EU Report: Effectiveness of EU Research and Innovation Proposals

Lord Brooke of Alverthorpe Excerpts

Thursday 21st November 2013 Lords Chamber

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I am also a member of Sub-Committee B so I declare an interest there. I join the noble Lord, Lord Kakkar, in expressing our gratitude to the noble Baroness, Lady O’Cathain, for leading us through this exercise, which was not easy. I express our grateful thanks, too, to our clerk, Nicole Mason, and our policy analyst, Paul Dowling. Additionally, I express my gratitude to the Minister, David Willetts, since I have taken evidence from a number of Ministers over the years and I think that we found his approach very refreshing. He was open in endeavouring to respond to the points that we put to him, and it is worth putting on record that he seems to be doing his best there. However, he is not doing it with the easiest of hands.

I say that in the light of having recently been in Brussels. I had not been there for quite some time and those I met ranged from representatives of the Parliament through to the Council. It did not surprise me that we had not had a speedy response to our document because the people I was meeting seemed to be saying, “Well, we want you to stay in Europe and we’re keen to have you there, but if you don’t want to stay then you will go”. This was a new response, different from any that I had heard before.

One felt also that there were some feelings that we have been withdrawing in a number of areas. The following statistic links indirectly to this question: the UK is entitled to 12% of the officials in the European Union but we are now down to only 4.5% of the people working in Brussels and in related organisations of the EU. If we are trying to get business in there, bidding for research and so on, it helps if we have officials working within the EU and particularly working in Brussels. That was given to us in evidence by some people who have made very successful applications in the past for money. We heard from a representative from Cambridge who has now moved to Brussels and says that having a base there has made a world of difference to what they could get when bidding compared with what was happening to them previously. I say to the Minister that, in the broadest sense, we need to have a look at what is happening with our representation there at official level. What chance do our people stand when going in from a distance, or indeed on the spot, if they do not have British officials who know the ropes, so to speak, and can guide them through the labyrinth that has evolved when it comes to submitting bids?

As others have said, many witnesses have explained that R&I is increasingly a global undertaking. While we might have some misgivings about some of the operations of the EU, its performance generally in this area has been identified by most of the people who gave evidence to us as being a worthwhile venture, to be supported and indeed expanded—subject, of course, to trying to ensure that we are getting value for money and that the infrastructure through which people have to apply for the money operates properly and is properly accountable. It is therefore good to see that the EU R&I budget for Horizon 2020 was agreed and publicly announced this week, at €79 billion. This is one of the areas where our committee can claim some success: we said in one of our recommendations, after the Council meeting in February, that the figure of €70 billion that was on offer was not enough and we thought it should be more. The good news was announced yesterday that it has gone up to €79 billion. We were one of the drops of water that went on to the pebble that has made the change.

I am sorry that we have not yet had a response from the Commission to the other points. I will therefore have to speak primarily to the issues where we have some influence and control, and that relates to the recommendations that impact on the areas where the Government can influence the course of events.

In their reply to us at the end of June to our report that was written in April, they seemed to be accepting that they were content with the €70 billion that had been allocated at that stage. We have ended up now with €79 billion. Reading the letter again, I find that it gives some feeling of complacency—a lack of ambition on our part in trying to maximise the returns that we could get for our people then to compete for research and innovation. I am wondering where the Government stood in that negotiation, and I would like to know if today they could give us some insight into how the figure moved up by nearly €10 billion—a phenomenal increase, really, given the background to the budget negotiations. I would welcome some insight there. I suspect that to a degree it might be related to the way in which, since Lisbon was introduced, the Parliament has been able to take unto itself far greater powers than was ever envisaged in the Lisbon agreements.

It is important for government and for all of us to take note of what is taking place in Europe, with the shift in power and relative strength between the Council and the Commission and between the Parliaments. Indeed, if we are to maximise the returns from our involvement in Europe, it is very important that we review the nature of the relationship that we have with some of our representatives there and that we spend more time with our MEPs. That is a side political issue but it knocks back into the question of how we approach research and innovation.

It is interesting, too, to look at how some of the other countries have responded immediately to the announcement about the budget decision having been reached. I see that the Irish have already set out their stall and are seeking to get at least €1 billion for Ireland. It is a far bigger amount than technically they are entitled to but that is the ambition that they have publicly announced. A number of other countries have already said what they plan to do. We have been waiting for quite some time in working with these processes, so can the Minister give us an indication of our ambition in the claims we will be making? How much money do we anticipate we will be trying to get back in terms of research and innovation? We do not have any clarity on this, whereas others have. Similarly, in looking at the shift in the budget figure, our approach may be somewhat complacent and not as ambitious as some of the other countries, which will be in there pitching very vigorously indeed to get the maximum amount returned to them.

We are of course in an international competitive scene and, in certain respects, as others have said, Europe is starting to fall behind some of the major world competitors such as China, Brazil and India. We have seen that, increasingly, they are maintaining high levels of investment in research relating to business and that in many areas they have a much clearer link with businesses than we have.

I am pleased to see that noble Lords associated with the academic world will be speaking later in this debate. We do extraordinarily well, in relative terms, in finding funding for our universities and our higher educational research areas, and long may that continue. The amount that Europe spends in the academic field of research compared with that spent on research in industry has been declining in recent years, whereas the element that our competitors devote to industry and manufacturing has been going up. However, the UK is even worse than it was some years ago in the division between the money going into research for academia and that going into industry. This is a cause of concern for all of us. If the Government are serious about trying to effect a shift in the basis of our economy, moving away from finance and more towards manufacturing and industry, this is something that needs to be given serious attention.

We questioned the Minister about that and about trying to establish closer working contacts, particularly with SMEs. As the noble Lord, Lord Kakkar, mentioned, SMEs are producing 98% of the business in Europe generally and they also feature very highly in the UK. One point of concern to us was the failure to make contacts with SMEs. In turn, that led some of us to have a look at the nature of the structure in the UK for reflecting SMEs’ views and for trying to link SMEs into government machines and, in turn, into applications for research funding and assistance.

Compared with the Germans and two or three of the other major successes in Europe, we find that we are very far behind. We have a disparate approach, ranging from the CBI to the chambers of commerce and even the Federation of Small Businesses. When I read some of the FSB’s submissions, it almost appeared that it was more interested in attacking Europe and its red tape than in trying to offer assistance to its members in submitting applications for research and improving their performance. The Government have to spend more time looking at the contact points. I think that the Minister, the right honourable David Willetts, was not entirely happy with what was there. Previously, they were underfunded and there were not sufficient of them. Have we made changes and do we have plans to put in further resources to provide that assistance?

I come from a trade union background and the Government are ever anxious to do inquiries into unions whenever they seem to be doing things that are not quite acceptable. I do not accept or support unacceptable behaviour. But in general terms of what the country needs, it is time that this Government, or some Government, look at the basis on which we seek to represent the major drivers of growth and jobs in this country—the SMEs. Can we not find a better way to bring them into a collective arrangement whereby they are given the necessary assistance and support to go forward and try to get—to use the rather foul term—their snouts in the trough of the very substantial amounts of money which should come to this country but which go to some others on a scale that is disproportionate to their entitlement?