Advanced Research and Invention Agency Bill (Second sitting)

Daniel Zeichner Excerpts

Wednesday 14th April 2021 Public Bill Committees

[The Chair]

Next we have Daniel Zeichner, followed by Jerome Mayhew.

[Daniel Zeichner (Cambridge) (Lab)]

Q It is a pleasure to serve under your chairmanship, Ms Cummins. I thank the witnesses for what has been an extremely interesting insight so far. I represent the city of Cambridge, where, as you can imagine, many of these issues are a frequent source of discussion. From what I have heard so far, I take it there is not one model of ARPA. You have a number of models, depending upon the different sectors. I heard Dr Highnam say earlier that DARPA had not been replicated anywhere else, yet we are trying to model our system on what you have got. How much does it depend upon the context, not just within the sector and whether it is ARPA-E, ARPA-H or DARPA, but in the wider system? We heard from witnesses earlier today about other aspects of the ecosystem—public procurement, things such as the Small Business Research Initiative, which I understand we have a much less successful version of in this country, and having a single client or defence system. If you do not have clarity on any of that, what would be the consequences? Perhaps I could start with Dr Highnam.

Dr Highnam: I said in my previous comment that I am aware of only one example that replicated DARPA intact, and that was the intelligence ARPA in the US, where I served for about six and a half years. It is very true to DARPA as it stands. Others depend on context, which includes the context of discussions like this one where there is certainly the framing of an organisation. It is being pulled and pushed and moulded by many different forces and interests. What you get coming out will, I am afraid, naturally reflect that. In intelligence here, it was a straightforward thing. We wanted something very similar to DARPA. A number of us had come from DARPA and knew what that was.

[Daniel Zeichner]

Professor Azoulay?

Professor Azoulay: ARPA-E is not identical to DARPA, but we certainly try to inspire it to a very large extent. I think the difficulty here is that it is a tight bundle of practices that fit together, so one open question is to what extent can you pick and choose in terms of the menu of practices? What can you undo until you in some sense undo the entire model? It is important for us to level with you that we do not really know the answer to this question, because fundamentally there has been one DARPA, and that is the one we have been able to see for 60 years. One possibility that we might want to have in mind is that it does not take a lot of changes in the model to undo its effectiveness.

[Daniel Zeichner]

Dr Dugan?

Dr Dugan: I agree with what Pierre just said. I might use an analogy if you will permit me. I think most would agree that Guardiola is a great coach. We could ask him how he has achieved the track record of wins and successes that he has. How has he envisioned a new style of play, constructed a team, coached the players, made decisions on the way in? He could write down some of the principles associated with that. On a day-to-day basis and across the duration of a season, he makes countless decisions, which are in service to these basic principles that create such a winning team. It is those detailed decisions that come from intuition and experience—the mastery of the practices and principles as Pierre would say—that are important to success.

At Wellcome Leap, for example, our first rule is to make as few rules as possible. Part of that is recognising that we have these practices and principles and we need to adjust a lot as we go along in the process. In setting up Wellcome Leap, I think Wellcome did a very good job of saying, “We are going to do the few things that we think are central. We need independence and governance. We need an experienced team to lead it. We need to free it from a profit motive, and then we need to let it do what it does.”

So there is this combination of a few principles that we can write down for you and then many other things that are about the practice of that come from the intuition and experience of leading these types of programmes to breakthroughs.

[Daniel Zeichner]

Q Just to come back on one point there, you say free it from the profit motive. I was quite struck through all of this by this stress on public service and honour, which is wonderful—perhaps we are struggling a bit with that here at the moment. Who owns the intellectual property on all of this? It is a complicated question. Is there a simple answer?

Dr Dugan: The organisations that create the breakthroughs own the intellectual property in the case of Wellcome Leap, and that is usually the case in DARPA. Now we usually also have a backstop, which says we have march-in rights if the entity either chooses not to commercialise it or to transition it to impact. Then we would go and say, “We need to take this in service of national security,” but at its core the intellectual property belongs to the inventor of the breakthroughs.

Dr Highnam: One addendum to that is that we have a notion here of Government purpose rights. Yes, the invention is owned by the creator, but if you receive DARPA funding and the appropriate terms are in the paperwork and the arrangement that we have with you then there are limited rights available to the US Government for those inventions.

Dr Dugan: Just to clarify what Peter is saying, those limited rights are about making sure the invention can be practised in service of national security.

[Daniel Zeichner]

That is really helpful. Thank you.

[The Chair]

I am afraid this will probably have to be the last question to this set of witnesses. I call Jerome Mayhew.

--- Later in debate ---

[Stephen Metcalfe]

Yes. You said that we have to build an ARIA that encourages that kind of collaboration. What is your advice about doing that? Where are the risks and rewards from an employer’s point of view?

Felicity Burch: One of the challenges is making sure that ARIA has its own clear purpose, so that businesses know why they would second people to it. The truth is that we have a lot of other institutions in the research/innovation landscape, as we have already referred to throughout this conversation, and as you have heard from the previous panels today. However, once ARIA is up and running, has a clear mission, and has some really great people on it who you can point to as being leaders in their field and really pushing the boundaries—when you can tell a clear story about what the organisation is set up to do—it will become a lot easier for a business to make the case that, “Yes, it makes sense for me to put a person on there; they are really aligned to what I am doing,” or not.

[Daniel Zeichner]

Q A few years ago, we were told that there was no magic money tree. That seems to have been parked temporarily, but I fear that it will return at some point. I detect enthusiasm from all of you for this project, but how much is your enthusiasm dependent upon the money being genuinely new and additional in terms of the wider research environment?

I have a second question. Through the day, we have heard from different witnesses mainly a view that there needs to be a mission but also some difference of opinion as to who should set that mission. Who do you think should be setting it? Maybe I can go to Sir Adrian first.

Adrian Smith: In terms of new money or old money, I think the key thing is really to look at the big picture. The aspiration—the 2.4% aspiration—is aiming at the average of the OECD, which has probably crept up now in any case to 2.5%. In the meantime, the United States is around 3% and Israel is around 4.7%. The big picture stuff is the total amount of investment in the R&D landscape. So I think there would be less warm support for this body if it were at the expense of that wider investment.

As for who sets the mission, I think it is an extremely interesting question. There is an interesting tension between what most of us would see, which is that if this agency is to have real street cred, it needs tremendous operational independence, but on the other hand the thinking behind it is that the mission will be of great benefit to the UK. Clearly, therefore, Government and a multitude of stakeholders have an interest in what the mission will be, and how the leadership of the new organisation will satisfy the desire on the part of all those stakeholders to have a finger in the pie of influencing the mission. I think that will be very interesting to see.

[Daniel Zeichner]

Q That sounds like a gloriously British response to me, but I agree with it. Felicity?

Felicity Burch: Similarly to Adrian’s response, support for this body comes alongside the fact that it is new money, and we need the new money in order to grow the level of R&D in the UK. The level of Government spending on today’s level—obviously, there are longer-term plans, but at today’s level—would not hit the target. I think we do need new money in the system, and it makes sense that ARIA is one of the places to which that money is directed. But we do not want to undermine other institutions, such as UKRI and Innovate UK, and catapults in particular are hugely important to businesses. We do not want to undermine that, and this is definitely about building up a coherent system.

One other thing to note is that we have tried to create something that looks like ARIA quite a few times before. For a long time, there has been a sense that we needed to do something like this. Initially, when what was the Technology Strategy Board was founded, people talked about it looking like a UK version of ARPA. When we established the industrial strategy challenge funds, people also talked about them being a UK version of ARPA. The difference with ARIA is the legislative approach and the creation of an independent body, which means we are genuinely doing something different. This is a really exciting way to leverage some of the Government’s R&D investment. As to who precisely sets the mission, I understand that BEIS would like the ARIA team to do that. There is a lot of sense in that, but they cannot do that in a vacuum; it needs to make sense to a wider science innovation community, and to society in fact. That comes back to the importance of a long-term market and the social issue that we might want to address with ARIA. We will be looking out for it to do those things.

[Daniel Zeichner]

Sir Jim?

Professor McDonald: Thank you. Coming back directly to the question, this must be new money to enhance the credibility of what is sought to be done. As you know, we said earlier that the UK’s research, science and innovation base is an absolute national asset. We cannot exploit that research base if it is underfunded and not attracting the very best talent with the very best facilities. This has to be additional investment to complement existing funding.

I agree with some of the implicit elements of your question that that investment must sit within the system perspective, so although this will be a new funding model that brings a new type of leadership into the research and innovation landscape, there must be plenty of dialogue between ARIA leadership and UKRI, BEIS and other entities that Adrian mentioned. There might be some competition, which would be healthy, but there may be some articulation in complementarity that will emerge if we are doing the right things. It needs new money and long-term commitment.

As to who should lead this, I buy into the model of greater independence and autonomy. The customer will exert influence; to go back to the comment about the customer being a Government Department or Departments, and industry as well, they will have an influence and try to prioritise where the CEO and the team and board will take the direction of travel for ARIA. I would like to see it exercise independence and autonomy going forward.

This may have been raised earlier, but I think public communication will be critically important. Let us have the public understand why this is important, and give a voice to the science, engineering and innovation community. They should be accountable for ensuring that the idea is understood by the nation. I am not suggesting that the public would be directly involved in the agenda, but that public engagement would raise awareness of what science innovation is all about and turn some of the Government’s superpower commitments into a reality for individuals out there in society.

New money, please, and a long-term commitment, and let us give this entity independence and autonomy but the accountability that sits behind it should respond to our customers’ drive for new technological solutions. That should be done in a way that drives value into the UK economy.

[The Chair]

Thank you. We will have a very quick sneaky question from the shadow Minister, Chi Onwurah.

--- Later in debate ---

[The Chair]

Thank you, Minister. Daniel Zeichner.

[Daniel Zeichner]

Q Thank you, Chair. Welcome, both of you; it is good to see you. I have been struck throughout today by the evidence that we have been looking at an American model, trying to learn lessons from it and importing it into what looks to me like a rather different environment and landscape here. I would like both of you to ignore all that we have heard today and answer the question I would ask at the beginning, which is: what is the big problem facing the UK R&D system? Do you think ARIA, as it is presented, can be bent to fit whatever problem it is that you think needs to be solved?

David Cleevely: What is the big problem? The big problem is that we do not have procurement systems that buy enough stuff from small and medium-sized enterprises. Half the employment growth in this country comes from 7% of the SMEs that are fast growing. If you look at a place like Cambridge, as you well know, Daniel, we have 20 $1 billion companies. Companies that have come into existence that were not even a glimmer in somebody’s eye in 2014 and are now about to be floated.

That is the kind of process we need to understand, and why we do not have more of those successes. In particular, if I may blow Cambridge’s trumpet, we need to understand why we have those things happening in Cambridge, and why they are not being replicated elsewhere. From my personal point of view, having sold a company to an American buyer last November, which, as you can imagine, was an interesting experience, it was because it had innovative technology. We were absolutely the best in the world and hardly anybody from the UK bought anything from us. The majority was being bought by Americans—American defence and security stuff.

It is a great disappointment to me that we do not have the ability to nurture and bring on. The way the Americans do it is that they have that complete system. They have an awful lot of money and effort going into procurement. Somebody spoke earlier about the infantilisation of Government Departments, and the way in which that expertise is not there. I will mention engineering again here. We need more engineers in Government, who can take those kinds of decisions and understand what we need to procure to be able to do things. That strikes me as so important. It is not to detract from AREPA, as we might call it, but in order for it to be as functional and effective as possible, we need to look at the entire system.

Bob Sorrell: That was a great answer from David. I will just pick up on a couple of things. I go back to the fundamental issue of matching the research that is coming out of ARIA with the market pull for it. It is important to define what the challenges are up front. The role of public procurement, as David raised, is critical, as is supporting the growth of the so-called Mittelstand—the mid-sized companies—and understanding what is behind the culture that leads to so many of those companies being sold at around the £50 million level, as opposed to growing to the hundreds-of-millions-of-pounds companies that they could be. How do we support them through that whole growth cycle? There is much more that I think we could do in that space.

[Daniel Zeichner]

Q To summarise slightly—I do not want to become a grim AREPA—what we need is not only an ARIA that can do the things that we have been talking about today, but possibly other things alongside it to make it work. Would you agree with that?

David Cleevely: It is fine tinkering around with the engine and putting another turbocharger on it, but if the chassis, the transmission system and the wheels will not deliver what you need, all that energy and power is going to go somewhere. In an international system, all we will do is to help to accelerate other countries that are willing to buy our stuff from us. That is fine; I am all for international co-operation, but I really would like to see a bigger contribution to economic growth and productivity improvements in the UK.

Bob Sorrell: To pick up on what David is saying, ARIA is part of the solution. We need all the things that we have, effectively, to put us in a position to lead against the challenges that we face. We would not be in this position if we did not have such a brilliant research community in the UK to start with. It is fantastic that we are having a conversation about how we capitalise on that. It is not just £800 million for ARIA, which is just seed money to start it, but the investment in the overall infrastructure that will make many of these things possible. We need to commit to doing that as well, if the UK is really going to lead and be the test bed and demonstration centre for the technologies that it can lead in and deploy globally.

David Cleevely: I think Bob and I are absolutely in agreement on that.

[Chi Onwurah]

Q If nobody else has a question, I will take the opportunity to come back on that point, particularly on procurement. I remember having a great deal of difficulty persuading the Prime Minister that the American Department of Defence was far better at buying stuff from UK small businesses than the UK Ministry of Defence, as the figures show. What do you think we could do, or what should Government be doing, to enable, require or ensure that ARIA, or AREPA, better supports small business growth and, at the same time, addresses the issue of market pull?

David Cleevely: The general thrust of what AREPA—if we are going to adopt that word—is trying to do is right. There are a number of things going on in bits of defence, for example. You have DASA and various others playing around with projects within the different services, for acquiring different kinds of technology. I think the phrase “a bit more coherence” was used by Felicity. I think we need to understand what the map of that innovation system looks like.

I am pretty convinced that people are pretty smart—they will make the right decisions. You just need to give them the right structure, hence my point that serendipity does not happen by accident. These kinds of things happen because you have constructed systems and processes so that people bump into and talk to each other, and will exchange ideas. ARIA is fine as it stands, but it sits within quite a complex system. I would like to see much more recognition within Government about how complex that system is, and how it actually operates. I completely agree with you that it has been far easier, in all my companies, to sell stuff into the United States—particularly into the United States defence market—than it has ever been to sell into the UK.

Bob Sorrell: To build on that, I did a couple of terms at Innovate UK and we tried stimulating public procurement during that period. I think a lot of it is about the culture and getting it right, to allow people to invest in those smaller companies and different technical solutions, to move them away from the existing ones. We got that to work during covid. We managed to get it to work, and we managed to get ourselves investing and procuring things in a different way. That is why I keep coming back to that and looking at what we did differently then that allowed people to make those different choices. I think we have to take some of that learning to see how we can get public procurement to work in a better way going forward.