EU Report: Effectiveness of EU Research and Innovation Proposals

Lord Young of Norwood Green Excerpts

Thursday 21st November 2013 Lords Chamber

[Lord Young of Norwood Green (Lab)]

My Lords, I felt inhibited participating in this debate even before that tour de force, delivered by my noble friend Lord Hunt. Like all other participants, I congratulate the committee on its comprehensive report, which has initiated a debate that is definitely one for the connoisseurs but is fascinating and wide-ranging. Everyone who participated in the debate recognised the challenge facing the UK in an increasingly competitive global marketplace. As my noble friend Lord Haskel said, we need a strategy—a coherent strategy—that enables us to succeed by harnessing the undoubted talents that exist in both higher education and public and private enterprise. Importantly, the committee report focuses on the question of SMEs.

As was said a number of times during the debate, higher education managed to get a 61% share of the budget, putting us among the top participating nation states. We need to replicate that success with private commercial organisations. Are we ready to take advantage of the new framework programme, Horizon 2020, which starts in 2014?

In preparing for the debate, I looked at the joint statement, Fuelling Growth: Research and Innovation as Drivers of UK Growth and Competitiveness, published by the Academy of Medical Sciences, the British Academy, the Royal Academy of Engineering and the Royal Society. It says that although we are world leaders in research, that cannot be taken for granted, as international competitors are catching up. It recommends that the Government,

“enhance its support for research and innovation with a long-term vision for the UK’s knowledge economy”,

and build a 10-year investment programme for R&I,

“at the heart of its emerging industrial strategy and plans for growth”.

A couple of other areas are well worth quoting from. One area the statement focuses on is the question of developing skills if we are going to achieve the kind of objectives we want to see in research and innovation. It says:

“Global competition for excellence makes it essential that the UK remains an attractive place for the most talented individuals and teams to work, whether they are from home or from elsewhere in the world. Excellent people will in turn attract commercial investment. With over one million new science, engineering and technology professionals and technicians required by 2020, the supply of high quality STEM skills in the UK will be even more important than it is today. The UK’s ability to nurture domestic talent and attract the best international researchers will be an important component of the response to this shortfall”.

I would welcome the Minister’s response on that particular issue. The statement ends with a plea:

“We advise the Government to develop a stable ten year investment framework for research, innovation and skills in consultation with the research communities in academia, industry and charities. This framework should sit at the heart of its emerging industrial strategy and plans for growth”.

Does the Minister agree with those two key aspects of the joint statement? Do the Government support the views in the report?

I am very interested in the Government’s response on assisting SMEs with what are defined as the national contact points. The committee welcomed the reform of these national contact points. The Minister writes that the national contact points will, collectively, be better resourced and a majority accessible on a full-time basis. Following up on the committee’s concern about engaging businesses and SMEs specifically, the Minister states that national contact points will offer:

“A stronger central support … especially to businesses”.

What exactly does the Minister mean by that? Outcome rather than intention is of paramount importance and it is hoped that this will contribute to increasing the share of participants coming from business and industry.

Many universities have associated business parks and science parks, and provide facilities for SMEs and start-up businesses; I have visited a few of these myself. Surely these business hubs should be the ideal place to encourage participation of SMEs. Unless I missed it, I did not see any reference in the committee report or the Government’s response to the role of local enterprise partnerships, which, after all, are the Government’s replacement for RDAs—something that we did not agree with but they are with us. What is the role of local enterprise partnerships in achieving the Horizon 2020 objectives? Surely they should be a key part of the jobs and growth strategy for encouraging SMEs to participate. The point made by my noble friend Lord Brooke about the role of the Federation of Small Businesses and chambers of commerce in assisting this process is also very important.

My noble friend Lord Haskel made the point that this funding is vital because in part it compensates for the failures in bank lending. Another important point was made by the noble Lord, Lord Kakkar, in his introduction, when he pointed out that innovation is at the heart of what Europe requires, and I liked his suggested new definition of countries as either innovation-rich or innovation-poor. It is an interesting viewpoint.

Throughout this debate we have seen the importance of funding. Although everybody has welcomed the increase, the point has been made a couple of times that if you compare the European contribution of something like €79 billion with the Chinese one, it is a cause for concern. When it comes to how long it takes for money to be received through this project—whether you take the 340-day average or the worst-case scenario that the noble Earl, Lord Liverpool, pointed to—surely that is a concern, even if one accepts the complexity of some of these projects. My noble friend Lady Warwick pointed out the importance of the funding and that we are nowhere near to meeting the Lisbon goal of 2% of GDP.

Another interesting point was made by my noble friend Lord Brooke when he talked about the UK attitude to Europe and whether we like it or not—and many of us do not—the fact that we now seem to have such a sceptical or ambivalent attitude towards Europe is being reflected in the European attitude towards us. He quoted the worrying statistic that now only 4.5% of EU officials are British.

The questions that the Minister has to address, apart from the specific ones that have been put to him by noble Lords, are: do we have a coherent strategy? Do we have a long-term vision for research and innovation? Do we have the policies that will encourage SMEs to become more active? Can we ensure that the policies we have will enable us to make the maximum use of the Horizon programme? I look forward to the Minister’s response.