Innovative and Competitive Technology
Mr Nigel Jones (Cheltenham)
What a pleasure it is to follow a thought-provoking speech such as the one that we have just heard from the hon. Member for Motherwell, South (Dr. Bray). I, too, welcome the hon. Member for Harrow, West (Mr. Hughes) to his new responsibilities. When the former Science Minister sat on the Bench I had a flashback to the Standing Committee which considered the Intelligence Services Bill, but fortunately we are discussing something a little more interesting today. I declare an interest in ICL.
I thank the members of the Science and Technology Committee for the excellent report which they produced in April. Clearly, they spent a great deal of time on the report–18 months, as we heard from the Chairman of the Committee. It was time well spent. However, like other hon. Members, I find the Government's response disappointing. One of the reasons why I became a Member of Parliament was that, after spending more than 20 years in the information technology industry, I could see other countries catching up with and overtaking Britain in their standard of living. They did it by investing in the future, not in the short term but in the long term, researching and developing products that might not produce tangible benefits this year or next year but in five, 10, or 15 years or longer down the track. If Britain is to survive as a modern, industrialised nation, the people of which enjoy a high standard of living, we must invest long term, too.
Whole swathes of our industry have contracted. We have heard about some of them, including the machine tools industry, today. The science and technology report identifies the real problem. It is a problem shortly to be exposed in a book entitled "The State We're In" by the eminent journalist Will Hutton. Mr. Hutton gave the inaugural Summerfield lecture at the Cheltenham festival of literature earlier this month and identified the problem as short-termism. Other hon. Members have pointed that out.
The former Chancellor of the Duchy of Lancaster listened positively to the wishes of the science community, but I always felt that he was beating his head against a brick wall in trying to persuade his Cabinet colleagues to invest in research and development. The
Government's response to the report confirms those fears. We have already heard about paragraph 186 of the report, which says clearly:
We believe the time has come for a major re-examination of the case for fiscal incentives for investment in research and development, both at personal and at company level. Such a review should be conducted openly, and its conclusions should be considered by experts outside the Treasury.
In paragraph 19 of the Government's response we read:
The Government does not, however, agree with the Committee that there is a case for general tax incentives for spending on research and development".
The Government are wrong on that point. We need to invest now in research and development of the new products that will create wealth and jobs in the future. Through the tax system we need to make it financially attractive for companies to invest in research and development, as they do in the United States.
For example, it should be more attractive for companies to invest in the future than to pay out excessive dividends to shareholders. The country, the companies and the shareholders all have an interest in long-term investment for the future instead of short-term gain. We have already heard that Japan, the United States and Germany are investing more in the future than we are. That means that they, not Britain, will create the wealth and the jobs in the last years of this century and into the next.
The banks, too, must be more flexible in supporting manufacturing industries that are investing in the future. There is a hopeful sign in the Government's response that the banks may be changing their attitude. Without properly funded research, we will spend even more time in the House in the coming years debating further cuts in social programmes, health, education, police and social services. As I have just touched on the police, is not it a disgrace that the Home Office is contemplating introducing a new formula which, at a time of record crime, would cut the budget of the chief constable in my area of Gloucestershire by 9.9 per cent?
I fear that the Government will put short-term financial issues before the long-term goal of providing for Britain an adequate base to maintain and improve our quality of life not only for our generation but for future generations. Indeed, the strategy of the Government seems to be to cut investment in key services to create enough elbow room for a cut in income tax before the next election. That is not only short-termism; it is cynical short-termism. One person's tax cut in 1996 could be that same person's job loss in 1998.
I came across an example of what is wrong a few months ago. An excellent company, Johnson Matthey, is one of the leaders in environmental technology, which is one of the growing industries. It makes catalytic converters, among other things, and it has recently carried out research into fuel cells, a subject mentioned in paragraph 346 of the Committee's report.
Johnson Matthey is now in a position to start manufacturing the technology. When I asked where it would make the new product I expected the answer to be Sonning, just outside Reading, where the research was carried out. But no. It will make the fuel cells in Belgium because the Belgian Government almost fell over themselves to attract Johnson Matthey to create Belgian jobs and exports for the Belgian economy. That is an instance where the Department of Trade and Industry could not keep the jobs and the wealth creation in Britain because it has such a small budget.
Many of the skills learnt in research are those of identifying and better understanding problems, and providing basic knowledge to be used in the future. A potential wealth-creating area may be identified, but will there be resources to make anything of it?
One key area which is regarded by some as likely to have bigger world market potential even than information technology—the field I came from—is biotechnology. Some hon. Members may have seen Dr. Chris Evans of Chiroscience in "The Money Programme" on BBC2 some time ago. He bemoaned the fact that it was likely that the new industry would not get off the ground in Britain because research and venture capital was so difficult to obtain.
Yesterday in The Sunday Times there was a report which should interest all hon. Members. It was entitled "Doctors unlock secret of old age". It states:
Scientists investigating the development of human cells believe they have unlocked the secret of ageing. The discovery could transform the quality of later life by enabling doctors to delay the onset of age-related illnesses … The research, funded partly by a British company, Biotechnology Investments, was hailed this weekend by international experts, who said that if the promise of early results was fulfilled, it could have profound impacts on the treatment of some of the biggest human killers, including cancer and heart and kidney disease.
Clearly there is still an enormous amount of research to be done in that field, but for the sake of mankind it is research that should be done and British scientists should be involved in it. The research is being carried out in California.
That is why it is so vital for the Government to realise that scientific research is not merely something that one should do. Once proven it is something that should permeate all Government Departments—to the Department of Trade and Industry and through it to health, agriculture and beyond.
The reality, as all hon. Members know, is that funding could be limitless. We can all think of projects that are worthy of investment but would far outstrip the budget of any of the parties in the House. There is a shortfall, however, which is damaging Britain's future.
During our debate on science in February, I mentioned David Ko, who was a lecturer in the department of physics at Oxford university. He was worried about the effects of Government funding policy, which was leading to a reduction in the number of physics graduates. Since that time, Mr. Ko has left what I consider to be his vital job at Oxford, because of the lack of funding, and is working for a merchant bank in the City. Perhaps, as the Chairman of the Committee pointed out, he may bring a scientific bent to the workings of that bank, but he went because it pays better and he no longer faces the pressure of making do with a budget that is totally insufficient for the job that he was asked to do.
There should be a proper career structure for research scientists, with salaries and conditions that reflect their level of qualification, which will keep scientists in Britain and encourage others to become scientists. We need to value our scientists in the same way as they are valued in Germany, France, Japan and the United States. We must also match our competitors in research and development.
In this month's edition of Laboratory News, the Government's rejection of tax breaks for research and development is greeted with some concern. The Save British Science executive secretary, Dr. John Malvie, condemned the Government's decision as "blind adherence to dogma." He said:
The Government should at least be trying to match the assistance that other countries give to R&D. Other countries adopt pragmatic approaches and are not bound by dogma in the way this Government appears to be.
I hope that when the Minister sums up he will provide answers to the questions raised so far and especially to paragraph 19 of the Government's response to the Committee's report. I wish him well in the task of persuading his colleagues of the importance of research in this country. If, as I suspect, he and the Chancellor of the Duchy are unable to persuade the Cabinet to invest more now, that is another example of why Britain needs a fresh start under a new Government.