Treasury Support for UK Science

Lord Johnson of Marylebone Excerpts

Wednesday 4th November 2015 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I commend the hon. Member for Penistone and Stocksbridge (Angela Smith) on bringing this issue to Westminster Hall for consideration.

I spoke to the Minister beforehand, so he knows which two issues I shall bring to his attention. I want to take up the issue of Northern Ireland, which was raised by my hon. Friend the Member for East Antrim (Sammy Wilson). I want to give two examples of science funding enabling universities in Northern Ireland to move forward with tremendous innovation and long-term vision to create and perfect medicines and research that will benefit people with diseases.

In Northern Ireland, we benefit from funding from a range of sources, including the EU, industry and charitable bodies, and others, including the hon. Member for Bury St Edmunds (Jo Churchill), have mentioned where moneys come from. A raft of funding comes into play. The key to that is the large amount of funding that comes centrally from the UK Government, which could be at risk if the UK science budget is cut in the spending review.

The UK science budget funds UK research councils, which in turn fund l5% of the research done by higher education institutions in Northern Ireland. The science budget also funds recurrent research funding. When I was about eight, which is a long time ago, I played with dominoes; one hits the next, and so on right round. There is that sort of domino effect with funding. The recurrent research funding covers 35.5% of the research income of higher education institutions in Northern Ireland. In addition to funding from the UK science budget, Northern Ireland also receives money from other UK Government sources that are not part of the UK science budget, such as Government Departments and Innovate UK. That represents some 22% of the research income of higher education institutions in Northern Ireland. A significant amount of Northern Irish universities’ research income is provided for by the UK Government. I am sure that that shows how important the budget is to the Province, to our students, and to innovation.

We need to continue with positive steps that will send out a strong signal of stability to the industry not just in Northern Ireland but across the United Kingdom. Evidence shows that private sector funding of science follows the lead of public sector funding.

[The Minister for Universities and Science (Joseph Johnson)]

indicated assent.

--- Later in debate ---

[The Minister for Universities and Science (Joseph Johnson)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing the debate, which is the fourth on the subject in as many months. The topic is also the subject of an ongoing Science and Technology Committee inquiry. All that activity underlines the great importance of science to our economy and to Members throughout the House. We have had an excellent debate, which has included fine contributions from Members representing all parts of the country from Bolton to Bury St Edmunds and Belfast, from Pudsey to Cambridge, from Cardiff to St Ives, and from Glasgow to Kirkcaldy and Cowdenbeath. Many issues have been raised, and I will try to touch on some of them later on, but all Members have essentially made the same fundamentally important point, which is that science is vital and so is the Government’s role in underpinning our excellent science base.

A reference was made, somewhat disobligingly, to the “dead hand of the Treasury” in all of this. Given that this debate specifically requests the Treasury’s view on our science budget—I am here representing all of Government, including the Treasury—I would challenge that characterisation and point out that the Treasury hand has fed the science base well in difficult times. Let us not forget the financial circumstances that we were in back in 2010 when the decision was made to protect the science ring fence. At a time when we were making decisions that involved discretionary cuts of £98 billion across the rest of Government, the Chancellor decided to protect the ring fence. We can be proud of that decision, and we welcome any scrutiny of our record.

The Chancellor has subsequently followed through on that big statement about the importance of science in our economy. In April last year, he set out his vision in a speech in Cambridge and said that he wanted the UK to be the best place in the world to do science. He has taken action since then to deliver on that ambition with, most recently, the publication of the Government’s productivity plan, which sets out our proposals to boost the UK’s growth and has science and innovation at its heart. We have a track record of demonstrating our understanding of the importance of science to our economy at a time of difficult decisions elsewhere in public expenditure.

Going into this Parliament, we made clear the importance to us of setting out a clear road map on the capital side of science expenditure. We committed to invest £1.1 billion per annum in the UK’s research infrastructure, rising with inflation, from 2015 all the way to 2021. That investment will ensure that the UK stays at the cutting edge of research and will help us to meet some of our greatest challenges. We can see the fruits of that commitment around the country. The Francis Crick Institute, which is almost complete and in which the Government have invested £350 million, will be a world-leading bio-discovery centre that will solve fundamental questions of health and disease. I was pleased to announce the other day that we had entered into negotiations with a preferred bidder for the building of a £200 million polar research ship that will keep Britain at the forefront of ocean science for decades to come. Tonne for tonne, the UK will have the most advanced oceanographic research vessel fleet in the world. I am delighted that the Cammel Laird shipyard in Birkenhead was selected to undertake that important work, which is a real boost for our shipbuilding industry. Earlier this year, I launched a £113 million capital investment partnership with IBM at the Hartree Centre in Daresbury, near Warrington, with the overall investment package from IBM being worth £200 million. There are many more such examples.

The Government’s activity is also evident in the constituency of the hon. Member for Penistone and Stocksbridge. We are building on its rich history of scientific discovery, to which she alluded, including stainless steel and Ronseal. Innovate UK has invested more than £61 million in Yorkshire since 2010, including more than £12 million in projects in the Sheffield city region last year. I recently announced £10 million of funding for a pioneering component manufacturing facility at the University of Sheffield’s Advanced Manufacturing Research Centre. In York, we have invested £27 million in a quantum technology hub to harness the potential of an area in which the UK is a world leader. The University of Sheffield is also home to two nodes of the high-value manufacturing catapult, in advanced machining and materials and in nuclear, with well over 100 industrial partners.

The setting up of catapults, the elite centres that commercialise new and emerging technologies, is another major initiative by the Government to entrench scientific excellence in the regions. Since the general election in May we have continued to roll out our catapult network. In the summer the Chancellor announced a new medicines technologies catapult to be based in Alderley Park in Cheshire, building on a pre-existing centre of excellence. We have also announced a precision medicine catapult to be based in Cambridge.

We have heard contributions from Scottish MPs this afternoon, and I will dwell briefly on Scotland and other devolved Administrations. Scotland is punching well above its weight within the UK, demonstrating its strong science and research base. It receives about 11% of the total pot of research council, Innovate UK and higher education research capital funding, compared with its share in our population of about 8%. I was in Glasgow last week and was delighted to inaugurate the construction of a new £68 million imaging centre of excellence, to which the Government are contributing £16 million as part of the precision medicine catapult. The hub of that catapult is in Cambridge, but an important spoke in the operation is in Glasgow. I have had dengue myself, so I was pleased to hear about the good work on the treatment of that unpleasant disease being funded up in Glasgow.

I can give many other examples of good scientific activity in Scotland that are in receipt of significant public support, but I also want to mention Northern Ireland, as we have had contributions from some of its Members. We want to do more to help Northern Ireland secure support and be more competitive when applying for grants.

[Danny Kinahan (South Antrim) (UUP)]

I apologise for not having been present to speak earlier, but I want to mention the numerous cuts in Northern Ireland as a result of the overall cuts. Will the Minister look at something similar to what we have in shared education, which is a £500 million loan facility? It could work with businesses and with how we do things in Northern Ireland, but be solely for science. In that way we could turn back the cuts that have happened, from primary schools right the way through to universities, which are still doing wonderful things.

[Joseph Johnson]

We want to help parts of the country that are receiving less than their share of science spend to be more competitive in the allocations of restricted funding. We have recently announced a process of science and innovation audits to enable areas to assess their potential fields of expertise, competence and excellence, so that they may focus on where they have a chance of being world-leading, globally excellent and more competitive. We look forward to helping consortia from Northern Ireland and other parts of the country—including universities, local enterprise partnerships and local authorities—to come together to assess where they can build on existing centres of excellence and become more competitive.

Government and Treasury investment in science goes much further than simply what the Department for Business, Innovation and Skills and its partner bodies do. Research and development tax credits have been mentioned a number of times, and they are extremely valuable and fast-expanding support for business investment. R and D tax credits are now worth £1.75 billion in relief to more than 18,200 companies, supporting more than £14.3 billion of innovative investment, as has been mentioned. In that context, I want to mention the patent box, a key initiative in making the UK tax regime competitive for innovative high-tech companies. It helps to drive growth and investment in the UK, creating high-value jobs in innovative industries. Some 639 companies have received benefits totalling £335 million since the relief was introduced in 2013.

UK science investments must be seen in perspective. We must look at the outputs of, as well as the inputs to, our science base. What I have described thus far is serious, substantial and robust investment, which has been delivering real results. We are the most productive science base in the G7, and our scientific impact on the world is out of proportion to our size as a nation and our level of investment. For every £1 spent by the Government on R and D, private sector productivity rises by 20p a year in perpetuity.

Government funding for science is only part of that story. Research and development in the UK also benefits from the private sector spending that the Government help crowd in. Business spending on R and D has risen by 8% to £18.4 billion. In a recent Westminster Hall debate secured by my hon. Friend the Member for Pudsey (Stuart Andrew), we heard about the important role of medical research charities, such as the British Heart Foundation. Charities receive additional support from the Treasury through gift aid on donations. On top of that, last year we spent £198 million from the charity research support fund.

Last year, Cancer Research UK reported gift aid income of more than £34 million. Overall in the past financial year, UK charities received £1.2 billion in tax repayments on gift aid donations. We have to look at direct Government spending through BIS and its partner bodies in the context of the bigger ecosystem that it creates. When we look at the bigger picture, we see that the UK’s overall spending on R and D reached £28.9 billion in the last year for which we have full data—up 7% on the previous year. That is an important context for us to bear in mind.

I will wrap up, so that the hon. Member for Penistone and Stocksbridge can conclude the debate. Debates such as this help to highlight the issues and choices involved in our responsibility to fund science. The UK science base is extraordinary; our cutting-edge research base is world-leading; our universities are world-class; we develop and attract the world’s brightest minds; and we have earned 14 Nobel prizes in the sciences over the past 12 years as a result. Science is one of our clear comparative advantages in the global race. BIS Ministers are working hard on making the strongest possible case to the Treasury. Our case will of course be balanced against priorities across Government, but we are hopeful that we have made the strongest possible case on behalf of science.