move.

[Lord Prior of Brampton]

The repurposing of off-patent drugs is an important and interesting area, not least because it can be great for patients. We are also looking at medicines which are a fraction of the cost of new ones that are still under patent. So the noble Baroness has raised an important issue. She also asked a question earlier about the regulatory aspects of Brexit which I failed to address. Without wanting to duck out of a debate with the noble Baroness, I suggest that she should meet my successor at the Department of Health, my noble friend Lord O’Shaughnessy, to talk about both these important issues.

The Department of Health is working with medical research charities and other stakeholders to examine how evidence showing new uses for existing drugs can be brought safely and more effectively into clinical practice to treat patients. This work applies across a whole spectrum of clinical conditions. The group has made significant progress in designing a drug repurposing pathway to help charities and others to navigate a route through the NHS so that they can see how research can be shared at a national level and then picked up locally, where it can reach the patient. It is probably better if the noble Baroness talks with my successor about the role of NICE and the MHRA and how the changes to the EMA might affect this. It is not something that we would like to include in the Bill. Would the noble Baroness be happy to withdraw her amendment?

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[Baroness Brown of Cambridge]

My Lords, Amendment 490B stands in my name and that of my noble friend Lord Krebs.

Both Amendment 490B and the other amendment in the group, Amendment 505D, in the name of the noble Lord, Lord Mendelsohn, seek to ensure that UKRI and the research councils operate “fair, open and transparent” funding and assessment processes. Such processes would ensure that the principle of supporting excellence wherever it is found is maintained, allowing for change and supporting strong competition and new entrants in areas of research—the very focus of much of the Bill. It aligns with the following description by the noble Lord, Lord Willetts, of the Haldane principle:

“Ministers should not decide which individual projects should be funded nor which researchers should receive the money. This has been crucial to the … success of British science ... Overall, excellence is and must remain the driver of funding decisions, and it is only by funding excellent research that the maximum benefits will be secured for the nation”.—[Official Report, Commons, 20/12/10; cols. 138-39WS.]


This amendment is about ensuring that we fund excellence in our university research system wherever it is found. I beg to move.

[Lord Prior of Brampton]

I thank the noble Baroness, Lady Brown, for raising this issue. I also thank the noble Lord, Lord Krebs.

The vast majority of research council grants are allocated through open and rigorous competition between all eligible institutions, which ensures that the principles of fairness and good use of public money are upheld. While I agree with noble Lords about the importance of open competition, the precise mechanism of how this is put into operation is a matter for the current and future independent funding bodies. This is consistent with the important principles of subsidiarity of decision-making and Haldane, which we have committed to defend through this Bill.

Further to this, these amendments would place an undue restriction on UKRI and the research councils by requiring that all their financial support must be allocated through open competition. This is not always suitable. For example, research councils also have an important role in providing core funding to support unique underpinning infrastructure, such as institutes and facilities. While I agree that the majority of council funding should be allocated through open competition, I feel that such a strict requirement is not consistent with the important principles of subsidiarity of decision-making and would hamper other important areas of council activity. I therefore ask the noble Baroness to withdraw the amendment.

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[Lord Willetts]

My Lords, I recall receiving the letter about the James Hutton Institute, but after so many Members of the House have spoken so eloquently about that case, I would like to make a wider point about the clause. There is a long-standing problem that the Minister will wrestle with of departmental R&D budgets being cut back and attempts always to put on to the science budget policies and budgetary responsibilities that should lie with individual departments. I am sure that that is the back-drop to this case. But with the new UKRI, there is an opportunity to look more widely at the kind of research institutes that are funded out of public money and on what terms.

We have heard examples this evening of the dual funding structure, on which we pride ourselves. However, the dual funding regime actually has some significant omissions, because it is research council funding for research institutes belonging to the councils and specific projects, and, secondly, a funding stream for universities. Those that miss out are research bodies that are not part of universities, and quite possibly not even part of the conventional public sector, that particularly need capital funding. Agencies such as the Welding Institute, now called TWI, or NIAB, the National Institute of Agricultural Botany, are charitable bodies that may get individual funding from a research council for a specific project, but they have not historically been able to receive significant capital support for growing their facilities. These are the kinds of issues that UKRI will wrestle with.

It would be helpful if the Minister could say that as UKRI is set up with its new scope, it will be within its power to look at these sorts of issues. It may find excellent research institutes for which, because of the size of its capital budget, UKRI can provide some kind of capital investment in a way that does not fall neatly in the dual funding arrangements that came before. That is a good example of what one might hope will be extra flexibility in the new arrangements, just as we have heard from the Bench opposite about the need for flexibility in another way.

[Lord Prior of Brampton]

My Lords, I have to start with the confession that the James Hutton Institute is just a name to me. I confess my appalling ignorance on this subject. I need to research it. If I could, I will investigate the particular circumstance relating to the James Hutton Institute and then write to the noble Lord. I hope that that will be acceptable to him. I am sure it is a world-leading institution but, as I said, I have not visited and am not familiar with it.

[Lord Watson of Invergowrie]

The Minister is very new to his post and there is absolutely no question of reproach here. What he has suggested is acceptable. However, the point made by the noble Earl, Lord Selborne, is an important one. He has identified a particular issue with the clause, and if the Minister could refer to that in his reply, it would perhaps open up an avenue for the matter to be returned to on Report.

[Lord Prior of Brampton]

Let me give the noble Lord my response. If it does not cover exactly the points that it should, I will pick it up outside here and write to my noble friend Lord Selborne and the noble Lord. I will also try to set my response in the context of the comments made by my noble friend Lord Willetts.

The clause will make sure that UKRI is able to carry out one of its primary functions: to provide individuals and organisations with financial support to carry out research and innovation.

The noble Lord, Lord Watson, raised questions about other research organisations’ eligibility for funding. Many of these organisations are currently not eligible to receive Research Council funding as their research activity is already separately funded from outside the science ring-fence by other government departments or the devolved Administrations.

The rationale is to keep a clear separation between government funding and challenge-led Research Council-funded science and the capability of science funded directly by government departments. This is compatible with funding excellent science and maintaining the integrity of the funding ring-fence.

Noble Lords have argued that the wording in Clause 88(4) relates to this eligibility policy. I can reassure noble Lords that the clause does not establish or steer UKRI’s eligibility criteria. The wording is intended to ensure that UKRI does not spend public funds unnecessarily where this might result in crowding out private sector investment or funding from other sources. It is one safeguard to ensure that UKRI spends public money wisely. It also enables collaborations and partnership working, as already debated, around research charities.

The Nurse review recommended that research councils should refresh their eligibility criteria to pilot an approach allowing PSREs to become eligible for funding where they put forward high-quality research proposals relevant to their capability in collaboration with a university partner. In response to this, Research Councils UK is looking to pilot ways to include PSREs in a second call for the global challenge and research fund, with funding to start in financial year 2017-18. While the Government agree that we should be making the most of the excellent science being done in PSREs, they also agree with Sir Paul Nurse that government departments should remain the principal funders of capability and funders of last resort for PSREs. I am not sure to what extent that addresses the point made by my noble friend Lord Willetts.

[The Earl of Selborne]

The whole point is that the James Hutton is not a PSRE. We want to deal with independent research institutions which get more than half their money from a government source.

[Lord Prior of Brampton]

I shall have to write to the noble Earl on that matter. I do not have the answer with me and it would be foolish to hazard a guess. The points raised by the noble Lord, Lord Willetts, need a full response as well. On that basis, I beg to move that Clause 88 stand part of the Bill.

Clause 88 agreed.

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[Lord Stevenson of Balmacara]

My Lords, this is an interesting amendment and it has been well trailed since the noble and learned Lord made it clear in a couple of our Committee sittings that he intended to speak on this issue. We are glad finally to get the benefit of his words expressing concern about the current drafting and the need to unpick it. I think the Minister will be at a slight disadvantage because we have been making this point throughout the six days of our deliberations in Committee. We have tried to draw the attention of the noble Viscount to the fact that wherever there is an opportunity, in our view, for the Bill to inflect a sensibility within the structures and operations of the various bodies being established under the new architecture, towards an inclusive way of treating those employed within these structures, it has always been rebuffed. That might be too strong a word, but although it has been played back to us as something the noble Viscount would think about, we have not even managed to get him to reflect on it.

So the Minister is not able to take responsibility for the omissions of the earlier sittings of the Committee, but this is a great opportunity to pick up the point. Given that he has come from a department which must have responsibility for employees—indeed, in his last outing he was dealing with trade union reform and related issues—he will be well aware of the sensitivities that these matters can give rise to. He might want to reflect on the need to respond positively to the noble and learned Lord, who has made such a fine point.

[Lord Prior of Brampton]

My Lords, I am going to respond but I will have to let the noble Lord draw his own conclusions as to how positive the response is. My noble and learned friend Lord Mackay has raised an interesting point and I thank him for that. In the interests of discipline and autonomy, and respecting the Haldane principle, it is right that the council should have special delegated authority to appoint and to set terms and conditions for specialist academic and research staff within that council and its institutes. There are particular cases where it may be necessary for councils to directly appoint and set terms and conditions for scientists, researchers and other technical staff involved in a research endeavour. In such cases, authority to do so will be delegated to the councils, as per subsections (2) and (3). A relevant example is the Medical Research Council’s Laboratory of Molecular Biology in Cambridge. There is no intention to change such long-standing and effective relationships.

I am sympathetic to the concern raised by my noble and learned friend Lord Mackay and agree that there are many other persons whose expertise is of great importance to the successful operation of a research council. As such, I reassure noble Lords that the Bill enables the continuation of existing practice to hire staff. Such persons will become employees of the councils through UKRI. Therefore, I ask my noble and learned friend to withdraw the amendment.

[Lord Mackay of Clashfern]

If I thought I had received an answer I would be happy to do so, but surely we need to defend these people. I quite understand that this will carry on and I hope it will, but I should like to know what it is that will carry on.

[Lord Prior of Brampton]

To quickly interject, I will look at the issue my noble and learned friend raises. As the noble Lord opposite said, I will reflect further on the matter and write to my noble and learned friend.

[Lord Mackay of Clashfern]

I am grateful for that. I am just sorry that the reflection has not taken place between the time I raised the issue and now, but there we are. We cannot do anything about it.

My noble friend mentioned a letter. I was at a meeting last week with a number of people interested in the Bill and its progress. They mentioned the letters referred to in Hansard. They asked where they could see them. I was not certain, but I assume they are in the Library.

[Lord Prior of Brampton]

I understand that they are.

[Lord Mackay of Clashfern]

I am persuaded to withdraw my amendment.

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[Baroness Garden of Frognal]

My Lords, I will speak very briefly to Amendments 503, 505 and 506, to which I added my name. All simply assert the importance of having regard to the principle of institutional autonomy, which we have raised at various times throughout the Bill. It seems appropriate to reassert the principle of the autonomy of higher education institutions in these three places. I beg to move.

[Lord Prior of Brampton]

My Lords, as with similar amendments regarding the OfS, I assure noble Lords that the Government agree that institutional autonomy is of the utmost importance, and that we are actively considering how to address the concerns that have been raised.

On Amendment 503, Clause 95 already protects institutional autonomy by stipulating the unhypothecated nature of Research England’s funding allocations—and it does so in stronger language than that proposed.

It is unnecessary to make Amendment 505 as the same protections given to Research England’s funding in respect of grants also apply to the Secretary of State’s power of direction. As I have already stated this evening, the power to give directions is limited to financial matters; it is not a power to direct UKRI more generally. This power is similar to that currently afforded by the Science and Technology Act 1965 and does not reduce the autonomy of institutions.

Amendment 506 would be overly restrictive and could also undermine the dual-support system. It would blur the distinction between the two funding streams of dual support and erode, if not end, grant funding awarded on the basis of peer-reviewed project excellence. UKRI and its councils need to retain strategic oversight of the research that they fund, just as the research councils do now. Unlike Research England, UKRI’s remit will not be limited to higher education institutions. UKRI will have a strategic vision for research and innovation across the UK. It will fund and engage with research institutes and facilities, as well as businesses, both domestically and internationally. The principle of institutional autonomy does not apply in the same way to many of these organisations. As such, I ask the noble Baroness to withdraw her amendment.

[Baroness Garden of Frognal]

I thank the Minister for his reassurances and explanation, and I beg leave to withdraw the amendment.

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[Lord Prior of Brampton]

I thank my noble and learned friend Lord Mackay for raising this important matter. I hope that I do better in response to this amendment than I did in response to his earlier amendment. It is absolutely right that UKRI and the OfS should work together in relation to research students and research degree-awarding powers.

Let me first reassure noble Lords that, while the responsibility for all degree- awarding powers will sit with the OfS, UKRI will play an active role in matters relating to research degree-awarding powers. It will be instrumental in developing the criteria and process by which applicants for these powers are assessed. For example, it will work with the OfS to identify suitable expert scrutinisers of RDAP applications. This collaboration will safeguard standards and ensure that assessors with the appropriate skills are core in decision-making. Likewise, on research students the OfS will be the regulator for all students, including postgraduate students, but UKRI will of course work with it when appropriate to provide expert advice in relation to postgraduate students.

As an example, as I said previously in this debate, each year thousands of research students in the UK are supported by research council funding. Putting a legislative requirement on the OfS and UKRI to make such funding decisions jointly would not add value; it would add only bureaucracy. However, having both organisations working together to develop a strategy that ensures that the pipeline for good research students is healthy would add value. The current legal provisions, subsequent government guidance and a healthy co-operative culture within the organisation will ensure that this happens. As the noble Lord, Lord Mendelsohn, mentioned earlier, one cannot sledgehammer a culture into shape between two organisations through legislation. That is why the joint working provision in the Bill has been drafted to be permissive. It will be a key aspect of UKRI and the OfS’s missions to co-operate with each other.

The Government will issue guidance to both organisations that will set out where we expect them to work together. There will be a memorandum of understanding between UKRI and the OfS to set out the detail. The executive teams and the boards will be responsible for ensuring that this important joint working is achieved. The advert for the UKRI board includes the duty of,

“ensuring strong, collaborative relationships are put in place to aid joint working with the Office for Students, the devolved HE funding bodies and other key partners”.

I recognise the strength of feeling on this matter and the Government have listened carefully to the issue raised by noble Lords here today. It is with the assurances that I have given that I ask my noble and learned friend to withdraw his amendment.

[Lord Mackay of Clashfern]

Yes, I certainly propose to withdraw the amendment now, but this is an extremely important point and I do not really think that government guidance can take the place of an Act of Parliament. The idea of granting research degree-awarding powers is an important matter for the national interest. I do not think that it can be left to guidance from the Minister, however wise that guidance may be. It is the responsibility of Parliament to set the structures under which that should happen. I cannot see at the moment how it can be right that the responsibility for that should be in the Office for Students when, standing alongside it in the administration, is UKRI, with all the technical qualifications for research which that implies. I will withdraw the amendment with happiness but in the hope that we can progress this matter further before we have the next session on the Bill. In the meantime, and with regard to the time, I am glad to finish.

Higher Education and Research Bill

Lord Prior of Brampton Excerpts

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

[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.

--- Later in debate ---

[The Earl of Selborne (Con)]

My Lords, these amendments certainly seem uncontroversial in that, if you look at paragraphs 2(5)(a) to (c)—we will come to a proposal later that another sub-paragraph be added—it is clear that these are experiences and expertise that will be highly valuable.

This gives me an opportunity to point out that, under sub-paragraph (c), one of the categories is experience of,

“industrial, commercial and financial matters”—

this is for a member of the UKRI board. This will be particularly essential, because of course Innovate UK will be subsumed as one of the nine councils within UKRI. It will have to have access to a completely new field of expertise, which Innovate UK does not have at the moment, particularly the ability to leverage new financial funds. Otherwise, you cannot expect the great expansion that we would like to see of Innovate UK, if it is to play the critical role in bringing research councils and commercial research into a closer relationship and improving our rather abysmal productivity levels—which, indeed, can probably be improved only by a successful rollout of innovation.

There will be a clash of cultures if UKRI is heavily weighted, as it almost certainly will be, towards,

“research into science, technology, humanities and new ideas”.

There simply must be people who understand the concept of risk, which is a completely different concept to the one that research councils at the moment have. I therefore point out just how critical it will be to have such experience not just on the council of Innovate UK, where inevitably all this expertise must lie, but it must be well represented on the UKRI board. Otherwise, the idea of bedding the two together will be doomed to disaster.

[Lord Prior of Brampton]

My Lords, I agree entirely with what the noble Lord, Lord Mendelsohn, said on the last group of amendments—that culture, not mechanics, is critical in this. That is one of the reasons why we are not being as prescriptive in the Bill as some people would like. That also applies to these two amendments.

I appreciate and understand the intention of these amendments, which recognise the vital role of the board in UKRI’s success. Of course, as my noble friend Lord Selborne just said, it is vital that the interests of research are properly balanced by people with experience in industry who are, as he put it, used to taking risks in the commercial world. The board will have responsibility for leading on overall strategic direction and cross-cutting decision-making, as well as ensuring close working relationships with the OfS and other key partners.

As noble Lords may be aware, an advertisement for board members has recently been published. It specifically calls for individuals with appropriate experience of those areas listed in the Bill but it also specifies that they,

“should be able to reflect and express authoritatively the perspective and views of stakeholder communities”.

I assure the noble Lord, Lord Sharkey, and others that we are seeking the highest calibre of candidates. It will be critical that we find the right mix of skills and experience from a diverse range of backgrounds across the UK and beyond, and it will be important to maintain as much flexibility as possible. The Bill has been carefully drafted, with the appropriate legal advice, to ensure that it will enable this on a continuing basis. I reassure noble Lords that the intent of the amendments is already reflected in this schedule, and on that basis I ask that the noble Lord withdraws his amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very good, sharp little debate. I look forward to the Minister’s response. Given his previous background in your Lordships’ House as a spokesman on behalf of the Department of Health, presumably he will speak with a bit more direct experience than would otherwise be expected. It must be very clear that, whereas in the first two groups of amendments we were talking about the mechanics and he was able to guide us away from any suggestion that the Bill might be amended, he is now firmly up against the fact that the culture is sorted here, but the mechanics are not. We will have to look very hard at the points made, with some force, by all those who have spoken.

We have signed up to most of the amendments in this grouping and support the points made by the noble Lords, Lord Willis and Lord Sharkey. They made it absolutely clear that what we are talking about is completely different from desirable changes. It is about ensuring that the huge success we have seen in the development of research—particularly medical research, but it applies to other research councils—is wired into the structure. We must have an assurance from the Minister that that will be the case.

What was not said, but is available for those who have read the briefings, is that the current situation is also of concern to charities. They feel that they have been slightly taken for granted. If there had not been the change proposed here for UKRI they would probably have come forward with suggestions that they should have been brought in at this stage, if they had not been before, to the Medical Research Council and others. That is not a new initiative; it has been a bit of sand in the oyster for some time. It would be appropriate to do as they suggest. We have already been reminded that the Nurse review made it clear that charities felt that, given,

“the overlap in their interests with the Research Councils, it is important that strong contacts are developed and maintained between the Councils and the charitable sector”.

Indeed, Sir Paul, in the final section of his report, says:

“To facilitate such interactions and to ensure that proper knowledge and understanding of the entire UK research endeavour is maintained, I recommend particular care is paid to ensuring there are strong interactions between the charitable research sector and the Research Councils”.


That is a coded phrase, but it is fairly clear that his intention would be that charities, which make so much of a difference to what we are doing and bringing in patients—they have been doing this for so long and have so much experience to offer—should be hard-wired into what we are about.

Our Amendment 486A is subsidiary in a sense because the primary purpose of these amendments is to make sure that charities are involved going forward. One amendment, which we support, suggests that the mechanics of this should be done by continuing the arrangement that those charities which currently fund jointly with research councils should be able to do so and there should be nothing in the Bill to prevent that. We suggest that, in looking at this, the Government might also look at the question of making sure that the UKRI has that capacity as well and there is no problem in any legal framework about it. We support these amendments.

[Lord Prior of Brampton]

My Lords, this has been a really good short debate. I think we are all in huge agreement about the importance of the charitable sector. I recognise the figures given today: over the lifetime of this Parliament some £6 billion—I think that is what the noble Lord, Lord Sharkey, said—will go into research from charities. That is about £1.3 billion a year, which is huge. As the noble Lord said, it is bigger than the NIHR. We are all acutely aware that research money from charities is absolutely fundamental to our whole research effort in the UK. Even after the increase of £2 billion a year from the Government in 2020, which is a fantastic change, if you compare our research spending with other countries we are still low. We depend heavily on the charitable sector.

I share with all noble Lords the aspiration for UKRI to work harmoniously and productively with the charitable sector. That is why the recent advert for the UKRI board lists engaging with charities among members’ duties and welcomes applicants with experience of the charitable sector. UKRI board members will be recruited on the basis of experience and expertise from across the full range of interests of the UK’s research and innovation system. We are ensuring this happens through our current recruitment exercise. If noble Lords will find it agreeable, we will reflect on today’s debate and see whether we ought to stiffen up that language.

[Lord Stevenson of Balmacara]

We have heard a number of variations on the theme of reflection. Before the noble Lord finishes, could he be clearer about whether he will seriously take this away and look at it with a view to coming back on Report or will he just sit and reflect on it? Noble Lords would be very grateful to know that.

[Lord Prior of Brampton]

I was under the impression that the word “reflection” has a parliamentary connotation and means more than just idly reflecting in the Bishops’ Bar after this debate, instead implying a serious discussion with colleagues and parliamentary draftsmen. Sometimes you can make amendments that satisfy the spirit of everything that has been discussed but they have unintended consequences which can have the opposite effect. When I use “reflect” now or later in this debate, I do so with serious intent.

Turning to Amendments 486A and 491 on partnering, raised by the noble Lord, Lord Sharkey, and the noble Baroness, Lady Morgan, with a third of university research income coming from links with business and charities, their contribution towards the UK research endeavour is clearly very significant. The councils continue to have an important role, encouraging links with universities and through forming their own direct partnerships. UKRI will continue this and ensure public, charitable and private investments in research are aligned to achieve maximum overall benefit. Noble Lords will have noted that UKRI has two specific powers to allow joint working: with the devolved Administrations and with the OfS. This is not just because these are important interactions; there are specific legal reasons why additional powers are necessary, for instance to allow Research England to continue to work with the devolved Administrations jointly on current UK-wide priorities, including developing the next research excellence framework.

In all other instances, however, I can reassure noble Lords that UKRI will not need specific provision to be able to work jointly with other bodies. I can absolutely reassure noble Lords that those partnerships between UKRI or its councils and the charitable research sector, not to mention other research funders, will be in no way impeded by the Bill. I can confirm the statement made by the UKRI chair, Sir John Kingman, in this respect. In fact, the Bill places a duty on UKRI to be as efficient, effective and economic as possible. It is difficult to envisage instances where collaborating with an appropriate funder from the charitable sector or elsewhere would not achieve these aims.

In conclusion, while I agree wholeheartedly with the spirit of this proposal and welcome the opportunity to recognise the important role of charity funders, no additions to the Bill are required to enable UKRI to work with other bodies or to ensure charity sector experience on the board. I ask the noble Lord to withdraw his amendment.

[Lord Sharkey]

Perhaps I might press the Minister for a little more clarity about how these partnerships will take place in future. Will there be any additional requirements in forming these partnerships above those that currently exist? I also asked whether there were any circumstances in which such proposed partnerships would need explicit approval from UKRI. The more general question which relates to that is: what spending decisions, if any, would be reserved to UKRI?

[Lord Prior of Brampton]

My Lords, I think I shall duck that to some extent and write to the noble Lord, if I may. Where money changes hands in these partnerships, there has always been some control from the Secretary of State. Is that not right for a new partnership or a joint venture? Rather than ad lib on this, I had better consult officials and write to the noble Lord.

[Lord Mackay of Clashfern]

I think it is reasonably clear that the research councils will cease to exist as bodies. They will become committees of UKRI. Therefore, it will be impossible for them to form any kind of partnership. What will happen, I assume, is that UKRI will form partnerships, perhaps resembling the partnerships that were there before, but there will be no question of the research councils having any right to form partnerships of any sort whatever. UKRI will have to do all of that.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, this has been a very interesting debate, and I am grateful to the noble Lord, Lord Patel, for introducing it so well, because he covered all the nuances. We have one amendment in this group, Amendment 500A, which complements the points that he was making. It reflects the need to make sure that Research England, in its functions, which would be very narrowly focused on England—including, of course, the north of England—could have the capacity to consult other bodies that perform the same functions in Scotland, Wales and Northern Ireland. That goes with the general grain of what is being discussed.

I have a fantasy that this area was probably dreamed up in the good old days before Brexit was on the horizon, in the confident assumption that there would be no separate Scotland—and certainly no separate Wales and Northern Ireland, if these issues are still in play, as I am sure they are. That reflects a relatively straightforward analysis of what had to be done to pay lip service to the need to ensure that those people not physically located in England were seen to have some influence on the levers that generated the money. But that is such a naive view of what is now such a complicated world that I wonder whether what is in the Bill is sufficient to take that trick. It is one area in which reflection will be required, as the noble and learned Lord hinted, because I do not think that what we have here will do.

I take it as axiomatic that UKRI is not a representative body and that there would be no advantage in making it so—so we are not talking about ensuring that the representation on it is in some way reflective of the various agencies and constituencies that need to be served by it. However, there are optical issues—it has to be seen to be representative in a way that would not have been the case two or three years ago. The idea that, as we heard from the letter of invitation, it has an acknowledgment of the need to recruit from people with obvious experience in an area will probably will not be sufficient. We are talking about the allocation of resources getting scarcer as we go forward, despite the Government’s reasonable largesse, in an environment where it would be very difficult for those bodies that have been funded to seek alternative matching funding. The institutions we are talking about are not all universities, because research is carried out outside the universities—although much less than in other European countries—in research institutes and similar places. Up until now these have been very reliant on external funding and, as we will hear in later amendments, they are feeling a cold wind coming. In this very complicated area we have to ensure that the funds will reach the institutions which are best able to provide the research services which UK plc is looking for and in a way that is seen to be fair.

We have not touched on the fairness issue. The noble Lord, Lord Patel, talked about the need for firewalls to make sure that the funding streams were not absorbed by other pressures and under other arrangements. That is probably a necessary but not sufficient condition and does not need to be in the Bill. However, the idea exists that England, because of the golden triangle effect, has a pre-eminent chance of getting all the funding and that, despite the way in which these funds will be allocated—through the Haldane principle and others—there will be enough room left for those who wish to make trouble about this in, say, Scotland or other places. This is a worry and it will need to be looked at very carefully before the Minister comes back. I do not have a solution to it, but we are not necessarily in the right place at the moment.

[Lord Prior of Brampton]

I thank the noble Lord, Lord Patel, for his speech at the beginning of this debate which helped identify some of the issues. First, I emphasise that UKRI, as a UK-wide body, has a built-in duty to work for the whole of the UK. The prospect of having people on the UKRI board from all parts of England, Scotland, Wales and Northern Ireland does not fill one with much joy. Secondly, I make it clear that these reforms will not affect current funding access for institutions in Wales, Scotland or Northern Ireland. In the other place, my honourable friend the Minister cited the Public Bill Committee evidence of the former vice-chancellor of the University of Dundee and current vice-chancellor of the University of Leeds, Sir Alan Langlands. I hope that noble Lords will permit me to echo that powerful evidence once more. Sir Alan said that,

“given the dynamics of devolution and the fact that essentially we are dealing with four different financial systems and four different policy frameworks, the one thing that has stuck together through all this has been the UK science and research community. The research councils, HEFCE and, indeed, BIS have played a hugely important part in that”.

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.

In answer to the question from the noble Lord, Lord Patel, on capital, the devolved Governments have a capital allocation direct from the Treasury as part of their block grant. Decisions on whether to allocate any of these funds on research or innovation are entirely for them: this will not change. Capital allocated by research councils, as a result of competitive processes, wherever the researchers are based across the UK, will continue to be delivered through the UKRI councils: this will not change. The Secretary of State, when making capital allocations for research, most recently through the capital road map, also makes an allocation for HE institutions to support the sustainability consequences of their relative success in winning research council funding. This process will not change, including the requirement for the devolved Governments to match-fund any allocation by the Secretary of State to the devolved funding councils.

On Amendment 501, I share the noble Lord’s desire that UKRI’s strategy should work for the whole of the UK. The strategy will be the product of a consultation with research and innovation institutions and bodies from across the UK. I also assure noble Lords that this consultation will of course incorporate the views of the devolved Governments. However, I disagree that this should be achieved by requiring the Secretary of State to formally consult with the devolved Governments on reserved UK government policy, which would undermine the whole devolution settlement.

I reassure the noble Lord, Lord Liddle, that we are putting in place extra protections for Research England. This reflects the provisions in the Further and Higher Education Act 1992, which places the same restriction on the Secretary of State in relation to HEFCE funding. The provision protects the academic freedom of institutions in respect of what is taught, what research is undertaken and who is employed. Likewise, I assure noble Lords that Research England will work closely with its devolved counterparts on matters of strategic interest—for example, on the research excellence framework. After discussions with the devolved Administrations, the Government passed a new clause in the other place, now Clause 107, to enable this joint working. Additionally, the current drafting of Clause 91 enables Research England to consult with its devolved equivalents, and we would fully expect it to do so whenever this was appropriate and valuable.

I turn to Amendment 502. UKRI must have flexibility to manage its funds to ensure best value for its resources and to meet our strategic aspirations for seamless administration of interdisciplinary research and joint research and innovation projects. Currently, allocations to funding bodies are discussed with the Treasury, which assesses any Barnett implications for the devolved Governments. This is not changed by the Bill. UKRI will also be bound by rules established for managing public money and a financial accountability and assurance framework which will be set up with the department. These arrangements do not constitute a reduction in current levels of parliamentary oversight. This amendment would place additional duties on Parliament to scrutinise even small variations in budgets that would be required in response to changes to project timelines or to support joint research and innovation projects, for example. This would not be a good use of Parliament’s time, and would hamper UKRI’s strategic agility by significantly slowing decision-making.

I urge noble Lords to consider the advice that the noble Lord, Lord Mandelson, offered at Second Reading:

“I urge UKRI not to be overly prescriptive about partitioning funds between its component parts. We need a system that allows partners to come together across STEM subjects, the humanities and social sciences, and with industry partners, to drive a research ecosystem which goes from blue-skies research to commercial application and impact”.—[Official Report, 6/12/16; col. 624.]


Noble Lords have raised concerns about Research England’s funding stream. I reassure them that the Secretary of State would not agree to UKRI viring money in such a way as to result in a net change in Research England’s stated budget over a full spending review period. This will be made clear in guidance to UKRI.

Amendment 504 would give an effective veto power to the devolved Governments on matters of reserved UK government policy. The power of direction is limited to financial matters and reflects existing powers. The Secretary of State may use it to deal swiftly with financial issues, and it is an essential safeguard to the over £6 billion of public money that UKRI will receive per annum. Since this power is intended to allow the Government to deal quickly with urgent financial matters, I further appeal to noble Lords that a restrictive and drawn-out process of consultation is not the right approach.

As regards Amendment 507, the Government will continue to work with the devolved Governments on research and innovation policy, as they do now. The Secretary of State, as a UK Minister, already has a duty to act in the best interests of the whole of the UK. The Government made an amendment in the other place to ensure that the Secretary of State, when appointing members to UKRI’s board, must have regard to the desirability of including at least one person with relevant experience in relation to at least one of Wales, Scotland and Northern Ireland. No such duty is currently in place regarding existing bodies with UK-wide remits. This strikes the right balance between ensuring relevant experience of research and innovation systems across the UK on UKRI’s board and giving the Secretary of State the flexibility to appoint the best people for these important roles. Here I assure the noble Lord, Lord Storey, that there will be a proper gender balance on the UKRI board. Further wording around the Secretary of State’s duties in this respect would damage this crucial flexibility. With these explanations and assurances I ask the noble Lord, Lord Patel, to withdraw his amendment.

--- Later in debate ---

[Lord Prior of Brampton]

My Lords, I agree that the issue of research council autonomy is of the utmost importance and will take this opportunity to restate the Government’s commitment to the Haldane principle so well described by my noble friend Lord Willetts. I think we will be coming back to the Haldane principle later this evening. We sought to embed it throughout Part 3 of the Bill.

These reforms have been developed following Sir Paul Nurse’s independent review of the research councils, which involved significant consultation with the sector. It would not be for the benefit of research and innovation, or the UK, were we to delay bringing these reforms forward while conducting another review. In implementing Sir Paul Nurse’s recommendations it will be necessary to make changes to current structures—for example to better enable inter-disciplinary research. I am confident that we can undertake these reforms to build on the existing success of our funding bodies.

I reassure noble Lords that the research councils will continue to be vital components of the research and innovation landscape, and through Clause 103 we are protecting their symbolic property and goodwill, including their name, insignia and branding. Furthermore, they will retain their discipline responsibility, operating within a structure that enables greater interdisciplinarity.

Key among Sir Paul Nurse’s recommendations is the need for a single accounting officer. To implement his vision, the governance structure of research councils needs to change and the role of the chief executive will evolve accordingly. Council executive chairs will be powerful positions focused on key strategic planning, performance management and decision-making within their disciplines. The role will have sufficient powers and should be able to attract extremely high-quality candidates. To ensure that this is the case, the role will combine those of the current council chair and chief executive.

I do not believe that a distinct, non-executive chair position is necessary within this new arrangement. Councils will have collective responsibility for strategic, scientific or innovation decisions in their disciplines and they will, for example, continue to take decisions on the prioritisation of their hypothecated budgets within their delegated limits. The UKRI chief executive and board, which of course has a non-executive chairman, as well as the executive committee, will be able to provide challenge and support to inform these decisions. Each executive chair will also be supported by their council. Introducing a non-executive chair and chief executive for each council into this line of accountability would risk confusing accountabilities within UKRI and undermine its key strategic role.

The noble Lord, Lord Mendelsohn, referred to Confucius and the three ways of improvement: reflection, imitation and experience. All my experience—it is possibly bitter experience—is that confused lines of accountability lead to problems. To have chief executives of councils who are accountable to a non-executive chairman, with perhaps a dotted line there and a straight line to the chief executive at UKRI, would build accountability problems into the structure. I was interested by the suggestion of the noble Lord, Lord Broers, of an equivalent to a senior independent director or SID, in a sense imitating corporate governance on the board of a council. That is worthy of further consideration. Perhaps the chair of UKRI might like to discuss that with council members once they have been appointed.

On the proposal for an executive committee, I fully agree that such a committee would provide a valuable forum within UKRI. Yet an executive committee would simply be a matter of good organisational design and governance, and it does not need to be in the Bill. However, noble Lords made an interesting case warranting—I regret to say—further reflection.

Following on from this, I will also address the suggestion from the noble Lord, Lord Mendelsohn, that the executive chairs of councils should be consulted on the development of UKRI’s strategy. I agree wholeheartedly; it is a necessity to ensure the overall coherence of the UKRI strategy and each council’s strategic delivery plan. I fully expect the executive committee, on which all the executive chairs will sit, to play an integral role in this process.

On Amendment 480, we set an upper limit on the number of members on each council to facilitate their effective and efficient operation. I believe that this is appropriate, particularly given that the UKRI board will take on certain functions such as oversight of corporate functions. None the less, the noble Lord, Lord Willis, and others made a compelling case to increase this limit. My noble friend Lady Neville-Jones suggested that there should be no limit at all. Again, that is something that we would like to reflect on.

On Amendment 481, regarding lay representation on councils, I appreciate the intent with which the noble Lord tabled this amendment and reassure him that this legislation does not preclude the councils from appointing lay members, as many currently do. I hope that I have provided some reassurance—

[Lord Willis of Knaresborough]

If you imagine having a chief executive who is also an academic, the rest of the council could then be appointed as academics. Where does the challenge come there to address the issues mentioned earlier about, for instance, the north, Scotland and other organisations?

[Lord Prior of Brampton]

I think the challenge comes from two places. First, the executive chairman would be on the executive committee of UKRI so it will be challenged there. Secondly, there will also be challenge—or support, where required—from the UKRI board. I hope that I have provided reassurance on the proposed governance structures and powers regarding the councils, and ask the noble Baroness to withdraw the amendment.

[Baroness Brown of Cambridge]

I thank the Minister for his detailed response, and in particular for his commitment to the Haldane principle and his assurance about the continued importance of the individual research councils within the new organisation. I also thank the other noble Lords who spoke powerfully in this debate for their contributions in support of both my own and the other amendments.

I really believe that UKRI can be a success but achieving that will need strong, autonomous and diverse councils working together. Governance changes do not need to remove independent chairs. Just about every major company in the world these days operates a matrix structure where people manage dotted and solid-line accountabilities and responsibilities. Managing that is not beyond the very best of science, innovation and business in the UK. I hope there will be some further reflection as the Minister withdraws to his room of many mirrors. I am glad that he will at least consider the proposal from the noble Lord, Lord Broers, of a senior independent director. I wonder if that senior independent director might still grow into an independent chair of a board.

I am delighted to hear that the Minister will also reflect on the size of councils, because they are diverse and will need to be of different sizes. As we heard from the noble Baroness, Lady Neville-Jones, the EPSRC distributes a lot of money across a very diverse collection of engineering, science and mathematics subject areas. It is very important that both the business and academic communities can be present on the council in order for it to make good decisions.

I am also delighted to hear that the Minister will reflect on whether an executive committee should be put in the Bill.

[Lord Prior of Brampton]

I did not say that I thought the executive committee should go in the Bill. I felt that it was not necessary for it to go in the Bill because it will just be part of normal, good operational governance.

[Baroness Brown of Cambridge]

I beg the Minister’s pardon. I misheard him. I thought he said he would reflect on that further and I thought that might mean it would appear in the Bill. Since it is so necessary, I do not see any reason he would not put it in the Bill because it would provide so much assurance to the community about the importance of the research councils. Of course, we would expect such a committee to play a key role in strategy.

As I think the Minister can tell, I am looking forward to hearing more about potential government amendments in this area and I hope that they will not disappoint us. On that basis, I am happy to withdraw the amendment.

--- Later in debate ---

[Lord Bilimoria (CB)]

My Lords, I declare my interest as chancellor of the University of Birmingham and chair of the advisory board of the University of Cambridge Judge Business School. On that note, if I may boast, today the FT global rankings for the MBA came out and the Judge Business School rose from number 10 to number five in the world. This is a business school that has been around for only 26 years, compared with the Harvard Business School, which is over 100 years old. One of the reasons for that success is the excellence of research at a university like Cambridge.

The problem that is overlooked completely by the Bill is that we in this country carry out excellent research despite underfunding it compared with competitor countries. We spend 1.7% of GDP, compared with 2.8% in the USA and Germany. Our research councils, which are world-class and respected around the world, have been doing a great job as autonomous units. One of the main worries about the Bill in universities and research councils is the removal of the autonomy of these institutions. They function well thanks to that autonomy.

I support Amendment 490D from the noble Baroness, Lady Brown, and the noble Lord, Lord Krebs, which would leave out the words “as UKRI may determine”. Under Clause 89, headed, “Exercise of functions by science and humanities Councils”, UKRI would have the right to determine what they do. This is absolutely wrong. Whatever the reasons the Government have given for having a layer like UKRI, many people—the noble Lord, Lord Rees, has argued well against it—have said it is completely not necessary and could be damaging to the whole sector. The analogy made was setting up a body to represent all the world-class museums in London, which are the best museums in the world. That would be completely unnecessary as they are doing a great job on their own. We have to ensure that the autonomy of the research councils is protected, whatever happens, even with the existence of this body called UKRI.

[Lord Prior of Brampton]

My Lords, my noble and learned friend Lord Mackay kindly referred to my usual clarity. I fear, in so far as I ever had any clarity, it is rapidly dissipating as time goes on. Still, I will try to respond to many of the issues that have been raised in this very interesting debate.

I shall start with the governance relationship between research councils and UKRI. I will resist the temptation to address the broader issue raised by the noble Lord, Lord Bilimoria, but I recognise that the UK still underfunds research compared with many of our competitor countries. Nevertheless, the £2 billion increase coming into UK research in 2020 is a significant change. One has to ask oneself whether that would have come about without UKRI being about to become our key co-ordinating research body.

Through Clause 89 the research councils retain their right to make decisions within their respective discipline areas. I assure noble Lords that UKRI must arrange for the seven research councils to carry out their roles and functions within their areas of activity. UKRI cannot prevent any of the research councils carrying out their functions in their respective areas.

I thank my noble and learned friend Lord Mackay for pointing out that references to “humanities” are in fact defined in the Bill, in Clause 105. It makes it very clear that they are defined as including the arts, and references to “sciences” include social sciences.

In discussions in the other place, the Government were clear that funding allocations would be made to each of the councils by the Government in the UKRI grant letter. Delegated authority limits will be set for the research councils to operate independently but additional approvals may be needed, including from the UKRI board, in line with current government best practice.

It is an important part of these reforms that UKRI will empower the councils to work together. The amendments would not prevent UKRI operating in this manner, but would obscure our intent for UKRI to take strategic decisions and facilitate development of the overall direction.

To address the point made by the noble Lord, Lord Mendelsohn, this reform is about far more than efficiency savings or a reduction in bureaucracy. We must deliver these where we have the opportunity to, but not at the expense of the strengths of the current system. However, the removal of the current duplication of back-office functions across multiple bodies will ultimately drive efficiency savings and reduce the administrative burdens placed on research and innovation leaders, freeing them up to focus on strategic decision-making. It will also help to deliver simplified systems and processes for funding recipients.

On Amendments 485C and 195A, I welcome the opportunity to assure noble Lords that UKRI’s core purpose is to seek to improve the UK’s science and knowledge base, and it will seek to improve knowledge and understanding through research. Advancing knowledge is a critical role of the whole of the UK research base, including UKRI and the research councils, and we will look carefully at this matter before we return to the House on Report. I share the aspiration of the noble Lords, Lord Willis and Lord Cameron, for UKRI to support research programmes that can help to shape government policy, ensure resilience and respond to key challenges facing the UK.

On social inclusion, community cohesion and social and cultural well-being, I am certain that the current duty on councils to consider the desirability of improving quality of life is sufficient to cover these.

Electricity Supply: International Interconnectors

Lord Prior of Brampton Excerpts

Thursday 26th January 2017 Lords Chamber

[The Lord Bishop of Chester]

To ask Her Majesty’s Government, at peak electricity demand, what level of supply is expected to be available through international interconnectors.

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

My Lords, Britain currently has 4 gigawatts of interconnection capacity with neighbouring countries, which feeds into the country’s 55 gigawatts at peak demand. For security of supply purposes, we do not count on interconnectors providing their full capacity. For 2021, we expect interconnectors to be able to provide 2.2 gigawatts through a time of system stress.

[The Lord Bishop of Chester]

My Lords, if we are to depend upon 2 gigawatts-plus when there is currently just under 1 gigawatt coming in because of the cold weather on the continent, what contractual arrangements—I underline “contractual”—will exist to guarantee that 2.2 gigawatts?

[Lord Prior of Brampton]

My Lords, I am not sure; I will have to write to the right reverend Prelate on that question. But more generally, the electricity provided through the interconnectors is a flexible supply. It can go either way, into or back from the continent, depending upon differential prices in the two markets. It is not part of our baseload capacity.

[Baroness Featherstone (LD)]

My Lords, 11.6 gigawatts of capacity from interconnectors has been paused because of Brexit. A key factor in ending that pause—as the Minister said, it will give us our security—will be whether the UK remains in the European internal energy market. What priority does this have with Her Majesty’s Government?

[Lord Prior of Brampton]

I do not think there will necessarily be any impact from Brexit on the interconnector market. We are committed to building another 7.7 gigawatts of capacity and, in the Budget of 2016, we increased that to an additional 9 gigawatts of capacity by 2021. We are going to increase the amount of electricity flowing both ways through the interconnector system.

[Lord Oxburgh (CB)]

My Lords, as the Minister is undoubtedly aware, last Tuesday, 17 January, we received nothing through our interconnectors. Wind and other renewables generation in the country made up 2% of our supply and the remainder came from gas, coal and nuclear. Does he agree that to keep the lights on and to ensure security of supply in the country, we must have a minimum amount of dispatchable generation which can meet that demand and, furthermore, that that dispatchable supply is likely to be gas with carbon capture and storage? I declare many non-pecuniary interests in carbon capture and storage.

[Lord Prior of Brampton]

My Lords, I have an app on my phone through which I can tell exactly where all the electricity is coming from at any time. That 2% from renewables is very low; obviously, the wind was not blowing that day. The noble Lord is absolutely right that our baseload is provided by gas, coal and nuclear and I assure him that, in its Winter Outlook Report of October 2016, the National Grid said that we had an electricity margin of 6.6%, compared to 5.1% for the same period last year. There are no current concerns about security of supply.

[Lord Elton (Con)]

My Lords, my noble friend has repeatedly said that the current can flow in both directions. Can he tell us in which direction it will flow when both the continent and this country are in the grip of acute conditions? Will that be determined by market forces, by contractual decisions or by political agreement?

--- Later in debate ---

[Lord Prior of Brampton]

I think that the right reverend Prelate also raised that question and I do not know what the contractual arrangements are. I will have to write to my noble friend if this is not correct, but my understanding is that the flow of electricity to or away from us depends upon market conditions in the two countries—that is, the price differential between them. If there are contractual arrangements, I will write to my noble friend accordingly.

[Lord Grantchester (Lab)]

My Lords, I welcome the Minister to his new responsibilities, and will follow up on some of the earlier questions. The EU norm for interconnection is currently about 10% of capacity and at present the UK has only 4% covered by interconnectors. Can the Minister confirm how many might come on stream between 2018 and 2023, and to what increased capacity? Notwithstanding his earlier answer, what guarantees can the Government give to ensure their status upon Brexit and access to the single energy market in the EU?

[Lord Prior of Brampton]

My Lords, the current percentage of our market supplied by interconnectors is, as the noble Lord says, around 4%. It is due to grow considerably between now and 2021. An additional 7.7 gigawatts of capacity are due to come on stream. As said, under Budget 2016 it may increase to 9 million gigawatts, but that will be post-2021.

[Lord Tugendhat (Con)]

My Lords, does my noble friend agree that security of supply should be a pre-eminent objective of energy policy; that self-sufficiency has an important role to play; and, in that context, that we will continue to rely on fossil fuels for a very long time to come?

[Lord Prior of Brampton]

I agree with my noble friend that security of supply is of paramount importance and that we will continue to rely on gas and, to a declining extent, coal in future. Of course, nuclear will form an increasingly important part of our baseload.

[Lord Broers (CB)]

My Lords, can the Minister reassure us that the Government are going ahead with the small modular nuclear reactor competition that was announced some time ago?

[Lord Prior of Brampton]

My Lords, I am aware of the small modular nuclear reactor programme. I will have to write to the noble Lord to tell him where we have got to in that process.

[Lord Berkeley (Lab)]

My Lords, will the Minister explain his answer on the Government wanting more nuclear? There are reports in France that there is a very serious shortage of power because so many of the nuclear power stations are on stop because they are breaking down—and that is before France starts operating its new one. Is it therefore not likely that there will be nothing coming from the interconnector for quite a few years, so should we not have alternative arrangements for the interim?

--- Later in debate ---

[Lord Prior of Brampton]

My Lords, we are putting in extra interconnector capacity, as the noble Lord knows. The problem in France is that much of their nuclear plant is getting quite old. It is one reason why we are investing more heavily in nuclear in this country.

Important Public Services (Education) Regulations 2017

Lord Prior of Brampton Excerpts

Tuesday 24th January 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

That the draft Regulations laid before the House on 5 December be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

Trade Union Act 2016 (Political Funds) (Transition Period) Regulations 2017

Lord Prior of Brampton Excerpts

Tuesday 24th January 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

That the draft Regulations laid before the House on 5 December be approved.

Motion agreed.

Important Public Services (Transport) Regulations 2017

Lord Prior of Brampton Excerpts

Tuesday 24th January 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

That the draft Regulations laid before the House on 5 December be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

Important Public Services (Border Security) Regulations 2017

Lord Prior of Brampton Excerpts

Tuesday 24th January 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

That the draft Regulations laid before the House on 5 December be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, the Trade Union Act modernises the UK’s industrial relations framework to better support an effective and collaborative approach to resolving industrial disputes. The Act restores a level of fairness to our industrial relations regime and gives effect to the Government’s manifesto commitments. It ensures that strikes can happen only as a result of a clear, positive decision by those entitled to vote, balancing the interests of unions with the interests of the majority of people who rely on important public services. The Act is not about removing rights. Indeed, the Prime Minister in her recent speech on Brexit made it clear that as we leave the European Union and translate the body of European law into our domestic regulations,

“we will ensure that workers’ rights are fully protected and maintained”.

The Act received Royal Assent in May 2016. Today we are debating six statutory instruments, the first five of which implement a 40% threshold for ballot mandate approval for key public service sectors. This means that as well as there being a requirement that 50% of union members who are eligible to vote do so, 40% of all eligible members will have to be in agreement with the proposed mandate. The sixth statutory instrument that we are debating today will set a 12-month transition period before new provisions for political funds come into force. These provisions will allow new union members to opt in to any political fund supported by their union, rather than any such subscription being automatic. The 12-month transition period will allow unions to make the necessary system and rule changes.

We propose that the 40% threshold and the transition period come into force on 1 March. We will also make a commencement order to ensure that Section 11 of the Trade Union Act is brought fully into force on that date. At the same time, we will bring into force a number of other provisions in the Trade Union Act. As I have mentioned, these include a 50% threshold for those eligible to vote to do so as well as additional information about the result of any ballot, two weeks’ notice of industrial action to be given to employers, new requirements to manage picketing, and reporting on industrial action and political fund expenditure. This ensures that the key changes to the way official industrial action is decided on and implemented are prioritised and come into effect as a single package.

The purpose of the ballot thresholds is to rebalance the ability of union members to strike with the interests of the general public, non-striking workers and employers. The Trade Union Act takes proportionate action to redress the balance and ensure that unions in these sectors have a strong democratic mandate before they take strike action.

The impact of strike action is most severe when it takes place in the important public services that people and businesses rely on every day, particularly where it leaves people with no real alternatives when strikes take place. This is particularly unfair when strike action goes ahead without strong support by a unionised workforce. This is why we have introduced an additional 40% approval threshold to apply to important public services such as health and rail transport, in addition to a requirement for a 50% turnout threshold. This is a robust threshold, and rightly so. It is in the interest of the public to know that where they face disruption in these crucial services as a result of strike action, this is because union members have secured a strong democratic mandate. This is also important for union members who were not in support of strike action. I know that some noble Lords have expressed concerns that these reforms do not go far enough. The Government believe that the measures they are putting in place strike the right balance.

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One just has to look at USDAW, which has put a very detailed case together to show how it may be able to implement these regulations within a proper timeframe. It falls outside these provisions. Unfortunately, I do not understand how the Government came to the view that this was how to implement the Trade Union Act. I hope the Minister is able to address these issues because I am sure that things can be done. It is certainly possible to direct the CO to look at different ways forward and to put a schedule together that identifies when unions will adequately be able to cover their obligations while following the rules. It is possible to do this using measures that can supersede or overlay the statutory instruments. I will be very grateful if the Minister can give us an undertaking tonight that he will not put unions in such an invidious position.

[Lord Prior of Brampton]

My Lords, I am not sure if I regret not being in the Chamber when this was originally discussed, but I would have been in a better position to address some of the issues raised if I had. Reading Hansard you do not quite get a sense of the very strong feelings of noble Lords. As it was almost an empty Chamber when I arrived tonight, I thought I might get off rather more easily than I have.

I completely agree with much of what the noble Lord, Lord Mendelsohn, said at the beginning of his speech. When you have difficult industrial relations in companies or sectors, it is very often not just the fault of the trade unions but of poor management, poor contracts and the like. I completely understand that.

I think the noble Lord, Lord Monks, said that an easy way of appeasing Conservative associations is to bring in hostile trade union legislation. I think we have moved on as a party and are now more enlightened. One noble Lord also said this was a debate about nostalgia; that may be so if you look back at the Conservative Party through the eyes of the Labour Party. We may have set ourselves up to be against trade unions but I agree with the Prime Minister that we are not against workers’ rights. On the contrary, the whole thrust of our industrial strategy is to provide decent, well-paid jobs for people throughout the country.

--- Later in debate ---

[Lord Prior of Brampton]

One cannot accept the recommendations until one has seen them. We will look at the review and make up our minds on which parts of it to implement. We cannot give any guarantees now to implement it.

As I said, I shall resist the temptation to get into a debate about the funding of political parties. That is for another time. We have had a debate before about the main issues in the Bill and there is no purpose in going much beyond what I said in my opening speech about the Government’s view. I explained the purpose of the 40% ballot threshold regulations—to rebalance the ability to strike of union members in the health, fire, education, transport and border force sectors with the interests of the general public. That is quite a significant limitation. We have tried to draw the distinctions carefully. I take the point made by the noble Lord, Lord Monks, about the definitional issues; we have tried to be as clear as we can in that regard.

We have also taken a proportionate approach in relation to the political funds opt-out in transition periods. It is reasonable to say that the trade unions knew back in May that we would be going for a transitional period, and 12 months was stated as a reasonable period by the Lords Select Committee. The unions have a way of avoiding the need to hold conferences, through Section 92 of the Trade Union and Labour Relations (Consolidation) Act if they wish to use it. I do not think 12 months is unreasonable: in the Conservative manifesto it was actually three months. I imagine that some noble Lords on the other side of the House were surprised by the Government’s response to the Select Committee’s recommendations. As the noble Lord, Lord Kerslake, said, it was a fair package and that was also the view of the noble Lord, Lord Burns. We have taken a proportionate approach to the political funds opt-in transition period regulations. We took on board the very helpful recommendations of the Select Committee, and these regulations provide for a 12-month transition period for implementation.

[Lord Whitty]

Just to be clear, the Select Committee recommended a minimum of 12 months, subject to a consultation. The noble Lord has now had the consultation, the burden of which is that we need longer than that if we are starting in March. So he is at odds with what the Select Committee intended.

[Lord Prior of Brampton]

We did have a consultation, and it is true to say that our views and those of some of the trade unions were different. We do have a different view: I think the trade unions would like a longer period. But our feeling was that 12 months was a reasonable period.

The regulations support the Government’s commitment to delivering a modernised industrial relations framework to better support an effective and collaborative approach for resolving industrial disputes. I believe they are fair and appropriate, and I commend them to noble Lords.

Motion agreed.

Important Public Services (Health) Regulations 2017

Lord Prior of Brampton Excerpts

Tuesday 24th January 2017 Lords Chamber

Moved by

[Lord Prior of Brampton]

That the draft Regulations laid before the House on 5 December be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.