Advanced Research and Invention Agency Bill

Lord Browne of Ladyton Excerpts

Report stage
Tuesday 14th December 2021 Lords Chamber

Moved by

[Lord Browne of Ladyton]

1: Clause 2, page 2, line 6, at end insert—
“(ba) financial support provided by ARIA may be treated as convertible to equity interest in the business entity which has received such support; (bb) for a period of ten years after ARIA has provided financial support, or made property available, the business entity which has received such support must obtain the consent of ARIA before—(i) transferring specified intellectual property rights from the United Kingdom to any territory outside the United Kingdom, or(ii) selling or otherwise transferring a controlling interest in that entity to another entity not resident in the United Kingdom;”Member’s explanatory statement
This amendment would enable ARIA to make it a condition of the provision of financial support to a business that it is convertible into an equity interest in the business and that, for 10 years after ARIA has provided financial support, or made property available, the business requires the consent of ARIA either to transfer abroad intellectual property rights or to sell or transfer a controlling interest in that business to another business not resident in the United Kingdom.

[Lord Browne of Ladyton (Lab)]

My Lords, Amendment 1 would enable ARIA to make it a condition of the provision of financial support to a business that it is convertible to an equity interest in the business and that for 10 years after ARIA has provided that financial support, or made property available, the business requires the consent of ARIA either to transfer abroad intellectual property rights or to sell or transfer a controlling interest in that business to another business not resident in the United Kingdom. I am grateful for the support from my noble friend Lady Chapman of Darlington and the noble Lords, Lord Morse and Lord Clement-Jones, who have added their names as supporters of the amendment. I am especially grateful to the noble Lord, Lord Morse, who prepared the first draft of the amendment—although, anticipating that its drafting may be criticised, I make it clear that I take full responsibility for its revised form.

In moving Amendment 1, I support the other five amendments in the group in the name of the noble Lord, Lord Lansley, and have added my name to Amendments 2 and 8. I am pleased that these amendments have been grouped, as they are a response to the same concern. The House will be pleased to hear that I do not intend to rehearse the arguments that I advanced in Committee. I am grateful for the support that I received then from the noble Lords, Lord Fox, Lord Lansley and Lord Broers, and my noble friends Lady Chapman and Lord Stansgate.

Yesterday, I and other noble Lords received a letter from the Minister, which I will come back to later. First, I will explain exactly what the amendment would do, because it is relevant to the letter, which was extremely welcome; it covers the issues that have been raised and shows that those who have amendments in this group have common concerns with the Government —we are broadly on the same page. The degree to which we differ is marginal now, and much less than it was at the beginning of these issues being raised in Committee. So that is progress, but I do not think we are yet where we want to be.

This amendment is to Clause 2, headed “ARIA’s functions”. It would amend Clause 2(4) to add to the conditions that in particular, in exercising its functions, ARIA may attach to financial support or making property available to other parties. It would do this in the context of a clause which has six subsections, five of which are permissive, including that being amended. They are permissive to the extent that they set out what ARIA may do and are designed to give ARIA the flexibility needed for it to carry out the challenging function it is charged with.

However, Clause 2(6) is instructive. It requires ARIA to have regard in exercising its functions to the desirability of doing so in a way which, as the Minister summarises it in his letter, ensures that

“public investment in research and innovation should drive long-term socioeconomic benefit and deliver overall value to UK taxpayers”.

That is a very good summary of what is required, and it is demanded of ARIA by this section of the Bill.

By going to the permissive elements of ARIA’s function, these amendments go beyond willing the end; they help ARIA by willing the means, specifically in relation to intellectual property. This amendment would do so by ensuring that the successes of ARIA stay for a sufficiently long time in the hands of those who have the UK’s best interests at heart.

I thank the Minister for his letter, and I welcome the invitation to a meeting with the Minister for Science, Research and Innovation, George Freeman, and himself to discuss further the concerns that underlie these amendments. I accept, as the letter says, that these concerns are broader than just this Bill, but we only have this Bill to deal with today and they are very significant in the context of what we are asking ARIA to do.

I thank the Minister not only for that invitation but for the all-Peers session that he arranged on 1 December to brief noble Lords on the devolved Administration agreement and ARIA’s governance. Those who attended were delighted that George Freeman turned up unexpectedly and generously shared with us, candidly, his views about several matters relevant to the establishment of ARIA and the policy implications of setting it up.

I was very pleased that, in response to a question about ownership of intellectual property posed by the noble Lord, Lord Lansley, the Science Minister shared his concern about the risk that publicly funded research and innovation may lead to foreign, as opposed to British, private or public gain—the issue at the heart of these amendments and mine in particular. We all now know that the Science Minister shares the concern that lies behind this problem. In fact, he shares it so much that he deflected the specific question about intellectual property and said, “I am much more worried about a very successful ARIA development falling into the hands of foreigners”.

In Committee, I pointed out that twice before the Committee stage I had tried to engage the Minister on this very issue—what is happening in the United Kingdom and has been happening for some time to some of our best and brightest businesses, and the effect it is having on our ability to apply these developments to the benefit of the United Kingdom. I even quoted on one occasion the concerns of the Bank of England about the way in which those businesses are funded and the damage this leveraged debt might do to the UK economy in the long term, but I could not engage the Minister on these issues. I was repeatedly told that we are an open economy that welcomes this investment, when in fact, in most cases, it is not investment at all

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I apologise for the length of my contribution, but it brings me to the end of this very important group. I hope that the detailed explanations of the Government’s approach, the further assurances on the robustness of the existing drafting in permitting the full suite of options that ARIA might need, and my offer of a meeting with the Science Minister for the noble Lord, Lord Browne, and others will be sufficient to enable the noble Lord to withdraw his amendment.

[Lord Browne of Ladyton (Lab)]

My Lords, I thank the Minister for the care he has taken in responding to this debate and I thank all noble Lords who have contributed to it. I find myself in the position—other than in the Minister’s case—of saying that I agree with everything everyone else said, and I include in that the noble Baroness, Lady Neville-Rolfe. I agree with everything that she said, other than that she has, with respect to both her and the Minister, made the same mistake in that they characterise this amendment as imposing or mandating behaviour on the part of ARIA. With respect to both of them—I pointed this out in my opening remarks to the Minister—this is a misreading of the Bill.

The amendment is placed in a position which does not mandate or impose anything. It enables ARIA to choose what it wants to do but directs its attention to what all contributors to this debate have made clear is an issue of necessity as far as they are concerned if we are to achieve what this letter I have received from the Minister expresses as our common objective—that is, to generate the greatest public value from ARIA’s exploitation activities which will be publicly funded. There is a common understanding that if these exploitation activities fall into the hands of businesses that are based abroad, large amounts of money and great improvements in our society and our socioeconomic affairs will be denied to the people of the United Kingdom. There is no doubt about that.

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[Lord Callanan (Con)]

I thank noble Lords who have contributed on this group of amendments. Turning to Amendment 6 in the names of the noble Lords, Lord Clement-Jones and Lord Fox, the noble Baroness, Lady Chapman, and the noble Viscount, Lord Stansgate, I start by thanking my noble friends Lady Noakes and Lord Patten for their supportive statements in general as the Bill has progressed through this House.

ARIA will be a lean, streamlined agency which we expect to employ people in the tens. It will recruit a small team of exceptional individuals with both technical expertise and scientific vision. I contend that it is appropriate that we consider how their time, focus and energy is best applied.

We have designed this new, unique agency to operate and behave in a way we do not usually see in the public sector—with leanness, agility and efficiency being core to its function. We have also tasked it with embracing risk and failure. As noted by my noble friend Lady Noakes during consideration in Grand Committee and again this evening, these exceptional scientists should not be fearful of or driven to risk-aversion by the prospect of FoI disclosures, nor should they be distracted or bogged down by the bureaucracy of fulfilling such requests.

The issue of the volume of FoI requests we expect ARIA to be subject to has been raised throughout the passage of this Bill, and comparisons have been drawn between the number of requests received by smaller public bodies such as parish councils, and other research organisations such as UKRI. Pursuing this exemption reflects our expectation that, given ARIA’s profile, its focus on high-risk research and the speculation on its activity so far, it would indeed be subject to a disproportionately high number of FoI requests. It is not accurate to suggest that ARIA would get the same number as a single UKRI research council or other small organisations. It is already clear that its activities will generate a much higher degree of interest and, therefore, corresponding requests.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests to DARPA. Let me remind the noble Lord that when making an FoI request in the US, requesters are required to consider paying applicable fees up to $25. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, it is not a like-for-like comparison to the FoI process in the UK. Therefore, in my view it is not right to assume that ARIA will receive a similar number of FoI requests to DARPA.

I also reassure noble Lords that our reasons for placing ARIA outside FoI legislation are specific and do not extend to other new public bodies, which will not have the same requirement for flexibility and agility and therefore will not require the same exemption.

However, to suggest that the agency will therefore be operating under a veil of secrecy is, in my view, not accurate. We expect ARIA to be an outward-facing and transparent body, which will proactively provide information about its activities to encourage collaboration around its programme goals, increase public understanding of its work and build public trust. Alongside this, it will be held to account by robust transparency arrangements. Let me remind noble Lords about them. It will publish its annual report and a statement of accounts, which will be laid before Parliament. It will be subject to annual audits by the National Audit Office. It will appear before and be accountable to Parliament through its chief executive officer and it will remain, of course, an arm’s-length body of my department in BEIS.

That said, I have also taken into account the opinions of noble Lords on this matter. To reflect the considered debate in Grand Committee on the balance of ARIA’s transparency and accountability arrangements with this unique freedom, I am happy to provide further assurances to noble Lords on ARIA’s reporting requirements. Annually, ARIA will proactively publish information on its regional funding and will make information publicly available on all delivery partners supported through the full range of its funding mechanisms. Taken alongside and together with ARIA’s annual report and accounts, these are significant and robust transparency arrangements which will ensure Parliament and the general public are informed of ARIA’s activities, the projects it funds and where it funds them.

I hope that, given these reassurances, noble Lords are satisfied that the FoI exemption serves an important function for ARIA and that we have struck the right balance here. I thank them for their input.

[Lord Browne of Ladyton (Lab)]

Before the Minister moves on to the next amendment and off the FoI amendment, has he read the Department of Defense information handout? That makes it clear that the vast majority of those who request information from DARPA would not have to pay any fee at all. Can the Minister share—either now or at some point—with noble Lords the genesis of his belief, which he has now repeated a number of times, that everyone who asks for information from DARPA has to pay a fee in the United States? If that is not true, then the comparison that we all make is a relevant comparison and is the only data; the only other thing we have is the Minister’s animus against freedom of information requests. And is he aware of the provisions of Section 19 of the Freedom of Information Act?

[Lord Callanan (Con)]

I think the noble Lord will find, if he looks at my remarks, that I did not say that every applicant will pay fees but that there is a general expectation that a fee of $25 will be charged, or even more in some cases if more information is required. However, there are exemptions to that, which can be exercised. If the noble Lord looks back at Hansard, he will see that I did not say that everyone would be charged a fee. In most cases, a fee would be applicable, but there are certain exemptions.

I turn to Amendment 7, in the names of the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Baroness, Lady Chapman, which relates to procurement regulations. I note that the noble Lords did not address this, but it is worth while setting out the Government’s position on that amendment. I believe there are clear reasons why this exemption is beneficial to ARIA and why it will be integral to the agency’s effective operation. First, unlike other R&D funders, ARIA will be commissioning and contracting others to do research for it in pursuit of its own technological visions or research goals. The process of contracting and commissioning means ARIA will be operating in fundamentally different ways from traditional R&D grant making, where procurement rules already do not apply. Placing ARIA outside the existing public procurement rules will mean that the agency can freely procure expert investment and consultancy advice, which will be important given the highly varied and technical nature of the agency’s work.

While we imagine that the bulk of ARIA’s research activities will be carried out by its partners and funders, it remains possible that ARIA may wish to procure and own a piece of research equipment to crowd-in interest from other research partners, or to accelerate the progress of a project. Freedom from traditional procurement rules will facilitate ARIA making those investments quickly and with ease. In my view, it is appropriate for ARIA to have greater flexibility than the R&D exemption would afford it so that it can design and tailor its contractual arrangements to precisely suit its research endeavour.

Secondly, in designing ARIA, we have put a premium on the agency investing and acting quickly. In our view, this agility would be incompatible with the public tendering process mandated in the Public Contracts Regulations 2015, which can require contracting authorities to put contracts out to open tender for up to two to three months. Such a delay could prevent critical investments being made with sufficient speed or, indeed, at all. In choosing to exempt ARIA from standard procurement rules, we have learnt from the successful approach taken by DARPA, which benefits from “other transactions” authority, giving the agency the flexibility to operate outside traditional US government contracting standards. It is our belief that ARIA should benefit from similar flexibilities.

I also dispute the notion that taking ARIA outside traditional procurement rules will leave the agency vulnerable to cronyism. I think this was a point made by the noble Baroness, Lady Chapman, in Committee. This exemption will ensure ARIA’s leadership and programme managers—who have been recruited for their technical expertise and scientific vision—can take decisions on ARIA’s procurement with autonomy, as they will have the freedom to procure at arm’s length from government and Ministers.

As I have already detailed, ARIA has clear lines of accountability, transparency and scrutiny in the preparation of its an annual report, scrutiny by the NAO and an annual independent audit to report on its procurement activities. As I have already alluded to, to reflect the constructive and considered debate in Grand Committee, ARIA will publish information on its delivery partners, and this expectation will be detailed in ARIA’s framework document. I thank the noble Baroness, Lady Chapman of Darlington, for tabling an amendment to that effect previously. I hope she and other noble Lords welcome this principled commitment to transparency, which would extend to delivery partners supported through the full range of ARIA’s funding mechanism.

In conclusion, I hope noble Lords have been assured that exempting ARIA from traditional procurement rules will be integral to the agency’s effective operation. The package of accountability, conflict of interest procedures and governance provisions that sit within this Bill are an appropriate counterbalance to that. Taken in the round, this represents an essential, proportionate and balanced freedom, placed in the hands of ARIA’s incoming leadership and programme managers. Taken together, I hope that the assurances and explanations I have been able to provide for noble Lords will allow the noble Lord to withdraw his amendment.

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[Lord Craig of Radley (CB)]

My Lords, I speak to Amendments 12 and 14 in the names of the noble Lords, Lord Browne of Ladyton and Lord Clement-Jones, the noble Viscount, Lord Stansgate, and myself. Noble Lords will be aware that a number of fields of modern technology and research are coming to rely more and more on mathematical sciences. When I gained my degree in pure maths at Oxford over 70 years ago, and for many years since, maths was seen largely as an adjunct to other fields of science and technology, but the world of digital—particularly of AI, machine learning, 5G and quantum computing—is now becoming mainstream. These diverse technologies rely very greatly on mathematics for help to find solutions and answers.

Mathematical sciences today are employed in many ways: from risk analysis of the use of driverless cars to the likelihood of collisions and how best to avoid them in space; from sifting with AI through large quantities of medical data to spot treatments for illness, to the best ways of introducing superfast broadband nationwide; contributing to security risk analyses, or delving into the more esoteric problems of known and unknown unknowns. Mathematical sciences feature in improvements that will benefit the lifestyle and health of wide cohorts of citizens and the esoteric work of astronomers unlocking the secrets of the cosmos. Analysing and predicting trends in the Covid-19 epidemic is another active field in which mathematical sciences play an important part.

The marginalisation and exclusion of mathematical sciences in government legislation prompts this amendment. For example, the 2004 guidelines on research and development limit the definition of mathematical contributions in research and development to the “physical and material universe”. Far from sticking to current definitions in this new legislation, is it not time to recognise the unique and growing contributions of mathematical sciences in the new digital age of AI, quantum computing and much, much more? The ARIA Bill is an ideal opportunity to do so and move on. The focus and capacity of the Bill’s provisions should explicitly embrace the mathematical sciences. These now include “blue skies” maths, which is sometimes referred to as a new form of “pure” maths.

My amendment is thus not a probing amendment; it is a simple and straightforward proposal to reflect the advances being made by mathematical sciences in the digital age. I challenge anyone to assert that this new agency will not be making use of mathematical sciences in its work. This Bill is an excellent opportunity to give the rightful recognition in statute to the key role of mathematical sciences in advanced research and inventions. I beg to move.

[Lord Browne of Ladyton (Lab)]

My Lords, I support the noble and gallant Lord’s amendments and have added my name to them. More broadly, I support the work of the London Mathematical Society and the Protect Pure Maths Campaign to emphasise the importance of mathematics alongside science and technology, not only to the whole STEM ecosystem but to the UK economy overall. The briefing that I have received from them estimates—I am sure this is correct—that mathematics adds more than £200 billion to the UK economy, which is nearly 10% of our GDP; and it is one of the top three subjects for graduate earnings. As the noble and gallant Lord explained, mathematics enables most of today’s exciting and urgent technological developments, including artificial intelligence, driverless cars, and the development of quantum computers and superfast broadband, as well as the modelling of the Covid-19 outbreak, underpinning national security, the finance sector and the rollout of vaccinations.

Mathematics is a British success story. If it gets recognition at this level from Parliament, I am certain that it will send a powerful and supportive message to young people across the country to consider mathematics as a career or for further study—and that can only be a good thing.

[Viscount Hanworth (Lab)]

My Lords, my Amendment 13 does not differ greatly from the previous amendment. Indeed, it differs in only one word: “pure”. In proposing my amendment, I have been mindful that mathematics is in danger in universities from an attempt by administrators to reduce its presence. At the University of Leicester, where I am an emeritus professor, a considerable number of staff described either as “pure mathematicians” or “managerial sociologists” have been sacked. The so-called pure mathematicians have been sacked on account of the unpopularity of maths, as revealed in perennial student surveys. Mathematical subjects tend to be unpopular with students because they are challenging. Nevertheless, they are the backbone of degrees in science, engineering and other subjects. I suspect that the managerial sociologists have been sacked because administrators are loath to recognise the expertise of others in a subject in which they believe they have significant experience. Be that as it may, my present concern is with mathematics.

Very few mathematicians would call themselves “pure” mathematicians. They describe themselves as mathematicians without qualification. Pure maths is concerned with giving order and clarity to the subject of mathematics, of which the exposition stands in constant need of reform. Applied mathematics, as the name suggests, is concerned with applying mathematics to substantive issues. We cannot have the one without the other. Legislation that declares that mathematical advances are not science unless they are advances in representing the nature and behaviour of the physical and material universe speaks of a wrong-headed attitude on the part of administrators who may have little understanding of the nature of science. In derogating the role of mathematics, this attitude could have dire consequences. I hope that the acknowledgement of the importance of mathematics to science will serve to counteract the wave of intellectual vandalism occasioned by the insurgency of administrators that is sweeping through British universities. I beg to move the amendment standing in my name, but I propose that it should stand or fall with the other amendments in this group.

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[Lord Browne of Ladyton (Lab)]

I speak principally to support Amendment 17 in the name of the noble Lord, Lord Morse, to which I added my name, but having heard the noble Baroness, Lady Noakes, twice—in Committee and today—on Amendments 15, 16 and 18, I am persuaded by her simple, accessible and convincing explanation that changing the Bill in this way would be to its benefit. Hearing from the noble Lord, Lord Morse, that the amendments reflect current practice, I am even more convinced, so I have corroboration and I support them.

I have had the benefit of having had the noble Lord, Lord Morse, explain his amendment to me on a number of occasions. If I was going to be partisan about this, I could think of a lot of contemporary examples of behaviour which the existing ACOBA system has manifestly failed to deal with. Apart from anything else, recent history has damaged significantly the reputation of politics and politicians as a group, and it has bled into civil servants because of the apparent practice of senior civil servants taking positions in private industry while continuing to work in the Civil Service. I have no intention of going through all of them. I am just convinced by the argument made by the noble Lord, whom I have known for a long period, that if we do not recognise that this could become a problem, and if it does become a problem, it will seriously damage ARIA and we should protect it—at the very least by including these provisions in the Bill and indicating that Parliament decided that people who have had those experiences should not move to other positions where it looks as though they are exploiting the information that they had for their own personal gain, and therefore operating in a way that most people in the country would think unethical. If in these circumstances we do not have a narrative that says, “We in Parliament are concerned that this may happen and took the steps that we could to prevent it from happening”, we will be complicit in the damage that will inevitably be done not only to ARIA but, yet again, to those who work in the public service as officials, civil servants, Ministers or just politicians.

[Baroness Chapman of Darlington (Lab)]

My Lords, I recognise the expertise of noble Baroness, Lady Noakes, on issues of corporate governance and, like my noble friend Lord Browne, I have enjoyed listening to her in Committee and again today. I will be interested to hear what assurances the Minister is able to give as a consequence of her amendments. I have learned a lot from her through this process and I look forward to learning more in the future.

I welcome Amendment 17 from the noble Lord, Lord Morse, whose case is no doubt bolstered by his experience over many years. It is a real joy to me that we have come to this House at more or less the same time. This is our first Bill together, and I am very pleased to add my name to his amendment.

There have long been concerns about “revolving doors” in politics—it is not something that started with this Government—but my noble friend Lord Browne was correct to observe that concern about issues such as those dealt with by Amendment 17 is growing, and frankly the Government have brought it on themselves. There is deep concern in the public mind about these issues and we shall see on Thursday what the people of North Shropshire make of it all.

I am struck by the fact that the Minister has taken the amendment from the noble Lord, Lord Morse—a very good amendment which we support—and has directed us to look at paragraph 11 of Schedule 1, which states:

“The Secretary of State may by regulations make provision about the procedures to be adopted for dealing with conflicts of interest.”


They may, but “may” is doing a lot of lifting there, and obviously they may not as well, so there is nothing to give us any assurance that the danger of which the noble Lord, Lord Morse, is correct to warn us could be averted by that provision. We are just not buying it. Although the Minister has, for illustrative purposes, provided a suggestion of how the regulations might look, that does not provide us any assurance whatever.

Given the Minister’s reluctance to accept any of the suggestions that we have made—none of the suggestions, from FoI to reporting, have been taken up by the Government—he is somewhat leaving ARIA exposed, in the way that the noble Lord, Lord Morse, explained so well. We want this organisation to succeed, but because of the Government’s rigidity on these issues, the fear is that we are setting it up with a weakness: this lack of transparency and ability to challenge.

The Minister is kidding himself if he thinks that these issues will not be scrutinised and that some of the problems that may emerge will not somehow get out. I am sure that the Public Accounts Committee will enjoy crawling all over this when it gets the opportunity to do so. We want this to work, but I am afraid that the Government’s approach is not doing ARIA any favours.

I want to hear what the Minister has to say and whether something can be done to provide us with the assurance we are looking for that ARIA will not be characterised—or mischaracterised, I hope—as some sort of secret agency. That would only cause this fascination and determination to probe into its activities to grow.