Autumn Statement: Economy

Lord Kakkar Excerpts

Tuesday 29th November 2016 Lords Chamber

[Lord Kakkar (CB)]

My Lords, I thank the Minister for the very thoughtful way in which he introduced this debate. I propose to concentrate on his second theme—productivity—and in particular on the role that enhanced investment in research and innovation may play. I declare my own interests as professor of surgery at University College London; chairman of University College London Partners, our academic health science system; and UK Business Ambassador for Healthcare and Life Sciences.

There is no doubt that the pursuit of technology investment in science and innovation has had a dramatic effect, transforming the lives of our fellow citizens and the population of our planet in the last 100 years. Its impact, properly directed and targeted at improving well-being and wealth, is quite astounding. It is therefore quite right for the Government to have recognised in the Autumn Statement the importance of a further emphasis on research and innovation funding and expenditure, not only to drive an improved productivity in our economy but to ensure that, as a knowledge-based economy, we are better able to compete globally. We should not take for granted that even this renewed commitment to research and innovation at a national level will protect us against substantial global competition. Only this week it was announced that 40% of all patents registered last year were registered in China, with 60% of the total global output in patent registrations being in Asia. It is a clear demonstration that whereas previously we looked to competitors in the European Union and the United States as the principal source for our competition as an innovation economy, that is no longer the case. It is therefore right that the Government have this emphasis.

There has been concern for a considerable time that we lag well below the OECD average for national investment in research and innovation. I ask the Minister: with this additional £2 billion a year of investment at steady state by 2021, where will we be in OECD rankings with regard to national investment in this area?

The current proposal does not provide all the answers with regard to improving our productivity based upon a greater emphasis on innovation. What approach will the Government take with regard to being able to bring together the broader ecosystem that has supported our national effort in research and driven our knowledge economy, to ensure that not only this investment but investment made on a commercial basis from other academia and universities, and in particular philanthropic investment, can be strategically directed towards driving the research effort in important areas of national need, one of those being, in particular, the life sciences?

I would also like to explore with the Minister what this extra investment means in reality. Our country has been particularly successful in achieving competitive research funding from European Union sources. The research and university communities rightly welcomed that the Government have committed to underwrite any applications made to European funding sources between now and final Brexit. This additional £2 billion of investment represents clearly a major investment but also an important challenge. Will the funds that have been announced replace those that may no longer be available from the European Union beyond the time of Brexit, or are they additional to funding that will come from other sources in our country to make up for the loss of research funding available to our universities and to our small and medium-sized enterprises from European sources after Brexit?

In terms of the allocation of this funding, how will the balance be struck between funding that is driven by research excellence and allocated on the basis of the Haldane principle, where the research needs and opportunities are identified by scientists, and funding for strategic investment in research that is identified as part of the national challenge, where interested parties—small and medium-sized enterprises and the universities and academic research collaborations—can come together and apply for that funding? Will it be the responsibility of UK Research and Innovation once both Innovation UK and the research councils come together? How will those national priorities be determined, and how will a determination be made of the effectiveness of this innovation as regards driving additional and much-needed productivity in the economy?

There is no doubt that the strategy is absolutely correct. It is absolutely appropriate to ensure that research council funding can be brought together with innovation funding and that the universities and commercial enterprises can work more effectively together to ensure not only the best approach to discovery but the exploitation of that discovery in order to generate wealth in our own country and provide the opportunity for us to contribute globally to addressing many of the important challenges facing not only our own country but many others around the world. However, there needs to be much more clarity. It may not be possible for the Government to address that at this stage but those answers will need to be provided to allay anxieties and fears and ensure that a confident approach towards a sustained research effort is maintained.

In addition to that, much of the benefit that we have derived as a nation from our participation in European Union research funding has come not only from the quantum of funds that have been made available to support our universities and other academic enterprises but from the capacity to participate in research networks in Europe and to access major infrastructure to undertake research activity. How much of this £2 billion in additional research and innovation funding that has been announced will be made available for the participation of our international institutions in global research networks? Will some of the funding be used to allow a continued participation in European networks? Will there be an opportunity for us to start to explore new and broader research collaborations, potentially with networks in the United States—another knowledge-based economy with a substantial and long-standing national strategy for investment in a similar fashion to that proposed by the industrial strategy challenge fund?

Those are vital questions that clearly need to be addressed carefully. However, they also need to be addressed quickly. There is a growing anxiety among those involved in research and innovation that if those questions are not answered, the great opportunities that the Government’s commitment to this area offer will be lost. That would be a great shame not only for our economy but for the well-being of our people in the years and decades to come.