Advanced Research and Invention Agency Bill

Lord Lansley Excerpts

Committee stage
Monday 22nd November 2021 Grand Committee

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Browne, for raising this very interesting issue. Without repeating verbatim what I said at Second Reading, one of the highlighted issues in delivering technology into the market in this country is not the invention phase but the scale-up—getting it beyond technology readiness level 7 and then getting it into the market and scaling up.

I discourage the noble Lord from using the phrase “predator” for venture capital. The money has to come from somewhere to deliver that scale-up, and I doubt that the Government will be the provider. The issue and challenge is that the VC industry in the United States is massive compared with what is available in UK-based funds, and thereby comes the lack of centricity about which the noble Baroness, Lady Noakes, spoke. We should very much consider looking for a way for businesses that have an invention to take it to market. To some extent, this amendment is looking at the other end of the problem; it stops stuff happening rather than allowing it to happen in a different way. I am not sure that it is the answer, but its spirit is very important.

There is another unintended consequence I would be concerned about. In the event that an entity could avoid a takeover, by taking money from ARIA it would in essence lock itself away from any commercial activity that could be beneficial to it as a company, the country and ARIA’s intentions. A one-size-fits-all approach—“We give you the money and you can’t do any commercial activity”—is not in the spirit of what this seeks to achieve. Looking at this again, we need to find a way to deliver that scale-up story. That is really the issue facing this country, not the invention bit that somehow this agency is focused on.

[Lord Lansley (Con)]

My Lords, I very much appreciate that the noble Lord, Lord Browne, has brought forward his Amendment 30 in particular. It is very helpful to our debate and rather complements the discussion we had about ARIA’s ability to exploit the intellectual property it gives rise to and to place the right kind of conditions. We will come back to that on Report; it is important that we do.

I hope the Government can, if not necessarily amend the Bill extensively, certainly make it clear that ARIA, in exercising its functions, should seek not only to promote economic growth and benefit in the United Kingdom but to make sure that—in so far as the public have subscribed through ARIA to the creation of intellectual property—the benefits of that will accrue to ARIA and, potentially, the Government. I would say that they should accrue to ARIA, with the ability to promote follow-on research activity as a result. I am sure the noble Lord is not planning to press his amendment and recognises the risk associated with its structure and the chilling effect it might have on the entities that might otherwise apply for grants, assets or activity.

I will just inject this thought. A number of noble Lords here in Grand Committee were contributors to our discussions on the National Security and Investment Act, and I hope my noble friend the Minister will be able to give us some specific assurances about how Ministers can use National Security and Investment Act powers to secure the protections that the noble Lord, Lord Browne of Ladyton, is looking for.

I worry that there may be gaps, because the National Security and Investment Act has its own criteria and thresholds, and this may relate to activities, projects and assets that do not fit within those criteria—but we none the less want the intellectual property created by ARIA to be protected in some way. So there may be a gap and we need to explore whether there is one and, if there is, how it might be secured: how ARIA, and Ministers through ARIA, can protect the value that might be derived from the intellectual property to which its projects give rise.

[Lord Broers (CB)]

My Lords, I rise to give the amendment moved by the noble Lord, Lord Browne, the very strongest support. We have talked around the issue of how we can solve the problem of losing our brilliant companies, because it is stunningly serious—and it is not just Arm and Nvidia. I am very pleased because I wrote to the Government about six months to a year ago to plead that the competitive agency should look at that, and it is at least looking at it now. The company Solexa was taken over by Illumina, having pioneered the successful way to decode DNA, and Illumina’s revenue flowed into the many billions—after the key technology had come entirely from the UK. These things should not have happened.

I ask whether we can add to the requirements on ARIA that incentives should somehow be given to our City, which has an appalling record of missing opportunities to invest in UK industries—creative industries in particular. It is all very well to talk about the scale of American venture capital: that is a very good point, but we can be very selective. Then perhaps we would not need a very big scale to look after companies such as Arm and Solexa—there was Verata before them, and several others that have left here almost with the certainty of being successful, and yet somehow we could not find our own funds to support them.

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[Lord Callanan (Con)]

My Lords, the Bill as introduced to the House added ARIA to the lists of reserved bodies within the three devolution Acts. That approach would have conferred on ARIA the same constitutional status as UKRI, which is the UK’s primary public R&D funder. More importantly, it would also have ensured ARIA’s independence by placing it outside the competence of the devolved legislatures.

Since then, my ministerial colleagues and officials have been in close discussions with all three devolved Administrations throughout the passage of the Bill, on the need for legislative consent Motions to be passed in the Scottish Parliament, the Senedd and the Northern Ireland Assembly. During those discussions, principled objections were raised to the creation of ARIA as a reserved body. As a result, we have worked—as I am sure the Committee would expect us to do—to develop an alternative way of guaranteeing ARIA’s independence, through something called the “agreement on the independence of ARIA”, which all four Administrations of the UK have said that they will abide by, and which will sit beneath the overarching memorandum of understanding on devolution.

I am delighted that the text of this document has now been agreed by all four Administrations of the UK and that we have been able to share it with noble Lords in advance of this discussion. I apologise for the fact that we were not able to provide the opportunity for noble Lords to consider this document at greater length before the Committee. However, I wanted to share it as soon as possible, albeit fairly shortly in advance, rather than not sharing it at all. I am confident that this agreement will allow ARIA’s important characteristics to be protected. On that basis, I am content to remove, through Amendments 37 and 40, the reservations that we originally placed in the Bill.

ARIA will remain a single UK-wide organisation able to find and fund the most exciting projects in all regions and nations of the UK. Through the agreement, all four Administrations of the UK have committed to upholding the important principles of ARIA’s strategic autonomy, operational autonomy and minimal bureaucracy.

[Lord Lansley (Con)]

My noble friend referred to the agreement having been shared with us, but I am not aware of having seen it or where it was shared with me.

[Baroness Noakes (Con)]

My noble friend also sent a letter to me following last week’s Committee; that was shared only with the noble Lord, Lord Browne of Ladyton. My noble friend’s department has form on not sharing widely with those in Committee when things are circulated. Can he go back to his department to ensure that all active members of the Committee get access to all the information circulated in response to its deliberations?

--- Later in debate ---

[Lord Lansley (Con)]

It was my intention to contribute to this debate briefly. Since the Minister has referred to the agreement, I probably ought to read it and digest it before venturing any additional comments.

I just point out to the Minister that the timing of all this is very odd. As far as I could have seen, and as I understood it in preparing for this debate, as of 9 November the Scottish Minister was not in the position of thinking that there was any agreement with the Government. He wrote to the convener of the Scottish Parliament on 9 November, set out the sequence of events stretching back to March, said that the Scottish Government, like the Welsh Government, were not in a position to agree legislative consent and gave the reasons he would not do so.

These amendments went down on 12 November, I think, so somewhere between 9 and 12 November the Government decided to do this thing. During the course of last week, they must have immediately entered into discussions with the devolved Administrations on the basis that they would give legislative consent. They have made clear all the way through that if it was not reserved, they supported the principle of the Bill and would give legislative consent to it. Now we are presented with this agreement and the consequences.

My noble friend is absolutely right; there are consequences. We had a debate last Wednesday about the role of the Chief Scientific Adviser in relation to the board, and the devolved Administrations have been looking for their chief scientific advisers to have the same status as the United Kingdom Government’s Chief Scientific Adviser. I think that is not what they are looking for now; it clearly would be unhelpful were that to be the case. It would have been helpful to have told us about that in the course of that debate last Wednesday and to have prefigured the fact that we come on to this at a later stage.

At the end of the day, they get money. Unless I am missing something, if you shift something from a reserved matter to a devolved competence, Barnett consequentials flow from that. What are they? How is the budget to be divided? Is it to be divided or is it going to be added to by way of the Barnett consequentials? I think we should be told that. Will that therefore mean that we anticipate that the other devolved Administrations will make grants to ARIA? Does this agreement suggest that there will be a pooled budget with grants made by the Secretary of State but that because of the nature of ARIA’s independence the grants will be in a global sum with few, if any, conditions attached to them and the devolved Administrations are agreeing to that? It begs questions. At the moment, I for one cannot debate the consequences of this set of changes because we do not have the information on which to do it. Even if we maybe let it through on the grounds that it helps to get the legislative consents through, I think we may have to return to some of the consequentials on Report.

[Baroness Randerson (LD)]

My Lords, I am pleased to follow the noble Lord, because he shares some of my concerns. I thank the Minister for communicating the information earlier today. Obviously I will read the actual agreement with great interest, but of course one accepts the noble Lord’s assurance that this agreement stands and will operate effectively.

The noble Lord, Lord Lansley, raises a good point about the previous objections of the devolved Administrations, which now appear to have been withdrawn. At what date can we expect legislative consent Motions to come forward from the devolved Administrations?

I also have a detailed question. In an earlier debate, my noble friend Lord Fox made the point that having a purpose is not at war with the concept of independence for an organisation. I was thinking of that point as I read the paragraph in the Minister’s communication that says the agreement

“allows for the UK Government Chief Scientific Advisor, and scientific advisors or equivalent representatives on behalf of Scotland, Wales and Northern Ireland to jointly communicate to ARIA the scientific challenges relevant to the policy priorities of their respective administrations. In keeping with ARIA’S autonomy, there will be no obligation for it to direct funding towards these issues.”

That worries me slightly. I am not arguing that ARIA should follow the separate views of the four nations, but if all four nations, via their scientific advisers, were to say to ARIA that one of the most important government priorities should be the road to zero carbon—I very much hope they would say that—would the Government really be happy for ARIA to invest in and champion a technology that increases CO₂ emissions? There are serious, fundamental points, rather than points of detail, that we still need to take into account on ARIA’s purpose and it working with the grain of government policy—not dotting every “i” and crossing every “t” but working with the grain of public policy.

Finally, I underline the concerns and questions about Barnett consequentials. I will not repeat the point; it is absolutely clear that this will have implications. I look forward to the expressed views of the devolved Administrations and the detail of the agreement when it becomes public. Given the information we have been given today, I am sure it will be possible for us to scrutinise it before Report.