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Science Strategy

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 14th October 2004.

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Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North 11:30 am, 14th October 2004

What representations he has received on his Department's measures to support science.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Following 200 representations in support of our 10-year science strategy and the announcement of an additional £1 billion of funding for science by 2008, I can report that we will have a national conference on science and innovation, in advance of the Budget, with all members of the scientific community and industry. We will discuss with them further ways of building on the successful 10-year strategy that was launched in the summer to improve the quality and quantity of science investment in the United Kingdom.

Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North

I thank my right hon. Friend for that answer. He will know that we have an excellent science base. The problem is translating that into practical reality, demonstrated by the historical low research and development expenditure. Professor van Reenen recently demonstrated that that was especially low in the 1980s because of a lack of Government support. Van Reenen and his colleagues have also said that tax subsidies have an effect, so the Government's measures on tax credits are to be welcomed. But could the Chancellor ensure that at the conference the separate issue that the Economic and Social Research Council identified in its report on productivity, namely intellectual property rights, will be on the agenda?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

My hon. Friend is right—the protection of intellectual property is crucial, particularly for a country such as ours, which holds a sizeable number of the new patents that are issued throughout the world. It is also important to recognise that the development of the science base in this country is possible only if there is substantial Government funding for science. The increase of £1 billion from the Government in the next few years, together with the welcome investment by the Wellcome Foundation, which is providing an additional £1 billion, will build up the science base in this country over the next few years in a way that has not happened before. A few minutes ago, I said that we now have the best support in living memory for small businesses to develop, and we also have the best support available, and we want to do more, to aid science and technology in this country, and to help spin-off companies from the universities. Not only will we do what we can to protect intellectual property but we will maintain the growth of incentives available to science-based industries.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I have to say that what the Chancellor has just said is complete rubbish. Is he not aware that his changes to the rules on venture capital have killed start-up businesses emerging from our universities stone dead? Will he go away, look at the problem and come back with something positive to tell the House? He should stop telling us things that, frankly, are not what universities are experiencing on the ground.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I would take the hon. Gentleman's representation seriously if he had been right about the windfall tax, which he opposed, extra spending on the NHS, which he opposed, and the minimum wage, which he opposed. He is factually wrong about what is happening to the venture capital industry in this country. The extra incentives that we have given that industry have been welcomed by all parts of it, which shows how remote the Conservative party is from business and industry in this country.

Photo of John McFall John McFall Chair, Treasury Committee

The Chancellor may be aware that the Treasury Committee is currently conducting an inquiry into regional productivity. On a recent visit to Germany, we were impressed by the nationwide Fraunhofer research institutes, which bridge the gap between higher education research and manufacturing industry. What measures is he taking to ensure that the welcome increase in science spending will secure the linkage between universities, higher education, manufacturing and other industries so that we can increase economic prosperity and productivity throughout the United Kingdom?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

My right hon. Friend, who is undertaking that investigation as Chairman of the Treasury Committee, is quite right—we want to build modern manufacturing strength in this country, which depends on investment in science and technology and on universities being in a position to produce spin-off companies. However, it also depends on businesses investing in innovation in ways that they did not in previous years. We have set a target to raise innovation expenditure from 1.9 per cent. to 2.5 per cent., and have put in additional money ourselves. The research and development tax credit has been taken up by thousands of small firms—

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

The Chancellor is wrong—it has been taken up by only 5 per cent. of all firms.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

The hon. Gentleman is quite wrong, as 95 per cent. of the firms eligible for the small business R and D credit have taken it up. I shall write to him today to put him right about the facts. Perhaps the Treasury Committee should undertake an inquiry into the Conservative party's lack of knowledge about what is happening to British industry. We will have to offer a course of education so that its candidates are prepared at the next election.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

As the Chancellor wants to talk about innovation, let us do so. Innovation and science, as he knows, rely on good research and development. He mentioned his tax credit scheme, yet it specifically and quite intentionally excludes the smallest partnerships and firms. Given that those are the very entrepreneurs who are at the cutting edge of both science and technology, why is the Chancellor deliberately excluding them from the scheme? Perhaps he should learn that lesson.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

We are spending £600 million on the small business R and D credit scheme. The hon. Gentleman proposes to extend the scheme to other firms, so presumably he wants to spend more on that credit. Why, therefore, does the shadow Chancellor want to cut the budget for science and research and development? Perhaps the hon. Gentleman should have a seminar with his right hon. Friend to try to square the circle.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

Scientists in my constituency appreciate the Chancellor's championing of science and the vast increase in that budget under this Government. How can we ensure that 2.5 per cent. of publicly funded research and development actually gets to small businesses?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Small businesses collect the R and D tax credit themselves. The tax credit is efficient; it works in America; and now it is working in Britain. The Conservatives should understand that thousands of companies' innovation plans depend on the R and D tax credit, which would be abolished under a Conservative Government. Not only the CBI, but all major businesses in this country welcomed our 10-year science document. The Opposition may want to disparage the Royal Society, Microsoft, the Wellcome Trust, the CBI and Qinetiq, which wanted the science strategy. The Conservative party would cut science expenditure, which, like the health service, education, transport and law and order, is another area of public expenditure that is at risk from a Conservative Administration.