Higher Education and Research Bill - Committee (7th Day) (Continued)

– in the House of Lords at 7:06 pm on 30th January 2017.

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Amendment 482C

Moved by Baroness Brown of Cambridge

482C: Schedule 9, page 105, line 30, at end insert—“(d) form, participate in forming or invest in a commercial arrangement including a company, partnership or other similar form of organisation for the purposes of supporting economic growth through commercialising research or promoting university-business collaboration (up to a financial limit determined periodically by the Secretary of State).”

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, in moving Amendment 482C, I wish to speak also to Amendments 490A, 495C and 495D in my name and those of my noble friends Lord Mair and Lord Broers. All these amendments relate to the issue that I and others highlighted earlier of the need to maintain and strengthen Innovate UK’s business focus within UKRI, and, in delivering its support to businesses of all sizes and stages of development, ensuring that Innovate UK is itself able to innovate in the forms of support it can deliver, so that they are appropriate to the need and scale of the business.

As we heard earlier, Schedule 9 states that UKRI is not allowed to enter into joint ventures, or form or invest in companies, partnerships or similar forms of organisations without the specific consent of the Secretary of State. These are just the kind of things that Innovate UK has done, does now, and which it is likely to want to do more of as it extends its activities in the future. The very successful catapults, for example, are companies which Innovate UK has formed, appointing their initial chairs and non-executive directors and funding them. Indeed, I understand that Innovate UK has recently appointed a chief investment officer to look at opportunities to support new technology-based companies. Schedule 9 appears to constrain this type of innovative business support rather than encourage it. The amendments would remedy this while still leaving an appropriate level of oversight and control with the Secretary of State.

Amendment 495C also supports the business focus and autonomy of Innovate UK within UKRI. It would transfer back from UKRI to the Innovate UK council, with, I hope, its independent chair, the determination of which of the UKRI functions Innovate UK should exercise to increase economic growth in the United Kingdom.

These are very important aspects of ensuring that Innovate UK can continue to provide innovative business-focused support to UK economic growth. I beg to move.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

My Lords, I will speak to the amendments standing in my name. Briefly, the context is of course that Innovate UK is a good thing that is making real progress, and we do not want to see anything that constrains it, particularly within this legislation. However, it is worth looking at the Government’s case for its inclusion in UKRI—we will deal with some of its merits later—and what that means for its operating method and efficiency, and whether it meets the right objectives. That is also about ensuring that Innovate UK has the right basis for entering it, which is what our Amendments 482D and 495E relate to. The efficient use of the interrelation between business and research is aptly put by the question I will ask having visited Harwell, where there is a fantastic facility. Particularly with regard to space, where we have a huge emerging industry, we have invested in a chamber to be able to test products as they would wear in space. There is a five-year waiting list, even though construction has not been completed yet. Therefore, where in the research world is the case made to extend those facilities and make them more available? That is part of what we are looking at here.

Amendment 495F would require Innovate UK, when exercising the functions required,

“to maintain its focus on assisting businesses”.

As well as some people having concerns about Innovate UK affecting the way the research is seen, we want to make sure that Innovate UK is established with the right focus and that its priorities and funding will not be excessively influenced by its proximity to the research councils and Research England.

One of the other issues on which we would like clarity from the Minister is how other elements, which have a strategic focus on these issues, relate to this. One is the role for the Council for Science and Technology, which is known by the acronym CST and sometimes dubbed “Charlie Sierra Tango”. It advises the Prime Minister on science and technology policy issues, which cut across the policy issues of government departments. It is housed in BEIS, and it is the most significant location where issues of science, technology and the interface with business are addressed by government. It would be logical for it to be proactively charged with the role and responsibility to look at this issue. We will be interested to see where it fits in.

Amendment 495G is our proposal that Innovate UK’s spending is separately reported and evaluated by the NAO, just to make sure, again, that we have that counterbalance.

In the development of the relationship with business and making sure that that function works particularly well, it is narrow just to consider the role of Innovate UK, however esteemed, useful and effective it is. We should be looking at the issues surrounding spin-outs—the commercialisation of university research, and how that works. We should be looking at some of the other elements; for example, the research council supported the Rainbow Seed Fund as a seed fund generator. It is a most outstanding, although small, fund, which has done a terrific job at encouraging investment in our research base and in companies that spin out from it. It will be useful to have some idea of where some of the new institutions, such as the Industrial Strategy Challenge Fund, which has been announced, will fit in with Innovate UK and its new research framework. Similarly, how will the Small Business Research Initiative fit in?

There are of course other examples. Many people commented on the recent announcements that we were looking for something similar to the Defense Advanced Research Projects AgencyDARPA—in the States, which has had fantastic non-military applications, such as computer networking, graphical interfaces and other things. Will the Government also consider, in the context of what they are trying to achieve, that there is a role for institutions such as Israel’s Yozma programme, which revolutionised Israel’s venture capital industry and has totally transformed its universities and capacity to the point where Israel is investing per GDP twice as much in private equity and venture capital as the United States? That has transformed the research capability of its institutions.

Innovate UK is therefore a good thing, it should not be restricted, and it should certainly have a lot more functions. However, is that the end of the story, and are there other ways in which research elements that we have already, as well as others, will be considered by the Government?

Photo of Lord Broers Lord Broers Crossbench 7:15 pm, 30th January 2017

My Lords, I support this case as well. Innovate UK has been very successful and should not be constrained in any way. It may be useful to talk about three examples of where institutions, excellent in the purest of research and in applied research, do similar things. I will start with Cambridge. I declare my interest again as a past vice-chancellor and head of the Department of Engineering, and I remain chair of the International Visiting Committee for the department—a point about internationality came up recently.

Cambridge University established Cambridge Enterprise about 10 years ago to aid the transfer of knowledge from the university through commercialisation. Its mission is to achieve this through intellectual property management and licensing, investment in university spin-outs, and consultancy management and advice. It has been a big success. Similarly, the Royal Society—I declare my interest as a fellow—launched the Royal Society Enterprise Fund in 2008, with the objective for it to become a financially successful contributor to early-stage company support and a role model for the translation of excellent science for commercial and social benefit. Again, the Royal Academy of Engineering—I declare my interest as a member and past president—recently established its Enterprise Hub, through which it offers a number of grants aimed at identifying and supporting the next generation of high potential entrepreneurs and prizes celebrating success in innovation and entrepreneurship. Innovate UK should also, as the amendment says,

“participate in forming or invest in a commercial arrangement including a company”.

One of the reasons that some of us are worried about bringing Innovate UK under UKRI is that it is so different from the research councils, and we do not want to harm the research councils or Innovate UK. This is therefore a plea to give Innovate UK its true freedom, which it enjoys at the moment.

Photo of Lord Mair Lord Mair Crossbench

My Lords, I support Amendments 482C, 490A, 495C and 495D, to which I have added my name, and support what has been said by my noble friends Lady Brown of Cambridge and Lord Broers.

The noble Lord, Lord Liddle, referred earlier to the industrial strategy. This is highly relevant to the Bill and to Innovate UK. The industrial strategy has 10 pillars. The first is:

“Investing in science, research and innovation”.

The Green Paper clearly acknowledges the serious problem we have in the UK with commercialising our outstanding science. It states that,

“historically, we have not been as successful at commercialisation and development as we have been at basic research … We have already taken action to address the UK’s … relative weakness in commercialisation, through the establishment of new, more industrially focused institutions such as Innovate UK”.

This group of amendments addresses the freedom of Innovate UK within UKRI to operate successfully and with full autonomy—otherwise there is a danger that it will not be as effective as it should be. I fully support the point made by my noble friend Lady Brown of Cambridge. Paragraph 16(1) of Schedule 9 states:

“UKRI may do anything which appears to it to be necessary or expedient for the purpose of, or in connection with, the exercise of its functions”.

However, paragraph 16(3) states that UKRI may not,

“form, participate in forming or invest in a company, partnership or other similar form of organisation”, except,

“with the consent of the Secretary of State”.

That seems unnecessarily restrictive on Innovate UK. It should not have to obtain the consent of the Secretary of State whenever it wishes to make an investment in a company, partnership or similar organisation. A very similar point was made earlier by my noble friend Lord Oxburgh in relation to forming joint ventures. Innovate UK should have the freedom and flexibility to invest as necessary to promote research and innovation to the greatest economic benefit of the UK—although, clearly, financial limits should be set periodically by the Secretary of State. That is the purpose of our Amendment 482C.

The world is changing very rapidly and it is therefore vital for the economy to have a high level of UK R&D investment in science and engineering. The UK must continue to be world leading in innovation. We cannot afford to slip behind, and UKRI must be made to work really effectively. Innovate UK, with its strong business-facing focus, along with the science and engineering community, must therefore be allowed to continue to play a key role in promoting research and innovation. Innovation is an inherently risky process with an uncertain outcome. To be really effective, Innovate UK must be allowed to promote high-risk and disruptive innovation.

This House’s Committee on Science and Technology, chaired by the noble Earl, Lord Selborne, and of which I am a member, heard in evidence that many businesses have concerns about the status of Innovate UK in the proposed UKRI, especially in relation to risk and the backing of new companies. Innovate UK must therefore be allowed to invest in commercial arrangements, including companies or partnerships, if it is to be fully effective in promoting innovation and commercialising research—and this should be in the Bill.

Innovate UK operates in a quite different way from a research council, so I urge the Minister to reflect on and give careful consideration to this matter, and to ensure that the proposed structure of UKRI is not unnecessarily restrictive on the crucial activities of Innovate UK.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, it is perhaps important to point out that Innovate UK is to be henceforth merely a committee of UKRI. The scope of its work is set out in Clause 90(1), which states:

“UKRI must arrange for Innovate UK to exercise such functions of UKRI as UKRI may determine for the purpose of increasing economic growth in the United Kingdom”.

So I do not think that there is any sense in which UKRI is autonomous. Innovate UK will have no employees of its own—they will all be employees of UKRI—and it certainly will not be autonomous in any sense that I can understand. The question may be whether the result that these amendments are aiming at can be attained only by taking Innovate UK out of UKRI and giving it a separate status. There may be disadvantages in that as well, but, as presently set out in the Bill, Innovate UK is a mere committee of UKRI—and that is not a particularly elevated status. In many aspects—not all, because I have just referred to a special aspect in the clause that I mentioned—it is being treated pretty much as a part of UKRI.

Photo of Baroness Neville-Jones Baroness Neville-Jones Conservative

My Lords, I support Amendments 482C, 495C and 495D. I note what has just been said about the committee status of Innovate UK, and many noble Lords—I include myself—do not regard that as a satisfactory way of running things. We would much prefer it to be a separate entity. If the Government are unable somehow to strengthen the role of Innovate UK within the present structure that they have chosen, there will be a real problem that we will have to tackle on Report.

The noble Lord, Lord Mair, said many of the things that I wanted to say, but much more eloquently. He made the absolutely vital point that the functioning of Innovate UK is crucial to the attainment of the Government’s industrial strategy. If that is the case, it will need the powers to enable it to do that. The purpose of Amendment 495C is to give Innovate UK the right initiative that is needed if it is to achieve its objective. Amendment 495D emphasises the central role of Innovate UK in promoting the commercialisation of research. It has to be able to enter into business relationships which underpin that; thus we come back to the problem that has been identified.

The Minister’s remarks will obviously be very important here. If the language is not right, perhaps it can be fixed, but this is an issue of fundamental importance on which I would like to hear what the Minister has to say.

Photo of The Earl of Selborne The Earl of Selborne Chair, Science and Technology Committee (Lords)

My Lords, the noble Lord, Lord Mair, referred to the short inquiry that the Science and Technology Committee undertook earlier this year, just as the Bill was introduced in the other place. It was clear from the evidence that we took from organisations such as BP, the Royal Academy of Engineering and others that they were rather taken by surprise by the way that the Government had implemented the Nurse review in this respect. After all, the Nurse review had been asked to look at research councils. However, when they had participated in the consultation, they had not thought to give their view on Innovate UK because they had not realised that it was part of the agenda. If you read the Nurse review carefully, you will see that it does not make a firm recommendation on this; rather, it states that this is something on which more consultation is required, although there would clearly be benefits from bringing Innovate UK and the research councils closer together—as I think we all accept.

Equally, there are real dangers, which have been referred to. In the letter that I wrote on behalf of the committee to the Minister, Mr Jo Johnson, we said that, if this is to work, the issues of autonomy, funding and business focus simply must be addressed. During any number of discussions that we have had, I have been prepared to give the Government the benefit of the doubt on this. I am sure that while the present Minister and the acting chairman are in their roles, they will be very sensitive to the need to keep this organisation business focused. However, we have to make sure that it survives the test of time when very different people are in those roles.

As my noble and learned friend Lord Mackay pointed out, autonomy is a real issue. We are talking about what is effectively a subset of UKRI, and UKRI has the last word. That is why, on one of the earlier groups of amendments, I suggested that it was absolutely critical to have on the UKRI board people who understood the Innovate UK agenda. That is not to say that they should be in a majority but, if these two cultures are to succeed in working together, it is clearly absolutely critical that there is a great deal of cross-representation and certainly a strong degree of business understanding, expertise and experience on the UKRI board, as well as on the Innovate UK council.

Again, I am absolutely certain that the issue of autonomy can be addressed by an understanding between UKRI and all its councils. The more I heard the earlier discussion, the more alarmed I became at how the councils could potentially be circumscribed. Clearly, that would be unhelpful. There would be a lack of ability to respond with the sort of flexibility that we heard about in relation to charities. We have a lot to learn from them.

Of course, if the Secretary of State is ultimately responsible, he will probably not abdicate all financial responsibility—I accept that—and, if I may say so, I think that the noble Lord, Lord Mair, is asking a lot if he wants to be free of all such restriction. However, again, there can be delegated powers. I hope that the Government realise that if they are going to set up UKRI with its council of Innovate UK, with a much enlarged brief, they will have to consider a completely different remit.

When we were taking evidence, the very impressive chief executive admitted that she and her colleagues were on a sharp learning curve when it came to venture capital and new sources of finance. However, over the lifetime of the legislation, that is what will be needed—just look at what organisations such as the Wellcome Trust have done to increase their financial base. I am not suggesting that anyone should be paid the vast amount that the Wellcome Trust pays its finance officer—he gets paid on results and it is an astonishing figure. Nevertheless, the concept is correct: you pay by results and you have to go out to the market and buy in or share the expertise. That is quite different even from what Innovate UK does at the moment.

It is no good thinking that the taxpayer is going to continue to fund this for ever-increasing sums. We all recognise that it will be an expensive business and we know that we are late entrants. The TSB, as it was called, was a relatively new institution and there will be an element of catch-up. Although we may congratulate ourselves by various indices—not all—on our success in the dissemination of innovation and the like, we still have a lot to do compared with other countries. So I agreed with the chief executive of Innovate UK when she told the committee that there will be a requirement to take on a lot of new skills that it does not have at the moment.

Ultimately, I think that the Secretary of State would be wise to aim high on this and look to the organisation that helped change the culture in this country around venture capital investment in new companies. It is a bleat I have heard so often in debates that scientists do not get support for spin-off companies and that we sell out early to get a quick profit. These are all issues on which UKRI could help change the culture. But it is going to need a lot of expertise that is not there at the moment. No one is suggesting that Innovate UK is going to make a dramatic change now, but, if we look 10 or 15 years ahead, surely it is reasonable to expect that it should.

The measures proposed in the amendments, particularly Amendments 495D and the earlier one, head in the right direction. I am not suggesting that the Secretary of State should give carte blanche; that is unrealistic. However, once we have thought through the implications of Innovate UK being within UKRI, it has to be clear to members of the business community—after all, it rightly looks to Innovate UK as something facing them—that there is not going to be mega-interference from people on the UKRI board who are much more interested in the other end of the spectrum than in its part, which is about developing innovative products with commercial possibilities and possibilities for improving our quality of life.

Photo of Lord Bilimoria Lord Bilimoria Crossbench 7:30 pm, 30th January 2017

My Lords, last year I shared a platform with the chief executive of Innovate UK at the International Festival for Business in Liverpool. We have heard from my noble friend Lord Mair about the great work it is doing and how important it is for our economy to encourage innovation and the translation of research from universities to business. Is it not ironic that here we have this Bill about which our greatest worry is its threat to autonomy—the autonomy of our universities, of our research institutions and, now, of Innovate UK? We cannot in any way stifle Innovate UK’s work or its ability to partner with or have joint ventures with organisations or to be innovative in itself. We cannot spoil Innovate UK being innovative. I urge the Government to listen to the amendment in the name of my noble friends Lady Brown, Lord Mair and Lord Broers and enable Innovate UK to be innovative itself.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I will begin by saying that I agree 100% with the principles behind many of the amendments in this group. It is absolutely right that Innovate UK should have as much autonomy as possible over all matters related to its remit and mission. We are fully agreed on that. However, I disagree with my noble friend Lady Neville-Jones. I fundamentally believe that Innovate UK will be better off within UKRI and that bringing together into one organisation research and the translation of research will create a much stronger one. I also feel that, when it comes to negotiating budgets with the Treasury and the like, again Innovate UK will be much better off within UKRI than if it were a separate body.

Photo of Baroness Neville-Jones Baroness Neville-Jones Conservative

My Lords, I am not in fact advocating that Innovate UK should be separate—that battle is over. But, if the Government are going to construct the structure that they now wish, my point is that the structure must enable Innovate UK to do its job. I do not think that the present draft allows that to happen.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank my noble friend for that.

Turning to how autonomous and free Innovate UK is, I fully agree it is important that it is able to provide a broad range of financial support, including the sorts of commercial activity listed in the amendments. I assure noble Lords that paragraph 16 of Schedule 9, which provides detail on UKRI’s supplementary powers, does permit UKRI and its councils to make such investments, but with the consent of the Secretary of State. This is not an unreasonable or overbearing condition. It is a necessary one to comply with cross-government rules set out by the Treasury in Managing Public Money. It is also not a change to current practice—such permissions are already required. For example, the noble Baroness, Lady Brown, mentioned catapults, but as things are set up, they do require consent from the Secretary of State.

It would not be responsible to cut out ministerial oversight entirely, particularly with regard to commercial activity that potentially carries a significant level of financial and/or reputational risk. Absolutely nothing in the Bill curtails the powers of Innovate UK to enter into joint ventures or investments in the way that it does at the moment. I agree fully with the comments of the noble Lord, Lord Mair, that commercialising our science, one of the 10 pillars in the industrial strategy, is critical to improving productivity in the UK more generally. The Government fully understand it is important that UKRI has flexibility in this regard. The Secretary of State will specify conditions for such activities, below which UKRI can act without referring back to its sponsor department.

I turn now to the amendments tabled by the noble Lord, Lord Mendelsohn. I cannot agree with Amendment 495E, which would risk taking the emphasis away from Innovate UK’s mission to support businesses by giving it further duties that are not reflected in its current charter. However, I find myself in complete agreement with the sentiment behind Amendment 495F. While the Government strongly believe that the current drafting protects Innovate UK’s business-facing focus, let me assure noble Lords that we will carefully reflect on the comments made in this debate.

On Amendment 495G, as a council of UKRI, Innovate UK will continue to undertake detailed evaluation of the economic impact of its business-led innovation projects. It is right that the organisation is given a degree of flexibility to determine how it reports on its activities, rather than entrenching such detail in this Bill. Let me reassure the House that it is not the Government’s intention to place artificial and unjustified limits on what commercial activity UKRI and Innovate UK may undertake. The Government’s position is very clear that Innovate UK must retain its business-facing focus. I hope that with the assurances I have given noble Lords this evening, the noble Baroness will withdraw her amendment.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, I thank the Minister for his detailed response and other noble Lords who have contributed fully to the debate. I am pleased that the Minister agrees with the principle behind many of these amendments—I hope I have understood him correctly this time—particularly the need for autonomy for Innovate UK and for it to be able to deliver a broad and innovative range of financial support and commercial activities.

The Minister mentioned that the Secretary of State would be able to specify conditions within which UKRI can act, which is specifically indicated in one of the amendments. Perhaps he can write to us with more information about that as it may further allay some of the concerns.

The issue of the autonomy of Innovate UK, and the opportunity and need to have an enlarged brief to deliver the economic growth which we are all keen to see from our science base, is so important that we would like to hear more about the Government’s thoughts in this area. It is an issue to which we may wish to return on Report. However, in the context of the strong reassurance that we have had on this point, and that we will hear more, I am happy to withdraw the amendment.

Amendment 482C withdrawn.

Amendment 482D not moved.

Schedule 9 agreed.

Clause 86: The Councils of UKRI

Amendment 483

Moved by Baroness Garden of Frognal (LD)

483: Clause 86, page 55, line 12, leave out paragraph (h)

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, I shall move Amendment 483 in my name and that of my noble friend Lord Storey and speak to Clause 90 stand part, to which the noble Lord, Lord Mendelsohn, has also added his name.

The previous group has already addressed these issues in some detail and so I shall be brief. These are probing amendments of course. We recognise that UKRI is effectively a fait accompli, but following concerns raised both tonight and elsewhere by supporters of Innovate UK and of the research councils that the proposed combining of forces may have unintended consequences, this seemed to be a moment to raise the issue again. Amendment 483 would remove Innovate UK from UKRI. In the previous debate, the noble and learned Lord, Lord Mackay, the noble Baroness, Lady Neville-Jones, and the noble Earl, Lord Selborne, all addressed this proposal without necessarily supporting it.

Innovate UK is primarily business focused. It works with the private sector and is generally supported by the business community. It should perform a key role in the industrial strategy, and it performs a valuable function in ensuring that the UK benefits from UK research. As the noble Lord, Lord Mair, set out, there are too many examples of research that is carried out in the UK by UK academics being commercialised elsewhere or undersold in the UK. Innovate UK has been successful in addressing and improving that situation. The noble Lord, Lord Broers, also addressed this issue, and the Minister addressed it in his closing remarks on the previous amendment. However, the challenges of Brexit add to the need for Innovate UK to work well, and there seems to be no good reason for changing its structures.

Concerns have also been expressed by the research community that the interests of pure academic research might be disadvantaged by being under the same governance as the commercial arm. We have heard those concerns expressed again this evening.

Clause 90 follows from that. It sets out clearly that Innovate UK has the purpose of increasing economic growth, to benefit business and improve quality of life. Those are all admirable aims, and after tonight’s discussion there may be additions to them. What assessments were made of possible detriment to Innovate UK and the research councils of being under the same umbrella? What evidence is there that such a combination will be successful? Is there any provision for a review in case any problems arise with this multifaceted and enormously influential institution? I beg to move.

Photo of The Earl of Selborne The Earl of Selborne Chair, Science and Technology Committee (Lords)

My Lords, we have discussed at good length the various problems that Innovate UK might or might not face within UKRI. I would like to explode one myth in case anyone has any illusion about the linear model or believes that ideas automatically start in academia and go in one direction only—into commerce. That model has long since been exploded. Ideas go in both directions and academia benefits as much from interaction with commercial activity as the other way round. Once we have got that into our heads and realise that we need to bring them all together and provide an opportunity for each to spark the other, then we will see how Innovate UK might realistically and helpfully be embedded in the organisation.

It did not help that the consultation in the early days, before the Bill was published and after the Nurse review, was, quite frankly, inadequate. There has been a great deal of excellent consultation since, which is why many of us have changed our minds—or at least are prepared to accept that it could be made to work—and I hope that we can be given further assurance about the issues referred to in the earlier debate about autonomy and being business-facing.

Photo of Lord Willetts Lord Willetts Conservative 7:45 pm, 30th January 2017

My Lords, in commenting briefly on this clause I draw attention to the fact that I am currently trying to set up a venture capital fund. It does not yet exist, but it might do.

Several noble Lords have gone through the thought process to which my noble friend Lord Selborne has just referred. The decision that Innovate UK should be part of the overall UKRI, which is not clear in the original Nurse review, we now accept and recognise.

There are two points on which it would be helpful to hear more from the Minister. If this involves one of the letters for which this Committee has become famous, so be it. It would be helpful to know how many of the Secretary of State’s powers—which are, as the Minister rightly said, explicit in the Bill as part of the usual Treasury controls—will, in practice, be delegated to Innovate UK. Although it is clear that in theory there is a great deal that Innovate UK can do only with the consent of the Secretary of State, it was not my experience as a Minister that I or Sir Vince Cable were endlessly getting petitions to do specific things. Organisations operated within a range of delegated authorities so that they could get on with doing things. It would be helpful if the Minister could indicate the kind of flexibility that he envisages Innovate UK would have within the UKRI regime.

Secondly, in the Bill as currently drafted there is a hint of old-think pre-industrial strategy. I wonder what would have happened if the chronology had been the other way round and we had had last week’s excellent consultation document on industrial strategy and then the legislation. Some of these constraints are hard to reconcile with the ideas in the industrial strategy. Again, if the Minister can show how this model will enable Ministers to deliver what they are talking about in the industrial strategy, it would be very helpful.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

My Lords, I shall speak to our amendments. The noble Baroness, Lady Garden, has made a very good case. The long and the short of how we see this is that we do not think it was a very good idea in the first place and time has passed on. Many of the comments that have been made will find an echo in our thoughts.

It is worth returning to the original Nurse review. The report states:

“In relation to Innovate UK, as stated earlier, the current delivery landscape is too complex and there should be a smoother pathway to more applied research. Integrating Innovate UK into the Research UK structure alongside the Research Councils could help such issues to be addressed However, Innovate UK has a different customer base as well as differences in delivery mechanisms, which Government needs to bear in mind in considering such an approach and which this review, according to its remit, has not looked at in depth”.

The noble Baroness, Lady Garden, made exactly that point: what evaluations were made when it went in?

I would suggest that both its target audience and the mechanisms that Innovate UK uses are so dramatically different that it is unlikely to be able to perform such an effective function within the context of UKRI. I think that it would be a terrible misfortune if Innovate UK, which has proved itself over some years to be a very effective body doing great things, were to come into UKRI with its current framework. That would not just be restrictive but could possibly be quite damaging for an institution that is following a good path.

I also think that this is a policy that was designed for a pre-Brexit world. In a post-Brexit world—which we are not in at the moment—we know that we are going to have to rely on research an awful lot more, and a great deal will be required of it. I cannot imagine that in such a situation we would ever put one of our most significant levers into this sort of environment; we would leave it to work independently. With the industrial strategy having now been published, it is absolutely clear that there is a massive hole in the delivery of its research objectives that would have been filled by Innovate UK. That is a mistake that the Government would be wise to take note of.

By the way, it is important to understand that Nurse himself recommended:

“At the very least, the Chief Executives of HEFCE and Innovate UK should be represented, on the Executive Committee of Research UK”, or UKRI. And that was probably a very measured judgment.

My final very brief point is in relation to what it is necessary to do to make the best of our university sector and to be able to commercialise at both ends of the spectrum via big company investments and tracking what research is being done as well as smaller companies emerging as the result of venture capital. An awful lot is going on in this area. Recently I spent time with some of the companies at Cambridge Enterprise Limited. Innovate UK is not the only solution that is required, and I think that it would be a colossal mistake to expect UKRI to perform that role and to forget the other things we may need to do. To restrict UKRI in that situation has the potential to do great harm to the long-term needs of our country, especially in an environment where we need an effective industrial strategy.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, we could debate this issue for two or three hours, but we must restrain ourselves. I turn first to the two points raised by my noble friend Lord Willetts. I will indeed have to write to him about the powers the Secretary of State will be planning to delegate to Innovate UK. In a way that also answers his second question because he referred to “old think”, and indeed some of that could be construed in this Bill when comparing it with the requirements of the industrial strategy. But if the delegation to UKRI and Innovate UK from the Secretary of State is right, I think it will be perfectly possible to reconcile that with the industrial strategy.

I would actually take issue with the noble Lord, Lord Mendelsohn, because I think that Brexit has made the coming together of Innovate UK with the research councils within UKRI even more necessary, but I agree that Innovate UK is only a part of the answer. We have to have a competitive fiscal regime, long-term risk capital and a well-trained technical workforce among many other things. Innovate UK on its own is not going to shift the productivity dial for the country, although we believe that it has an important part to play.

The noble Baroness, Lady Garden, asked about an assessment of Innovate UK. A detailed business plan was made, although I am afraid that I cannot remember when it was published. I shall certainly endeavour to send her a copy of that report. The fact is that this is more of a judgment than something which can be proved with spreadsheets and the like. I think that the right judgment is to bring innovation together with research; that is the right thing to do because the reality is that one of our weaknesses, as other noble Lords have mentioned, is that we have a fantastic research base but have not been able to take maximum commercial advantage of it. That is a space which Innovate UK has filled and will continue to do so.

The extra investment being made by the Government in UKRI is a clear vote of confidence, and our support for the central role of Innovate UK in delivering our future knowledge economy will include a substantial increase in grant funding. The Bill seeks to name Innovate UK in legislation for the first time. It will retain its own individual funding stream and grow its support for business-led technology and innovation as a key part of the industrial strategy. I think it is worth quoting Ruth McKernan, the chief executive of Innovate UK:

“The establishment of UK Research and Innovation, including the research councils and Innovate UK, recognises the vital role innovation plays and further strengthens the UK’s ability to turn scientific excellence into economic impact”.

That is one of the 10 pillars of the industrial strategy referred to earlier by the noble Lord, Lord Mair. It is absolutely fundamental to our future and bringing these organisations together is critically important. Only by bringing Innovate UK into UKRI will we remove the remaining barriers to greater joint working between research and business at all levels. Businesses will be able to identify more readily possible research partners and will benefit from the better alignment of the outputs of research with business needs in, for example, technology and data skills. Researchers will benefit from greater exposure to business and commercialisation expertise so that they can achieve maximum impact. It will be simpler to find and form partnerships and there will be easier movement between academia and business. The UK will benefit from a more strategic, agile and impactful approach across UKRI’s portfolio which can respond to real-world challenges and opportunities.

The critical achievement is reaching the right balance between freedom and autonomy for Innovate UK while recognising at the same time that, ultimately, the Secretary of State has to be held financially accountable in Parliament for the money that is spent. With that, I hope that the noble Baroness will feel able to withdraw her amendment.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, I thank the Minister for his reply and other noble Lords for their contributions to this short debate. As the Minister said, we could have carried on debating this for rather a long time, but of course we will not.

One of the points made by the noble Lord, Lord Mendelsohn, about Brexit is that it generates an extra degree of uncertainty, and with all the uncertainties already around, this may not be a propitious moment to be creating another uncertainty by combining Innovate UK with the research councils. I look forward to another letter for the dossier, and indeed we are acquiring quite a number of them at the moment. If there is any more clarification, I would also welcome that. In the meantime, I beg leave to withdraw the amendment.

Amendment 483 withdrawn.

Amendment 483A

Moved by Lord Stevenson of Balmacara

483A: Clause 86, page 55, line 14, leave out subsection (2)

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

My Lords, this continues on the theme of uncertainties. I think that I can deal with the issue fairly quickly; at least that is my aspiration in moving the amendment. The starting point for this brief debate is Clause 86, which lists the seven current research councils and then adds Innovate UK and Research England. The intriguing statement is:

“The Secretary of State may by regulations amend”, that list so as to,

“add or omit a Council, or … change the name of a Council … But the regulations may not omit, or change the name of, Innovate UK or Research England”.

Inevitably, the question that arises is: why is that? This is not in any sense an attempt to set in concrete the existing structures. These councils have come and gone and changed their names with dazzling frequency and I do not think that what we have before us, the seven currently dealing with the range of research that they do, will last for very long. But it is important to have an explanation from the Minister, perhaps by letter if he so chooses, of what consultation might be undertaken before the councils are changed—because there is a bit of a worry about the uncertainty.

Photo of Lord Willetts Lord Willetts Conservative

The noble Lord has just made an assertion which I do not think is quite correct. After the research councils were created in 1965 by the Wilson Government, if someone who had participated in those debates at the time were to look at this list of research councils, they would indeed observe changes. However, it is not the case that they change frequently: rather, they have changed very slowly over time. For example, the Economic and Social Research Council was created in the 1980s and the Science and Technology Facilities Council more recently. But the noble Lord should recognise that there is some quite deep continuity here, which is important if we want to ensure that they remain stable entities in the new dispensation.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

That is a very kind intervention because I no longer need to give the second half of my speech, in which I would have stated that the names of the councils are only one aspect; the worry is that the work might change. That was the point I was seeking to make. I beg to move.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 8:00 pm, 30th January 2017

My Lords, the global research and innovation landscape is constantly evolving. It is important that the Government can react to this by making changes to the research councils, just as they have done in the past—for example, with the creation of the Arts and Humanities Research Council in 2005. We are all saying the same thing.

In the other place, the Minister of State, Jo Johnson, was absolutely clear that any future changes would not be undertaken lightly. This is reflected in the fact that this power cannot be exercised without legislative scrutiny and the agreement of Parliament through the affirmative resolution procedure. I can assure noble Lords that this is not a change in approach and reflects existing powers to make changes to the research councils. Secondary legislation strikes the right balance here. Primary legislation would impact on the ability of UKRI to react quickly to changing circumstances. Technology is changing very rapidly, as we all know.

In the other place the Minister of State committed that the Government would seek the views of the stakeholder community through proper consultation prior to putting any proposal forward. I reiterate that commitment. In the hypothetical event that such consultation had not taken place, I am absolutely sure that this would be strongly challenged by noble Lords during the affirmative resolution process. I believe that this is an appropriate and powerful safeguard. However, I understand noble Lords’ concerns and will reflect on today’s debate. I therefore ask noble Lords not to press their amendments.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

I am almost humbled to accept such a wonderful offer. I thank the Minister very much indeed and beg leave to withdraw the amendment.

Amendment 483A withdrawn.

Amendments 483B and 484 not moved.

Clause 86 agreed.

Clause 87: UK research and innovation functions

Amendments 484ZA and 484A not moved.

Amendment 484AA had been withdrawn from the Marshalled List.

Amendments 484AB to 484D not moved.

Amendment 485

Moved by Lord Prior of Brampton

485: Clause 87, page 55, line 26, at end insert—“( ) facilitate, encourage and support knowledge exchange in relation to science, technology, humanities and new ideas,”

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the Government have brought forward these amendments to clarify the vital importance of knowledge exchange within UKRI. Knowledge exchange is an essential mechanism to support universities in effectively contributing to UK growth, but it is not limited to higher education innovation funding, which is currently administered by HEFCE. The integration of knowledge exchange functions across UKRI is critical to achieving greater strategic co-ordination across the research funding landscape.

Amendment 485 agreed.

Amendment 485ZA not moved.

Amendment 485A

Moved by Baroness Brown of Cambridge

485A: Clause 87, page 55, line 32, at end insert—“( ) facilitate, encourage and support the development of activities in higher education providers associated with entrepreneurship, innovation, commercialisation and support of regional economic growth.”

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

I shall speak to Amendments 485A, 496 and 499A in my name. I welcome the government amendments to include knowledge exchange in UKRI, but I do not feel that they go far enough. The Minister mentioned the Higher Education Innovation Fund, which is currently distributed to universities by HEFCE on the basis of encouraging interactions with industry and business, which includes knowledge transfer, collaboration support for registration of intellectual property, entrepreneurship and a range of other things.

Historically, HEIF has been assessed as delivering a benefit to the UK of £7.30 for every £1 invested. It is mentioned in the new industrial strategy as one of the routes to address the concern that the UK is excellent in research but not innovation. Indeed, the Green Paper is looking to explore the expansion of HEIF. This news will be celebrated by UK higher education institutions of all kinds, from the highly research-intensive to the more applied and business-focused institutions.

I understand from discussions with the Minister of State and the Bill team that HEIF will continue to be delivered by Research England. This is again good news, except that in Clause 91 Research England can provide financial support only for research or facilities for the purposes of, or in connection with, research. This needs to be addressed at the Research England level in Clause 91 and for UKRI in Clause 87.

The government amendments in this group are very much appreciated as they go some way towards addressing this issue by extending the UKRI and Research England support to knowledge exchange. However, I am not quite sure what the definition of “knowledge exchange” is. I believe that HEIF as currently applied delivers benefit some way beyond what one might assume is included in “knowledge exchange”. It is used to support entrepreneurship activities among undergraduates, postgraduates, researchers and university staff. It helps to support initiatives such as “dragons’ den” competitions for start-up companies in universities. It supports working with local enterprise partnerships on business growth in the regions. I am not sure whether all of these activities can be classified as knowledge exchange, but they are all important in ensuring that our universities play a strong role in stimulating innovation, entrepreneurship and economic growth locally and nationally.

My amendments would go further than the Government’s proposals to ensure that the excellent work done under HEIF can continue—and, indeed, to allow Research England to distribute other such funds in future with equally broad scope for encouraging university-business links and entrepreneurial activities. I do not believe that these amendments have different objectives from those of the Government, but I ask the Minister to reflect on whether the wording of the government amendments could go further to ensure that they cover the quite broad scope of HEIF as it is currently very effectively used.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I am very grateful to the noble Baroness, Lady Brown, who described the wide range of activities undertaken by universities under the banner of knowledge exchange—and, beyond that, the contribution that they make to their local communities, to entrepreneurship and to local economic growth.

The Bill makes clear that Research England will retain HEFCE’s research and knowledge exchange functions. This will include distributing higher education innovation funding. This vital block grant for universities in England represents an important source of stability to the sector, allowing maintenance of facilities, core staff, support for postgraduate students and a degree of entrepreneurial research activity. Research England and the new Office for Students will act together to deliver HEIF—an example of the close joint working between the two bodies and their shared remit to support business-university collaboration. The Office for Students will continue to encourage student activities such as entrepreneurship training.

The Bill ensures that UKRI will be equipped to continue to support universities to continue to play a critical role in their communities, including through knowledge exchange.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

I thank the Minister for his reassuring response. I am keen to know how the OfS and Research England will work together to deliver HEIF funding, because, as the Minister will know, there is a very precise formula for delivering HEIF funding relating to things such as the amount of university-business research collaboration undertaken by universities. It is important to understand how work will be done between the two organisations to continue to deliver this funding. Will the Minister include that in one of his letters? In that light, I beg leave to withdraw the amendment.

Amendment 485A withdrawn.

Amendments 485B to 485D not moved.

Amendment 485E

Moved by Lord Mendelsohn

485E: Clause 87, page 55, line 32, at end insert—“( ) facilitate, encourage and support UK research’s participation in EU programmes and initiatives and be responsible for ensuring the UK’s position on international research projects.”

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

My Lords, this group of amendments relates to UK research and the impact of leaving the European Union and probes the Government’s intentions about how we should approach this. Of course, as has been said the Bill was written in a pre-Brexit environment and there is not inherently a good post-Brexit situation. A great many concerns have been expressed over the issues of funding and staff—researchers and others—and students being able to gain access to it, and also about our leadership in the European and international research community being diminished as a result. Indeed, on other amendments we have already debated some of those issues.

I have a genuine personal concern about this. I have been involved in two businesses now that are both within the context of our science and research base. The fundraising of one, which I was looking to participate in, has been pulled because the CIO, the CTO and two engineers and designers—who are European—now plan to return to their countries. The company has a considerable problem in being able to deliver its plans. The other company is in a similar position. Not all is doom and gloom; I am invested in another company which does not have too many EU nationals involved.

I have spent rather too long with doctors in recent times but one of the medical research teams told me that his team was informed not only that it would not be welcome as part of the European bid that it had been involved in for some time, but also that it was felt that the UK being involved would mark it down. As a result, a whole group of researchers is giving notice and planning to leave, and is currently planning arrangements for their children.

As a result, we have a pressing need to address some of these issues quickly. While there are other amendments on this—I note the presence of the noble Lord, Lord Hannay, who proposed some very good ones—we tabled Amendment 507ZA to establish a UKRI visa department which may well have a useful function in a post-Brexit scenario but certainly, in our view, in a pre-Brexit scenario has symbolic value and is an important aspect of what we need to do to reassure people that this is a primary concern, something the Government will address and that they will almost move mountains to deal with.

The other amendments look at ensuring that UKRI spends a lot of time—I think it will need additional resourcing for this—to make sure that the UK continues to have a very strong participation in EU programmes and initiatives. There is much to be done in intergovernmental negotiations, which this is not part of. The Government need to work harder at those sorts of things. Of course, as in Amendment 485F, we are concerned about other aspects of research support from the EU. The Government committed to supporting the European funds that are lost—that is to be welcomed—but it is important that we quantify that loss on an ongoing basis.

We must also consider that we will have lost some important research opportunities. For example, there is a belief among many in the sector that our inability to access the European Research Council creates a real gap as it, in particular, complements other funding activities in Europe and has an investigator-driven or bottom-up approach. It allows researchers to identify new opportunities and directions in any field of research rather than other sorts of priorities being established in other ways. Those sorts of gaps are important for us to identify.

Given the firm consensus that exists to ensure that the UK base remains as strong, world-leading and important as it should be in future, the purpose of this group is to track what we do, do more to hold our position and show symbolically that we will welcome and look after people who come here. If we do not do that, we will lose our global position as a world-leading base. I beg to move.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 8:15 pm, 30th January 2017

My Lords, I speak to Amendment 488, which has in a way been trailed already in its substance by the noble Lord, Lord Oxburgh, who raised but did not get a response about the absence in the Bill of any serious reference to continuing co-operation overseas, and also by the noble Lord, Lord Mendelsohn, who pointed out that there is a quite a lot of cross-coverage in what he is putting forward as probing amendments and what I am putting forward as a substantive amendment.

Amendment 488 is very simple, merely adding a further task for the UKRI in the list given in this clause. It says that,

“UKRI shall take every possible opportunity to encourage and facilitate the maximum co-operation between British higher education

The wording does not limit this to the EU. Although it is to some extent Brexit-related, it looks much wider than that. Clearly, it will not in itself provide the legal or policy framework for co-operation between the UK and EU when we are outside, because that will be laid down by the Government in their Brexit negotiations. I very much welcome the fact that the Prime Minister in her Lancaster House speech explicitly mentioned this as one of the areas where Britain will want to go on co-operating as closely as possible. The amendment does not provide for that. It is a task merely for UKRI, and UKRI will have to operate within the scope of whatever arrangements the Government may negotiate with the EU—on money, legal base, and all that sort of stuff.

The EU dimension is, however, very significant. The noble Lord, Lord Mendelsohn, mentioned it briefly. Since the EU’s Horizon 2020 programme began in 2014, the UK has provided 5,428 participants—more than any other member state. The UK co-ordinates around 20% of the projects. We have received 16.4% of the funding, adding up to something like £2.63 billion.

Turning to the separate European Research Council programmes, here I mention the noble Lord, Lord Patten of Barnes, whose name is on the amendment, because he was very much instrumental in setting up the European Research Council many years ago when he was working at the Commission. It is a brilliant organisation, much less bureaucratic than some of the other aspects of the European Union. In the ERC programmes, we have 699 grant-holders and are the most successful member state.

There is a lot at stake here. In addition, something like 46% of UK research involves some overseas partners. That surely demonstrates how important a part of UKRI’s work will involve this international dimension. I very much hope that the Minister will feel able, even today, to say simply that he accepts the amendment. I cannot believe that it cuts across or does anything other than complement the Government’s own objectives. So I will listen with great care when the Minister responds to this debate and I will hope to be delighted to hear that he thinks this is a jolly good amendment.

Photo of Lord Storey Lord Storey Liberal Democrat Lords Spokesperson (Education)

My Lords, we have Amendment 490 in this group. I echo what has been said by other noble Lords about the paramount importance of international—particularly EU—academics, scientists and researchers employed in the UK.

The Government’s own industrial strategy highlights the importance of continued investment in science and R&D, noting that the UK spends 1.7% of GDP on public and private R&D, compared with an OECD average of 2.4%. Presumably that is why the Government have committed to substantial new investment in R&D, including an extra £4.7 billion by 2020-21—a 20% increase in spending, which must be welcomed. However, the ability of this investment to pay dividends depends on ensuring that world-class people come here to carry out that research. It is no good finding the extra money if you do not have the people. Without ensuring that the best and the brightest are working here, throwing money at research will not help and will not enable UKRI to reach its strategic goals.

The curtailment of freedom of movement, coupled with an already complex visa regime for non-EU workers, threatens to undermine our scientific research base. Indeed, just the uncertainty over Brexit is already having an effect. As Dr Jo Beall, director of education and society for the British Council, told the Education Select Committee on 25 January, the UK is already losing out on vital research as academics pull out of research bids or choose not to take up posts in the UK as a result of uncertainty over their long-term future. The uncertainty over Brexit means that the viability of scientific projects that could take 20 to 30 years cannot be guaranteed, either in funding terms or, crucially, even whether the academics who start such projects will be able to live in the UK throughout that time or recruit the others they need to make a success of the projects.

The amendment does not seek to force the Government into maintaining freedom of movement, although of course this is an approach that my party favours. Instead, it seeks to ensure that the effect of such a change on the viability of world-leading science and research is recorded and understood so that it might influence government decision-making. The amendment would therefore require an annual report by UKRI on the impact of scientific academics and researchers, employed either directly through UKRI or through higher education institutions. Should the report identify a fall in the number of international researchers and academics in the UK, the amendment would require the Secretary of State to assess the impact of such a reduction on the ability of UKRI to deliver its functions.

The intention of the amendment is to give the Secretary of State the responsibility of understanding that failure to protect the free movement of academics and researchers risks undermining the Government’s aim of being a world leader in R&D. The very viability of this goal, identified in the Government’s own industrial strategy, depends on having such an assessment and not simply assuming that relying purely on home-grown scientists will provide the capacity or diversity needed to compete in a globally competitive field.

Photo of Baroness Smith of Newnham Baroness Smith of Newnham Liberal Democrat

My Lords, I welcome all these amendments. As ever, I declare my interests as outlined in the register. I am employed by the University of Cambridge and I have at various times benefited from EU funding. I am particularly keen to speak in support of Amendment 488 in the name of the noble Lord, Lord Hannay, and I want to stress the importance of research co-operation.

The Government have committed to keeping research funding going up to 2020 and, if we lose funding under Horizon 2020, that that can be replaced. But funding is only part of it. Research co-operation—the dynamism of exchanging ideas and being able to co-operate with partners across the European Union—is absolutely vital, whether in social sciences or hard research science. If we lose that, we will lose something that is absolutely crucial to research and innovation in this country.

I also add my support for Amendment 507ZA, which I believe is in this set. It mentions the idea of an UKRI visa department. I very much hope that when the United Kingdom leaves the European Union, our colleagues from within it will not be subject to visas. But if they are, that will jeopardise co-operation with our European partners even more than would simply leaving the European Union and the single market. If that happens, something like an UKRI visa department will become even more important. A simplification of the way in which academics and others have to face visa regimes would be most welcome, because it is one of the many things that increasingly put people off coming to the United Kingdom.

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

When the Minister replies, perhaps he could say something about the role of UKRI in the thinking about regulatory harmonisation. Would he like to say something to create a bit of certainty regarding medical research, clinical trials and so on?

Photo of Lord Bilimoria Lord Bilimoria Crossbench

My Lords, today I hosted a group of education leaders from India and in our discussion, they asked: “What are your worries about Brexit when it comes to the UK education sector?”. In listing my worries, a list which is too long to talk about now, I stated that one of my biggest concerned research. It is all very well for the Government to say, “We’ll keep giving you the funding for research that we get from the European Union, even if we leave”, but it is much more important than that. That is why I support Amendment 488 in the name of the noble Lord, Lord Hannay.

The key to research is collaboration. Already, we are seeing EU-funded research universities in Europe not partnering with UK universities because they are worried that we will be leaving the European Union. If I may illustrate the power of collaborative research, while I was in India in November, at the same time as the Prime Minister and the Universities Minister, Jo Johnson, the University of Birmingham held a workshop with the Panjab University. There we showed the power of collaborative research: when the University of Birmingham conducts research, our field-weighted citation impact is 1.87. The Panjab University figure is 1.37. Yet when we carry out collaborative research, the impact is 5.64, or three times the Birmingham figure. When we do research with Harvard University—I am an alumnus of the Harvard Business School—while Birmingham’s impact is 1.87 and Harvard’s is 2.4, our combined impact is 5.69. This is serious. We must encourage collaborative research with the European Union and this amendment should be in the Bill.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I think we are all pretty much in violent agreement about the critical importance of collaboration across countries, but also about being able to attract the best and brightest to the UK. There is no question about that. When one hears the story from the noble Lord, Lord Mendelsohn, about individuals who have decided not to come here for various reasons because of Brexit, it is depressing. On the other hand, only today Novo Nordisk, the big Danish pharmaceutical company and diabetes specialist, announced that it is investing £100 million at Oxford. AstraZeneca is also building its global research facilities at Cambridge. The truth is that anecdotes can be misleading and that the jury is out.

We have to demonstrate to the international community that we are open for business, and persuade it that that is the case. Other countries have similar issues at the moment. I imagine that many scientists in the USA are thinking, “Should we stay in the US or move?”. Scientists in other parts of Europe will be thinking similar things. We have to demonstrate to this increasingly internationally mobile part of the community that Britain is the place to be. I was struck that at the Crick institute, some 34% of all its principal investigators are EU nationals, which illustrates that it is essential that we reassure them of their welcome here.

That is what the Prime Minister has been doing. She said in her Lancaster House speech on 17 January that we will,

“welcome agreement to continue to collaborate with our European partners on major science, research, and technology initiatives”.

She went on to describe her vision of,

“a secure, prosperous, tolerant country—a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead”.

There should be no doubt that the Government are fully apprised of this issue and that we are determined to be, as the Prime Minister said, a magnet for international talent. I do not suppose that the country is going to be glued to reading Hansard tomorrow, but it worth making that point on any opportunities that we get.

As well as positioning the UK as the best place for science and innovation, as one of her key objectives for the Brexit negotiations, the Prime Minister is also placing research and development at the heart of the UK’s industrial strategy, as we discussed earlier in the debate. The Bill enables UKRI to carry out any and all of its functions outside of the UK and to represent the UK Government internationally if requested to do so by the Secretary of State. UKRI will specifically support, for example, the global Science and Innovation Network and the Newton Fund teams based in embassies across the world, and the international science strategy and diplomacy teams within BEIS and the FCO. UKRI will continue to fund an extensive range of international collaboration directly and will be by far the largest partner for the Government in the receipt and use of funds from international science-orientated government programmes.

Specifically on Amendment 490, let me assure the Committee that the Higher Education Statistics Agency and the research councils already collect the data to which this new clause refers. This will not change under UKRI. On Amendment 507ZA, let me echo my right honourable friend David Davis, who has made it clear that,

“We will always welcome those with the skills, the drive and the expertise to make our nation better still. If we are to win in the global marketplace, we must win the global battle for talent.”

I hope that goes some way to reassuring noble Lords, and the noble Lords, Lord Hannay and Lord Bilimoria, in particular.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 8:30 pm, 30th January 2017

It does not do anything of the sort. The Minister has told us that the Government agree with the sentiments in the amendment, but he has not said that they accept the amendment. That is what matters. The Minister does not need to worry about whether anybody reads Hansard tomorrow. If the Government accept the amendment, it will be in the Bill, and people will not have to read Hansard. I seriously do not know why the Government cannot simply accept that amendment or, at the very least, why the Minister cannot say that he will go away and study it and reflect upon it before Report, rather than excluding accepting it. It is, quite honestly, absurd. I ask the Minister to think very carefully before he sits down after this short debate.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord stopped me in full flow. I was just getting to a point raised by the noble Baroness, Lady Brown, regarding visa applications. As the research councils do now, we expect UKRI, as an employer, to have a role in sponsoring visa applications for international staff on its own payroll and, in some circumstances, for particular individuals with agreed posts in universities. However, it would not be practical to make UKRI responsible for visa sponsorship for the whole sector. I think we will probably have to come back later to discuss that issue in more detail. The Government do not agree—this, I am afraid, goes to the point made by the noble Lord, Lord Hannay—that the Bill should be amended as suggested, as UKRI will be an outward-looking organisation and will build on our current excellence. I therefore ask the noble Lord to withdraw the amendment.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

I thank the Minister for his reply. I shall not echo the sentiment of the noble Lord, Lord Hannay. I think more needs to be done, and I shall just make two points. We have to face up to a certain reality. While it is no doubt true that some people in the United States of America are considering their position, there it is a somewhat temporary measure. There it may be four years or eight years, but our exit from Europe will have much longer term implications. That is the issue we have to address.

While it is certainly true that things are coming to us—although some of the stuff that has been announced was being discussed well before Brexit, and people have taken a different view on risks—there is a human dimension here: making sure we are attracting talent. I have a corporate finance business. International companies that used to send people to the UK will now look elsewhere when trying to attract eastern European talent. London is not the only location they will now look at as the right sort of place to locate families.

It is important that we get this talent issue under control, and find a way to make sure that we fully express our ambitions and put the right sort of measures in the Bill. However, given the Minister’s comments—hopefully there will be some form of reflection—I beg leave to withdraw the amendment.

Amendment 485E withdrawn.

Amendments 485F to 486A not moved.

Amendment 487

Moved by Viscount Younger of Leckie

487: Clause 87, page 55, line 38, at end insert—“( ) For the purposes of this Part, “knowledge exchange”, in relation to science, technology, humanities or new ideas, means a process or other activity by which knowledge is exchanged where—(a) the knowledge is in, or in connection with, science, technology, humanities or new ideas (as the case may be), and(b) the exchange contributes, or is likely to contribute, (whether directly or indirectly) to an economic or social benefit in the United Kingdom or elsewhere.”

Amendment 487 agreed.

Amendment 488 not moved.

Amendment 489

Moved by Lord Patel

489: Clause 87, page 55, line 38, at end insert—“( ) In carrying out its functions under subsection (1), UKRI must recognise the autonomy of the Research Councils, their institutions and their partnerships and relationships, and the principle of subsidiarity in decision-making.”

Photo of Lord Patel Lord Patel Chair, Long-Term Sustainability of the NHS Committee

My Lords, the aim of Amendment 489 is to investigate and ask what autonomy the research councils will have when UKRI is the single voice for research. Although I accept that UKRI has a very important purpose in being that voice, it must allow the individual research councils to flourish in order to identify the most promising science and, through their institutes, deliver ground-breaking insight and understanding. My amendment seeks to ensure that UKRI can co-ordinate but does not in any way crush the expertise, independence and autonomy that created organisations such as the Laboratory of Molecular Biology in Cambridge, an institute of the MRC often referred to as the UK’s Nobel prize factory—I think at the last count for 15 scientists.

The executive chairs and management of the councils should be allowed to decide on scientific priorities and have the authority to run their organisations in an effective way, working within the strategic framework set by UKRI, but without having to defer to the UKRI board for operational or scientific issues. Research councils need a distinct identity, and the independence and agility that goes with it, to enable them to undertake procurement and form partnerships, joint ventures and collaborations without continuous recourse to the UKRI supervisory board. In mentioning the example of the Medical Research Council, I should have declared an interest in that I have been associated with the council for a long time and until recently was a council member.

The Medical Research Council has collaborated with AstraZeneca on drug development and Marks & Spencer on food security, as well as collaborating internationally in several cases. Research councils should have the right to retain returns from the exploitation of publicly generated IPR. Such IPR will continue to be both an important source of revenue and a valuable incentive to translate scientific developments into new products and devices. Individual research councils could be encouraged to develop IPR and be able to share in the economic benefits of exploiting them, recycling them back into science and research for the good of the nation.

Furthermore, internationally renowned brand identities, such as that of the MRC, should be retained. There is clear evidence that brand identities such as the Medical Research Council’s attract some of the very best scientists to the UK. Its reputation for rigour and excellence also leverages co-funding from other research funders, often in a ratio of 10:1 or more.

The current wording in the Bill that UKRI will arrange for councils to,

“exercise such functions … as UKRI may determine”, does not seem to sit easily with the principles of subsidiarity, autonomy and independence of research council disciplines. There is a need for greater clarity as to how the autonomy of the research councils will be maintained. I beg to move.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

I shall speak to a couple of amendments that are worth addressing, but I associate myself with the proposals by the noble Lord, Lord Patel, which have a great deal of merit.

In Amendments 495J and 500ZA, we believe we are dealing with a drafting error that currently makes ineligible independent research organisations for financial support as well as a higher education provider. We think that that excludes museums and is probably a drafting mistake, so we would be very grateful to get some clarification from the Minister about whether museums would be incorporated.

One of my sons is a big fan of a TV programme called “The Big Bang Theory”, which is the story of some young people in America who in the main, as is the vogue of the time, are what you would consider to be “geeks”. The episodes start with the name of a scientific principle, theory or experiment, so prior to this debate my son believed that my interest in the Haldane principle was about “The Big Bang Theory” as opposed to the autonomy of research councils.

The Haldane principle is one that everyone holds dear. There has been a great deal of debate about whether a more explicit reference to it should be in the Bill, and I think there is a broad consensus towards that view. I hope the Minister considers the two amendments on that issue. I am not particularly prissy about the drafting but I am sure everyone in the research and science community would be very interested to have it confirmed by the Minister if that were something the Government were keen to do.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, I support Amendment 489 from the noble Lord, Lord Patel, and shall speak to Amendments 503A and 505A in my name and that of my noble friend Lord Krebs. Amendment 503A follows on from the comments of the noble Lord, Lord Mendelsohn, about the Haldane principle. At Second Reading many noble Lords, including the noble Baroness, Lady Kennedy, and the noble and learned Lords, Lord Kakkar, Lord Winston and Lord Krebs, urged the Minister of State to be bold and take this opportunity to, as the noble Lord, Lord Mandelson, put it,

“hardwire the arm’s-length, Haldane principle into the Bill”, or, rather more to my taste, as Lord Waldegrave said more simply,

“let us at least try to put the Haldane principle on the face of the Bill”.—[Official Report, 6/12/16; cols. 624-27.]

In the words of the noble Lord, Lord Willetts, when he was Minister for Universities and Science:

“The Haldane principle means that decisions on individual research proposals are best taken by researchers themselves through peer review … Prioritisation of an individual research council’s spending within its allocation is not a decision for Ministers”.

He said the principle was,

“vital for the protection of academic independence and excellence”.—[Official Report, Commons, 20/12/10; col. 138WS.]

Its presence in the Bill would remove many of the other concerns about the autonomy and operation of the research councils in the new UKRI organisation. Amendment 503A would put a specific reference to the Haldane principle in the Bill in relation to the Secretary of State’s direction to UKRI.

Amendment 505A picks up the important issue of ensuring the continuation of the dual funding model for research. It seeks to assure that the streams of funding for research grants, distributed by the research councils, and for QR, distributed on the basis of the results of the research excellence framework by Research England, could not be redistributed or used for cross-subsidy. It is important that the two funding streams remain distinct and complementary. In addition to the eloquent support from the noble Lords, Lord Kakkar and Lord Kerslake, for the dual funding systems in their Second Reading speeches, Sir Paul Nurse commented in the Nurse review, on which much of this part of the Bill is based, that having QR in addition to research grants was:

“one of the reasons behind the UK’s success in research and these separate funding streams should be preserved”.

These two streams should be evaluated and distributed in separate and complementary ways, as should other funding streams such as HEIF, as we heard earlier.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 8:45 pm, 30th January 2017

My Lords, I thank the noble Lord, Lord Patel, for a very thoughtful speech at the beginning of the debate. On Amendment 489, I want to make it clear that the Government agree that councils must be able to operate with autonomy and authority over decisions within their fields of activity. For that decision to be made, we must ensure that experts in their fields are involved in allocating grants. I can reassure the noble Lord, Lord Patel, that the objectives of his amendment are already achieved in the Bill.

The Bill ensures that UKRI cannot prevent any of the research councils carrying out their duties in their specialist areas by requiring UKRI to devolve its functions to the councils for these activities. This will give the councils the independence they need to pursue their research agendas while also being able to interact as part of UKRI. Furthermore, by bringing the councils together within UKRI, we introduce the opportunity for a strategic centre, but with responsibility to consider broader issues than any council can alone. This strategic focus is a feature that many noble Lords raised at Second Reading.

Amendment 503ZA examines the Secretary of State’s power of direction. Let me reassure noble Lords that powers of direction are rarely used, but given the very large sums of public money that UKRI will be accountable for—some £6 billion—it is proportionate. The Secretary of State currently has an equivalent power of direction over research councils, and our proposals are intended to mirror that. I can reassure noble Lords that the power will not be used day to day to steer UKRI’s operations, nor as an override to the Government’s long-term commitment to the Haldane principle. However, the Secretary of State must be able to deal swiftly with any financial issues arising, for example, from financial mismanagement.

Turning to Amendments 503A and 505C, I welcome the opportunity to restate the Government’s commitment to the Written Ministerial Statement on the Haldane principle made by my noble friend Lord Willetts in 2010 which will apply to all research funding allocated to UKRI. This Statement is carefully balanced and considers important, interrelated and sometimes conflicting factors. It is, however, a policy statement, not a legal document. Obtaining such a balance in legislation through a legal definition of Haldane is not a simple task. However I will reflect on the helpful comments made here today. I hope that noble Lords will accept that if we could write Haldane into the Bill in a non-equivocal and legal way, we would do so.

On dual support, the Bill sets out in legislation for the first time the dual support system for research referred to here as balanced funding. I hope this clarifies any potential misunderstandings about the relationship between the two. Some noble Lords have asked, not unreasonably, why a different description is used. It is because the protection of the two funding streams and the balance between them are both important, and both must be carefully considered by the Secretary of State when making grants to UKRI. I agree with noble Lords that the nature of dual support is anchored in the complementary allocation and evaluation mechanisms of the two funding streams. Amendment 505ZA would replace the need for the Secretary of State to consider both halves of the dual support with a need to consider only one part—the block grant.

Let me reassure noble Lords that Clauses 95 and 96 already put considerable conditions on the Secretary of State’s powers which protect the unhypothecated nature of quality-related funding and ensure that this will continue through Research England. These restrictions are consistent with Section 68 of the Further and Higher Education Act 1992. They protect academic freedom by ensuring that terms and conditions of grants cannot be framed in terms of particular courses of study, programmes of research, appointment of academic staff or admission of students.

The system of dual support sustains a dynamic balance between research that is strategically relevant and internationally peer reviewed, and research that is directed from within institutions. However, the precise modes of operation of the two streams have changed over time, for example through the evolution of the RAE into the REF. Similarly, we should not try to permanently fix what the balance should be between the two parts of dual support. Funding flows are dynamic, and there is no formula or set proportion for the balance of funding across the two parts of dual support. When considering what the balance of funding should be, as now, the Secretary of State will take advice from UKRI and consider issues such as the strategic priorities of the research base and the sustainability of higher education, research capability, and other research facilities supported through the UKRI budget.

I turn to the proposal in Amendment 495J, tabled by the noble Lord, Lord Mendelsohn, that the remit of Research England be extended to cover independent research organisations. At present, research councils accredit organisations to compete for funding if they possess the capacity to carry out research that enhances the national research base. These organisations include hospitals, museums and other public sector research establishments. Those organisations currently receive their underpinning capability funding, similar to the QR block grant from other parts of Government, and there are no plans to change this arrangement.

This debate has covered some of the most fundamental matters about how we undertake research in the UK. I have listened very carefully, seeking to draw on the experience here in this House. With the hope of further constructive dialogue, I ask the noble Lord, Lord Patel, to withdraw his amendment.

Photo of Lord Patel Lord Patel Chair, Long-Term Sustainability of the NHS Committee

My Lords, I thank the Minister for his comments. I was encouraged by his reassurances about maintaining the autonomy of research councils. Putting that on record is satisfactory to me. I am grateful to other noble Lords, and I hope that they have found that their amendments were responded to. On that basis, I beg leave to withdraw the amendment.

Amendment 489 withdrawn.

Amendment 489A

Moved by Baroness Morgan of Drefelin

489A: Clause 87, page 55, line 38, at end insert—“( ) In subsection (1)(c) the exploitation of science includes, but is not limited to, licencing for off-patent drugs in new indications.”

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

My Lords, I remind the House of my interests as declared in the register as chief executive of a medical research charity and chair of the NCRI, as I mentioned earlier.

This is a probing amendment. I apologise that I was unable to attend Second Reading, when I would have flagged up this issue. I took a tumble over the handlebars of my bicycle, so I was not able to be here. I am recovering, although I now have a little lisp.

My amendment probes whether UK Research and Innovation could have a role in ensuring that a particular avenue of research in which I am concerned—research into new indications for off-patent drugs—is fully exploited for public benefit, for patients and the NHS where appropriate.

Research into new indications for off-patent drugs can be funded by medical research charities, research councils or the National Institute for Health Research. It is often driven forward by clinical academics. There is rarely a commercial incentive for pharmaceutical companies to support such investment once a patent has expired on a drug. There is then little commercial incentive for a pharmaceutical company to fund the regulatory activities needed to promote the availability of off-patent drugs in new indications, such as licensing them to be sold and advertised for such a new purpose. Therefore, the new indication, if identified, can remain off-label—or even unlicensed.

Where a treatment is off-label or unlicensed, a number of barriers prevent it being used routinely, and prevent the public investment in that research being exploited. Clinicians can prescribe for this new indication without a licence, but, if they do, they will take on more personal responsibility and, potentially, a greater administrative burden. This can create disincentives to prescribing, even where there is evidence to support the new indication.

There is no timely system in any of the UK nations for these repurposed drugs to find their way, if appropriate, into baseline commissioning. This results in confusion and patchy access across the UK. There are a number of examples, but I will pick up only two. The first example is bisphosphonates. They were originally licensed for the prevention of bone fractures in adults with advanced breast cancer, and subsequently licensed for osteoporosis. This class of drug is now off patent. However, bisphosphonates have been shown to be effective in reducing the risk in postmenopausal women with primary breast cancer of developing metastatic breast cancer, which is incurable.

Because bisphosphonates are off patent, they have not been licensed for this use and there is no clear national commissioning policy. We are all worrying about the really expensive drugs out there but, when used to prevent metastatic breast cancer, these cost about 43p a day. The treatment could save around 1,100 lives if given to the entire eligible population of about 35,000 women a year. If this treatment was commissioned routinely, as has been suggested, it could save the NHS about £5 million per annual cohort of patients.

Another good example of this would be simvastatin, a drug which may represent a real breakthrough for patients with secondary progressive multiple sclerosis. It is a type of statin which was originally licensed for treating high cholesterol and preventing cardiovascular disease, and the patent ran out in 2004. In a recent phase 2 clinical trial it was shown to be effective in slowing brain atrophy in secondary progressive multiple sclerosis by over 40%. More evidence is needed, but phase 3 clinical trials of this drug could show that this is the first treatment able to slow or stop the deterioration seen in that condition. There are estimated to be about 65,000 people living with this form of MS in the UK. The first patented disease-modifying therapies for progressive forms of MS are likely to carry significant price tags, but this off-patent drug would cost the NHS pennies.

So there is clearly a gap—one could say a market failure—here. There could be a role for UKRI to fill this and promote the public interest by the exploitation of publicly funded research into new indications for old drugs. Studying repurposed drugs with public funding is an area of great interest. If we do not get it right it is a double waste of taxpayers’ money: once because of the public expenditure on research and twice because the benefits of that research do not reach the patients, resulting in an opportunity cost for the NHS. I am interested in probing whether there is an opportunity for the new institution to take forward this publicly funded research which would not otherwise be exploited commercially. I beg to move.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The repurposing of off-patent drugs is an important and interesting area, not least because it can be great for patients. We are also looking at medicines which are a fraction of the cost of new ones that are still under patent. So the noble Baroness has raised an important issue. She also asked a question earlier about the regulatory aspects of Brexit which I failed to address. Without wanting to duck out of a debate with the noble Baroness, I suggest that she should meet my successor at the Department of Health, my noble friend Lord O’Shaughnessy, to talk about both these important issues.

The Department of Health is working with medical research charities and other stakeholders to examine how evidence showing new uses for existing drugs can be brought safely and more effectively into clinical practice to treat patients. This work applies across a whole spectrum of clinical conditions. The group has made significant progress in designing a drug repurposing pathway to help charities and others to navigate a route through the NHS so that they can see how research can be shared at a national level and then picked up locally, where it can reach the patient. It is probably better if the noble Baroness talks with my successor about the role of NICE and the MHRA and how the changes to the EMA might affect this. It is not something that we would like to include in the Bill. Would the noble Baroness be happy to withdraw her amendment?

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench 9:00 pm, 30th January 2017

My Lords, I thank the Minister for that response. My concern is that the Bill states clearly that UKRI will be responsible for exploitation. I was interested to explore how widely that could be interpreted. I am concerned about inertia in this regard. There is potential here for that exploitation to be delivered more effectively and for public funds to benefit from that. A bit of momentum would be great. However, I am very happy to withdraw the amendment and take up the Minister’s suggestion.

Amendment 489A withdrawn.

Clause 87, as amended, agreed.

Amendment 490 not moved.

Clause 88: Financial support: supplementary provision

Amendment 490A not moved.

Amendment 490B

Moved by Baroness Brown of Cambridge

490B: Clause 88, page 56, line 18, at end insert—“( ) In exercising the power under section 87, UKRI and the Research Councils must operate fair, open and transparent competitions for funding.”

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, Amendment 490B stands in my name and that of my noble friend Lord Krebs.

Both Amendment 490B and the other amendment in the group, Amendment 505D, in the name of the noble Lord, Lord Mendelsohn, seek to ensure that UKRI and the research councils operate “fair, open and transparent” funding and assessment processes. Such processes would ensure that the principle of supporting excellence wherever it is found is maintained, allowing for change and supporting strong competition and new entrants in areas of research—the very focus of much of the Bill. It aligns with the following description by the noble Lord, Lord Willetts, of the Haldane principle:

“Ministers should not decide which individual projects should be funded nor which researchers should receive the money. This has been crucial to the … success of British science ... Overall, excellence is and must remain the driver of funding decisions, and it is only by funding excellent research that the maximum benefits will be secured for the nation”.—[Official Report, Commons, 20/12/10; cols. 138-39WS.]

This amendment is about ensuring that we fund excellence in our university research system wherever it is found. I beg to move.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the noble Baroness, Lady Brown, for raising this issue. I also thank the noble Lord, Lord Krebs.

The vast majority of research council grants are allocated through open and rigorous competition between all eligible institutions, which ensures that the principles of fairness and good use of public money are upheld. While I agree with noble Lords about the importance of open competition, the precise mechanism of how this is put into operation is a matter for the current and future independent funding bodies. This is consistent with the important principles of subsidiarity of decision-making and Haldane, which we have committed to defend through this Bill.

Further to this, these amendments would place an undue restriction on UKRI and the research councils by requiring that all their financial support must be allocated through open competition. This is not always suitable. For example, research councils also have an important role in providing core funding to support unique underpinning infrastructure, such as institutes and facilities. While I agree that the majority of council funding should be allocated through open competition, I feel that such a strict requirement is not consistent with the important principles of subsidiarity of decision-making and would hamper other important areas of council activity. I therefore ask the noble Baroness to withdraw the amendment.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

I thank the Minister for his response and for his commitment to the principle behind the amendment. I also thank him for his earlier strong support for the Haldane principle and for perhaps setting a challenge to the team of determining whether it is possible to encapsulate this in law. In the light of these reassurances and the very strong commitment we have heard today to Haldane, I am happy to beg leave to withdraw the amendment.

Amendment 490B withdrawn.

Debate on whether Clause 88 should stand part of the Bill.

Photo of Lord Watson of Invergowrie Lord Watson of Invergowrie Shadow Spokesperson (Education)

My Lords, in the unavoidable absence of the noble and learned Lord, Lord Wallace of Tankerness, I will speak to Clause 88 stand part.

Ministers are prone to deflecting arguments with the warning that they might contain “unintended consequences”. We have heard that several times, and I notice that the noble Lord, Lord Prior, followed that trend this afternoon in his response to the first amendments moved by the noble Lord, Lord Patel. Therefore, when a Bill or part of a Bill contains a provision which might have unintended consequences, logic suggests that Ministers should be willing to take that argument on board and act on it—surely that is consistency.

Clause 88 is one of the most closely associated with an issue which is of concern to the noble and learned Lord, Lord Wallace, and myself. It relates to the position in which the Bill will place a world-leading scientific organisation based in Scotland: the James Hutton Institute. At this juncture I should declare an interest of sorts. The institute has its headquarters on the outskirts of Dundee in the village of Invergowrie, which happens to be the place where I spent my childhood—the village, that is, not the institute—and which is reflected in my title. By way of clarification I should say that I have not lived in Invergowrie since 1972, and although the institute, then the Scottish Crop Research Institute, was there during my childhood, I have never entered its premises—not even as a minor, although I may well have attempted it on occasion.

The institute was one of many which sent briefings to noble Lords on the Bill and, as I have done with representatives of many other institutions that made contact, I arranged to meet with its chief executive and chief of science, Professor Colin Campbell. The tale he had to tell is a worrying one, concerning funding eligibility criteria which the Bill may leave in place, and the consequent effect on the James Hutton Institute.

The institute encompasses a distinctive range of integrated strengths in land, crop, waters, environmental and socioeconomic science, and is the biggest independent research institute in this area in the UK. Approximately 60% of its funding comes from the Scottish Government and the remainder is from the EU, international, UK and Scottish agencies, and some from private industry. Its research has been shown to make a significant contribution to the UK economy, with £12 returned for every £1 invested. It recently became one of the most successful institutes in the UK in winning EU money from the Horizon 2020 funding programme. That is the source of the dilemma facing the institute. While EU funding is open to all institutions and research providers and encourages collaboration with industry and especially small and medium-sized enterprises, as constituted, the Research Councils UK is not open to all and has eligibility rules which exclude the James Hutton Institute and others.

The institute is currently ineligible for direct access to RCUK funding due to a rule that states that no organisation receiving more than 50% of its funding from a single funder is eligible. The rule was introduced more than 20 years ago, apparently to avoid a situation whereby veterinary and surveillance labs, as fully-funded government agencies, could not attract additional research funds from RCUK—which is not unreasonable. The James Hutton Institute is not a surveillance lab, although, as I said, it receives 60% of its funds from the Scottish Government. A significant amount of that funding is for centralised science facilities and national capability, which it is fully open to other institutions to use. The institute is not a public sector research establishment, and is currently the only independent research institute not eligible for research council funding.

The main concern is that with the restructuring of the RCUK and the establishment of UKRI, not only will the 50% eligibility rule carry over but there may be unintended consequences if such matters are unintentionally overlooked or if any new arrangements encompass rerouted EU funding once the UK leaves the EU. This would be very serious for the James Hutton Institute, as there is a risk that it could go from being one of the most successful research providers in gaining European funding to having next to no access at all.

As the noble Lord, Lord Patel, said when speaking to his amendments, Scotland punches above its weight in research terms. Universities Scotland said in one of its briefing papers sent to noble Lords that on the basis of competitive excellence, Scottish universities win around 14% of project funding from research councils but only around 7% from Innovate UK. Scottish research in all forms was able to win more than €200 million in the last year for which figures are available. Scottish institutions are naturally concerned about what the future will hold once the UK ceases to be a member of the EU. Not all EU funding will be lost, but it will become much more difficult to achieve when bidding is done from a standalone UK.

That, therefore, is the context within which the James Hutton Institute finds itself. It will have much of its EU finding closed off—perhaps all of it if in future it is all channelled through UKRI, to which the institute will have no access because of the 50% rule to which I referred.

It seems that there was no vehicle in terms of a detailed amendment to the Bill that would have achieved what is necessary for the institute to be able to have access to a level playing field—the scrapping of that 50% rule. I am hopeful that the Minister will be able to tell me—after a suitable period of reflection, of course—what can be done. However, the rule has applied since the Biotechnology and Biological Sciences Research Council, one of the seven research councils that work together, was founded in 1994, and that is funded by BEIS, so surely the Government can exercise their influence in this matter. Would the civil servants working in RCUK—or UKRI, as it will become—have the final say or can they be told to change what is clearly an anachronism?

This matter has been raised directly with the Minister for Universities and Science and with Sir John Kingman, and it seems that a misconception may have emerged. It appears that there are plans to run pilot trials in which PSREs in England Wales may be given access to RCUK, but this does not help the James Hutton Institute because, as I have already mentioned, it is not a PSRE and it may in any case suffer if it has to await the outcome of trials.

In conclusion, I say to the Minister, “Over to you”. This is a Catch-22 situation in which the James Hutton Institute finds itself through no fault of its own. The 50% rule is a barrier that can be dismantled if the will is there. Surely it must be.

Photo of The Earl of Selborne The Earl of Selborne Chair, Science and Technology Committee (Lords)

My Lords, I strongly support the noble Lord, Lord Watson, on this. I assure noble Lords that I have entered the premises of the James Hutton Institute, which is held in high regard not just in this country but internationally.

Here we have a situation where government departments are, very reasonably, keen to try to live within their means, and there is a suspicion among the research councils that public sector research establishments might be unloaded on to research council funding. When I wrote to my noble friend Lord Younger, having raised this matter at Second Reading but without referring specifically to the James Hutton Institute, he was good enough to admit that that was the concern. Those who were concerned did not want departments to get rid of their responsibilities by passing the funding over to research councils.

This is a typical government spat, with public sector research establishments not being allowed to apply for research council funds. As I understand it, this is a ruling made through the Department for Business, Energy and Industrial Strategy. Of course, as the noble Lord, Lord Watson, pointed out, the irony is that the James Hutton Institute is not even a PSRE, so it gets caught by a sort of collateral fire. It is an international institute but, through this ruling that any institute that gets funding of more than 50% cannot apply for research council funding, it cannot apply for international funding either, whether at an EU or an international level. This is a clearly pernicious ruling that has no bearing on the James Hutton Institute. As I said, it is there to be prevent PSREs being unloaded on to research councils. It lies within the power of the Minister, standing at the Dispatch Box today, to say that Clause 88(4), which says that,

“UKRI must have regard to the desirability of not discouraging the person from maintaining or developing funding from other sources”, can be put into operation immediately. Forget the rather infelicitous double negative; it is saying, “We encourage people working in research to look for funding wherever they can”, but of course that must be based on the quality of the science—supporting excellence, as the previous amendment referred to. No one doubts that the James Hutton Institute is a centre of excellence that should be encouraged to apply for international funding and indeed for research council funding. It needs this pernicious ruling to be abolished, and that could be done here and now.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, my noble and learned friend Lord Wallace of Tankerness, who, along with the noble Lord, Lord Watson, originally tabled his opposition to the clause, is not able to be here today, and I regret that I can claim no connections at all with Invergowrie.

As has been explained, the Bill in its current form risks acting as a catalyst, which, under Brexit, may magnify and exacerbate the negative impact of the 50% rule on research organisations such as the James Hutton Institute. Of course, it may, as has also been explained, cause these long-established, highly respected organisations to downsize or close operations. It is already having an impact on attracting and retaining staff. It also creates an unequal playing field because, conversely, there are no restrictions on organisations that are majority funded by research councils. It seems a very unfair and archaic rule. I add my voice to those of the two noble Lords who have already spoken and urge the Government to work with Research Councils UK to remove the rule to ensure a fair and sustainable funding environment.

Photo of Lord Willetts Lord Willetts Conservative 9:15 pm, 30th January 2017

My Lords, I recall receiving the letter about the James Hutton Institute, but after so many Members of the House have spoken so eloquently about that case, I would like to make a wider point about the clause. There is a long-standing problem that the Minister will wrestle with of departmental R&D budgets being cut back and attempts always to put on to the science budget policies and budgetary responsibilities that should lie with individual departments. I am sure that that is the back-drop to this case. But with the new UKRI, there is an opportunity to look more widely at the kind of research institutes that are funded out of public money and on what terms.

We have heard examples this evening of the dual funding structure, on which we pride ourselves. However, the dual funding regime actually has some significant omissions, because it is research council funding for research institutes belonging to the councils and specific projects, and, secondly, a funding stream for universities. Those that miss out are research bodies that are not part of universities, and quite possibly not even part of the conventional public sector, that particularly need capital funding. Agencies such as the Welding Institute, now called TWI, or NIAB, the National Institute of Agricultural Botany, are charitable bodies that may get individual funding from a research council for a specific project, but they have not historically been able to receive significant capital support for growing their facilities. These are the kinds of issues that UKRI will wrestle with.

It would be helpful if the Minister could say that as UKRI is set up with its new scope, it will be within its power to look at these sorts of issues. It may find excellent research institutes for which, because of the size of its capital budget, UKRI can provide some kind of capital investment in a way that does not fall neatly in the dual funding arrangements that came before. That is a good example of what one might hope will be extra flexibility in the new arrangements, just as we have heard from the Bench opposite about the need for flexibility in another way.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I have to start with the confession that the James Hutton Institute is just a name to me. I confess my appalling ignorance on this subject. I need to research it. If I could, I will investigate the particular circumstance relating to the James Hutton Institute and then write to the noble Lord. I hope that that will be acceptable to him. I am sure it is a world-leading institution but, as I said, I have not visited and am not familiar with it.

Photo of Lord Watson of Invergowrie Lord Watson of Invergowrie Shadow Spokesperson (Education)

The Minister is very new to his post and there is absolutely no question of reproach here. What he has suggested is acceptable. However, the point made by the noble Earl, Lord Selborne, is an important one. He has identified a particular issue with the clause, and if the Minister could refer to that in his reply, it would perhaps open up an avenue for the matter to be returned to on Report.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Let me give the noble Lord my response. If it does not cover exactly the points that it should, I will pick it up outside here and write to my noble friend Lord Selborne and the noble Lord. I will also try to set my response in the context of the comments made by my noble friend Lord Willetts.

The clause will make sure that UKRI is able to carry out one of its primary functions: to provide individuals and organisations with financial support to carry out research and innovation.

The noble Lord, Lord Watson, raised questions about other research organisations’ eligibility for funding. Many of these organisations are currently not eligible to receive Research Council funding as their research activity is already separately funded from outside the science ring-fence by other government departments or the devolved Administrations.

The rationale is to keep a clear separation between government funding and challenge-led Research Council-funded science and the capability of science funded directly by government departments. This is compatible with funding excellent science and maintaining the integrity of the funding ring-fence.

Noble Lords have argued that the wording in Clause 88(4) relates to this eligibility policy. I can reassure noble Lords that the clause does not establish or steer UKRI’s eligibility criteria. The wording is intended to ensure that UKRI does not spend public funds unnecessarily where this might result in crowding out private sector investment or funding from other sources. It is one safeguard to ensure that UKRI spends public money wisely. It also enables collaborations and partnership working, as already debated, around research charities.

The Nurse review recommended that research councils should refresh their eligibility criteria to pilot an approach allowing PSREs to become eligible for funding where they put forward high-quality research proposals relevant to their capability in collaboration with a university partner. In response to this, Research Councils UK is looking to pilot ways to include PSREs in a second call for the global challenge and research fund, with funding to start in financial year 2017-18. While the Government agree that we should be making the most of the excellent science being done in PSREs, they also agree with Sir Paul Nurse that government departments should remain the principal funders of capability and funders of last resort for PSREs. I am not sure to what extent that addresses the point made by my noble friend Lord Willetts.

Photo of The Earl of Selborne The Earl of Selborne Chair, Science and Technology Committee (Lords)

The whole point is that the James Hutton is not a PSRE. We want to deal with independent research institutions which get more than half their money from a government source.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I shall have to write to the noble Earl on that matter. I do not have the answer with me and it would be foolish to hazard a guess. The points raised by the noble Lord, Lord Willetts, need a full response as well. On that basis, I beg to move that Clause 88 stand part of the Bill.

Clause 88 agreed.

Clause 89: Exercise of functions by science and humanities Councils

Amendments 490C, 490D and 491 not moved.

Amendment 492

Moved by Lord Mackay of Clashfern

492: Clause 89, page 57, line 13, after “scientist” insert “, or other person whose knowledge or experience is important to the operation of that Council,”

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, this is a short but important point. Schedule 9 paragraph 8(1) states:

“UKRI may … appoint employees, and … make such other arrangements for the staffing of UKRI as it considers appropriate.

Sub-paragraph (2) states:

“The terms and conditions of appointment as employees are to be determined by UKRI with the approval of the Secretary of State”.

That is the general provision. However, there is an extraordinary provision in Clause 89. After listing the research councils—it is interesting that the arts and humanities are separate although the arts include humanities, although that does not matter too much—subsection (2) states:

“Arrangements under this section may, in particular, provide for the exercise by the Council concerned of UKRI’s functions under paragraph 8(1) and (2) of Schedule 9”— those are the paragraphs I have just read—

“in relation to relevant specialist employees”.

In other words, the council is going to get, possibly, a chance to make arrangements in regard to relevant specialist employees. Who are these?

“A ‘relevant specialist employee’, in relation to a Council, means a researcher or scientist employed by UKRI to work in the field of activity of that Council”.

It is quite obvious that the term “scientist” is fairly ambiguous. For example, would it include a specialist doctor working for the MRC?

The other obvious question is whether this applies to technicians in laboratories. Is a technician a scientist? I would think they certainly are, but it cannot be taken as a certainty that the construction of the term “scientist” in this Bill would necessarily include a technician because sometimes we distinguish between them in the terminology. So far as researchers are concerned, they are vague in the extreme. Is a person who organises research but does not do any himself or herself qualify as a researcher? I thought that there must be some principle behind the selection of the terms “researcher” and “scientist”, and that is what my amendment ventures to suggest. It provides that, for a specialist employee,

“after ‘scientist’ insert ‘, or other person whose knowledge or experience is important to the operation of that Council”.

That is the only way to avoid ambiguity.

I have the impression from my discussions with the department that the general view is much in accordance with mine, but the officials seem to think that the terms “scientist” and “researcher” would include them all. I would like to say that they do not, but it is certainly is not clear at all and I see no reason why it should not be. The easiest way to put it clearly is not to set out a list of all the people we can think of, because there would quite a number; rather, it is to set out the principle on which the relevant specialist employee as a characteristic is determined. That is what I have tried to do in my amendment, and I am happy to seek a better formulation if the Minister wishes it. I raised this point when I wrote to my noble friend’s predecessor and to the Minister in the Commons. I hope that we might be able to get an answer to this question tonight and I beg to move.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

My Lords, this is an interesting amendment and it has been well trailed since the noble and learned Lord made it clear in a couple of our Committee sittings that he intended to speak on this issue. We are glad finally to get the benefit of his words expressing concern about the current drafting and the need to unpick it. I think the Minister will be at a slight disadvantage because we have been making this point throughout the six days of our deliberations in Committee. We have tried to draw the attention of the noble Viscount to the fact that wherever there is an opportunity, in our view, for the Bill to inflect a sensibility within the structures and operations of the various bodies being established under the new architecture, towards an inclusive way of treating those employed within these structures, it has always been rebuffed. That might be too strong a word, but although it has been played back to us as something the noble Viscount would think about, we have not even managed to get him to reflect on it.

So the Minister is not able to take responsibility for the omissions of the earlier sittings of the Committee, but this is a great opportunity to pick up the point. Given that he has come from a department which must have responsibility for employees—indeed, in his last outing he was dealing with trade union reform and related issues—he will be well aware of the sensitivities that these matters can give rise to. He might want to reflect on the need to respond positively to the noble and learned Lord, who has made such a fine point.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I am going to respond but I will have to let the noble Lord draw his own conclusions as to how positive the response is. My noble and learned friend Lord Mackay has raised an interesting point and I thank him for that. In the interests of discipline and autonomy, and respecting the Haldane principle, it is right that the council should have special delegated authority to appoint and to set terms and conditions for specialist academic and research staff within that council and its institutes. There are particular cases where it may be necessary for councils to directly appoint and set terms and conditions for scientists, researchers and other technical staff involved in a research endeavour. In such cases, authority to do so will be delegated to the councils, as per subsections (2) and (3). A relevant example is the Medical Research Council’s Laboratory of Molecular Biology in Cambridge. There is no intention to change such long-standing and effective relationships.

I am sympathetic to the concern raised by my noble and learned friend Lord Mackay and agree that there are many other persons whose expertise is of great importance to the successful operation of a research council. As such, I reassure noble Lords that the Bill enables the continuation of existing practice to hire staff. Such persons will become employees of the councils through UKRI. Therefore, I ask my noble and learned friend to withdraw the amendment.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative 9:30 pm, 30th January 2017

If I thought I had received an answer I would be happy to do so, but surely we need to defend these people. I quite understand that this will carry on and I hope it will, but I should like to know what it is that will carry on.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

To quickly interject, I will look at the issue my noble and learned friend raises. As the noble Lord opposite said, I will reflect further on the matter and write to my noble and learned friend.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

I am grateful for that. I am just sorry that the reflection has not taken place between the time I raised the issue and now, but there we are. We cannot do anything about it.

My noble friend mentioned a letter. I was at a meeting last week with a number of people interested in the Bill and its progress. They mentioned the letters referred to in Hansard. They asked where they could see them. I was not certain, but I assume they are in the Library.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

I am persuaded to withdraw my amendment.

Amendment 492 withdrawn.

Amendments 493 to 495BA not moved.

Clause 89 agreed.

Clause 90: Exercise of functions by Innovate UK

Amendments 495C to 495G not moved.

Clause 90 agreed.

Clause 91: Exercise of functions by Research England

Amendments 495H to 496 not moved.

Amendments 497 and 498

Moved by Viscount Younger of Leckie

497: Clause 91, page 58, line 3, after “research” insert “into, or knowledge exchange in relation to, science, technology, humanities or new ideas”

498: Clause 91, page 58, line 7, at end insert “into, or knowledge exchange in relation to, science, technology, humanities or new ideas”

Amendments 497 and 498 agreed.

Amendments 499 to 499B not moved.

Amendment 500

Moved by Viscount Younger of Leckie

500: Clause 91, page 58, leave out lines 11 and 12 and insert “—(a) the undertaking of research into science, technology, humanities or new ideas by eligible higher education providers receiving financial support which is within subsection (2), or(b) the undertaking of knowledge exchange in relation to science, technology, humanities or new ideas by eligible education providers receiving such financial support.”

Amendment 500 agreed.

Amendments 500ZA and 500A not moved.

Clause 91, as amended, agreed.

Clause 92 agreed.

Clause 93: UKRI’s research and innovation strategy

Amendments 500B to 501A not moved.

Clause 93 agreed.

Clause 94: Councils’ strategic delivery plans

Amendment 501B not moved.

Clause 94 agreed.

Clause 95: Grants to UKRI from the Secretary of State

Amendment 502 not moved.

Amendment 503

Moved by Baroness Garden of Frognal

503: Clause 95, page 60, line 3, after “(1)” insert “must respect the principle of institutional autonomy set out in section 2(6A), and”

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, I will speak very briefly to Amendments 503, 505 and 506, to which I added my name. All simply assert the importance of having regard to the principle of institutional autonomy, which we have raised at various times throughout the Bill. It seems appropriate to reassert the principle of the autonomy of higher education institutions in these three places. I beg to move.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, as with similar amendments regarding the OfS, I assure noble Lords that the Government agree that institutional autonomy is of the utmost importance, and that we are actively considering how to address the concerns that have been raised.

On Amendment 503, Clause 95 already protects institutional autonomy by stipulating the unhypothecated nature of Research England’s funding allocations—and it does so in stronger language than that proposed.

It is unnecessary to make Amendment 505 as the same protections given to Research England’s funding in respect of grants also apply to the Secretary of State’s power of direction. As I have already stated this evening, the power to give directions is limited to financial matters; it is not a power to direct UKRI more generally. This power is similar to that currently afforded by the Science and Technology Act 1965 and does not reduce the autonomy of institutions.

Amendment 506 would be overly restrictive and could also undermine the dual-support system. It would blur the distinction between the two funding streams of dual support and erode, if not end, grant funding awarded on the basis of peer-reviewed project excellence. UKRI and its councils need to retain strategic oversight of the research that they fund, just as the research councils do now. Unlike Research England, UKRI’s remit will not be limited to higher education institutions. UKRI will have a strategic vision for research and innovation across the UK. It will fund and engage with research institutes and facilities, as well as businesses, both domestically and internationally. The principle of institutional autonomy does not apply in the same way to many of these organisations. As such, I ask the noble Baroness to withdraw her amendment.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

I thank the Minister for his reassurances and explanation, and I beg leave to withdraw the amendment.

Amendment 503 withdrawn.

Clause 95 agreed.

Clause 96: Secretary of State’s power to give directions to UKRI

Amendments 503ZA to 505 not moved.

Clause 96 agreed.

Clause 97: Balanced funding and advice from UKRI

Amendments 505ZA to 505B not moved.

Clause 97 agreed.

Amendment 505C not moved.

Clause 98: General duties

Amendments 505D and 506 not moved.

Clause 98 agreed.

Clauses 99 to 102 agreed.

Amendments 507 and 507ZA not moved.

Clause 103: Predecessor bodies and preservation of symbolic property

Amendments 507ZB to 507B not moved.

Clause 103 agreed.

Clause 104 agreed.

Clause 105: Definitions

Amendment 508

Moved by Viscount Younger of Leckie

508: Clause 105, page 64, line 5, at end insert—““knowledge exchange” has the meaning given by section 87;”

Amendment 508 agreed.

Clause 105, as amended, agreed.

Clause 106: Cooperation and information sharing between the OfS and UKRI

Amendments 508A to 508D not moved.

Amendment 509

Moved by Lord Mackay of Clashfern

509: Clause 106, page 64, line 16, at end insert—“( ) Where a decision to be made by the OfS or UKRI relates to—(a) the power to award research degrees; or(b) research students;the OfS and UKRI must make the decision jointly.”

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, I mentioned this amendment in an earlier group. However, because of the way these things are structured, I did not get an opportunity to reply to the Minister. This is a vital matter. I cannot see why the Office for Students, with no particular qualification in relation to research, should be solely responsible for the decision to award research degrees.

The Minister indicated that there is a general power for the Secretary of State to order co-operation and so on. In the Bill the power to make a joint decision is very restricted indeed and would not apply in this connection to the power of the Office for Students to award research degrees. It certainly would not enable UKRI to take part in that.

I can see that there may be a difficulty about research students. I do not mind too much about that. It seems to me that that is also a question about research, but it may be that it is very routine and therefore the Office for Students would need to be involved in that. But giving the Office for Students the power to award a research degree power to a higher education provider while there is a body standing by—created by the Bill, with all the expertise of research—but not taking part at all, does not make any sense. I say this with the greatest possible respect.

The Minister suggested that it might work against the interests that were being talked about but I really cannot see why these research degree-awarding powers should be a matter for the Office for Students alone. I can see that it may have a legitimate interest in the provider as a whole but it certainly does not have the full expertise of research that UKRI can give. This seems to be an ideal situation for joint decision-making. I beg to move.

Photo of Baroness O'Neill of Bengarve Baroness O'Neill of Bengarve Crossbench

My Lords, I add my support to the amendment. It seems extraordinary to imagine the Office for Students unilaterally making a decision that an institution should have the power to award research degrees. Surely it is quite essential that a research organisation—particularly, in this case, UKRI—should be heavily involved. Equally, I do not think that UKRI can make the decision alone because it relates also to the capacity of university departments to receive and look after research students.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

My Lords, briefly, I put my name to this amendment because it raises quite a big issue in relation to the respective powers, which the noble and learned Lord explained very well. We have almost a surfeit of expertise around and it needs to be picked through very carefully. I invite the Minister to respond after due reflection, perhaps in writing, because this is something that we will need to come back to when we look again at the powers of the OfS on Report. This is not his current responsibility; it will probably be for the noble Viscount the Minister to respond.

This is a question of what powers the Secretary of State feels need to apply to which institution, not just in relation to the power to award research degrees—which is in itself an important decision—but in relation to, for instance, the quality of the teaching that might be involved.

We are hearing a lot about the way in which the department feels strongly that a measure must be introduced that will allow it to assess the quality of teaching. As far as we understand it, at the moment that is at an institutional level—although it will go down to departmental and, possibly, to course level. If it goes to course level, or even to departmental level, presumably it would be an imperfect measure if it did not also look at the research degrees that were awarded by that department or by the staff involved. We therefore have to know a lot more about this before we can make a decision about whether the powers are allocated correctly and whether the responsibilities lie in the right place. I look forward to having responses in due course.

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 9:45 pm, 30th January 2017

I thank my noble and learned friend Lord Mackay for raising this important matter. I hope that I do better in response to this amendment than I did in response to his earlier amendment. It is absolutely right that UKRI and the OfS should work together in relation to research students and research degree-awarding powers.

Let me first reassure noble Lords that, while the responsibility for all degree- awarding powers will sit with the OfS, UKRI will play an active role in matters relating to research degree-awarding powers. It will be instrumental in developing the criteria and process by which applicants for these powers are assessed. For example, it will work with the OfS to identify suitable expert scrutinisers of RDAP applications. This collaboration will safeguard standards and ensure that assessors with the appropriate skills are core in decision-making. Likewise, on research students the OfS will be the regulator for all students, including postgraduate students, but UKRI will of course work with it when appropriate to provide expert advice in relation to postgraduate students.

As an example, as I said previously in this debate, each year thousands of research students in the UK are supported by research council funding. Putting a legislative requirement on the OfS and UKRI to make such funding decisions jointly would not add value; it would add only bureaucracy. However, having both organisations working together to develop a strategy that ensures that the pipeline for good research students is healthy would add value. The current legal provisions, subsequent government guidance and a healthy co-operative culture within the organisation will ensure that this happens. As the noble Lord, Lord Mendelsohn, mentioned earlier, one cannot sledgehammer a culture into shape between two organisations through legislation. That is why the joint working provision in the Bill has been drafted to be permissive. It will be a key aspect of UKRI and the OfS’s missions to co-operate with each other.

The Government will issue guidance to both organisations that will set out where we expect them to work together. There will be a memorandum of understanding between UKRI and the OfS to set out the detail. The executive teams and the boards will be responsible for ensuring that this important joint working is achieved. The advert for the UKRI board includes the duty of,

“ensuring strong, collaborative relationships are put in place to aid joint working with the Office for Students, the devolved HE funding bodies and other key partners”.

I recognise the strength of feeling on this matter and the Government have listened carefully to the issue raised by noble Lords here today. It is with the assurances that I have given that I ask my noble and learned friend to withdraw his amendment.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

Yes, I certainly propose to withdraw the amendment now, but this is an extremely important point and I do not really think that government guidance can take the place of an Act of Parliament. The idea of granting research degree-awarding powers is an important matter for the national interest. I do not think that it can be left to guidance from the Minister, however wise that guidance may be. It is the responsibility of Parliament to set the structures under which that should happen. I cannot see at the moment how it can be right that the responsibility for that should be in the Office for Students when, standing alongside it in the administration, is UKRI, with all the technical qualifications for research which that implies. I will withdraw the amendment with happiness but in the hope that we can progress this matter further before we have the next session on the Bill. In the meantime, and with regard to the time, I am glad to finish.

Amendment 509 withdrawn.

Amendment 509A not moved.

Clause 106 agreed.

Clauses 107 to 109 agreed.

Schedule 10 agreed.

Clauses 110 to 112 agreed.

Clause 113: Regulations

Amendments 510 and 510A not moved.

Amendment 511

Moved by Baroness Deech

511: Clause 113, page 67, line 4, at end insert—“( ) an order under section 43(1) (variation or revocation of other authorisations to grant degrees etc.);”

Photo of Baroness Deech Baroness Deech Crossbench

I shall speak to this amendment although my name is not on it. As we got to the end of this Committee stage, this group of amendments struck me as a chance to give Parliament more oversight into fleshing out the Bill. The Bill—and now we are nearly at the end—is not much more than a framework, albeit a very heavy framework, on which later policy is to be hung. We have no detail on the metrics in the teaching excellence framework or the detailed criteria that the Office for Students may use to establish or abolish universities. It is not clear how a lot of this Bill will work in practice. Over and over again we have been asked to take matters on trust and have been told that details will follow. We do not know how much of a light touch or not the Secretary of State will be using in guidance to the UKRI and the OfS. We do not know what providers will do to the market or how the status of the sector will hold up. We do not know how much there will be a fracture between teaching and research to the detriment of both. Now that we have reached the end of the Committee with so many gaps in the Bill, can the Minister assure us that there will be some process of post-legislative scrutiny to ensure that this experiment is working? I beg to move.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

I take this opportunity simply to congratulate the Minister on having taken over this intricate and important part of the Bill. He has discharged his responsibilities with great skill.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Department for Education) (Higher Education)

My Lords, as this is the last group of amendments, most of which were not moved by the noble Lord, Lord Stevenson, I shall respond briefly and particularly take note of the general comments made by the noble Baroness, Lady Deech. I shall make a short concluding comment. If there are matters in this group of amendments that require some writing, I will write to all noble Lords and put a copy of such letters in the Library of the House.

I shall make some concluding comments about this quite long Committee stage. I record my appreciation of the whole Committee and of all noble Lords who have taken part in all the debates for the quality and constructive nature of the discussions we have been having in the past few weeks. I am very pleased that noble Lords recognise that Committee stage is about discussing the Bill, probing the detail and, importantly, giving all sides an opportunity to listen to other noble Lords’ points of view. As a result, noble Lords have not felt the need to divide the Committee beyond the first amendment on the first day. For that, I am grateful.

Now we have some time before the Bill enters its Report stage. The noble Lord, Lord Stevenson, has challenged me on the meaning of different verbs used on occasion by me on and around the word “reflect”. I hope I can leave a smile on his face—or perhaps not—by saying that I am actively working with my honourable friend in the other place, Jo Johnson, to reflect on these discussions and consider the best way forward. On a serious note, I hope the noble Lord and the noble Lords, Lord Watson and Mendelsohn, realise that I have given much warmer words than that at certain points. In that spirit, I want to be sure that he understands that we are looking very carefully at Hansard and reflecting generally on all the debates. I am looking forward to Report. In the meantime, I would just say that I have very much appreciated the debates and look forward to future ones.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

My Lords, because of the invitation to reflect, I will take a slight liberty and make two points. The worst time of my life was when I occupied a post in the British film industry and was involved in trying to get decisions for funding for films. We were often engaged in trying to deal with larger, richer and often foreign bodies, which were prepared to tantalise us with the thought that they might invest in our films. It became well known in that process that the worst decision you could get was the slow maybe. I am afraid we are in that situation. The Minister has said that he is reflecting and thinking, but we have not been able to get clarity. It is easier to have a straight, “No, we are not taking this forward”, than it is to have variations on “thinking hard about” or reflecting. I appreciate the gesture that he has made, but it has been a bit of a frustrating period, and I am sure the noble and learned Lord, Lord Mackay, will also say that sometimes it has been very hard to understand where the Minister has wanted to get to with a particular issue because we did not get clarity about it.

However, that is all past. We are now into a period of calm waters, and perhaps we can pick up the threads of some of what we are doing and try to take forward the ideas for Report and possibly onwards from then. I hope that that will be a fruitful time, and I look forward to it.

Photo of Baroness Deech Baroness Deech Crossbench

My Lords, I am happy to withdraw the amendment, but given that this is such a massive Bill with so many unknowns in it, I and probably others will be calling on Report for some sort of post-legislative scrutiny and checking. However, for now, I beg leave to withdraw the amendment.

Amendment 511 withdrawn.

Amendments 512 to 512B not moved.

Amendment 513

Moved by Viscount Younger of Leckie

513: Clause 113, page 67, line 24, at end insert “(whether before or after the regulations are made)”

Amendment 513 agreed.

Clause 113, as amended, agreed.

Clauses 114 to 116 agreed.

Schedules 11 and 12 agreed.

Clause 117: Extent

Amendment 514 not moved.

Clause 117 agreed.

Clause 118: Commencement

Amendment 515

Moved by Viscount Younger of Leckie

515: Clause 118, page 69, line 16, at end insert—“( ) Section 83(2)(ba)(ii) and (3) come into force, in relation to Wales, on such day as the Welsh Ministers may by regulations made by statutory instrument appoint.”

Amendment 515 agreed.

Amendment 516 not moved.

Clause 118, as amended, agreed.

Clause 119 agreed.

House resumed.

Bill reported with amendments.

House adjourned at 9.59 pm.