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Higher Education and the Economy

Part of the debate – in the House of Lords at 2:40 pm on 19th April 2007.

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Photo of Lord Bhattacharyya Lord Bhattacharyya Labour 2:40 pm, 19th April 2007

My Lords, I thank my noble friend Lady Warwick for securing this important debate. I declare an interest as the director of Warwick Manufacturing Group at Warwick University.

In the Budget, the Chancellor announced that the Government will spend £6.3 billion on science by 2011 and that we aim to spend 2.5 per cent of our GDP on research and development. This funding is vital because universities provide the framework for economic growth, both from building the skills base and through research. Since 1997, increased funding and the extra income from tuition fees mean that our universities are prospering after years of neglect. Alan Johnson and his predecessors deserve great credit for their achievements.

Now we need to ensure that our universities drive economic growth. The excellent 1993 White Paper from the noble Lord, Lord Waldegrave, entitled Realising our Potential, linked science, engineering and technology with national wealth creation and quality of life. The problem was that there was very little investment to go with the vision. Today, funding has increased, but the words "engineering" and "technology" seem to have disappeared from our official vocabulary. I hope that we do not also lose the words "wealth creation" because to reach the 2.5 per cent GDP target, we need to attract R&D funding from the private sector to universities.

I remember asking the research councils to provide funding for postgraduate training on the basis of how much investment could be levered from industry for high-quality courses. The Engineering and Physical Sciences Research Council took my advice, and its system now provides incentives for academics and increased engagement with industry, and is hugely successful. That would not have happened if we had not understood the priorities of industry. Attracting private R&D funding can also create enormous wealth. I go to Boston quite often, where the number of businesses and spin-offs on Route 128 near Harvard, MIT and other universities is simply staggering.

Here in the UK our research and teaching is of excellent quality and extremely good value for money but, sadly, our business creation performance—other than in a few universities—is very patchy, even though venture capitalists are desperate to fund new ideas in engineering research and with private sector partnerships. I remember the late Lord Butterworth, when I started at Warwick and there were huge cuts in the university sector, giving me a chair and saying, "Get on with it". I was lucky enough to find a vice-chancellor who gave me the freedom to do that. He said, "I will not interfere—get on with it. If it fails, it's your fault, and if you succeed it's our success". I did not mind because I cherished the freedom he gave me. Because of that freedom, we have attracted hundreds of millions of pounds in private funding and produced highly rated research and excellent teaching. All my equipment came from the private sector and I suspect that in my area it is the best in the world.

I fear that the freedom I found at Warwick is still a rarity. Universities also have to deal with too much external bureaucracy when seeking state funding. The blunt truth is that universities are prepared to put up with months of revising bid forms in order to gain state funding but commercial partners are not. Speed of reaction and delivery is paramount when dealing with the private sector. We have to take risks. At Warwick, we recently decided that cyber-security will be vital to the nation. Because of our flexibility we have already been able to invest in e-security as part of our plan to build a new £50 million digital laboratory. We were able to move very fast, recruiting the best people and starting the programme within eight weeks. If we had been slower, we would have lost our edge to institutions overseas.

I understand that if the Government are to invest in innovation, they must have some way of knowing that the funding is actually going to related projects. We should lighten bureaucracy by trusting those institutions that deliver on priorities. The principle should be that if you deliver, you receive funding, which would have the benefit of giving academic entrepreneurs the incentive to innovate and make a difference.

Over the past 10 years the Government have delivered on the mantra of "education, education, education", at least with regard to higher education. I am sure that the Chancellor, in whatever role he takes on next, will continue to invest in such a vital part of the nation's economy.