EU Membership: UK Science

Earl of Selborne Excerpts

Thursday 23rd March 2017 Lords Chamber

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[The Earl of Selborne]

That this House takes note of the report from the Science and Technology Committee A Time for Boldness: EU Membership and UK Science after the Referendum (1st Report, HL Paper 85).

[The Earl of Selborne (Con)]

The report A Time for Boldness, which is the subject of this debate, is a follow-up to the April report of the Science and Technology Committee on EU Membership and UK Science, which explored the principal links between EU membership and the effectiveness of United Kingdom science. I first thank our committee clerk Anna Murphy, our policy analyst Daniel Rathbone and our specialist adviser Professor Graeme Reid, who once more gave valuable help to the committee.

Our previous report noted that a large majority of the UK science community highly valued European Union membership, but with some important qualifications. They particularly valued the ease with which talented scientists could move between member states, thereby enhancing scientific collaboration, the advantages—in most cases but not all—of harmonised regulations and the ability to access substantial funding.

In the light of the referendum result, the core question we resolved to address in this follow-up report was what actions are needed to ensure that United Kingdom science continues to flourish as the United Kingdom negotiates its exit from the European Union and thereafter plays an ever stronger role in delivering international competitiveness for the United Kingdom, as well as further progress to enhancing our quality of life.

The Government have recognised the key role that science, technology and innovation must play. The White Paper on exiting the EU has a chapter entitled “Ensuring the UK remains the best place for science and innovation”. It highlights the funding commitments made in the Autumn Statement and the Green Paper published in January on a new industrial strategy which seeks to,

“put the UK and British companies at the forefront of innovation by developing the products and services that address the challenges of the future”.

The Green Paper stresses our dependence in future on becoming a more innovative economy and on the need to do more to commercialise our world-leading science to drive growth across the United Kingdom.

While our report predates both the White Paper on exiting the European Union and the Green Paper on a new industrial strategy, it can be seen as a contribution to addressing the agenda of these policy papers. Our report considers the following issues: the future funding of science and the need for scientists to continue to move between borders; the Government’s role in providing research infrastructure; and the potential opportunities offered by and after Brexit.

First, on funding issues from 2007 to 2013 the United Kingdom received €8.8 billion for research development and innovation from the European Union, while contributing about €5.4 billion to the European Union for research. So we were net beneficiaries in that respect. The Government gave welcome assurances that it would underwrite approved Horizon 2020 projects funding with new money, in addition to the science funding already committed for the period to 2021. Even more welcome in November, the Prime Minister announced a real-terms increase in government investment, with £2 billion a year by 2020 for research and development,

“to help put post-Brexit Britain at the cutting edge of science”,

and technology discovery. This money will be challenged through a national productivity investment fund and a new industrial strategy fund. This was an encouraging response to the implications of Brexit but the new money promised by the Government should not be seen as a replacement for European Union funding after the United Kingdom has left the EU. The EU funding should be replaced with new money.

There remain reports about discrimination against UK researchers post the Brexit vote in seeking EU funding and collaboration. Both the Minister, Jo Johnson, and the EU Commissioner have urged scientists to provide hard evidence. In paragraph 39 we suggest that for the sake of transparency, any evidence received of discrimination, together with an assessment on whether the concerns have been adequately addressed, should be published in “anonymised aggregate form”.

The White Paper states that researchers should continue to bid for competitive EU research funding such as Horizon 2020 while the UK remains a member of the EU, and that existing EU students and those starting courses in 2016-17 and 2017-18 will continue to be eligible for student loans and home fee status for the duration of their courses.

Once negotiations on the terms of our leaving the EU start, it will be highly desirable at an early stage to secure longer-term assurances both for European Union students in the United Kingdom and for British students in EU member states. In order better to refute any perception that we are less welcoming than before to students and researchers we recommend in the report that the Government should maintain the Chevening scholarships and create additional scholarships for the most talented career researchers at PhD and post-doctoral levels, expand the global challenges fund and the Newton fund and make additional resources available for international research collaboration.

In paragraph 69 we recommended that the Government initiate a search for “outstanding scientific leaders” from around the globe and attract them to the United Kingdom with compelling offers of research funding. It was therefore highly gratifying to hear in the Budget Statement from the Chancellor of the Exchequer that £100 million is to be used to attract best minds to the UK over the next four years to make us a world leader in science and engineering. I congratulate the Government on this welcome initiative.

I turn to the free movement of scientists. The committee’s report is one of many to draw attention to the idiocy of not treating student numbers separately for immigration purposes. Can the Minister say whether the Government will seek to reverse the amendment made in this House to the Higher Education and Research Bill last week, which would remove students from the immigration figures? The Government’s response to the committee says that the calculation of net migration statistics is in line with best practice around the world. I would refute that—it simply is not the case, as has so often been stated in this House.

The title of the report, A Time for Boldness, refers in particular to our recommendation in paragraph 76 that we identify opportunities for bold long-term moves to reinforce the UK’s global standing in science. This could include hosting, in partnership with Governments and funding bodies from other countries, one or more new international research facilities, subject of course to a rigorous review and appraisal of value for money. We already host six pan-European research infrastructures in the UK, about whose long-term future the Russell group expressed some concern in its evidence to us. We also host such major research stations as the European Space Agency and the European Centre for Medium-Range Weather Forecasts. I know that the noble Lord, Lord Krebs, in his intervention today will speak on the need to ensure that the European Centre for Medium-Range Weather Forecasts is retained in this country, although its data centre will be moved to Italy. I would very much support that.

The Committee recommended that the voice of the scientific community should be heard alongside the voice of business during the Brexit negotiations and in making future alliances. We need science at the centre of the negotiations. We urged the Government to assess in the short term the need for a chief scientific adviser in the Department for International Trade, bearing in mind the scale of scientific analysis that underpins the international trade regulations which will be required for trade negotiations. The Government’s response said that the Department for International Trade is considering the case for appointing a chief scientific adviser. Can the Minister tell the House of any progress in this respect?

Lastly, I turn to such opportunities as might be offered for science after Brexit, in spite of the very obvious challenges. The Science and Technology Committee is currently taking evidence on the Green Paper, Building our Industrial Strategy. As I said earlier, this Green Paper gives encouraging priority to investing in science, research and innovation and recognises that our future ability to attract inward investment will depend heavily on the quality of our science base. The Green Paper furthermore says that the United Kingdom is fortunate to be a nation of science and technical progress. I would put it more strongly: without excellence in science, research and innovation, our prospects would be dire. We need to invest wisely and more generously in our science base to match the funding of our competitors, build on excellence, reform our public procurement to support innovative businesses, and expand the scale and scope of the research and development tax credit to cover a wider span of business innovation. Could Brexit be the catalyst that leads to continuity of policies for science, technology and innovation for more than just a few years at a time? I beg to move.

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[The Earl of Selborne]

My Lords, it remains for me to thank all participants for their positive approach to our report. I was particularly pleased to hear from the Front Benches that they rather liked our title, for which the noble Lord, Lord Hennessy, should take a bow. He had an even more exuberant title for a later report, which I am afraid I vetoed—but he got away with this one.

If there is a takeaway message from this, I think we accept that my noble friend the Minister is absolutely right: there is a compelling narrative from government and more resources have indeed been made available. But it is not just in this House that perceptions are created and what we have heard from the noble Lords, Lord Winston and Lord Mair, and others who could be described as at the coalface is an accurate representation of perceptions which simply have to be changed. It is not just the Government who have a responsibility for doing this; I quite accept that academia will have to do its bit as well. We will all have to do our bit, including those of us like me who just sit on the sides and commentate or criticise.

This debate has given a lot of positive messages as to how the perceptions could change. We have unanimously recognised the internationalism of science and how critical international collaboration is. We need welcoming signals for both people and institutions. This has been a very helpful debate.

Motion agreed.

Higher Education and Research Bill

Earl of Selborne Excerpts

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

[Baroness Young of Old Scone (Lab)]

My Lords, I support Amendment 166 in the names of the noble Baroness, Lady Brown of Cambridge, and the noble Lord, Lord Stevenson of Balmacara. I apologise that I was not present for this item when it was dealt with in Committee because I was abroad, but I have read carefully the discussion that happened at that point.

I, too, am a member of the Science and Technology Committee, which looked at this issue recently. I share the concern that was raised by a number of witnesses that Innovate UK would be hijacked by the research councils and become the commercialisation and innovation arm of the research councils, and that that would usurp the hugely valuable role that Innovate UK currently has in being business facing and supporting innovation, especially by small businesses and especially at very early stages, when an entrepreneur has a bright idea but no backers and no proof of concept. I share the concerns of the noble Baroness, Lady Brown of Cambridge, that the membership and chairmanship of the committee for Innovate UK need to be very much business focused and to include a predominance of business-focused people.

I recognise that the Government have gone some way in Amendment 183 and I welcome that. Indeed, I welcome the meetings that I have had with Ministers here and Sir John Kingman and with the Minister of State for Universities and Science in the other place—who is not here today, although he regularly is—but it is probably my conversations with Jo Johnson that have made me the most alarmed, I am afraid, because although he gives assurances throughout about the business-facing role of Innovate UK, every time I have heard him describe it unprompted, he immediately describes it as being the innovation arm of the research councils.

I hope the Minister will recognise that the role of Innovate UK needs further strengthening and that to give it a business-based chairman and a predominance of business-based members on the committee would do that.

[The Earl of Selborne (Con)]

My Lords, I welcome government Amendment 183, which addresses the issue that the noble Baroness, Lady Young, has just referred to. As chairman of the Science and Technology Committee, I can confirm that we were indeed concerned at the original proposals, some months back now, that Innovate UK should be put together with Research England into a research council, because it was clearly absolutely essential that the business community should have confidence that it had Innovate UK very much at its disposal as its organisation, and it was not somehow going to be subsumed by the research councils to be the commercial arm of Research Councils UK.

I accept that the concerns expressed by the noble Baronesses, Lady Brown and Lady Young, have validity, but I recognise that the government amendments, particularly paragraphs (a) and (b) in Amendment 183, requiring arrangements to have regard to,

“persons engaged in business activities”,

and,

“the need to promote innovation by persons carrying on business”,

go a very long way from where we were some months ago. I, for one, am content to accept these as meeting most of my original concerns.

[Lord Bhattacharyya (Lab)]

My Lords, I draw attention to my interests as declared in the register, and specifically to my chairmanship of WMG at the University of Warwick. I should also mention that I served as a member of Sir Paul Nurse’s review of the UK research and innovation landscape that put all this together.

As peace appears to be breaking out today, I hope that those who laboured for so long in the salt mines of Committee will allow me a few brief words on Amendments 166, 173 and 183. All three will help Innovate UK promote partnerships between business and academia. I can tell your Lordships that that can be a tough job. When I started WMG, we encountered a lot of opposition. Academics are protective of their independence from commerce. However, engineers like making an impact—the bigger, the better—so their curiosity won out in the end.

We know that academic traditions can obstruct business collaboration. For example, grant application writing is a highly prized skill in universities, for a very good reason: critical assessment of research proposals is vital to academic debate. Businesses see this rather differently, especially if they are expected to disclose commercially sensitive knowledge. The Technology Strategy Board was created to address this cultural gap. We debated it here for about four years before it was formed because there were arguments on whether government should intervene and pick winners and many other arguments at that time. But we won and the Technology Strategy Board was created. Of course, this body is now Innovate UK.

Change is constant, so Innovate UK needs leaders who understand the way business and science are changing, as well as the flexibility to create the right partnerships. Amendment 166 would ensure this. Today, every business is multidisciplinary. If you make cars, you need programmers, cryptographers and medical researchers, as well as metallurgists and engineers. Bringing Innovate UK and the research councils under the same roof makes both scientific and commercial sense. Amendments 173 and 183 will ensure both business and scientific knowledge in Innovate UK’s leadership, allowing it to build flexible partnerships with business.

Innovate UK’s role is to act as a catalyst for business collaboration and partnership with academia. However, although flexibility is needed, Innovate UK should not be a bank. It has neither the resources nor the skill set. Instead, it should use its commercial expertise to create incentives to encourage businesses to invest in innovation. Its role is that of a matchmaker, not a moneylender. Its role has to be to improve productivity in this country via scientific research. The amendments in this group will help Innovate UK deliver on that vital task. More generally, the amendments proposed elsewhere today will do the same for UKRI as a whole.

Higher Education and Research Bill

Earl of Selborne Excerpts

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

[Baroness Garden of Frognal]

My Lords, I added my name to my noble friend Lord Fox’s Amendment 473, which is remarkably similar to the one my noble friend Lord Sharkey has just spoken to. I therefore agree with my noble friend Lord Sharkey.

[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.

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[The Earl of Selborne]

My Lords, I support the thrust of these amendments and I am sure that everyone would wish to acknowledge the enormous contribution made by organisations such as the Wellcome Trust and Cancer Research UK, to name two of the largest. The noble Lord, Lord Willis, gave us the figures of just how big their contribution is at £1.2 billion from those two alone, while the sector as a whole contributes something like £1.6 billion, which is an enormous sum.

UKRI is to be the very much desired champion of research and to attract not only the interest of the Treasury but of the business and wider community, and it must therefore be totally conversant with all aspects of our research portfolio. That will include not only the large charities to which I have just referred but the smaller ones working in different fields such as the environment and nutrition. Also, we should not be too hard on the business community. Let us remember that it spends more on research than academia, something like 70%. Where we are failing at the moment is in the application of research.

We know that our science base is absolutely excellent and business will always depend on it. It should be nurtured and if anything we must increase its funding, and we therefore warmly welcome the fact that £2 billion will have been secured by the end of this Parliament. But it will not all go to academia because it has to be spread around the entire research portfolio in the country, which means that Innovate UK will be able to help bring the science base and industry together in a more purposeful way to the advantage of jobs, regional employment and much else. If we are to have a successful knowledge economy, as the industrial strategy White Paper pointed out, it will be through the successful implementation of large parts of this Bill. So I welcome the reminder that the charitable sector is an extremely important component. I am sure that when the composition of the UKRI membership is undertaken, difficult task though that may be, the charitable sector will have to be represented.

[Lord Patel (CB)]

My Lords, I rise briefly to support the amendment moved by the noble Lord, Lord Willis of Knaresborough, and spoken to by the noble and learned Lord, Lord Mackay of Clashfern, who covered extensively the reason why it is necessary for the charity sector to be represented on the board of UKRI. My experience during my time serving on the Medical Research Council showed that collaborations between the three major medical research charities, the Wellcome Trust, Cancer Research UK and the British Heart Foundation, made an enormous contribution. It would be rather odd if the medical research charities are not represented on a body whose job is going to be that of co-ordinating research in the entire sector across the United Kingdom. It is imperative that they should be represented, and I think that UKRI will gain from that. Again, I support the amendment.

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[Lord Mair (CB)]

My Lords, I support Amendments 479A and 481A, to which I have added my name. I declare my interests in higher education and research as a professor of engineering at Cambridge University and as indicated in the register. I speak from my experience both as an active leader of university research, collaborating very closely with industry, and as a practising engineer in industry for almost 30 years before becoming an academic.

As has been said by my noble friend Lady Brown of Cambridge, and reinforced by the noble Lord, Lord Willis, the aim of these amendments is to maximise the effectiveness of the councils, including Innovate UK, under the proposed new UKRI structure. They should each retain independent non-executive chairs, as well as having a chief executive. This generally works very well for the research councils and Innovate UK as they currently operate—each has a chief executive and a non-executive chair, the latter usually from a business background. This is surely good governance, facilitating the successful operation of each council, as well as ensuring that the council can provide effective challenge to its chief executive. The non-executive chair can also play a key role as an independent senior voice for each council. The Bill proposes to remove the non-executive chair, which many of us believe would reduce the effectiveness of each council. The aim of these amendments is to restore that important role.

In the case of Innovate UK, it is especially important that the non-executive chair that we are proposing should be from a science-related business background. Industry will want to see this. Close engagement with industry is vital for Innovate UK’s effectiveness. Innovate UK will be able to operate most effectively with its unique business-facing focus if the majority of the ordinary council members are from a science or engineering-related business background. There is a real danger that industry will perceive the UKRI structure currently proposed in the Bill as a downgrading of Innovate UK in terms of industry engagement. Amendments 479A and 481A seek to avoid this.

[The Earl of Selborne]

My Lords, I will also speak to Amendments 479A and 481A. Perhaps I should declare a historical interest in Amendment 479A, because way back in the 1980s when there were six research councils, two of them had a non-executive chairman—the Medical Research Council, chaired by Lord Jellicoe, and what was then the Agricultural and Food Research Council, which I chaired and which has now been subsumed into the Biotechnology and Biological Sciences Research Council. I think that both Lord Jellicoe and I were rather flattered when, as a result of the review of the research council model, it was decided that the other four should no longer be headed by what was called a HORC—a head of research council—but a non-executive chairman, whose job was to do what happens in good governance in any other organisation, where the chairman holds the chief executive to account and the two have very separate roles. That model has been well adopted by the research councils. I was on the Science and Technology Committee of this House at the time, when some of my colleagues looked with some suspicion at this proposal, but now it is clearly viewed with universal favour.

On Amendment 481A, it is inconceivable that Innovate UK should not continue to have a non-executive chairman, as it does at the moment. Innovate UK has got to be business related and facing business. Business needs to continue to have confidence that it is there to represent its interests and that it has not been taken over by academia and other interests. That will be a battle. As I said on an earlier amendment, the cultures will be very different. These two amendments precisely deal with this issue and like the noble Lord, Lord Mair, I support them both heartily.

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[Lord Blunkett (Lab)]

This will probably be the shortest speech I have made, or ever will make, in the House of Lords. I have a registered interest as a fellow of the Academy of Social Sciences and would like to reinforce what the noble Lord, Lord Willetts, has indicated this afternoon. Given that the Minister is respected as someone who does not just listen and reflect but is actually prepared to give and to come back with solutions, I hope we will be able to reflect on the importance of avoiding doubt and—as the noble Lord, Lord Willetts, has said—misunderstandings simply by getting the wording right and reassuring people that we are approaching this with a comprehensive view for the well-being of our university research community and for the future well-being of the country.

[The Earl of Selborne]

My Lords, for slightly different reasons, I also support the concept that social sciences should be in the Bill. One of the purposes of the formation of UKRI is to address the need to promote interdisciplinary research. So many of the exciting areas of science are interdisciplinary, but it has to be admitted that research councils have not always successfully collaborated, certainly not with other parts of the research portfolio. We have talked about the great contribution that charities, the departments and independent research institutes make, and one of the jobs of UKRI will be to have real knowledge about how all these can contribute together. One thing that is absolutely certain is that social sciences are the key to interdisciplinary research. It is almost impossible to think of a research programme that does not have some social science implication, so it would be enormously helpful just to remind us that when we are talking about interdisciplinary research, we should see social sciences as key to that.

I also very much agree with Amendment 494 in this group, for the reasons that the noble Lord, Lord Liddle, touched on earlier, regarding how UKRI should be charged with responsibility for social inclusion and community cohesion. If it was just about economic benefit, we might as well continue to have the golden triangle and all that flows from that, and the lack of community cohesion. This is a game where UKRI, taking as it does an overall view, can make a real contribution to ensuring that the areas which are suffering at the moment from a lack of investment and poor productivity benefit from innovation.

At the risk of repeating what I said at Second Reading, although we congratulate ourselves, quite rightly, time and again on the quality of our science base, it does not necessarily work through in terms of productivity, which is below the EU average: 50% of United Kingdom cities are in the bottom 25% of European cities in terms of productivity. That is a goal on which we should always concentrate our minds. Innovation and the science base are both key to getting this right—this is about the long term—but the formation of UKRI, bringing together as it does the research councils and Innovate UK, must be seen to have these wider objectives.

Higher Education and Research Bill

Earl of Selborne Excerpts

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

[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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[Baroness Garden of Frognal (LD)]

My Lords, I shall move Amendment 483 in my name and that of my noble friend Lord Storey and speak to Clause 90 stand part, to which the noble Lord, Lord Mendelsohn, has also added his name.

The previous group has already addressed these issues in some detail and so I shall be brief. These are probing amendments of course. We recognise that UKRI is effectively a fait accompli, but following concerns raised both tonight and elsewhere by supporters of Innovate UK and of the research councils that the proposed combining of forces may have unintended consequences, this seemed to be a moment to raise the issue again. Amendment 483 would remove Innovate UK from UKRI. In the previous debate, the noble and learned Lord, Lord Mackay, the noble Baroness, Lady Neville-Jones, and the noble Earl, Lord Selborne, all addressed this proposal without necessarily supporting it.

Innovate UK is primarily business focused. It works with the private sector and is generally supported by the business community. It should perform a key role in the industrial strategy, and it performs a valuable function in ensuring that the UK benefits from UK research. As the noble Lord, Lord Mair, set out, there are too many examples of research that is carried out in the UK by UK academics being commercialised elsewhere or undersold in the UK. Innovate UK has been successful in addressing and improving that situation. The noble Lord, Lord Broers, also addressed this issue, and the Minister addressed it in his closing remarks on the previous amendment. However, the challenges of Brexit add to the need for Innovate UK to work well, and there seems to be no good reason for changing its structures.

Concerns have also been expressed by the research community that the interests of pure academic research might be disadvantaged by being under the same governance as the commercial arm. We have heard those concerns expressed again this evening.

Clause 90 follows from that. It sets out clearly that Innovate UK has the purpose of increasing economic growth, to benefit business and improve quality of life. Those are all admirable aims, and after tonight’s discussion there may be additions to them. What assessments were made of possible detriment to Innovate UK and the research councils of being under the same umbrella? What evidence is there that such a combination will be successful? Is there any provision for a review in case any problems arise with this multifaceted and enormously influential institution? I beg to move.

[The Earl of Selborne]

My Lords, we have discussed at good length the various problems that Innovate UK might or might not face within UKRI. I would like to explode one myth in case anyone has any illusion about the linear model or believes that ideas automatically start in academia and go in one direction only—into commerce. That model has long since been exploded. Ideas go in both directions and academia benefits as much from interaction with commercial activity as the other way round. Once we have got that into our heads and realise that we need to bring them all together and provide an opportunity for each to spark the other, then we will see how Innovate UK might realistically and helpfully be embedded in the organisation.

It did not help that the consultation in the early days, before the Bill was published and after the Nurse review, was, quite frankly, inadequate. There has been a great deal of excellent consultation since, which is why many of us have changed our minds—or at least are prepared to accept that it could be made to work—and I hope that we can be given further assurance about the issues referred to in the earlier debate about autonomy and being business-facing.

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[Lord Watson of Invergowrie (Lab)]

My Lords, in the unavoidable absence of the noble and learned Lord, Lord Wallace of Tankerness, I will speak to Clause 88 stand part.

Ministers are prone to deflecting arguments with the warning that they might contain “unintended consequences”. We have heard that several times, and I notice that the noble Lord, Lord Prior, followed that trend this afternoon in his response to the first amendments moved by the noble Lord, Lord Patel. Therefore, when a Bill or part of a Bill contains a provision which might have unintended consequences, logic suggests that Ministers should be willing to take that argument on board and act on it—surely that is consistency.

Clause 88 is one of the most closely associated with an issue which is of concern to the noble and learned Lord, Lord Wallace, and myself. It relates to the position in which the Bill will place a world-leading scientific organisation based in Scotland: the James Hutton Institute. At this juncture I should declare an interest of sorts. The institute has its headquarters on the outskirts of Dundee in the village of Invergowrie, which happens to be the place where I spent my childhood—the village, that is, not the institute—and which is reflected in my title. By way of clarification I should say that I have not lived in Invergowrie since 1972, and although the institute, then the Scottish Crop Research Institute, was there during my childhood, I have never entered its premises—not even as a minor, although I may well have attempted it on occasion.

The institute was one of many which sent briefings to noble Lords on the Bill and, as I have done with representatives of many other institutions that made contact, I arranged to meet with its chief executive and chief of science, Professor Colin Campbell. The tale he had to tell is a worrying one, concerning funding eligibility criteria which the Bill may leave in place, and the consequent effect on the James Hutton Institute.

The institute encompasses a distinctive range of integrated strengths in land, crop, waters, environmental and socioeconomic science, and is the biggest independent research institute in this area in the UK. Approximately 60% of its funding comes from the Scottish Government and the remainder is from the EU, international, UK and Scottish agencies, and some from private industry. Its research has been shown to make a significant contribution to the UK economy, with £12 returned for every £1 invested. It recently became one of the most successful institutes in the UK in winning EU money from the Horizon 2020 funding programme. That is the source of the dilemma facing the institute. While EU funding is open to all institutions and research providers and encourages collaboration with industry and especially small and medium-sized enterprises, as constituted, the Research Councils UK is not open to all and has eligibility rules which exclude the James Hutton Institute and others.

The institute is currently ineligible for direct access to RCUK funding due to a rule that states that no organisation receiving more than 50% of its funding from a single funder is eligible. The rule was introduced more than 20 years ago, apparently to avoid a situation whereby veterinary and surveillance labs, as fully funded government agencies, could not attract additional research funds from RCUK—which is not unreasonable. The James Hutton Institute is not a surveillance lab, although, as I said, it receives 60% of its funds from the Scottish Government. A significant amount of that funding is for centralised science facilities and national capability, which it is fully open to other institutions to use. The institute is not a public sector research establishment, and is currently the only independent research institute not eligible for research council funding.

The main concern is that with the restructuring of the RCUK and the establishment of UKRI, not only will the 50% eligibility rule carry over but there may be unintended consequences if such matters are unintentionally overlooked or if any new arrangements encompass rerouted EU funding once the UK leaves the EU. This would be very serious for the James Hutton Institute, as there is a risk that it could go from being one of the most successful research providers in gaining European funding to having next to no access at all.

As the noble Lord, Lord Patel, said when speaking to his amendments, Scotland punches above its weight in research terms. Universities Scotland said in one of its briefing papers sent to noble Lords that on the basis of competitive excellence, Scottish universities win around 14% of project funding from research councils but only around 7% from Innovate UK. Scottish research in all forms was able to win more than €200 million in the last year for which figures are available. Scottish institutions are naturally concerned about what the future will hold once the UK ceases to be a member of the EU. Not all EU funding will be lost, but it will become much more difficult to achieve when bidding is done from a standalone UK.

That, therefore, is the context within which the James Hutton Institute finds itself. It will have much of its EU finding closed off—perhaps all of it if in future it is all channelled through UKRI, to which the institute will have no access because of the 50% rule to which I referred.

It seems that there was no vehicle in terms of a detailed amendment to the Bill that would have achieved what is necessary for the institute to be able to have access to a level playing field—the scrapping of that 50% rule. I am hopeful that the Minister will be able to tell me—after a suitable period of reflection, of course—what can be done. However, the rule has applied since the Biotechnology and Biological Sciences Research Council, one of the seven research councils that work together, was founded in 1994, and that is funded by BEIS, so surely the Government can exercise their influence in this matter. Would the civil servants working in RCUK—or UKRI, as it will become—have the final say or can they be told to change what is clearly an anachronism?

This matter has been raised directly with the Minister for Universities and Science and with Sir John Kingman, and it seems that a misconception may have emerged. It appears that there are plans to run pilot trials in which PSREs in England Wales may be given access to RCUK, but this does not help the James Hutton Institute because, as I have already mentioned, it is not a PSRE and it may in any case suffer if it has to await the outcome of trials.

In conclusion, I say to the Minister, “Over to you”. This is a Catch-22 situation in which the James Hutton Institute finds itself through no fault of its own. The 50% rule is a barrier that can be dismantled if the will is there. Surely it must be.

[The Earl of Selborne]

My Lords, I strongly support the noble Lord, Lord Watson, on this. I assure noble Lords that I have entered the premises of the James Hutton Institute, which is held in high regard not just in this country but internationally.

Here we have a situation where government departments are, very reasonably, keen to try to live within their means, and there is a suspicion among the research councils that public sector research establishments might be unloaded on to research council funding. When I wrote to my noble friend Lord Younger, having raised this matter at Second Reading but without referring specifically to the James Hutton Institute, he was good enough to admit that that was the concern. Those who were concerned did not want departments to get rid of their responsibilities by passing the funding over to research councils.

This is a typical government spat, with public sector research establishments not being allowed to apply for research council funds. As I understand it, this is a ruling made through the Department for Business, Energy and Industrial Strategy. Of course, as the noble Lord, Lord Watson, pointed out, the irony is that the James Hutton Institute is not even a PSRE, so it gets caught by a sort of collateral fire. It is an international institute but, through this ruling that any institute that gets funding of more than 50% cannot apply for research council funding, it cannot apply for international funding either, whether at an EU or an international level. This is a clearly pernicious ruling that has no bearing on the James Hutton Institute. As I said, it is there to prevent PSREs being unloaded on to research councils. It lies within the power of the Minister, standing at the Dispatch Box today, to say that Clause 88(4), which says that,

“UKRI must have regard to the desirability of not discouraging the person from maintaining or developing funding from other sources”,

can be put into operation immediately. Forget the rather infelicitous double negative; it is saying, “We encourage people working in research to look for funding wherever they can”, but of course that must be based on the quality of the science—supporting excellence, as the previous amendment referred to. No one doubts that the James Hutton Institute is a centre of excellence that should be encouraged to apply for international funding and indeed for research council funding. It needs this pernicious ruling to be abolished, and that could be done here and now.

[Baroness Garden of Frognal]

My Lords, my noble and learned friend Lord Wallace of Tankerness, who, along with the noble Lord, Lord Watson, originally tabled his opposition to the clause, is not able to be here today, and I regret that I can claim no connections at all with Invergowrie.

As has been explained, the Bill in its current form risks acting as a catalyst, which, under Brexit, may magnify and exacerbate the negative impact of the 50% rule on research organisations such as the James Hutton Institute. Of course, it may, as has also been explained, cause these long-established, highly respected organisations to downsize or close operations. It is already having an impact on attracting and retaining staff. It also creates an unequal playing field because, conversely, there are no restrictions on organisations that are majority funded by research councils. It seems a very unfair and archaic rule. I add my voice to those of the two noble Lords who have already spoken and urge the Government to work with Research Councils UK to remove the rule to ensure a fair and sustainable funding environment.

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[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.