Life Sciences Industrial Strategy (Science and Technology Committee Report)

Lord Desai Excerpts

Tuesday 23rd October 2018 Lords Chamber

[Lord Desai (Lab)]

My Lords, I thank the noble Lord, Lord Patel, for chairing the committee that created this report and for his very good presentation. I also blame him for getting me to speak, otherwise I would not have spoken. Being the 11th speaker I promise to try to say something different. I promise not to talk about Brexit or the 29 Nobel Prize winners.

In a long time following government policies I have never seen an industrial strategy succeed if it was formed by the Government. Governments are not very good at forming industrial strategies. Industrialisation happens from the private sector not the public sector. Reading the report, very good though it is, I thought that setting up boards and implementation strategies was all top down. Somehow we will sit there and design a policy which will be implemented. That is not the way that innovations happen. I have been through the Harold Wilson policy when the idea was to encourage large corporations over small ones. Then we had the Conservative Party strategy and then new Labour’s one. We need to understand that if this is the way you want to go, fair enough, but there has to be a single lead person to implement it.

I will give two examples. First, when the redevelopment of the London docks was done—it is not an industrial plan but it was a major project—the noble Lord, Lord Heseltine, was crucial in driving the process forward. It happened because there was a responsible point person to implement it. Another example is the northern powerhouse strategy where the noble Lord, Lord O’Neill, has taken a lot of interest and been driving it forward. So yes have a strategy, have various committees that do various things, but then have a point person whose responsibility it is to deliver the strategy. Unless you have a point person the strategy will not be delivered. In parenthesis, I also worry about these very important people who do very useful work in their daytime jobs sitting around in a committee room in London for three or four hours. The opportunity cost of that must be enormous. They should have a conference call. We need to think about what successful strategies of innovation or change we have followed in the past and whether they can be repeated in this case.

My next point is about the NHS. It has been called the pivotal agency for this subject. It has been criticised by my noble friend Lord Hunt. I want to try to explain why it would be difficult for the NHS to do what is expected of it. We all love the NHS and we are always unhappy with it. We always want to lay more and more aims and objectives and goals on its shoulders. The main thing about the NHS, which will always be the case, is that it is underfunded. It is a universal law that if you price something at zero you will have perpetual excess demand and you will have to ration. You will have to decide what to do and what not to do. Current needs are so acute that things such as innovation may happen, but they will not happen by policy but by accident. As my noble friend Lord Hunt pointed out, you may have innovations that will be helpful and cut costs in the long run but to be able to afford to try that you need a bit of excess fat in the system. That excess fat is not there. If you adopt an innovation and it goes wrong the whole world will descend on you—newspapers and everybody will say, “My God, why are they wasting money doing this?” It is like a poor family living at the edge of the poverty line being told, “The food your children are eating is not healthy. Why don’t you eat organic food?” They reply that yes it would be better for them but they cannot afford it. One of the reasons for the obesity epidemic in poorer families is that bad food is cheaper and good food is expensive. But that is another story.

If we are going to have the NHS do anything about education innovations we will have to think of a new way of doing it. It is also a highly centralised situation. I read somewhere—in paragraph 58 or something—that they do not want an innovation that cannot be implemented across the whole thing. Why do they not adopt an innovation and let it spread? That is not in the logic of a centralised system. A centralised system is not very good for encouraging innovation. We know all this. It is not rocket science. Let us be kind to the NHS and say that what it does it does very well but it will not be able to do other things that we want it to unless we generate some extra income for it.

I shall just mention data. The noble Lord, Lord Freyberg, who will follow me, knows much more about the commercialisation of data and so on, and I am sure he will say more about it. However, I shall make two observations. By and large, under both parties in government, we have not been very good at using internet data in a large data-creating strategy—at recording, storing and using large datasets. We have failed again and again and had to abandon it. If we are to see NHS data converted into income and benefit for the NHS, we will have to get a better strategy than we have had so far.

There are two dangers. First, if we insist on centralisation, it is too large a problem to standardise and get all the data in a single format. If we do not do it, however, the problem will be that some regions will benefit from selling their data but others will not. The biggest danger is that as soon as you sell data people will say, “You’re privatising the NHS. Stop it”. I would love to see a package in which NHS data is sold for the benefit of both research and patients and can generate income. If someone can find a way of doing it, they should get a Nobel Prize. But it is not as easy as all that.

I want to say one more thing. It is usually said that in America it is much easier for pharmaceutical firms to innovate. It is more difficult in the UK. Why is that? In the UK we have what I call a monopsony buyer of drugs. There is a single buyer of drugs with very little room for experimentation. It does not have the excess fat to be able to experiment; it must buy whatever is going. In America, not only is expenditure much larger—as a total, as a percentage of GDP and per capita—it is decentralised. A pharmaceutical firm can try out an innovation in this, that or the other region and sell it across much more easily than by going to the NHS and having to bargain over whether it will buy the drugs. This is not an insurmountable obstacle, but we have to understand that the nature of the NHS is such that it would not be a very efficient buyer of innovations that it would be risky to adopt and which could fail.

In this respect, perhaps we ought to study why innovations in fields such as fintech and artificial intelligence in the UK are much more successful. There are fantastic small fintech firms that then grow bigger because they start small and are bought out. The fintech process is similar; it does not involve that much science but it involves technology and imagination in inventing new products and uses. We have a thriving fintech sector and a thriving artificial intelligence sector. It should be similar in this case; we should be able to have many successful small, innovative firms, which later grow into larger firms—or not. One question we ought to study is: why might there be obstacles in the life sciences sector that prevent such processes happening?

I have spoken for far too long, but this is an excellent report and I am sure the Government will derive the right lessons from it.