EU Report: Effectiveness of EU Research and Innovation Proposals

Lord Kakkar Excerpts

Thursday 21st November 2013 Lords Chamber

Moved by

[Lord Kakkar]

That this House takes note of the Report of the European Union Committee on the Effectiveness of EU Research and Innovation Proposals (15th Report, Session 2012–13, HL Paper 162).

[Lord Kakkar (CB)]

My Lords, I beg leave to move the Motion standing in my name on the Order Paper. It is a great privilege to do so in place of the noble Baroness, Lady O’Cathain, chairman of your Lordships’ European Union Sub-Committee B on the internal market. She was responsible for chairing this important inquiry but sends her apologies as she is unable to be here today.

At the outset I take the opportunity to thank the clerks to our committee, and Nicole Mason and Paul Dowling for their marvellous contribution and hard work in having steered this very short inquiry over a three-month period in the previous Session to a successful conclusion. I also take this opportunity to thank members of the then-EU Sub-Committee B, the noble Lord, Lord Elton, and the noble Baronesses, Lady Scott of Needham Market and Lady Buscombe, for their important contributions to the deliberations in the committee at that time.

The committee decided to undertake a short inquiry during a period in which the question of the next multi-annual financial framework of the European Union was being discussed—that is, the Union’s budget. We did that because, as your Lordships will be aware, EU Sub-Committee B has responsibility for scrutiny of matters dealing with the internal market. During the previous Session we began to receive a large number of proposals for scrutiny, which were eventually attributed to funding in that new multi-annual financial framework in a programme known as Horizon 2020, which was dedicated towards research and innovation in the European Union.

It was of course welcome to see so many proposals coming forward from the Commission that related to the question of research and innovation. However, there was some anxiety among noble Lords on the committee that with so many proposals coming forward, it was not entirely clear what the Commission regarded as research and innovation with regard to such a broad range of proposals that would ultimately be dependent on a single pot of funding. It was also not entirely clear how so many proposals could be accommodated in what would ultimately be a limited budget. The period of the inquiry was a mere three months, and we are grateful to all those who took the trouble to make submissions, both written and oral, for consideration by the committee. I must express deep gratitude on behalf of the chairman of the committee to all members of the committee for having worked so hard in that very compressed period of time to conclude this important report.

The report has so far enjoyed a very detailed response from Her Majesty’s Government. I must express the deepest gratitude to Her Majesty’s Government for having dealt with it in such a timely fashion and for having provided a detailed response to many of the recommendations that the committee made. It is regrettable that we have so far yet to hear from the European Commission on the important conclusions that were raised in the report, which was designed to be available to the Commission as it started to consider in more detail the framework for research, innovation and funding over the next cycle of the European Union budget. We understand that that response will be forthcoming very shortly and we look forward to receiving it. However, regrettably, your Lordships will not have the benefit of the Commission’s view on the work of your Lordships’ committee as part of this debate.

Before proceeding further, I remind your Lordships of my own entry in the Register of Lords’ Interests as Professor of Surgery at University College London, chairman-elect of University College London Partners academic health science centre, and a recently appointed UK business ambassador for healthcare and life sciences. I am therefore eligible to apply for much of the funding for research and innovation available in the European Union and would like to make sure that noble Lords are aware of that.

The reason why the committee decided to undertake this important inquiry was that research and innovation is at the heart of what Europe requires to drive economic growth. It is well recognised that research and innovation is at the heart of any successful, vibrant economy. The World Economic Forum recently suggested that we should move away from talking about developed and developing economies and talk instead about innovation-rich and innovation-poor economies. In that context, there has been some concern that, in the economic crisis that continues to face many parts of the European Union and many member states, there might be a temptation for the Commission to decide that a clear and determined focus on funding research and innovation should be sacrificed to use those funds for other purposes. We wanted to assure ourselves that that would not be the case.

As part of our inquiry, we were reminded that the European Union’s principal competitors are deeply committed to research and innovation. One such example is China—an important competitor, which, by 2015, has determined that 2.2% of its GDP will be focused on research and innovation expenditure, some €180 billion a year. The agreed 2014-2020 multiannual financial framework commitment for research and innovation expenditure under the Horizon 2020 programme of the European Union is some €70 billion. We need to put in context the fact that our competitors have recognised and are determined to drive forward innovation in their own economies. Of course, that can be done in part at European level, but it needs also to remain a deeply committed area of activity for each member state as part of the use and setting of its own budgets.

I mentioned a concern about the drift in describing certain programmes and projects as relating to research and innovation as their primary purpose in the hope that they might avail themselves of funding from the Horizon 2020 envelope—the €70 billion currently agreed as part of the proposed budget. Here we need to be clear that there are mechanisms in place, as the new budget goes forward, to secure true research and innovation focus for funding that is attributed to research and innovation activity. In 2009, a declaration made by the Commission, member states, stakeholders and others in the research and innovation community—the Lund declaration—made it clear that, in going forward in the European Union, the focus in research and innovation funding should be to meet the grand challenges facing member states. The big issues such as health, well-being, and so on, should be addressed by big programmes of imaginative research and innovation rather than by defining rigid themes of activity that are somewhat ossified before the funding becomes available and prevent the true purpose of innovation.

The Lund declaration also recognised as a set of principles on which to take forward research and innovation funding in the European Union that the prime, underlying principle on which funds are made available across Europe for competing projects is one of supporting excellence and the highest quality, not compromising those funds in any way for other purposes or any form of political expediency. In that context, your Lordships’ committee came to the clear conclusion that, despite the economic crisis, the European Union should redouble its efforts on research and innovation expenditure. Although the funds finally agreed in the current budget round were not as high as one might have hoped, they are an increase on the funding available for research and innovation in the previous budget, and that should be welcomed.

In terms of practical issues, the first is participation. Here I look much more at the position of participants from the United Kingdom wishing to avail themselves of the important funds available in the Union for research and innovation funding. Our higher education institutions and many of our larger commercial enterprises are well organised and able to develop the partnerships and create proposals that are highly attractive in order to enjoy substantial European funding. In particular, our universities have become adept at developing relationships across Europe to make their proposals of relevance not only to academic communities and society more broadly in the United Kingdom but applicable, and therefore of interest, to similar academic entities and society more broadly among European member states.

However, the large body of small and medium-sized enterprises, some 98% of companies in our country, have found it less easy to interact and develop the successful pan-European alliances necessary to attract substantial research and innovation funding. Yet when we look at the issue in economic terms, there is no doubt that the success of these SMEs is going to be vital to drive economic growth across Europe and help achieve the kind of increase in employment that we all expect these types of businesses to deliver for the broader economy. In this regard, I ask the Minister where Her Majesty’s Government are on ensuring that the mechanisms available within our own support structures for businesses in terms of their application for European funding currently stand. Contact points within the structure of the technology strategy boards seem an appropriate opportunity for a greater focus on helping small and medium-sized enterprises interact more successfully in the future. This can be done first by influencing the calls for proposals that are put out under the banner of research and innovation funding in the European Union—the Horizon 2020 programme; by ensuring that our SMEs are better able to develop European alliances to make their funding proposals attractive as pan-European projects; and by ensuring that they are able to deliver those applications and, if those applications are successful, programmes that have meaningful impact for the European economies. I wonder whether the Minister can comment further on where Her Majesty’s Government are with regard to developing those support structures.

The second practical issue is the basis for the allocation of these funds. We have heard that although the budget will be substantial—some €70 billion over this financial framework—those funds still represent only a fraction of the global expenditure on research and innovation available among our principal competitors. It is therefore essential that a single principle remains at the heart of the allocation of these funds—that is, allocation based on the excellence and quality of the proposals and independent peer review, with no other influence on how those funds are allocated. It is that basis of allocation which has ensured that our own universities and other participants from the United Kingdom have done so well in this funding, and it is the basis on which we can be certain that much of what has been done in previous programmes of research and innovation expenditure in Europe continues to develop strong outputs for the benefit of all citizens across Europe. It was reassuring to learn that the Commission now has appointed a chief scientific adviser with a scientific advisory council. Can the Minister confirm that the Government continue to emphasise among their European partners in the Council of Ministers and in their discussions with the Commission the vital importance of the transparent, objective allocation of funds based on the excellence and quality of applications? They should not stray into using these funds potentially to build capacity in parts of Europe where the science base is not currently strong, which is an important objective that should be achieved through regional development funds, rather than this funding for research and innovation.

We heard some disturbing statistics about the time to grant. This is the time it takes from the end of a call for proposals to grants being made. It averages some 340 days. We found this unbelievable. In the fast-moving area of innovation and research where discoveries are being made every day, a proposal to seek funding for a particular project can remain fresh only for a certain period of time, after which by definition something else must be discovered and that should take precedence. If the bureaucratic process actually to get the funds out is taking so long, that can be a major disincentive to smaller organisations, particularly the SMEs, and to university departments where committing funds to keep staff in place to be able to work on an ultimate research project can be exceedingly difficult. I would be grateful if the Minister could confirm that Her Majesty’s Government will continue to push for a reduction in the red tape. Of course there must be processes in place securely to protect the funding, but we must make sure that they are not so bureaucratic that in the end the purpose of the exercise, which is innovation, is inadvertently destroyed.

Finally, there is an important ongoing need to continue to review the success with which these funds have been applied. It needs to be clearly and objectively demonstrated to the citizens of all European countries that this money, coming ultimately from the taxpayer, is being used to good purpose through a careful assessment, first, of the needs of the projects being supported, and then that what was promised as part of the application process by successfully awarded programmes is being delivered, and that the deliverables which were the focus of so much hope as part of the application process are translated into meaningful impacts and benefits for the people of Europe.

Many other noble Lords who contributed to the development of the report have points to make about other elements in it. I beg to move.

--- Later in debate ---

[Lord Kakkar]

My Lords, I thank all noble Lords who have taken the trouble to contribute to this very thorough and thoughtful debate, in which important issues have been raised. I think that it has demonstrated the deep commitment of your Lordships’ House not only to pursuing questions with regard to research and innovation, which are vital for the future of our nation and, indeed, for the future of all European nations, but to continuing to scrutinise and encourage the further development of programmes within the European Union. Those programmes can be brought to bear not only for the benefit of the people of our own country but for the benefit of the citizens of Europe more broadly.

Motion agreed.