Advanced Research and Invention Agency Bill

Lord Fox Excerpts

Committee stage
Wednesday 17th November 2021 Grand Committee

[Lord Browne of Ladyton (Lab)]

My Lords, I will speak in support of Amendments 1 and 26—to which I have added my name—and Amendment 21. Like the noble Baroness, Lady Brown, and the noble Lord, Lord Oates, I have to tender my apologies for not contributing to the Second Reading debate. I was not at COP 26 or on my way there, I was actually in this Room in the Committee on the Armed Forces Bill and speaking to amendments in my name and which I had supported. I regret that I was unable to be there.

I agree with the arguments put forward by a number of noble Lords and I do not intend to rehearse them. Because I was not at Second Reading, I read the debate very carefully and a number of Peers raised the issue of lack of purpose of ARIA and suggested a climate change purpose, which I support. The Minister pushed back on this. He said that solving particular national challenges falls

“very much within the UKRI remit”

and a programme to develop these challenges would be decided by the national science and technology council in due course. He may be in a position to tell us how long that “due course” will be today. It would be interesting if he was.

Finally, he commented that:

“It would clearly be inappropriate to create another new body to do essentially the same thing.”


He said that ARIA’s leadership would be responsible for setting its strategy and—here I quote the issue I am really interested in—upholding

“the autonomy which is at the heart of this new agency”.—[Official Report, 2/11/21; col. 1200.]

That is what I want to explore. I hope I have not misrepresented the noble Lord’s response but if I have, he will have the opportunity to correct me.

It is clear that ARIA enjoys some autonomy but it is not unlimited. In fact, in exercising its functions as set out in Clause 2(6), it “must have regard to” a number of things and they are very broad. I will read them in short:

“contributing to economic growth, or an economic benefit, in the United Kingdom … promoting scientific innovation and invention in the United Kingdom”—

there is the word “innovation”—and

“improving the quality of life in the United Kingdom”.

That is pretty broad. So, it is constrained to do that.

Clause 5 states:

“The Secretary of State may give ARIA directions … in the interests of national security.”


These directions must be complied with and I fully appreciate why that is there. I understand it and I think it is necessary, and I do not expect the Minister to expand on that.

However, I do expect him to expand on the potential significant restriction that is in Clause 4. Clause 4 grants the power by which the Secretary of State may make grants to ARIA. Clause 4(2) states:

“Grants under subsection (1) may be subject to conditions.”


Clause 4(3) refers to one particular condition, for some reason, in the absence of any others: that the grant may need

“to be repaid (with or without payment of interest).”

I was intrigued by that and thought there was bound to be an explanation of what the Government have in mind. What limitations on the autonomy of ARIA are going be put in these conditions? Why do the Government think they need this restriction?

As always, I reached for the Explanatory Notes. I will quote them because they make very clear the purpose of this:

“This Clause provides the Secretary of State with a grant funding power in relation to ARIA.”


I had worked that out. They then state:

“The Secretary of State can make grants subject to conditions. In particular, the conditions may require the repayment of financial support with or without payment of interest.”


They simply restate the clause.

I am still at a loss to understand. I hope that if the Minister chooses to reject any of these amendments on the basis of the restriction of autonomy, he will give the Grand Committee the opportunity to understand what restrictions the Government intend to put on the autonomy of ARIA. That will help us, at the appropriate time, to decide whether these restrictions—I do not believe they are restrictions; I will come to that in a moment—are actually restricting any autonomy which it is likely to have. If that is the issue on which these amendments stumble, it needs to be described in a wee bit more detail.

However, my argument is that these provisions do not seek to create a new body to do essentially the same thing as the national science and technology council, but of course we will not know what that is until we see what the national science and technology council does under the leadership of the Prime Minister. In the context of a world in which we have clear national priorities, we are told that we cannot allow an autonomy for this institution that we would not allow for any other institution; that is, to act against the national interest. I remind the Minister that the pursuit of a sustainable and resilient society is one of the four overarching objectives set by the strategic framework set out in the integrated review. That framework, in the Government’s own words,

“establishes the Government’s overarching national security and international policy objectives … to 2025.”

The provision to constrain ARIA from acting against that is clearly in the stated agreed national interest.

In relation to the Climate Change Act, that is a national obligation. Surely, we cannot anticipate that ARIA would act against that national obligation of net zero by 2050, or the imperative of adaptation to climate change, or the environmental goals which have been, and are being, developed in this Parliament. In a sense, red lines are being put around ARIA but they are about national imperatives, which are shared by everyone, including the Government. They are desirable for all the reasons that noble Lords have set out but, I have one question for the Minister, which I would like him to answer either now or at some point before Report: what do the Government expect the CEO and the board of ARIA to want to do which would be inconsistent with these provisions? I guarantee noble Lords that should it wish to do any such things, the Government would seek to restrict its autonomy because it would be acting in an undesirable way.

[Lord Fox (LD)]

My Lords, this has been a fascinating debate. I thank all noble Lords for their contributions. I was delighted to hear the defence of basic research made by the noble Lord, Lord Willetts, and the point he made about bureaucracy in the rest—it should be said, the larger part—of research funding was well made and echoed many of the Second Reading comments.

However, there is a danger that we are taking the DARPA bait a little too seriously. The Government have played this into all their communications. Let us look at what we are comparing. DARPA has a huge budget, many times bigger than even the best budget we could expect for ARIA. It has been there for decades. The noble Lord, Lord Willetts, mentioned Mariana Mazzucato. What she is very good at is pointing out how the technologies developed in DARPA have then been picked up by technology businesses within the United States, some of them part of the “military-industrial complex”, as the noble Baroness, Lady Bennett, put it, but of course Apple is one of her best examples and even the noble Baroness, Lady Bennett, might have one of those to hand. The mobilisation of this technology is absolutely key, which is why what the noble Lord, Lord Broers, had to say was so important and why the project management part is such a central point.

I refer back to the points that started to be made through Amendment 25, proposed by the noble Lord, Lord Lansley. At Second Reading, the Minister deployed the words of Professor Dame Ottoline Leyser, the chief executive of UKRI. He quoted her telling the Public Bill Committee in the other place that

“the priorities that the Government and Ministers set to solve particular challenges for the nation … fall very much within the UKRI remit”.—[Official Report, Commons, Advanced Research and Invention Agency Bill Committee, 14/4/21; col. 8]

The implication—and almost the stated point—was that because UKRI is covering this, there is no need for ARIA to cover it.

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[Lord Morse (CB)]

My Lords, I will speak only briefly, primarily about the amendments from the noble Baroness, Lady Noakes. They all reflect best practice in corporate behaviour and should be taken very seriously. The one that goes even deeper than that is Amendment 6, which looks at the prohibition of civil servants and former Ministers from being on the board for five years. That is really important and thoughtful—that we do not import Civil Service groupthink, which is well protected in other venues and continues for long periods of time. Not to have that on the board is a major protection for the qualities that you want ARIA to have.

[Lord Fox (LD)]

My Lords, I am now going to indulge in some groupthink by agreeing with the last speaker and the noble Baroness, Lady Noakes. The Government fail to take her advice on corporate governance at their peril. All her amendments are sensible and ones that I hope the Minister, who clearly will not endorse them today, will be able to take away, think about and maybe amend a little to put the Government’s thumbprint on them. I suggest that it would be helpful to look at them seriously.

Amendments 5 and 7, as we have heard from the noble Lord, Lord Lansley, seek to inculcate the House of Commons Select Committee into the appointments process, at least at some point within it. Noble Lords will see, later on in the Bill, that Amendment 32 also seeks to carve out an ongoing role for that Select Committee. Clearly, if I were to stand by Amendment 32, Amendments 5 and 7 would also make a lot of sense, in that they will be there at the beginning.

It may be out of kilter or otherwise, but this set of amendments really looks at the membership and members of the board. I have a quick query, which may just be me getting things confused. The Minister kindly sent around the draft of the SI on conflicts of interests. Of course, this may come in when we come to talk about the fourth group of amendments. It refers to “members” throughout, and I am not clear what a member of this organisation is, which made me think that I am not actually clear what the legal structure of this organisation is. I think there is some work to do to help me—if no one else—through. Is this an incorporated association? Is it a company limited by guarantee? What is it? Until we know that, some of the other things that we need to discuss will become very difficult.

[Baroness Chapman of Darlington (Lab)]

My Lords, I will quickly put on record our position on this. I am also fascinated to find out why this issue of the Chief Scientific Adviser is there. I can imagine why, and I am speculating as to why, but I would like to know what the Minister had in his head in proposing that.

I put on record our support for Amendments 5 and 7 in particular. One of the themes from us on this Bill is about trying to enhance democratic engagement with ARIA—not control or oversight, but we think that there is space for some engagement there.

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[Lord Fox (LD)]

I asked some specific questions about the future legal structure of ARIA and the nature of who its members are. I do not think the Minister had time to answer.

[Lord Callanan (Con)]

I will write to the noble Lord with the legal details he requires.

[Baroness Noakes (Con)]

My Lords, I can probably help the noble Lord, Lord Fox. In the case of public corporations created by statute, it is quite common that they are the members. It is not usually drafted as if the board is a separate legal entity.

[Lord Fox (LD)]

The non-execs and execs, or just the non-execs?

[Baroness Noakes (Con)]

No, the members. The members are executive and non-executive, as defined. They comprise the body. That is quite normal in public sector formulations. While I referred to the board when I introduced my amendments, that is not set out in legislation because they are the members. In common parlance, I was talking about the creation of the board of the agency.

I thank noble Lords for their support and their contributions to this short debate, and I welcome the noble Lord, Lord Morse, to our deliberations. I heard what the Minister had to say. He has decided that there will be four executives and therefore a minimum board size of nine, but I do not think he really engaged with the substance of my arguments on why the potential for 15—or, indeed, more because the Bill does not limit the size of the board to 15—which was a little disappointing.

When the Minister dealt with whether or not there could be payments for pensions or gratuities to non-executives, he said that the Government do not intend to do that but are going to put it in anyway. Actually, this is really old drafting, which I can point to in many old statutes, which have not been used for many years, for very good reason, and there really is no need to carry on drafting in this way.

I could go on but I am not going to answer the individual points made by the Minister in response to my speech. I hope he will go away and read more carefully the content of the debate because I think there are some issues that he did not deal with in his reply, and I will certainly read his remarks more carefully when I see them in Hansard. I anticipate returning to some of these issues on Report. In the meantime, I beg leave to withdraw my amendment.

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[Lord Browne of Ladyton (Lab)]

My Lords, I want to express the hope that the Minister is going to tell the Committee that consultations have taken place with the Scottish Government, the Welsh Government and whoever the appropriate people are presently to represent the people of Northern Ireland about the issues raised by Amendment 4, and that she can satisfy the Committee that this has all been agreed. If not, I can tell her that it has the potential to be quite a serious issue in Scotland.

[Lord Fox (LD)]

My Lords, this has been an interesting debate. I fully associate myself with the words of my noble friend Lady Randerson. To put it plainly, we have heard around the Committee a strong feeling that the nations of the United Kingdom have to be fully engaged in this agency in some way, although, to echo the last speaker, the way in which that can be worked through is something we can all be flexible about. I think we all look forward to the debate on Amendments 37 and 40 to hear what the Government's thinking is about those.

On Amendment 9, having some eyes and ears around the regions as well as the nations is essential. Regarding most of the amendments from the noble Baroness, Lady Chapman, she is right to stress that inequality is a central issue and it should be a focus of what we do. However, I would point out that while a lot of people have mentioned London in the context of being rich and well funded, it is not just a matter of region because within a region there can be huge variation. I shall use the example of the London Borough of Tower Hamlets, which I declare I have a home in. There we have some of the richest people and some of the most deprived living a few yards apart.

The noble Lord, Lord Ravensdale, raised the issue of HQ locations. Some noble Lords may know that the European Medicines Agency was due to go into Tower Hamlets but now, for reasons they will all know, it is not. So I will mention that I am supporting the campaign by my colleague in Tower Hamlets, councillor Rabina Khan, to locate ARIA in Tower Hamlets and take the place of the European Medicines Agency. It would be a good development around there and something that I think would be very constructive.

Although I do not fully agree with the wording of the amendments from the noble Baroness, Lady Chapman, I think there is a sense in there that we need to get a hold of. How does this agency engage? How does it not become isolated in the golden triangle or somewhere else? That is the question to which we seek some response from the Minister. That is the issue we will take to Report, whether in amendments such as this or in a new version that seeks to make sure we have engagement across the whole country, national or regional.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank the noble Baroness, Lady Randerson, for her remarks on these amendments. Many points were raised that I agree with, including a number from the noble Baroness, Lady Chapman. I will address the different elements of this group in turn.

First, I should be clear that it is absolutely the Government’s intention that ARIA increases prosperity across England, Wales, Scotland and Northern Ireland. This is reflected in ARIA’s existing functions, which require it to have regard to contributing to economic growth or economic benefit in the UK or, for example, improving the quality of life. There is no need for specific additional powers to allow ARIA to operate regionally; the Bill as it stands already allows ARIA to do so. Addressing regional inequality is at the heart of our levelling-up agenda and innovation strategy, driving greater benefits from our R&D system to more places across the UK.

I will now address head-on the proposed location of ARIA, because there is none. No decision on the location of these offices has been taken. As a funder, the contribution the new agency makes will result from its project portfolio and funding decisions; it is not an infrastructure project. ARIA will have only a small physical presence at its headquarters, the location of which will probably not be agreed until the appointment of the chief executive officer. That may have some bearing on where it is to be located. I cannot make the commitment that it will not be based in the London-Cambridge-Oxford arc, but that is not our intention at this stage. We have a completely open mind as to its location.

Amendment 23 would impose a new duty and reporting obligations on ARIA in this regard. It is my view that these system-wide ambitions should not be the statutory responsibility of a small new agency that represents about 1% of UK R&D spending. As we have stated previously, UKRI is the public R&D funder with system-wide responsibilities. Tackling systemic issues, such as the overall regional distribution of R&D funding, falls firmly within the UKRI remit.

ARIA’s purpose is to pursue the most ambitious research and innovation projects, where the benefits are long-term and uncertain, wherever in the country they are located. ARIA should not be subject to the political priorities of the Government of the day, no matter how long-standing or important those priorities might be. I believe that seeking to quantify its economic impact in every region of the UK and submitting that for outside assessment, under the shadow of this statutory obligation, would incentivise exactly the same risk-intolerant approach that we are seeking to liberate ARIA from.

We are in danger of expecting ARIA to spread itself too thinly, against the recommendation of the Royal Society and the House of Commons Science and Technology Committee that it focus on a very limited number of programmes. ARIA cannot be expected to be active in all regions of the UK at once, so I suggest that Amendment 34 is not an appropriate obligation to place on the organisation.

We have spoken at length about the importance of providing ARIA with independence and equipping it to take risks and tolerate failure. A board appointed by the Secretary of State advising ARIA where to direct its funding represents an extraordinary level of political control over ARIA’s activities. It is completely inconsistent with the decisions on project-level spending being taken by technical experts based on a deep understanding of the relevant field and the scientific merits of the proposals.

In a similar vein, Amendment 4 looks to add a representative from each of the devolved Administrations to ARIA’s board. Ministers in Scotland, Wales and Northern Ireland are unanimous in their support for the important principle of ARIA’s independence. We have had close discussions with Ministers and officials at all levels in all three devolved Governments throughout the passage of the Bill.

We have agreed a mechanism for input with the devolved Governments which will be set out in an agreement between the four Administrations of the UK. The agreed text of this MoU will be shared before Report, but it is contingent on the government amendments we will come to discuss later. The final version signed by all parties will be published before Royal Assent. All four Administrations of the UK are committed to upholding the important principles of ARIA’s strategic autonomy, operational autonomy and minimal bureaucracy. Similarly, all are committed to facilitating ARIA’s seamless operation throughout the UK.

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[Baroness Noakes (Con)]

My Lords, I can probably help the noble Viscount. It is a shame that the noble Lord, Lord Morse, has not stayed with us. I think what I am about to say was referred to in the opening remarks of the noble Baroness, Lady Chapman.

Because the Comptroller and Auditor-General is specified as the person to examine, certify and report on the statement of accounts, the National Audit Act 1983 gives the Comptroller and Auditor-General the power to do value-for-money audits in the way that the National Audit Office does for all government and public departments. The power therefore already exists and there is no need for Amendment 11, as I think the noble Baroness herself conceded; it is simply not an issue. A power for the Comptroller and Auditor-General to carry out a value-for-money audit will exist and the audit will be carried out in the normal way that the National Audit Office undertakes its value-for-money audits.

[Lord Fox (LD)]

Again, this is an interesting group of amendments, and the noble Baroness, Lady Chapman, and the noble Lord, Lord Ravensdale, should be congratulated on tabling them. Bearing in mind what the noble Baroness, Lady Noakes, has just said, I was already planning to focus on Amendments 12, 13 and 14 and not to talk to Amendment 11, and that is probably a good idea.

However, I say to the noble Lord, Lord Browne, that I do not think his work was wasted because one way or another he has managed to uncover the fact that the Government have decided deliberately to exclude this requirement that they expect every other central government purchase to meet. The Minister has a serious question to answer as to why that is being left out.

Amendments 12, 13 and 14 cover an important issue. I do not think we need to underline, after the week or 10 days that we have just had, why it is in the interests of ARIA itself for it to be seen that there is no conflict and there are no issues around where the money is being spent. In a sense, these amendments or versions of them, will help ARIA in its own housekeeping. Of course, the Electoral Commission will register donors. As the noble Baroness, Lady Chapman says, we then need a list of all the companies and then to go to Companies House to find out who is registered as being in control of those companies. Making it easier also makes it clearer to the ARIA administration what it is dealing with.

I go back to the statutory instrument that we are not debating today, which talks about conflict of interest—so it is clearly relevant. It says that a member of ARIA must disclose any “relevant interests” promptly on appointment. The trouble with that is that I do not think that many people can consider their donations to be a relevant interest, but they are relevant with respect to an organisation of this nature. So something clearer needs to be spelled out, either in the statutory instrument or in the primary legislation. I would prefer it to be in the primary legislation.

When that is done, in listing the companies that are being supported, I suspect that the Minister is going to stand up, in the same way as he is going to stand up when we debate the freedom of information stuff, and say, “This work needs to be kept under wraps and kept secret”. There is a balance to run on this, and if there is an issue we need to find a third-party agency to scrutinise it on behalf of Parliament. But to hide specifically through national security or proprietorial security is wrong, because in that darkness—even if abuses are not happening—the perception of abuse will happen, which will harm ARIA before it even starts.

[Lord Broers (CB)]

I have just a word of disagreement on some of this. Short-termism has been our problem; we must keep the timescales long enough. If you keep pulling the plant up and looking at the roots, it will not grow. On the other hand, one thing that we should practise from the beginning is what is in Amendment 16 from the noble Lord, Lord Ravensdale. The one thing that technologists have made a mistake on in the last decade or two is not to bring social scientists in early, to really look at the implications of what their technology will do. I strongly support that amendment, but I have severe reservations about the others.

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[Baroness Chapman of Darlington (Lab)]

My Lords, I support the noble Baroness, Lady Noakes. I had not had the pleasure of hearing from her at such length as we have today, and I am very impressed by her contributions. The issue of borrowing money is a concern. There is clearly the potential for financial risk but also significant reputational risk when a level of borrowing might emerge that may seem unduly risky. I am concerned about that and interested in what the Minister will say to prevent that concern doing any damage to ARIA.

[Lord Fox (LD)]

My Lords, rarely have I got to the end of a speech by the noble Baroness, Lady Noakes, and been crying out for more. On her second amendment, I wanted to know what she had against partnerships and joint ventures. I do not think there was a clear under -standing as to why that is a particular concern, given that many research processes go ahead collaboratively as joint ventures, partnerships or co-projects. I am interested to know, because I am sure there is a good reason; I just do not know what it is. While we are talking about that amendment, I would be pleased if the Minister could confirm that, whatever relationship ARIA is putting together, the National Security and Investment Act applies. I assume that to be the case.

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[Lord Lansley (Con)]

The purpose of Amendment 22 —this is in the part of the Bill about what conditions ARIA might attach to its financial support—is to give ARIA the flexibility to attach whatever conditions it wishes. In some cases, it might give financial support and not seek to retain intellectual property, or it may enter into an arrangement which says that it retains all the intellectual property, or somewhere in between. However, that is for the circumstances of the individual project rather than something mandated in legislation.

[Lord Fox (LD)]

My Lords, the more I look at this and listen to the wisdom of the noble Lord, Lord Lansley, and, previously, the noble Baroness, Lady Noakes, the more curious paragraph 17(2) of Schedule 1 becomes, because of both what is in it and what is not. I am prepared to accept the thesis of the noble Lord, Lord Lansley, that “and other property” would add some copper plating to it.

I hark back to the end of the response of the noble Lord, Lord Callanan, at Second Reading, where I popped up and asked a question about property. The Minister was clear that this would include ARIA purchasing pieces of research equipment. Research equipment can run to many tens, if not hundreds, of thousands of pounds—at least as much as property—yet, somehow, that does not appear to be on this list either. There is perhaps work to be done to understand the objective of this list. I am sure that the Minister will say that it is to afford ARIA the amount of freedom that it needs, but it seems to be quite a selective list, and I wonder what it was based on in the first place.

I turn to the other amendments before us and suggest that perhaps the most important is Amendment 28. It is a great shame that, because of a prior appointment, my noble friend Lord Clement-Jones was not able to be here for this section at least because, when it comes to intellectual property, most of us know that he has a strong expertise. I know that he will read very closely the Hansard report of this and, far from marking the homework of the noble Lord, Lord Lansley, I am sure that it will be the Minister’s homework that he will be marking. I hope that we can return to it.

Looking at Amendment 28, it seems eminently sensible to legislate for success, because we want this to succeed. If this succeeds, there should be a flow of revenue coming back into ARIA. We need to understand that this will not then become a cash cow for other parts of BEIS or indeed the Treasury. What this amendment therefore seeks to do—and, I think, would achieve—is to put that ring-fence in place; for that, the noble Lord, Lord Lansley, should be congratulated.

[Lord Browne of Ladyton (Lab)]

My Lords, for the second time today I am grateful to the noble Lord, Lord Lansley—the first was for saving me before the Minister had to expose my misunderstanding of a part of the Bill. He revealed, as the noble Lord, Lord Fox, pointed out, an even more fruitful argument for later in the consideration of this Bill, which I will look at more carefully.

I am grateful to the noble Lord for drawing my attention to the specific provisions of paragraph 17 of Schedule 1. When I read it, I honestly do not understand the purpose of paragraph 17(2) at all, unless these powers are not included in what is I think the most expansive and limitless description of powers that I have ever seen anywhere. In paragraph 17(1), ARIA is given powers to do

“anything which appears to it to be necessary or expedient for the purpose of, or in connection with, the exercise of its functions.”

There does not seem to be any point in trying to list anything. I tried to see if there was anything in common with these particular powers that required them to be expressly described, and I may find out that that is right when the Minister responds.

I am also grateful to the noble Lord for opening up this issue of intellectual property, because it was my concerns about where the intellectual property may end up that caused me to table Amendment 30. It is against the recent experience of practice that has developed in this country of businesses with intellectual property that has been developed by public funds disappearing off, principally into the United States; this is sometimes because a business is stripped apart and the prize piece is taken out because it is of greater value in another marketplace than it is in ours.

This is an issue on which I hope to have an opportunity to expand when we get to Amendment 30, which is causing great concern to the Bank of England about its effect on the economy of the United Kingdom. I am sure we will get an opportunity to debate that next time we meet in Committee. I have nothing further to add, but I am grateful to the noble Lord, Lord Lansley, including for encouraging the noble Lord, Lord Broers, to explain why the freedom of intellectual property management is crucial to getting the best of ARIA.

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[Lord Fox (LD)]

On Second Reading, the noble Lord, Lord Callanan, said that “It”—ie ARIA—

“can fund the purchase of a piece of research equipment, which ARIA then owns, and it can loan it out on the condition that it is then returned within a specific timeframe.”—[Official Report, 2/11/21; col.1204.]

So essentially, it becomes an equipment lending library. That is not exactly what the Minister has just said. Are the two things both true, is only one of them true, or what?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I think they are both true.