My Lords, the department whose affairs I shadow—namely, the Department for Innovation, Universities and Skills—has been rightly grouped among the departments to be considered today, because the issues with which it is concerned are central to the competitiveness of the British economy. Indeed, in setting up the new department in July 2007, the Prime Minister said:
"The new Department will be responsible for driving forward delivery of the Government's ... vision to make Britain one of the best places in the world for science, research and innovation, and to deliver the ambition of a world-class skills base".
I shall talk today about those two issues: science and technology, and the skills agenda. Both are marked by requiring upfront investment, especially investment in human capital, before the benefit from that investment can be reaped.
As with all investments, the temptation in a downturn is to economise and to cut. What is not essential today can be put off until tomorrow. My plea to the Government and to business is to recognise how important these investments are to our future competitiveness. Britain now has to live by its brains, not its brawn, a point made by the noble Lords, Lord Rooker and Lord Bhattacharyya. If we fail to make these investments, our ability to hold our own as we emerge from this recession will be much damaged. The noble Lord, Lord Marlesford, was correct in saying that capitalism can be, and has been, saved by the enterprise and technology of this country, but it cannot be saved if we make no investment in it.
In relation to science, the strategic framework for science policy was set by this Government in July 2004 in their 10-year framework for investment with a target of reaching a public and private investment in R&D of 2.5 per cent of GDP by 2014. We are now nearly halfway through that period, but, sadly, we are no nearer reaching that target in relation to gross expenditure on research and development. We hover around the 2 per cent mark. To my mind, the Government have done their part. They have fulfilled their promise. Funding of the science base through the research councils has, to date, been given priority, and even in the last Comprehensive Spending Review maintained a real growth rate of 2.5 per cent. Here I pay tribute to the noble Lord, Lord Sainsbury, who for much of this period was the Minister for Science and drove much of this programme. I very much hope we shall see this rate of funding maintained through the period of the next CSR, 2011 to 2014.
I have three specific questions for the Minister. First, the weak link is private sector R&D, which has not responded to a regime of generous tax credits and remains stubbornly at around 1 per cent, even for the prosperous years of 2005 to 2006. The great danger is that in this deep recession we shall see substantial cuts in funding. What steps are the Government taking to prevent this? Secondly, while the Government have increased their funding for the science base, they have cut back fairly savagely on R&D spending by government departments themselves. In addition, R&D budgets for departments have been raided on a number of occasions. The BERR budget was raided for £68 million to fund retraining and redeployment at Rover. The Defra R&D budget, vital to our climate change challenges, was raided to pay for the disastrous mistakes made in the new agricultural support programme. Can we have an assurance that this will not happen again? If the Government do not give priority to R&D, how can we expect private industry to do so?
Thirdly, I draw attention to a brief debate that we had on
I turn briefly to apprenticeships. The noble Lord, Lord Mandelson, said that the children, learning and skills Bill, which will come before this House later in the Session, provides that every young person who so wishes should be able to make use of an entitlement to an apprenticeship, and puts the onus on local authorities to find places for those who wish to take up this entitlement. In an excellent report on apprenticeships from your Lordships' Select Committee on Economic Affairs a couple of years ago, it was stated:
"Apprenticeship should be established as the main route to skills below graduate level. It should be the standard method for a combination of work and learning to contribute to the Government's goal that all young people aged 17 and 18 should participate in some form of education and training".
My response to that was very much "hear, hear". Yet while the Government are establishing this entitlement to an apprenticeship, they are far from establishing it as the standard method of combining work and learning. Rather, they have muddied the field by launching, at the same time, the new 14 to 19 diplomas. These 14 different sector lines in areas such as health and social care, engineering, construction, communication and media studies, as explained by the person now in charge of them at the DCSF,
"will not make a young person work ready", but are nevertheless aimed at those who,
"want to combine practical and theoretical learning".
They will learn about the world of work but gain very little practical experience. The minimum requirement is 10 days' work experience.
Meanwhile, the extremely popular and successful Young Apprenticeship programme remains only a pilot and there are, as yet, no clear lines of progression from the diplomas to the post-16 apprenticeships. It makes for a difficult choice for 13 year-olds and their parents. Do they stick to the tried and tested, but often dull, GCSEs? Do they go for these new diplomas, which talk about the world of work but give little actual experience? Or do they opt for a young apprenticeship, which will guarantee them a route into an apprenticeship?
If we are to emerge from this current recession with the capacity to compete within the global framework, the skills of the workforce and their ability to innovate and benefit from developments in science and technology will be crucial. This has been understood by this Government for a long time and they have introduced—and continue to introduce—many changes aimed at ensuring that we reap these benefits. I am not alone in thinking that perhaps they have introduced too many changes and failed to allow those that they have made to take firm root. These diplomas are another example. This recession will, in many senses, be an acid test of whether this is so.