Higher Education and Research Bill - Report (4th Day)

Part of the debate – in the House of Lords at 7:00 pm on 15th March 2017.

Alert me about debates like this

Photo of Lord Prior of Brampton Lord Prior of Brampton Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 7:00 pm, 15th March 2017

My Lords, I find myself in complete agreement with the noble Baronesses, Lady Brown and Lady Young, my noble friend Lord Selborne, and the noble Lords, Lord Bhattacharyya, Lord Bilimoria and Lord Stevenson. All our sentiments are the same. To pick up on a phrase from the noble Lord, Lord Bhattacharyya, about the purpose of Innovate UK, if we were to sum it up in three words, which he did, they would be “productivity from research”.

When we discussed the first amendment today, the noble Lord, Lord Krebs, talked about the serendipitous fruits that can sometimes spring from blue-sky basic research. The point of Innovate UK is to ensure that more of those fruits take root in the UK, rather than ending up in Silicon Valley or Israel, or in other countries which are frankly more innovative than we are. The whole purpose of UKRI in bringing together Innovate UK with the research councils is to create more fertile soil for some of the great ideas, technologies and research that come out of our universities.

In creating UKRI we are making something new, greater than the sum of its constituent parts. We are not merely bolting together nine separate bodies. To make this work the governance structures need to change, so we are introducing an overarching board in UKRI and a high-profile chair and chief executive. It is appropriate that the governance of the councils changes too to reflect this. We have been listening to debate on this for some time now, particularly the contributions on the role of the council chairs from the noble Baroness, Lady Brown, the noble Lord, Lord Mair—I know that he cannot be here today for other reasons—the noble Lord, Lord Broers, and my noble friend Lord Selborne. However, introducing a non-executive chair for the councils into these new lines of accountability would risk confusing accountabilities within UKRI and undermine its key strategic role. This would apply just as much to Innovate UK as to the other councils.

Although I can of course see the attraction of having a well-known leading industrialist as a non-executive chair of Innovate UK, it would not sit well within the governance structure of UKRI. I think it would fatally undermine the whole concept of UKRI. However, we acknowledge that chairs can play valuable roles outside direct lines of accountability, for example in giving support to the chief executive and acting as a route for high-level communication. We have already discussed the sensible suggestion by the noble Lord, Lord Broers, that we give one member of each council the role of a senior independent member. We have given assurances that that will be done and we hope that it is adequate to address his concerns. The noble Lord, Lord Mendelsohn, gave a good description of the important role that a senior independent member can play in these circumstances, without undermining the integrity of the governance structure of UKRI.

Amendment 166 also seeks to determine the background of a majority of Innovate UK’s council members. As was discussed in respect of UKRI board members in an earlier group, prescribing the background of members of councils in legislation would encroach on the freedom of UKRI and its councils to manage their own affairs and could be unhelpful in achieving the best possible mix of individuals at any one time. However, we agree with the sentiments expressed. In the case of Innovate UK, government would have a strong expectation, set through guidance, that a substantial proportion of members should have a science-related business background. Indeed, Innovate UK’s current board membership speaks for itself, with most of the council members having science and technology-related business backgrounds. In addition, the board contains much complementary experience of universities, finance, economics, consulting and government.

On Amendment 173, many of your Lordships have asked to see stronger language in the Bill to protect Innovate UK’s business-facing role. In Committee, the Government undertook to reflect on how this could be done and have tabled an amendment that achieves this in two ways. First, our amendments introduce stronger language to describe Innovate UK’s role in supporting the business community. Having,

“regard to … the need to support … persons engaged in business” is substantially more direct than the previous text. Secondly, Amendment 183 introduces a new requirement to have regard to,

“the need to promote innovation by persons carrying on business” in the UK. Finally, it maintains the overarching mission to increase economic growth and the existing duty to have regard to,

“the desirability of improving quality of life”.

It has been said that productivity is not everything but it is nearly everything. If there is one word that should be in Innovate UK’s DNA, it is “productivity”. With these amendments, the Bill could not now be clearer on Innovate UK’s mission to support business innovation. It is therefore distinct from the other councils of UKRI.

The noble Baroness, Lady Brown, and the noble Lords, Lord Broers and Lord Mair, also raised concerns in Committee that Innovate UK’s freedoms to engage in certain activities appeared overly restrictive in the Bill. Let me be clear: there will be no diminution of Innovate UK’s current freedoms in the move to UKRI. The Bill’s text is based on conditions that apply to all government departments and public bodies, and is determined by the Treasury.

Government Amendment 183 is intended to make it clear that UKRI can, for example, enter into joint ventures or form or invest in a company subject to appropriate safeguards and, moreover, that the broad parameters of these activities will be set out clearly in advance and can be iterated as Innovate UK’s portfolio of support develops. I hope that these amendments reassure noble Lords over the Government’s positive intent for business innovation. These reforms come in the context of the historically large Autumn Statement settlement for innovation funding as part of the industrial strategy.

Finally, regarding Amendment 173A, tabled by the noble Lords, Lord Oxburgh and Lord Broers, let me reassure them—I hope that this meets the point raised by the noble Lord, Lord Oxburgh—that it is not the intention of the Bill to disrupt existing commitments and obligations within the current councils. Government will not require UKRI or its councils to seek the Secretary of State’s permission to continue with existing joint ventures as part of the legal process to set up UKRI and, in forming new ventures, government will not subject councils to any oversight from the Secretary of State that the councils do not already undergo. Indeed, our ambition is that they will be subject to less process and be able to concentrate more on their functions.

Furthermore, noble Lords may not be aware that a great deal of work is currently under way in the councils and their parent departments to ensure a smooth transfer of personnel, assets and activities from the current organisations to the OfS and UKRI—subject, of course, to the will of Parliament. Joint ventures, alongside many other forms of corporate arrangements, are very much in scope of this work. The Bill provides tools in Schedule 10 to transfer these assets efficiently from the councils to UKRI through property transfer schemes. If more specific intervention is required, for example as may be the case where a joint venture is not arranged under UK law, the novation of contracts and joint ventures will be individually addressed.

I hope this reassures the House of two things: first, that we do not intend to inflict any undue process on UKRI and its councils; and, secondly, that they will continue to have delegated autonomy over matters pertaining to their subject areas. In summary for this group addressing Innovate UK and UKRI’s financial freedoms, I kindly request the noble Baroness, Lady Brown, to withdraw her amendment.