Queen's Speech — Debate (5th Day)

Part of the debate – in the House of Lords at 6:03 pm on 25 November 2009.

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Photo of Lord Bhattacharyya Lord Bhattacharyya Labour 6:03, 25 November 2009

My Lords, I start by declaring a quarter century of interest. For that time, I have been the director of the Warwick Manufacturing Group, which uses research, technology and knowledge transfer to support British and international industry.

The gracious Speech makes it clear that securing sustainable growth is the main challenge facing the nation. My group's experience of recent rapid growth in China and India underlines the importance of industry and manufacturing to wealth creation. The speed of expansion there has been relentless. In Britain, however, the past three decades of growth in financial services meant that those of us who championed manufacturing were voices in the wilderness.

It often takes a crisis, such as the financial tsunami that has hit across the world, for views to change. It has become clear that we need a different route to prosperity. I am delighted that there is now a convergence of views that we need to support manufacturing and encourage industrial exports. It is especially refreshing that my noble friend the Secretary of State has focused government thinking on manufacturing with his concept of industrial activism. My noble friend is making the right statements and I only hope that he is in place long enough to secure this as his legacy.

The Government's principles are right, but every engineer knows that achieving sustainable growth is not as easy as it looks. It will take time, effort and sustained policies. Every nation aims to be an innovation-led economy. The reality is that Britain must make careful choices to get the most out of our scientific research.

Let us take low-carbon vehicles. This year, China announced that it would invest $3.5 billion in low-carbon vehicle research. If the UK were completely to focus on electric vehicles, we would put severe pressure on our power generation industry. Therefore, I applaud the Secretary of State for announcing pilots in many cities to see the consequences of electric vehicles. I hope that they are successful and that we shall soon see the results of his activism.

As Britain has expertise in developing low-carbon conventional vehicles, including advanced hybrids, where should we fund research to get the best results for our industry, while maintaining and creating employment? These are difficult questions, so it is no surprise that this House has heard many debates on how British industry might benefit from our undoubted excellence in research, going right back to the formation of DSIR during the First World War. The debates on manufacturing and science and technology are often cross-party. The Callaghan Government commissioned the Finniston report, which proposed a greater focus on engineering in universities. The report was implemented by a Conservative Government. A decade later, the White Paper of the noble Lord, Lord Waldegrave, Realising Our Potential, was widely welcomed. This report cited wealth creation as a vital force for science and technology research. Unfortunately, it was not supported with funds.

Under this Government, we have seen the doubling of science research funding, including the launch of the Technology Strategy Board, which I advocated for many years. Unfortunately, over time, the role of wealth creation has received little more than lip service. These changes are encouraging entrepreneurship. We can see it in the increasing number of successful UK research companies. Last year, Britain had 923 spin-out companies that had been in business for more than three years, an increase of a third. Yet this is not enough. British scientific history is littered with breakthroughs made in our universities but made profitable abroad. To prevent that from happening again, we must ensure that our research funding system really drives forward applied research.

The Higher Ambitions framework makes it clear that the Government see impact as a key part of the next research excellence framework. As I said in this House before the launch of the research excellence framework, it is vital that we measure real impacts. The Government must keep their nerve, no matter how many petitions are launched on websites. The danger is that impact assessment turns into a box-ticking exercise, not a measure of the ability to create jobs, attract private investment or develop new products and processes. To avoid this, we must give equal status to real-world impact, at least in the engineering research excellence framework. This is appropriate because engineering is all about the application of principles to reality.

If most scientific research is about improving a theory, engineering research should be about improving the world. The Engineering and Physical Sciences Research Council has supported much outstanding work. Now the challenge is to get that knowledge out into the world. We must make it easier for universities and companies to work together to create wealth through technology. A vital step is to increase the research budget for industrial and academic collaboration in the Technology Strategy Board. The research councils get nearly £3 billion a year from the Government, but there is scope for much more collaboration between the research councils and the Technology Strategy Board. It is not asking for extra money; it is about the reallocation of funds. The £120 million of programmes proposed in the spending review is not enough.

We must also learn how to act quickly. We are a nation of bureaucrats, committees, boards and councils. The problem with such institutions is that they can move slowly and, in operating by consensus, endorse the lowest common denominator. Such a system also means that one or two key figures can gain huge power over research and technology funding. This process can lead to decisions that reflect particular views, not the wider interest. When dealing with outside groups, this becomes a real obstacle to building partnerships. Of course, it takes two to tango. Business must also play a part. British industry does too little research and development. That will take a long time to improve. Universities must play a central role in that change. To attract business partners, we need a well funded system with a grant process that is straightforward, not a more complex version of a Kafka novel.

We scientists and engineers were fortunate to receive a decade of increased funding. We now need to put the application of that research at the heart of our industrial strategy. Growth requires world-class products and processes. We have a world-class research infrastructure and we must now make the most of it. If we do, the prospects for long-term growth will be bright.