Advanced Research and Invention Agency Bill (First sitting)

Stephen Flynn Excerpts

Wednesday 14th April 2021 Public Bill Committees

[Amanda Solloway]

Q Thank you, that is really helpful. My next question is to Dame Ottoline. We acknowledge that there is clearly a role for ARIA, but I think it is important that it does not just fund the usual suspects. What are your thoughts on this? How will ARIA be able to target people and ideas that are not picked up through the current system, for example that UKRI is able to target?

Professor Leyser: Absolutely. I think that the kinds of examples that Tris has just talked about are quite illustrative from that point of view. Typically, the way the current system works is that we would put out a call for applications in a variety of contexts. It might be a completely open call; right across UKRI we run these so-called response-paid funding competitions where people with ideas about what they want to do can apply for funding to do them, whatever they might be. On the whole, those kinds of applications are the sort of bread and butter of really established research organisations: universities, institutes and, through Innovate UK, businesses. A lot of them are also collaborative with industry. It is that kind of grant application process that then goes through peer review, and we try to pick the projects that, as an overall portfolio, will best deliver what the UK needs, both in the short term and, absolutely, in the longer term, building that capacity and capability.

It tends to be established organisations that know the system and how to apply for those kinds of projects, and which have the structures available in their organisations to do that. With ARIA, however, I think there is the opportunity to test a much wider range of models, such as those kinds of competition-type prize approaches that Tris described—he is an expert in those. There is also a fairly well-established system called Kaggle for coding competitions, for example. That potentially reaches a much wider range of people. You do not have to apply; you do not have to have a system that can support that kind of application process. The funding flow is very different: it is a response to the results; it is the winner of the competition. As a result, it may be possible to reach a much wider range of people. In that coding space, for example, there are really extraordinary people working in their homes as freelance coders who would find it very difficult to access the classical UKRI and most of the funders that there are currently.

I very much hope that we would be able to tap into some of the talent right across the UK that is not in the more established places. That would be one really exciting outcome from this with that prize model. Where you have a really clear objective—so it is really clear who has won the money, so to speak—it is possible to do that in a way that does not automatically engage the kind of financial management systems that we have to use. For example, are we sure that this money is being spent on what the applicant said it would be spent on? If you are giving somebody the money for having done the research or having delivered the outcome—the car that goes across the desert—you are in a very different situation.

I do think there is a very interesting possibility for ARIA to reach those people who are talented and can contribute in ways that it is much harder to with the standard systems. I hope that we would learn from that and be able to import some of that expertise into the standard system when it was established and really clear that it was providing good value for money in a robust way.

[Stephen Flynn (Aberdeen South) (SNP)]

Q Thank you Dame Ottoline and Mr Dyson for your answers so far, which have been incredibly informative and helpful. I want to pick up on a couple of things that you have said. You have both mentioned the benefits of a small, agile agency. I guess that raises the question of whether £800 million is a sufficient budget for that small, agile agency. To pick on something that you said, Mr Dyson, about ARIA being quite ruthless in terms of stopping the funding of things quite early on, what would you expect the failure level to be, and how do you expect us all to measure in a reasonable way the success or otherwise of ARIA?

Tris Dyson: Well, more money is better. I think this money needs to be deployed intelligently, so being quite clear on the missions and the focuses is really important. It is even more important with a still significant amount of money but relatively smaller sums. Getting those areas right is really important. The examples that were just given about Kaggle and databased approaches are potentially a useful avenue for some of this, because the R&D investments and sunk costs are relatively low as opposed to building spaceships or something like that. That would be the sort of calculation you might need to make.

You can also use leverage. One of the areas that the UK has been pioneering is around regulatory sandboxes, for example, through the regulators’ pioneer fund, which is administered through UKRI. But some regulators, off their own backs, have also been setting up and developing sandboxes that allow innovators to play with datasets in an environment where the regulator is giving them a little bit more permission than they might have had otherwise. That in itself is an incentive, particularly when you are playing around with datasets.

You can think of examples where we have got significant strengths. One of the things we have talked about a lot during the pandemic—more recently, at least—is the UK’s strengths in genomics research. That means we have got an enormous range of data that could be made available to people through the likes of Genomics England, which in itself is an inducement or an encouragement above and beyond the financial. So being clever—boxing clever—with the money is important.

In terms of ruthlessness, part of this comes to the culture. The ARIA team will have to establish a culture where they trial things out, set targets and objectives and have constant reviews where they get together and decide whether to kill things off. That is clearer when you have defined missions or objectives that you are working towards. It is much harder when you are fostering lots and lots of different things—it is hard to compare X with Y.

Professor Leyser: From my point of view, the question I would ask is not so much how much money should ARIA have but what proportion of the public sector R&D spend should go into this way-out-there, high-risk, transformative research-type project and, of that, how much should be in ARIA. It is a proportionality question and, as Tris said at the beginning, at a time when there is an aim to drive up UK investment in R&D to 2.4%—hopefully beyond that, because 2.4% is the OECD average and I think we should aim to be considerably better than average—that is quite a stretch target for us. We do incredibly well—the quality and amount of research and innovation in this country is extraordinary—given that we currently invest only 1.7% of our GDP. So I think the opportunities to build that really high-quality inclusive knowledge economy, given how well we perform in the R&D sector with such a small proportion of R&D, are incredibly high.

On that rising trajectory, with us aiming for that 2.4% and beyond, I think spending a small proportion of that on this edge-of-the-edge research capacity and capability is the right thing to do. I would look at the budget in that context as a percentage of the overall R&D spend. People have been comparing the current ARIA budget with the budget of organisations such as DARPA, but if you look at it as a percentage, you get a very different number because, obviously, the US spends a much higher proportion of their—anyway—bigger budget on R&D than we do. That is the important question from that point of view.

How will we know that it has succeeded, and what would one expect the percentage failure to be? I agree with Tris that it is incredible difficult to predict. There is also serendipity and other things to factor in. If you set yourself a fantastic target of solving a particular problem or producing a particular new product and you fail to do that, none the less, along the way you might discover something extraordinary that you can apply in another field.

That high-risk appetite feeds into the question, again, of how much money or what proportion of the overall R&D portfolio should be invested in that way. One has to think about risk in R&D in that portfolio way. It is considered generally in investment markets that really high-performing investment portfolios are a portfolio. You invest in stuff that you know will deliver in an incremental sort of way, and then you invest in the really high-risk crash or multiply parts of the system. That is very much how one has to think about ARIA.

In that domain, where you have a very high probability of failure—that is what high risk means—but also an extraordinary probability of amazing levels of transformative success, it is a dice roll. The total number of projects will be relatively small, so it is very hard to predict an absolute number or proportion that one would expect, and one should not need to—that is what high risk, high reward means.

[The Chair]

Thank you, Dame Ottoline. We have just under 20 minutes. Members need to be around the horseshoe to ask a question—there is a microphone on the corner. I will tell you the order in which I will ask questions, so those who are not in the horseshoe can get there. I will go to Daniel Zeichner first, Stephen Metcalfe second, Dawn Butler third, Aaron Bell fourth, Virginia Crosbie fifth and Chi Onwurah at the end. If anyone else would like to ask a question, please indicate.

--- Later in debate ---

[The Chair]

Absolutely, and then I will go to Stephen.

Professor Mazzucato: One of the things that DARPA is very good at is not only turning the tap on, in terms of funding the things that we have been talking about, but knowing when to turn it off. Knowing how to pivot and to be flexible and agile is absolutely necessary. Not only should this agency be free from burdensome bureaucracy, it needs to proactively get an agile and flexible structure, and the metrics that tell you when to turn the tap off, because this is the challenge. You want to be long-termist—going for the difficult things and not the easy ones, which you do not need an ARIA for—and also to have the metrics internally to tell you when things are not going right and when you actually have to stop.

[Stephen Flynn]

Q Thank you to the three of you for your information so far; it has been incredibly helpful.

I have a question for James and Mariana, and then one for Mr Bond. James and Mariana, you both clearly want to see a mission. However, I do not think we should necessarily kid ourselves that the Government will be minded to agree to any amendment in line with that. Do you have any other wider concerns about the Bill whatsoever, or around ARIA as an entity? Do you see any positives at all? In a previous evidence session, we heard about the good prospect of it being small and agile. Is that something that you would see as a positive?

Mr Bond, you are placing a lot of emphasis on the director—I think you used the words “people with high integrity who are brilliant”. That is pretty vague, to say the least. I am sure we could all pick people who we think are brilliant and have high integrity, so are there any definitive qualities, or anything at all with a little more substance, that individuals should have, perhaps in relation to scientific merit, or their background and commercial activities?

Professor Wilsdon: You are specifically thinking about aspects of the Bill that can be tightened and improved, accepting that there is only so much that can be done at this stage. The National Academy of Sciences—the Royal Academy—has published a very good and detailed set of probing amendments to the Bill just this week, and I would certainly endorse several of them. They include inserting a clause that requires ARIA to complement the work of UKRI. That would go at least some way to dealing with the concern that persists over boundary skirmishes, shall we say, or fuzziness at the edges of what the big public funding agency is there to do and what this new thing is there to do.

Accepting that it is going to be hard in the middle of the Bill to define the mission—it is the wrong way to go about it—I wonder whether tightening up some explanation in the legislation of how the process of defining the function and orientation will work, whether on a cyclical basis, for example, choosing particular things to focus on over a five-year cycle or whatever, would also help.

I worry greatly about the touching faith that Philip and others seem to place in the capacity of the chief executive and chair to be these sort of omniscient, wise characters and, indeed, in the Government to choose the right people. It is very important when we are spending £800 million of public money that we establish proper mechanisms of transparency and accountability. I do not think that has to inhibit innovation. I do not think there is any supporting evidence that freedom of information or other measures that currently exist are inhibitive of effective innovation. I do not recall any discussion of that coming up during the passage of the Higher Education and Research Act 2017, three or four years ago, which Committee members may have been part of, and when UKRI was being created. It was not a problem to which any discussion was directed, so I am confused. Such provisions apply to DARPA and other bodies in the US system.

When it comes to people, I hope very much that the Government manage to secure talented people. I hear Lex Greensill is available and has impressed many senior figures in Government in the past with his innovative and disruptive approach to various financial mechanisms. That is the point: if we want this thing to survive and persist and be a valuable addition, it needs to be set up in a way that will avoid capture by anyone—by me, by Mariana, by Philip, by anyone. That is the reason why we have the structures. It really is incumbent on Parliament now, through this process, to try to put more of those mechanisms in place. I just do not see the evidence that they will inhibit its effectiveness.

The biggest barrier to effective, creative, high-risk funding of research and development in this country over the past 10 years has been lack of investment, period. That is the issue: lack of investment. It is great—it is wonderful—that the Government are tackling that with its doubling of public R&D by 2025, if they get there. As I said at the start, that creates the space in which new initiatives such as ARIA can thrive—I hope they do—but there is no evidence that I am aware of for some of these unsupported assertions that are being bandied around about bureaucracy in the system and transparency being the problem. I just do not see it. In terms of the legislation, it is very important to try to tighten those provisions.

Professor Mazzucato: I would agree with a lot of what James said on investment. It is very important to remember that the UK continues to have a below-average GERD—gross R&D spending—over GDP, but also a below-average BERD—business investment in R&D. One of the key things that the DARPA model did in the past was precisely through being ambitious in areas that were market creating, not just market fixing, and also really cheap to crowd in business investment. Again, as I mentioned before, we need metrics to make sure that is happening—in other words, that it is actually creating additionality and getting investment to happen that would not have happened otherwise.

Coming back to the big question, which is a very important one, there are three big things we need to make sure we are doing. One is to have a very clear idea of the innovation landscape in the UK and exactly the gap that this new agency would be filling, because even though it might be exciting to form a new agency, if it is not filling a real gap and is just creating a bit of confusion and repetition, or creating something we do not need, that is a huge problem. Personally, I think it is a good idea, especially if we structure it in the right way.

One of the things I did in the European Commission was put forward this idea of mission-oriented innovation. On the back of that, missions are now a new legal instrument within the European Horizon programme. What that does is ensure that the part of the European budget that used to be challenge-oriented in a very vague way now has the concept of missions to guide it. I argued that we needed to make sure we know what we are talking about when we use the word. I argued that five different conditions had to be there.

The first was that missions be bold and inspirational with wide societal relevance. The second was clear direction—targeted, measurable and time-bound. That is the point before: making sure you can answer “Did you achieve it or not?” The third was to be ambitious but realistic, supporting existing research and innovation actions as well as applying them to those difficult new areas, and, again, areas where there is actually a customer basis. The fourth was that they have to be cross-disciplinary, cross-sector and cross-actor. I gave an example where it is not just about going to the moon—a carbon-neutral city would also require all sorts of innovation across multiple sectors. So it is making sure this does not replace a sectoral approach, but really fosters that inter-sectoral approach. The fifth was that it has to stimulate multiple bottom-up solutions. That is where we need to make sure we are not confusing the concept of missions with projects—often pet projects.

Third is the whole point about expertise in Government. Of course we need expertise in Government and we often have that expertise. When we do not have that is also when you are most open to capture. In my recent book “Mission Economy” I dug out some really interesting documents in NASA, during the Apollo programme, where they said “If we stop investing within our own brain, our own R&D, we are going to get captured”—by what they called “brochuremanship”. At the time, businesses did not have sexy PowerPoints, like, say, PwC, Deloitte and so on: companies came in with brochures to argue why they should be working with NASA. They said, “We need to be working with the best businesses out there, and in order to know how even to write the terms of reference with the businesses and know which ones to work with, we ourselves have to be knowledgeable.”

This comes back to the point, do we have a Government who have been, over the last decades, investing within their own dynamic capabilities within the public sector? I think, here, we need to look at what has been recently coming out in the news. Lord Agnew argued that we have been infantilising Whitehall by the over-use of consulting companies. So the lack of investment within Whitehall, within Government, in their own capabilities, is the biggest opener to the possibility of getting captured; because they do not necessarily then know what they are doing in different landscapes.

Lastly, I would argue that one of the things that most distinguishes the UK innovation landscape from the US one, even taking size into consideration, and everything else, is the lack of confidence. Since I have lived in the UK, for the last 20 years—I am now proudly a UK citizen—there has been constant change in names, whether it is the Technology Strategy Board becoming Innovate UK or what is now the Department for Business, Energy and Industrial Strategy having changed its name four times in the past 20 years. If Government do not know what innovation is for, and if they have these constant consultations with others telling them what to do, that exudes—it kind of reeks of—lack of security. I am not saying you should be confident for the sake of it. I do not even think that is necessarily a value to be held; but this idea that actually we do not even know what we are talking about in terms of what the role of BEIS is, or what the different types of institutions are, what their role is and how they can work together with a dynamic, innovative division of labour, instead of constantly changing the names of existing institutions or bringing forth new ones: that is just something that someone is going to have to deal with.

[The Chair]

Professor Bond?

Professor Bond: I think the question I was asked was about the qualities I might look for in someone. I think that the principal quality that you want in a director, and in the programme managers, is divergent thinking. We have a tremendous system for educating people to become extraordinarily good convergent thinkers. That means they are very good at solving problems in a specialised domain; and that is a valuable set of skills. Here, you need something that goes beyond it. We have heard a lot about NASA. NASA famously realised this in the early days and set about looking for divergent thinkers—and had a test for divergent thinkers. You want someone who shows the ability to be both a very good convergent thinker—a conventional thinker—but also a very good divergent thinker. That is a much rarer thing.

I think you want someone who has shown that they have a real interest in cross-cutting by having done it much of their life. A lot of people talk about it but do not do it. So you want someone who does. When I say cross-cutting I mean across different disciplines—someone who has actually done more than one discipline and someone who has actually worked with industry and academia. That is what I think would be ideal—someone who has an insight into science but also engineering, because you are going to need engineering know-how, and engineering thinking is not the same as scientific thinking. I have worked a lot with Formula 1, for example, and with Rolls-Royce, and it is a different form of thinking.

It is a little closer to what Professor Mazzucato was referring to when she said that you want to combine the thinking of fundamental research with really pushing the limits and boundaries of things. I think you want someone like that. Someone phrased it to me recently as not wanting to see the usual suspects; that is probably one way you can frame it. I think you want somebody who is clearly respected, because people who know them know that at least they have solved some hard problems.

I would like to address the point about avoiding capture. You can talk about people having special interests. Lots of people have come out and said what they think this should do. I have tried rather hard to say exactly what I do not think it should do. I do not think it should do this, that or the other and I do not think that you should necessarily say that it should do this, that or the other, so I am not someone who would want to end up capturing it, in that sense. I want to firmly assert that you put trust in people. When you put trust in people, those people will have some ideas, expertise and background, so you will be making choices. Making choices does not equate to capture, and it is entirely possible to put trust into excellent people and let them do things. We do that with democracy and with Parliament.

In terms of the level of transparency, transparency is a good and wonderful thing in most areas, but if you are asking people to go out on a limb to really push the envelope, I would assert that there is an argument, which has some validity, that you make it psychologically much easier for them if they do not feel that they are under a microscope. Many people tend to step back when they are there. Unless there is some overarching reason for it, I think that they can absolutely be over the size of what is done—they should be and will be—but I do not think it needs to be excessively burdensome in terms of the transparency of what is happening. Again, it comes back to the trust model that you have. The trust model I have is that I believe you can find people you can put trust into, even with £800 million.