Higher Education and Research Bill

Baroness Neville-Jones Excerpts

2nd reading (Hansard): House of Lords
Tuesday 6th December 2016 Lords Chamber

[Baroness Neville-Jones (Con)]

My Lords, I declare an interest, given my membership of the Engineering and Physical Sciences Research Council, the Foundation for Science and Technology and the council of Lancaster University.

As the Minister has said, this is an important Bill of considerable scope that makes major changes to the governance of higher education and research in this country. I have to say I do not think the timing is brilliant, given the major uncertainties created by Brexit for higher education institutions, as their income and so much of their staffing is dependent on contacts overseas and on building up the networks that are vital to their intellectual capital and livelihood. I say to the Government that, when the legislation comes into operation, it will be important for them to be very responsive to any signs of unwanted and unintended side-effects and willing to take early corrective action if necessary. We will have to watch the implementation of this legislation.

Many noble Lords have commented on the TEF. In recent years, research has undoubtedly gained a prestige that teaching has not had. I agree with those who have said that teaching is very important to undergraduates. I agree that a TEF is not a bad idea at all, and I am favour of it in principle. The important issue, obviously, is how quality will be measured and whether the measurement will be regarded by those who undergo it as having real value. We need to get that right, but there is too little in the Bill at the moment about how that will be done, and I hope to hear more from the Government about it. I am not enamoured of the “gold, silver and bronze” nomenclature; I do not think it is appropriate. I also fear it will send the wrong signals to foreign students who, not particularly understanding what it is all about, will nevertheless draw the worst conclusions about the quality of institutions in this country compared with elsewhere. The Government need to rethink that.

I want to make one more comment about the university side before I turn to research. It has been argued to me that the power being given to the Office for Students to validate degree awarding is a last-resort power and, if all goes well, may never be used. I remain to be convinced that consciously building a conflict of interest into a governance structure as a way of breaking a potential closed shop is really the way to go about it. I support the idea of opening up the sector to new providers—that is not my beef—and it is already happening, which I welcome. However, lowering standards will not be the answer. I hope we shall hear, in the course of the discussions on the Bill, more from the Government about how it is envisaged that the Office for Students will carry out this duty that it is taking on.

I turn to research. Research and innovation have played a prominent role in the life of this country since Charles II founded the Royal Society and, frankly, post-Brexit their role is going to be nothing short of vital. The new money announced by the Government for research and innovation is a welcome sign of their recognition of this, and I look forward to their plans for an industrial strategy, which we are going to hear about shortly. The contribution that is going to be made by the research and innovation community will be key, so the new structures have to work well from the word go. We are not going to have the luxury of a period in which we can get it all going and working properly; it really will have to work properly from the outset.

I was initially pretty sceptical about the need for so major a change in the set-up to correct what was perceived as a problem of insufficient co-ordination and co-operation between the research councils. Frankly, I am still not sure if I have been persuaded or simply worn down by the arguments that I have heard. However, the Government have made a powerful case for a more strategic approach, though there are some inherent dangers in the degree of centralisation that will now come about with the creation of UKRI and we need to watch that. I also think the proposed design is top-heavy. As drafted, the Bill will, as with the universities, abolish the royal charters of the separate councils, and that affects autonomy. Other provisions will have the same effect. The staffing and size of each council board will be smaller. The membership will be “drawn from the community” and chaired by the chief executive, who will be part of an UKRI committee with other chief executives. We see the building of a top-down structure.

As things stand, the councils have many consultative and communication functions to carry out with academic institutions, and it is vital that that continues. Frankly, I doubt that the smaller boards that we will have if this goes through as drafted will be able to do this properly. I also think it a pity that people like myself, who cannot claim to belong to the “community” as understood in the Bill but who take a close interest in research and innovation, will no longer find a place on a research council board. Perhaps the Government think that is a good idea, I do not know, but diversity is an important attribute on those boards.

The authority of the individual research councils is being considerably weakened. It is hard to avoid the conclusion that the flow will in future be from the top down, not the other way. That carries with it the danger of too much policy-directed research and not enough research freedom and blue-sky thinking. The Government say they uphold the Haldane principle, and it would be good to see that in the Bill. Perhaps the Minister will say more about the specific range of functions to be carried out by the councils and the protections that will be available to protect their autonomy.

Other noble Lords have spoken extremely powerfully about the position of Innovate UK, notably the noble Lords, Lord Broers and Lord Mair, and my noble friend Lady Rock. I am not going to repeat what they said but I entirely agree with it. I would have preferred it to have stayed as a separate institution with autonomous status, and I doubt that its problem is really the relationship with the research community. It must remain business facing and properly funded.

Higher Education and Research Bill

Baroness Neville-Jones Excerpts

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

[Lord Turnberg (Lab)]

My Lords, I too support the amendments. I am afraid I did not speak in the Second Reading debate—I was detained unavoidably elsewhere—so I express my interest as having recently retired from 19 years as the scientific adviser of the Association of Medical Research Charities. I clearly outlived my usefulness there. I am also a member of boards of a number of medical research charities.

It seems incredible that the charity sector is not mentioned and represented in this group of activities. We know that Cancer Research UK funds the majority of research into cancer. The British Heart Foundation funds the majority of research into heart diseases. It has buildings and professors of cardiology. The Wolfson trust funds a large number of research buildings in universities around the UK. Arthritis Research UK funds the majority of research into arthritis. There is also the Wellcome Trust Sanger Institute, where a huge amount of work is going on, supported solely by the research charity sector.

Another element to this is that many of the charities are funded solely by raising funds from the public—from patients and their carers. In a way they represent that constituency. It is a vital sector, yet they are not represented in UKRI. We must correct that. I hope the noble Lord will take these amendments seriously.

[Baroness Neville-Jones (Con)]

My Lords, a number of points have been raised in this group of amendments. I hope when he replies my noble friend the Minister will not lose sight of the extremely pertinent questions asked by the noble Lord, Lord Willis, about the ability of research councils to form partnerships and to do so without having to seek permission.

[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.

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[Lord Patel]

Perhaps I might expand on that. I had always assumed that the research councils will be able to form partnerships. If what the noble and learned Lord, Lord Mackay of Clashfern, just said is true, the Minister needs to emphasise that because it changes the whole working relationship between the research councils and UKRI.

[Baroness Neville-Jones]

Could there not be a delegated authority to do this?

[Lord Willis of Knaresborough]

The Minister asked me to withdraw the amendment but I think we have started a whole new debate—this letter will be very interesting when it appears. I thank the Minister for his response, particularly for nuancing the whole issue of taking something back for Report for stiffening up, which is a very nice phrase and we look forward to this stiffening up on Report. I thank noble Lords for their contributions, particularly the noble Lord, Lord Turnberg. I assure him that he has not outlived his usefulness. There is a great deal of usefulness still to come.

This has been a hugely interesting debate. Two things have emerged from it. First, recognising the importance of the charitable sector for research, particularly medical research, by the councils themselves or indeed UKRI is something that has to be addressed. I hope the Minister will address it when it comes back on Report. Secondly, partnerships are now a fundamental issue. I agree totally with the noble Lord, Lord Patel. The understanding of most people in this Committee—other than the noble and learned Lord, Lord Mackay of Clashfern—was that the councils would be able, as they are now, to make their own arrangements for commercial and other partnerships, either with charities or bodies overseas. If that is not to be the case, a whole new bureaucracy has just emerged from this debate. But I thank the Minister and beg leave to withdraw the amendment.

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[Baroness Neville-Jones]

My Lords, I also support Amendments 479A, 480 and 481A to 481D. I remind the House of my already declared interest as a so-called lay member of the Engineering and Physical Sciences Research Council.

The case for a non-executive chairman has been made extremely cogently by both the noble Baroness, Lady Brown, and my noble friend Lord Selborne, and I hardly need repeat what they have said. Certainly, anyone who has read the corporate code knows that the case for non-executive chairmen is spelled out extremely clearly and cogently and that the notion of having an executive chairman is roundly condemned. The first works much better than the second and avoids conflicts of interest. The two functions are different and should be carried out by different people. Innovate UK will be much stronger in its performance if it is chaired by someone who has a science-related background but is also in the business community. It is crucial that we should make that link.

As to membership, having had personal experience of council membership—I am not the only person in the Chamber so to have done—the EPSRC has one of the bigger budgets and one of the bigger boards. I talked to the chief executive, who told me that there is a limit of 18. He said it operates customarily on about 15 or 16. I do not think the boards need to be quite as large if we have UKRI also on the scene. However, we should be practical about this. All of the members of the board of the council have full-time careers and are doing a full-time job—this is something extra that they do—and some are very pressed indeed. The noble Lord, Lord Darzi, is a good example of someone who does multifarious things. The thought that the board can operate with the subcommittees that it has, with the travel it engages in and the consultations that it has with the universities, and that it can do so without having both numbers and variety of people on the board—businessmen as well as people like myself and academics—is fanciful. It will weaken the total structure if one does not allow the councils to fulfil the remit that UKRI is meant to create and enable them to do.

It is important that the Government do not limit the size of the council to that which would make it difficult for it to be effective. I am not going to suggest a limit—if you want to put in a minimum, put it in—but, on the whole, the figure for the councils, certainly for the larger ones, should be in double figures.

[Lord Broers]

My Lords, I have added my name to Amendments 479A and 481A. I understand the concern about the appointment of non-executive chairs because that would introduce an additional level of management, which is clearly undesirable. I feel that the disadvantages of not having a non-executive chair are quite serious, and they have been put extremely well by my noble friends Lady Brown and Lord Mair and by the noble Lord, Lord Willis.

However, one case has not been mentioned. A non-executive chair becomes absolutely critical when the members of a board feel that the CEO is not performing adequately. In that instance, under the current arrangement, presumably it will have to be the UKRI CEO, who would not have watched that person performing as the members of his or her council would have done. Although the UKRI CEO could consult with the members, the UKRI CEO will not be nearly as familiar with the situation as they are. That is, as I say, quite serious.

A possible solution, but perhaps not a satisfactory one, would be to appoint a senior council member in a somewhat similar way to the senior non-executive directors who have become fashionable on corporate boards. That senior member could act as an adviser to the CEO and perhaps chair meetings where there were concerns that the CEO had a serious conflict of interest.

Higher Education and Research Bill

Baroness Neville-Jones Excerpts

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

[Lord Mackay of Clashfern (Con)]

My Lords, it is perhaps important to point out that Innovate UK is to be henceforth merely a committee of UKRI. The scope of its work is set out in Clause 90(1), which states:

“UKRI must arrange for Innovate UK to exercise such functions of UKRI as UKRI may determine for the purpose of increasing economic growth in the United Kingdom”.


So I do not think that there is any sense in which UKRI is autonomous. Innovate UK will have no employees of its own—they will all be employees of UKRI—and it certainly will not be autonomous in any sense that I can understand. The question may be whether the result that these amendments are aiming at can be attained only by taking Innovate UK out of UKRI and giving it a separate status. There may be disadvantages in that as well, but, as presently set out in the Bill, Innovate UK is a mere committee of UKRI—and that is not a particularly elevated status. In many aspects—not all, because I have just referred to a special aspect in the clause that I mentioned—it is being treated pretty much as a part of UKRI.

[Baroness Neville-Jones (Con)]

My Lords, I support Amendments 482C, 495C and 495D. I note what has just been said about the committee status of Innovate UK, and many noble Lords—I include myself—do not regard that as a satisfactory way of running things. We would much prefer it to be a separate entity. If the Government are unable somehow to strengthen the role of Innovate UK within the present structure that they have chosen, there will be a real problem that we will have to tackle on Report.

The noble Lord, Lord Mair, said many of the things that I wanted to say, but much more eloquently. He made the absolutely vital point that the functioning of Innovate UK is crucial to the attainment of the Government’s industrial strategy. If that is the case, it will need the powers to enable it to do that. The purpose of Amendment 495C is to give Innovate UK the right initiative that is needed if it is to achieve its objective. Amendment 495D emphasises the central role of Innovate UK in promoting the commercialisation of research. It has to be able to enter into business relationships which underpin that; thus we come back to the problem that has been identified.

The Minister’s remarks will obviously be very important here. If the language is not right, perhaps it can be fixed, but this is an issue of fundamental importance on which I would like to hear what the Minister has to say.

[The Earl of Selborne (Con)]

My Lords, the noble Lord, Lord Mair, referred to the short inquiry that the Science and Technology Committee undertook earlier this year, just as the Bill was introduced in the other place. It was clear from the evidence that we took from organisations such as BP, the Royal Academy of Engineering and others that they were rather taken by surprise by the way that the Government had implemented the Nurse review in this respect. After all, the Nurse review had been asked to look at research councils. However, when they had participated in the consultation, they had not thought to give their view on Innovate UK because they had not realised that it was part of the agenda. If you read the Nurse review carefully, you will see that it does not make a firm recommendation on this; rather, it states that this is something on which more consultation is required, although there would clearly be benefits from bringing Innovate UK and the research councils closer together—as I think we all accept.

Equally, there are real dangers, which have been referred to. In the letter that I wrote on behalf of the committee to the Minister, Mr Jo Johnson, we said that, if this is to work, the issues of autonomy, funding and business focus simply must be addressed. During any number of discussions that we have had, I have been prepared to give the Government the benefit of the doubt on this. I am sure that while the present Minister and the acting chairman are in their roles, they will be very sensitive to the need to keep this organisation business focused. However, we have to make sure that it survives the test of time when very different people are in those roles.

As my noble and learned friend Lord Mackay pointed out, autonomy is a real issue. We are talking about what is effectively a subset of UKRI, and UKRI has the last word. That is why, on one of the earlier groups of amendments, I suggested that it was absolutely critical to have on the UKRI board people who understood the Innovate UK agenda. That is not to say that they should be in a majority but, if these two cultures are to succeed in working together, it is clearly absolutely critical that there is a great deal of cross-representation and certainly a strong degree of business understanding, expertise and experience on the UKRI board, as well as on the Innovate UK council.

Again, I am absolutely certain that the issue of autonomy can be addressed by an understanding between UKRI and all its councils. The more I heard the earlier discussion, the more alarmed I became at how the councils could potentially be circumscribed. Clearly, that would be unhelpful. There would be a lack of ability to respond with the sort of flexibility that we heard about in relation to charities. We have a lot to learn from them.

Of course, if the Secretary of State is ultimately responsible, he will probably not abdicate all financial responsibility—I accept that—and, if I may say so, I think that the noble Lord, Lord Mair, is asking a lot if he wants to be free of all such restriction. However, again, there can be delegated powers. I hope that the Government realise that if they are going to set up UKRI with its council of Innovate UK, with a much enlarged brief, they will have to consider a completely different remit.

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

My Lords, I 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.