Treasury Support for UK Science

Sammy Wilson Excerpts

Wednesday 4th November 2015 Westminster Hall

[Sammy Wilson (East Antrim) (DUP)]

I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate.

I do not want to rehearse all the advantages that come from spending on science, other than to say that we in Northern Ireland have found that it has helped us to increase investment. There is a strong correlation between what a company spends on science, research and development and its ability to export and about two thirds of increases in productivity are the result of spending on innovation, research and development.

In a debate such as this, I suppose the first question people will ask is: a lot of the work on improving science spending in places such as Northern Ireland and Scotland is done by the devolved Administrations, so what are they doing? In Northern Ireland, we have focused on a number of areas. First, £45 million is being spent on research facilities in universities, and by 2020 we hope to be funding 1,000 postgraduate research places a year in local universities. That will not only allow universities to increase their research capacity but ensure that there is a pool of skilled labour for the inward investment that we hope to attract. Invest NI has devoted £80 million a year to bringing projects from the lab to the marketplace.

Those are examples of the positive things that the devolved Administrations can do, but it is important to note that the devolved Administrations are dependent on decisions made by the Treasury and central Government. Their ability to do those things and to be innovative in their policies depends on the core funding that comes to them. That is not to say that they should not or do not look for other ways of attracting additional funding, bringing in their own resources and prioritising their own spending, but because the block grant is the main source of the spend available to the devolved Administrations and since most tax policy is decided centrally, there is a role for central Government.

I have four points to make about central Government’s role in spending on science, innovation and research and development. First, although it was ring-fenced over the five years of the previous Government, central Government spending has fallen by 15% in real terms. That affects the resources available here in England, but also, through the Barnett formula, the amount of money available to the devolved Administrations. I know we have difficult spending decisions to make, but look at the success of science spending. I will not repeat the figures that have been quoted already, but that money translates into a very high success rate, as shown by the many research papers cited as a result of the work financed by that spending. When the Government are deciding on spending priorities, surely the priority should be those areas where the spending is actually seen to work.

Secondly, I want to discuss the distribution of money. I was pleased by the Minister’s speech at Sheffield’s Advanced Manufacturing Research Centre about one nation science. I am sure he will regret ever saying this, but he said that one nation science

“means developing that excellence for the whole country, making sure all areas and all groups of people can reach their full potential”.

That is not happening in practice. If one looks at the money distributed by the research councils, although Northern Ireland has 3% of the population, we receive only 0.7% of funding—indeed, per head of population, seven times more money from the research councils goes to London as to facilities in Northern Ireland. The Minister could well argue that London has greater capacity, but we have proven ourselves. For example, although we account for only 0.03% of the world’s population, 0.3% of the research papers that are cited as being highly significant come from Northern Ireland. We perform 10 times better than our population distribution would suggest. We do need to look at how the money is distributed across the United Kingdom.

Thirdly, there are additional sources of money, especially the Horizon 2020 funding that is available from the European Union. I am no great fan of the EU, but the money is there. A condition of that funding is that there must be collaboration between companies and universities in different member states. What could central Government do to improve performance and encourage that kind of collaboration? It helps to expose companies and universities to new knowledge and markets, and there is value in that.

Finally, the hon. Member for Cambridge (Daniel Zeichner) mentioned research and development tax credits. There is talk about whether they should be translated into loans or kept as tax credits, but the one thing I know is that those tax credits are an important way of levering in private finance. Last year, their notional cost to the Treasury was £1.8 billion, but that drew down £14.3 billion of research and development, expenditure and innovation. To me, that is a good return for a fiscal measure, so those tax credits should be maintained.

I know that not all the points I have made fall within the Minister’s remit, but the Government should consider them when dealing with this important issue.