Examination of Witnesses

Advanced Research and Invention Agency Bill – in a Public Bill Committee at 9:29 am on 14th April 2021.

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Professor James Wilsdon, Professor Mariana Mazzucato and Professor Philip Bond gave evidence.

Photo of Esther McVey Esther McVey Conservative, Tatton 10:25 am, 14th April 2021

Q We will now hear oral evidence from Professor James Wilsdon of the University of Sheffield, Professor Marianna Mazzucato from University College London, and Professor Philip Bond from the University of Manchester. We have until 11.25 am for this session. Could the witnesses please introduce themselves for the record? I call, first, Professor James Wilsdon—[Interruption.] James cannot hear at the moment, so we are just going to sort the sound. Can I move on to Professor Marianna Mazzucato?

Professor Mazzucato:

I am a professor at University College London, where I am the founding director of the Institute for Innovation and Public Purpose.

Professor Bond:

Good morning, everybody. I have very unstable internet, so if I vanish, that is why and I apologise. I am Professor Philip Bond and I work as a professional problem solver and inventor. I am the professor of creativity and innovation at the University of Manchester, and I have visiting professorships at the University of Bristol in the computer science department, and also in engineering and mathematics. I am also visiting professor in the applied mathematics department at the University of Oxford.

Professor Wilsdon:

Good morning. I am James Wilsdon, and I am professor of research policy at the University of Sheffield, and also director of a thing called the Research on Research Institute, which is based at the Wellcome Trust and does research on research systems, cultures and decision making.

Photo of Esther McVey Esther McVey Conservative, Tatton

Again, I will start with Chi Onwurah, move across to the Minister, and then go side to side between the parties. After I have been to Stephen Flynn, I will ask Members to indicate whether they want to ask a question. I think we will get through everybody, as we were quite successful last time.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

Q I thank our witnesses for taking the time to join us today and bringing us the benefit of your considerable expertise and experience. Professor Mazzucato, you wrote the groundbreaking book “The Entrepreneurial State” and the more recent “Mission Economy”—perhaps there is a clue in the title, in terms of the emphasis on the benefits that mission-orientated research can bring. Indeed, many thought that this new agency, ARIA, was based on some of your work, yet at the same time it does not seem to reflect some of the important context that you set out for it. Can you tell us whether it will achieve the benefits that you set out in your work? What needs to change? What should the Bill Committee look at changing in order to ensure that that can happen? Similarly, Professor Wilsdon and Professor Bond, based on your work on research and innovation systems—particularly in a UK context—what benefits will ARIA bring and what needs to change in order to improve it?

Professor Mazzucato:

Thank you so much for the question and for inviting me to give evidence. Without going into the history of the DARPA model—I am sure you have done that already—I think the really important thing is to ask what it is about the UK system that an ARIA could give benefit to. We need to remember that the whole point of having a DARPA or ARIA-type institution is actually to provide that kind of purpose-driven approach to innovation. It is not a replacement for blue-sky research, funded in the United States by the National Science Foundation or in the UK by the research councils. It is precisely that kind of rare moment where you can do high-risk, high-bet research, very much linked between the basic and the applied; it is neither basic nor applied.

Fundamentally, where it has been successful—let us not forget that other countries have also tried this and it has not always been successful—is when it is on the back of a strong system. For example, DARPA in the US would have failed miserably had there not also been a strong military and defence system.

Secondly, it has to work across Government. DARPA in the US, for example, works with the small business innovation research programme, a procurement programme across all the different Departments, which set aside about 3% of their budgets to do purpose-driven research that brings in, for example, small and medium-sized enterprises. Again, that procurement side means that it is fundamentally linked to how Government works; it is not separate from Government.

Thirdly, it has always been linked with a vision or mission of what is to be done. Again, in the wartime scenario, it is clear that the DARPA model was mainly about military goals, but the Advanced Research Projects Agency – Energy, or ARPA-E, is about renewable energy and a green transition, and the Advanced Research Projects Agency – Health is about strengthening the health system and going after big health innovations.

What questions are we asking in the UK that an ARPA-H and ARPA-E or an ARIA would actually resolve? If we think of one of the biggest successes of DARPA, which is of course the internet, they did not obsess about the internet. They were not saying, “Oh, we need a technology.” They needed to solve a problem. The problem at the time was getting the satellites to communicate, and the internet was a solution for that. There were also many other experiments being done at the time, some of which failed. It is about that kind of willingness to take risks, but those being purpose-driven and problem-oriented.

The first question we should be asking in the UK is: what are the big problems? What questions are we asking that would even require an ARIA? If we do not have enough of a national debate on that, and if we do not have enough of a rethink in Government on things like procurement—the everyday of what Government does—and if we do not have strong systems underlying an ARIA, such as health and energy systems and so on, it will be really hard for this agency to be successful.

Professor Wilsdon:

I agree with everything that Mariana has just said. The one thing that many of us have been calling for since this idea was floated as an option for the UK system is more clarity on its purpose—its mission, in Mariana’s language. It is regrettable, in a way, that it has reached the stage of a Bill without that question having yet been properly answered. There are multiple dimensions to why it is regrettable.

First, it is a recipe for confusion. When it does finally decide what it is for, it has to then negotiate and haggle for space in the wider system, as Mariana said. That is time-wasting and is a source of bureaucracy, which this thing is supposed to avoid. Secondly, the Bill and the debate around it sort of vests the choices about purpose and function in the leadership of ARIA. I agree with Mariana that the role of Government in setting up a new agency is surely to undertake and co-ordinate with the public and wider society a discussion of what this would be for—what big priorities we have as UK society to which a new agency can be directed.

I am fully in favour of a new agency. I think there are lots of arguments, as we have heard already from Ottoline Leyser and Tris Dyson, that in a system that is expanding and doubling its budget over a short period of time, there is definitely scope in the budget to do new things, and I would be wholly in favour of that. Without that clarity, we essentially run the risk of setting it up and then there being a delayed period before it actually does anything very effective.

The final point I would make is that in relying on appointing the leadership as the route to answering the question, all you do is move the source of the problem. If the Government have not been able to resolve the question of what it is for, how do we identify who the right leaders are? We have not yet decided what this thing is for and where it operates in terms of the scale of basic to applied. Does it have domain focuses? I don’t see how you can find the right people. If you do find people, how do you avoid it simply becoming a tool, a plaything, of their prior interests and priorities?

In today’s line-up of witnesses, you are going to hear a number of compelling visions from different people for what this thing could do. I do not have a particular vision to sell you, but those visions map on to the prize and the things that you would expect the CBI or the Royal Academy of Engineering to argue for. If you set something up without resolving that first, you are moving it to the site of the leadership. It is a recipe for capture by particular interests in the system, which I think would be regrettable and quite distorting of the role that this thing is supposed to play, which is to be added to existing things.

I worry generally about the process, as someone who is perfectly happy to support the idea. I don’t think it is being executed in an optimal way to achieve the outcomes that the Government wish to see.

Professor Bond:

I thank the previous speakers. I think that the idea is about having radical innovation, which is different from grand missions and grand challenges. Certainly the budgets that have been talked about fit an agency doing radical innovation, rather than some very large-scale grand challenges. The discussion over the need for a directed mission is an interesting one. You can do it both ways. The original ARPA started off with the rather nebulous but powerful mission statement of, “Develop strategic advantage”. That is acceptable if you have a good director who understands what that means. DARPA, for example, or IARPA and so on, have somewhat narrower remits, but that does not necessarily make things easier. A really good director can overcome issues around narrowness of mission statement by using the opportunity to do things that span across many domains. In fact, I think it is a rather liberating thing. The fact that we have not at this point had utter clarity on things I regard as extraordinarily good, not bad.

A defining characteristic of all of the US ARPAs is that they have a strong focus on rotating people in and out—about 80% from industry and 20% from academia, or some balance like that—and they do a lot of work with both. I entirely agree with what was said about a link between applied and more fundamental research, but I want to strengthen that statement by saying that with the industry base there is a focus on getting things done as opposed to publishing papers, and it is important to remember that.

On risk tolerance, a lot has been said about DARPA and taking a lot of risk. I personally think that talking about taking a lot of risk is a poor framing of what they do. What they aim to do is have a significant multiplicative effect on what they achieve. In other words, radical innovation simply says, “We want step change. We want to do things that would create a tremendous impact were they to be done.” What DARPA—all the ARPAs probably, but let’s talk about DARPA in America—has always been good at is managing that risk tremendously well. A large part of the reason they have succeeded is their extraordinarily good management of risk.

In terms of deciding what it is for and whether one should necessarily have a public engagement with that, for some things that is very valuable. For others, opacity is surprisingly effective. Most of the US agencies have some degree of opacity, partly because they work on defence and security, but partly because you are going to ask people to stick their neck out and try to do things that they start out by viewing as probably impossible. Step 1 for an ARPA mission specialist or programme manager is to try to get some evidence that it is not impossible and might be possible. If you are asking people to work like that, shining a spotlight on them is more or less placing them under pressure to step back from that plate and become more conservative. I do not think that is a good thing.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

Q Thank you very much. Professor Mazzucato, you were very clear that it is helpful not to consider this as a replacement institution. We have already heard some confusion as to whether it is cutting edge or transactional. You were also clear about the need for a strong research base, engagement on procurement, and a vision. What should that vision or mission be, in your view? We have heard from Professor Bond that there might be a trade-off between transparency and risk taking. How would you respond to that?

Professor Mazzucato:

I just want to clarify what I understand in terms of challenge orientation, because I think there is also a bit of confusion there. Challenges globally are the sustainable development goals. Every country is actually signed up to them, including the UK, so we should hear a bit more about the SDGs in the UK national debate.

Let us just bring it back to the DARPA or NASA kind of model. Broadly defined, DARPA is, of course, challenge-oriented. The key thing is how it can translate those challenges into missions. Take the moon landing, which I wrote about in my recent book. I talked about both what to copy and what not to copy from it—most of it was what not to copy. The challenge was the space race, the cold war, Sputnik—NASA did not have much to do without that. They transformed that into a mission, which was to get to the moon and back again in one generation, so it would be wrong to say that DARPA and NASA are not challenge-oriented.

The point is that how they are structured is much more specific than that. Those are problems that need solving. They did not just say, “Oh, let’s go and compete in space with the Russians.” Again, it was very specific: getting to the moon and back in one generation. You can actually answer the question, “Did you get there: yes or no?” Lots of different sectors got involved; it was not just one big isolated project—that is the whole picking winners problem. It required innovation in nutrition, textiles, materials, electronics, and the whole software industry can, in some ways, be seen as an output of that. Again, how did they organise the thinking and the purposefulness of the organisation? One of the first things they did was change their own internal structure to be much more horizontal, with project managers, precisely to be purpose-oriented.

I just think there is a bit of a false dichotomy between whether you need a challenge or whether it is about a big radical innovation. DARPA has always been challenge-oriented, and that is why they needed those radical innovations to actually confront those challenges. The questions they were asking were much more specific and were framed in a targeted way, so you could actually answer the question, “Did we achieve it or not?”

In terms of the risk, I absolutely agree that it is not about risk for the sake of risk. In a conference I organised back in 2014, called “Mission Oriented Innovation”, I invited Cheryl Martin, who back then was the second director of ARPA-E, and she said that they actually structured ARPA-E in such a way as to welcome as much high-risk thinking, and that the whole point was to matter in the economy. They would actually measure their success both on whether they took those risks, because if they were going for easy things, they were not doing their job, and on whether their successes, of which there would only be a few—they accepted that there would be lots of failures—would have a big impact in the economy. For example, they ended up being very important for battery storage.

ARPA-E is very different from DARPA. It has a tiny budget of about only $300 million a year. One of its problems—it is also really important for the UK to learn about the problems—is that it has been too wedded to industry. It has focused too much on asking industry what it needs and then it ends up almost being this massive technology office, compared with DARPA, which had a very clear Government customer—basically, the Department of Defence. It is important to ask again who the obvious customer for ARIA is and how that is linked to different Departments, so it does not just become a matter of bringing geeks into government—the line Dominic Cummings mentioned. Yes, you want experts in government, but geeks in and of themselves are not what you want to strive for; you want to solve problems that different Departments of a democratically elected Government put out there.

We should also make sure that those problems are not told to Government by experts like ourselves on this Zoom call, or other Zoom calls, as James rightly said, when everyone will just put forward their own pet project. We need to think about the democratic forums and the different types of the debate that are needed in a country, precisely so that the problems and purpose are shared as widely as possible. That includes winning the war, back in the cold war days.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

Q What do you think ARIA’s mission should be? I will put that same question to the other witnesses.

Professor Mazzucato:

I am holding the 2017 industrial strategy, which Greg Clark’s team put together. We very much advised on that and one of my roles was to say stop just making lists of sectors. You will remember that under David Cameron’s team there were five sectors: automotive, aerospace, life sciences, finance/financial services and the creative sector. I said not to make a list of random sectors, which can easily get captured by those sectors with the loudest voice, but to think about what their problems were. They solved that in the industrial strategy—they listened, and I was very happy—and decided on four challenges, namely, healthy ageing, clean growth, the future of mobility and the opportunities that AI and the data economy provide to us.

In terms of identifying the missions underneath those, I set up a commission co-chaired with Lord David Willetts entitled the Commission for Mission Oriented Innovation and Industrial Strategy. We worked very closely with the different challenge teams in BEIS precisely to answer your question. It is definitely not the role of an economist, academic or business person to tell you what the missions are. That must be co-created within Departments alongside different stakeholders, but surely the first answer is that those missions must be those that respond to those four challenges.

On clean growth, the answer must be carbon-neutral cities all over the UK; or take a global challenge such as clean oceans—sustainable development goal 13—and getting the plastic out of the ocean. What is the UK’s contribution to that? What about the digital divide, under the challenge of AI and the data economy? Just think back to when the BBC had a mission. Back in the 1980s, it wanted to get every kid to code, before it was sexy—today it is very sexy to talk about coding. The BBC was doing that back then, and its own procurement strategy helped to deliver that by producing the BBC Micro computer. The BBC did that not because it was obsessed by technology but because it needed it to fulfil that mission. So, this strategy is not completely new to the UK, but we should not pursue it as a siloed project; it must answer the big questions such as the digital divide, carbon neutrality, health ageing and so on. But you have the 2017 industrial strategy, so start there; we cannot keep rethinking from scratch each time.

Professor Wilsdon:

I do not have a mission in my back pocket that I want to push. My argument is simply that the thing needs to have more clarity. I do not really mind what it ends up doing, as long as we go into it with a better sense of what we are trying to get out of it, as Mariana said. It is worth going back to some of the other strategic documents that operate and run the UK system, including the industrial strategy, as Mariana says.

In July last year, the UK Government published its draft R&D roadmap. Again, that is a good idea and it is something that many other countries do. It set out a longer-term planned direction for the system, and tried to explain to the system and to wider stakeholders how the different parts fit together and their different functions. To me, the logical sequence of events would have been to conclude that process—I realise it has been a difficult year for everyone for obvious reasons—and then to identify the particular gaps and priorities to which a new funding mechanism could be directed. What we have done is fixate on a particular institutional model, imported from the US in the late ’60s, and dumped into Britain today, as the way in which somehow, magically, we are going to cut through all sorts of real or perceived barriers and obstacles in our existing research and innovation system. I just think that is a very flawed way to do this.

We are where we are. The Bill is in front of Parliament. We need to focus at this point on how we can amend it, or you can amend it, to improve it. I think that trying to bring more clarity, or at least a sense of how this issue will be addressed through the governance of this new thing, is really important. Otherwise, you or your successors, and we or our successors, will be back here in a few years’ time, asking ourselves why it did not work. I know that it has a tolerance of failure—we are all in favour of that—but the thing has to at least succeed in some respects, alongside its appetite for failure.

Photo of Esther McVey Esther McVey Conservative, Tatton

Professor Bond, did you want to comment?

Professor Bond:

I just want to make a remark, if I may, on scale. Talking in the same breath of putting man on the moon, which cost up to 5% of US GDP, so roughly 60% of UK GDP, and ARIA, for which the figure is £200 million a year, is, I think, an issue.

I agree that there is confusion about challenge. The grand challenges are really better structured in different ways, which is why NASA has a director and why the Manhattan project had very strong, firm leadership. I want to use that to emphasise, first, that ARPA/DARPA mainly does not use challenges. There are some fields where it has done—robotics, autonomous vehicles and a few others—but that is not its main way of doing things. The issue about the word “challenge” is that for some things, particularly in computer science, it can be a very good way to bring together people in different teams that would not normally operate in that way, but it is just a mechanism for doing that.

The question you have asked me is about the mission for ARIA. I totally agree, by the way, with what was said: it is much easier in life if you have a customer. But if a really good director is picked, they are going to go out and get some customers—probably within Government. There is so much that can be done in government; there are so many good things to be done that if you have an imaginative and intelligent director—I am sure that will happen—that person can find plenty of sensible things to do. I therefore think you do not need to be overly prescriptive; you can try to leave it open.

I was also involved in the structuring around the industrial strategy grand challenges. First, they are another step up in scale. Secondly, I do not think we should be binding anyone to having to focus on those at all. It is rather obvious that there are many interesting and important problems societally. It is obvious that there are many, many ways in which somebody could look to do things, whether with education and helping kids to learn better, or with the NHS or anything else. I would leave it up to the director and the mission folk to do. The whole point of a DARPA is really to leave it open.

What you want these people to do is one thing: you want to demand of them that they make their best attempt to do radical innovation—to do things that, were they to work, would mean a step change in what should be done. It is going to be easier if that can get implemented in some efficient and effective way, so how that is done is a great question, especially as it will be a small office. That is somewhere that the office is clearly going to have to work with Government and find customers within Government, and do things that are so impressive that that will work. That is a challenge, but that is why you get a director.

Photo of Amanda Solloway Amanda Solloway Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Q Thank you, Ms McVey, and thank you to all the witnesses. I have just one question for Professor Philip Bond. We have tried to balance giving ARIA independence and ensuring good governance. What are your thoughts on the ideal size of ARIA’s board and giving ARIA’s chair the freedom to decide who sits on it?

Professor Bond:

I would probably have a board and another structure. Certainly one of the super-important things that works in the US ARPA is that the programme managers are challenged in a sort of dragons’ den. It is a friendly dragons’ den, but they have to convince very capable, technical people that they can do what they do. That is one structure that would need to be slotted into place.

As for the board, I think you could have a slightly unusual board. I do not think it needs to be big; it could be very small. It could be less than 10 people, for sure, but you could also expand it a little bit with something that is a bit like a non-executive director, or NED—somebody from a different area with a rather different take on things. The balance will be important. You want a balance of people; I think you want some very radical thinkers in there, some people who know how things work in industry and some people who know how things work in academia, and so on.

As for the autonomy, I am personally a big believer in giving the chair and the director enormous amounts of autonomy. You pick people you are willing to bet on and then hand them a lot of trust. In fact, if you want to define the ARPA model at some level, it is this: it is a different model of trust. Bureaucracies occur because although we like to trust people, we have to throw up lots of rules and regulations to make sure that things work the way we feel they should work. What you are doing in creating this kind of model is handing trust to people. You want people with high integrity who are brilliant, and then you let them get on with it, and you trust that they will do something that reflects their character.

I do not think the board needs to be big; I think it needs to be very good. There should be a small number of outstandingly good people, who can tap into a broader network and bring in people to give a different vision and view from that which you will only ever get with a small number of people.

Photo of Esther McVey Esther McVey Conservative, Tatton

Before I go to Stephen Flynn, can I just have an indication of who wants to ask questions? I have got Sarah, Daniel, Aaron, Jane—okay. Thanks very much indeed.

Professor Mazzucato:

Can I make one super-quick point on what Philip just mentioned?

Photo of Esther McVey Esther McVey Conservative, Tatton

Absolutely, and then I will go to Stephen.

Professor Mazzucato:

One of the things that DARPA is very good at is not only turning the tap on, in terms of funding the things that we have been talking about, but knowing when to turn it off. Knowing how to pivot and to be flexible and agile is absolutely necessary. Not only should this agency be free from burdensome bureaucracy, it needs to proactively get an agile and flexible structure, and the metrics that tell you when to turn the tap off, because this is the challenge. You want to be long-termist—going for the difficult things and not the easy ones, which you do not need an ARIA for—and also to have the metrics internally to tell you when things are not going right and when you actually have to stop.

Photo of Stephen Flynn Stephen Flynn Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Q Thank you to the three of you for your information so far; it has been incredibly helpful.

I have a question for James and Mariana, and then one for Mr Bond. James and Mariana, you both clearly want to see a mission. However, I do not think we should necessarily kid ourselves that the Government will be minded to agree to any amendment in line with that. Do you have any other wider concerns about the Bill whatsoever, or around ARIA as an entity? Do you see any positives at all? In a previous evidence session, we heard about the good prospect of it being small and agile. Is that something that you would see as a positive?

Mr Bond, you are placing a lot of emphasis on the director—I think you used the words “people with high integrity who are brilliant”. That is pretty vague, to say the least. I am sure we could all pick people who we think are brilliant and have high integrity, so are there any definitive qualities, or anything at all with a little more substance, that individuals should have, perhaps in relation to scientific merit, or their background and commercial activities?

Professor Wilsdon:

You are specifically thinking about aspects of the Bill that can be tightened and improved, accepting that there is only so much that can be done at this stage. The National Academy of Sciences—the Royal Academy—has published a very good and detailed set of probing amendments to the Bill just this week, and I would certainly endorse several of them. They include inserting a clause that requires ARIA to complement the work of UKRI. That would go at least some way to dealing with the concern that persists over boundary skirmishes, shall we say, or fuzziness at the edges of what the big public funding agency is there to do and what this new thing is there to do.

Accepting that it is going to be hard in the middle of the Bill to define the mission—it is the wrong way to go about it—I wonder whether tightening up some explanation in the legislation of how the process of defining the function and orientation will work, whether on a cyclical basis, for example, choosing particular things to focus on over a five-year cycle or whatever, would also help.

I worry greatly about the touching faith that Philip and others seem to place in the capacity of the chief executive and chair to be these sort of omniscient, wise characters and, indeed, in the Government to choose the right people. It is very important when we are spending £800 million of public money that we establish proper mechanisms of transparency and accountability. I do not think that has to inhibit innovation. I do not think there is any supporting evidence that freedom of information or other measures that currently exist are inhibitive of effective innovation. I do not recall any discussion of that coming up during the passage of the Higher Education and Research Act 2017, three or four years ago, which Committee members may have been part of, and when UKRI was being created. It was not a problem to which any discussion was directed, so I am confused. Such provisions apply to DARPA and other bodies in the US system.

When it comes to people, I hope very much that the Government manage to secure talented people. I hear Lex Greensill is available and has impressed many senior figures in Government in the past with his innovative and disruptive approach to various financial mechanisms. That is the point: if we want this thing to survive and persist and be a valuable addition, it needs to be set up in a way that will avoid capture by anyone—by me, by Mariana, by Philip, by anyone. That is the reason why we have the structures. It really is incumbent on Parliament now, through this process, to try to put more of those mechanisms in place. I just do not see the evidence that they will inhibit its effectiveness.

The biggest barrier to effective, creative, high-risk funding of research and development in this country over the past 10 years has been lack of investment, period. That is the issue: lack of investment. It is great—it is wonderful—that the Government are tackling that with its doubling of public R&D by 2025, if they get there. As I said at the start, that creates the space in which new initiatives such as ARIA can thrive—I hope they do—but there is no evidence that I am aware of for some of these unsupported assertions that are being bandied around about bureaucracy in the system and transparency being the problem. I just do not see it. In terms of the legislation, it is very important to try to tighten those provisions.

Professor Mazzucato:

I would agree with a lot of what James said on investment. It is very important to remember that the UK continues to have a below-average GERD—gross R&D spending—over GDP, but also a below-average BERD—business investment in R&D. One of the key things that the DARPA model did in the past was precisely through being ambitious in areas that were market creating, not just market fixing, and also really cheap to crowd in business investment. Again, as I mentioned before, we need metrics to make sure that is happening—in other words, that it is actually creating additionality and getting investment to happen that would not have happened otherwise.

Coming back to the big question, which is a very important one, there are three big things we need to make sure we are doing. One is to have a very clear idea of the innovation landscape in the UK and exactly the gap that this new agency would be filling, because even though it might be exciting to form a new agency, if it is not filling a real gap and is just creating a bit of confusion and repetition, or creating something we do not need, that is a huge problem. Personally, I think it is a good idea, especially if we structure it in the right way.

One of the things I did in the European Commission was put forward this idea of mission-oriented innovation. On the back of that, missions are now a new legal instrument within the European Horizon programme. What that does is ensure that the part of the European budget that used to be challenge-oriented in a very vague way now has the concept of missions to guide it. I argued that we needed to make sure we know what we are talking about when we use the word. I argued that five different conditions had to be there.

The first was that missions be bold and inspirational with wide societal relevance. The second was clear direction—targeted, measurable and time-bound. That is the point before: making sure you can answer “Did you achieve it or not?” The third was to be ambitious but realistic, supporting existing research and innovation actions as well as applying them to those difficult new areas, and, again, areas where there is actually a customer basis. The fourth was that they have to be cross-disciplinary, cross-sector and cross-actor. I gave an example where it is not just about going to the moon—a carbon-neutral city would also require all sorts of innovation across multiple sectors. So it is making sure this does not replace a sectoral approach, but really fosters that inter-sectoral approach. The fifth was that it has to stimulate multiple bottom-up solutions. That is where we need to make sure we are not confusing the concept of missions with projects—often pet projects.

Third is the whole point about expertise in Government. Of course we need expertise in Government and we often have that expertise. When we do not have that is also when you are most open to capture. In my recent book “Mission Economy” I dug out some really interesting documents in NASA, during the Apollo programme, where they said “If we stop investing within our own brain, our own R&D, we are going to get captured”—by what they called “brochuremanship”. At the time, businesses did not have sexy PowerPoints, like, say, PwC, Deloitte and so on: companies came in with brochures to argue why they should be working with NASA. They said, “We need to be working with the best businesses out there, and in order to know how even to write the terms of reference with the businesses and know which ones to work with, we ourselves have to be knowledgeable.”

This comes back to the point, do we have a Government who have been, over the last decades, investing within their own dynamic capabilities within the public sector? I think, here, we need to look at what has been recently coming out in the news. Lord Agnew argued that we have been infantilising Whitehall by the over-use of consulting companies. So the lack of investment within Whitehall, within Government, in their own capabilities, is the biggest opener to the possibility of getting captured; because they do not necessarily then know what they are doing in different landscapes.

Lastly, I would argue that one of the things that most distinguishes the UK innovation landscape from the US one, even taking size into consideration, and everything else, is the lack of confidence. Since I have lived in the UK, for the last 20 years—I am now proudly a UK citizen—there has been constant change in names, whether it is the Technology Strategy Board becoming Innovate UK or what is now the Department for Business, Energy and Industrial Strategy having changed its name four times in the past 20 years. If Government do not know what innovation is for, and if they have these constant consultations with others telling them what to do, that exudes—it kind of reeks of—lack of security. I am not saying you should be confident for the sake of it. I do not even think that is necessarily a value to be held; but this idea that actually we do not even know what we are talking about in terms of what the role of BEIS is, or what the different types of institutions are, what their role is and how they can work together with a dynamic, innovative division of labour, instead of constantly changing the names of existing institutions or bringing forth new ones: that is just something that someone is going to have to deal with.

Professor Bond:

I think the question I was asked was about the qualities I might look for in someone. I think that the principal quality that you want in a director, and in the programme managers, is divergent thinking. We have a tremendous system for educating people to become extraordinarily good convergent thinkers. That means they are very good at solving problems in a specialised domain; and that is a valuable set of skills. Here, you need something that goes beyond it. We have heard a lot about NASA. NASA famously realised this in the early days and set about looking for divergent thinkers—and had a test for divergent thinkers. You want someone who shows the ability to be both a very good convergent thinker—a conventional thinker—but also a very good divergent thinker. That is a much rarer thing.

I think you want someone who has shown that they have a real interest in cross-cutting by having done it much of their life. A lot of people talk about it but do not do it. So you want someone who does. When I say cross-cutting I mean across different disciplines—someone who has actually done more than one discipline and someone who has actually worked with industry and academia. That is what I think would be ideal—someone who has an insight into science but also engineering, because you are going to need engineering know-how, and engineering thinking is not the same as scientific thinking. I have worked a lot with Formula 1, for example, and with Rolls-Royce, and it is a different form of thinking.

It is a little closer to what Professor Mazzucato was referring to when she said that you want to combine the thinking of fundamental research with really pushing the limits and boundaries of things. I think you want someone like that. Someone phrased it to me recently as not wanting to see the usual suspects; that is probably one way you can frame it. I think you want somebody who is clearly respected, because people who know them know that at least they have solved some hard problems.

I would like to address the point about avoiding capture. You can talk about people having special interests. Lots of people have come out and said what they think this should do. I have tried rather hard to say exactly what I do not think it should do. I do not think it should do this, that or the other and I do not think that you should necessarily say that it should do this, that or the other, so I am not someone who would want to end up capturing it, in that sense. I want to firmly assert that you put trust in people. When you put trust in people, those people will have some ideas, expertise and background, so you will be making choices. Making choices does not equate to capture, and it is entirely possible to put trust into excellent people and let them do things. We do that with democracy and with Parliament.

In terms of the level of transparency, transparency is a good and wonderful thing in most areas, but if you are asking people to go out on a limb to really push the envelope, I would assert that there is an argument, which has some validity, that you make it psychologically much easier for them if they do not feel that they are under a microscope. Many people tend to step back when they are there. Unless there is some overarching reason for it, I think that they can absolutely be over the size of what is done—they should be and will be—but I do not think it needs to be excessively burdensome in terms of the transparency of what is happening. Again, it comes back to the trust model that you have. The trust model I have is that I believe you can find people you can put trust into, even with £800 million.

Photo of Esther McVey Esther McVey Conservative, Tatton

Thank you very much. I am just going to give the timing because I do not want to run out of time and we have less than 15 minutes left. I have the list of people wanting to speak and I will take it in this order: Daniel Zeichner, Jane Hunt, Sarah Owen and Aaron Bell. Did I miss anybody out? No. I move now to Daniel Zeichner.

Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Environment, Food and Rural Affairs)

Q Thank you very much, Ms McVey. I have two questions; the first is to Professor Mazzucato. You obviously set a lot of store by the 2017 industrial strategy—you waved!—yet its current status seems somewhat uncertain. Were that not to be going forward, does this whole system then work, in your view? What would be the impact of not having those great challenges and goals set out?

Then I have a question for Professor Bond, which was actually posed by Professor Wilsdon in an article he wrote a while ago. He asked:

“What empirical evidence is there of the problems in the UK’s R&D system to which the Aria bill is the solution?”

Professor Mazzucato:

Talking about innovation policy without an industrial strategy or an industrial strategy without an innovation policy are equally futile. The problem is what do we even mean by an industrial strategy. I have already mentioned that I think that the wrong kind of industrial strategy is one that makes a random list of sectors, technologies or types of firms, to find SMEs and so on. It is more one that focuses on problems and then gets all sorts of different sectors to solve those problems together and then, for example with SMEs, it gives them extra support because they are small. The support they get is not because they are small, as though small is great quality, but because they become an active member of a transformation strategy in which both the industrial and the innovation side are equally important.

It has been talked about that the UK Government are abandoning their industrial strategy; I do not think that is actually true. I speak to very able civil servants working today in BEIS and I think action on an industrial strategy is going forward. My question is, why have we decided that it is no longer called an industrial strategy? That actually comes back to my previous point about the lack of confidence—perhaps someone decided that it sounds too ideological, although I am not sure why because it is not at all. The US Government are reviving their industrial strategy. Many countries have industrial strategies. The reason that Denmark is the No. 1 provider of high tech green digital services to China, which is spending more than $2 trillion greening its whole economy, is because it has had an industrial strategy.

One thing is to name things for what they are. The UK continues to have an industrial strategy. Wonderful documents have come out about the innovation policy from BEIS, but if we are not calling things what they are, that creates confusion. The way to attract top people to Government is to be clear, as I said before, about what Government are for.

Let us look at the way that the US Government managed to hire a Nobel prize-winning physicist to direct the Department of Energy, Steve Chu. He set up ARPA-E back in 2009, where the first director was Arun Majumdar, who then went on to direct the energy programme for Google. He was not told to come in because he was a geek, or to incentivise business for the sake of it; he was told to come in to help Obama direct the stimulus programme, which was $800 billion, in a green direction. That sounded incredibly exciting and, of course, he was willing to leave Stanford for some years to do that.

The best way to bring top thinkers and experts with different types of expertise into Government is to make it exciting in terms of what Government are there to do. That has to be not just fixing market failures but being actively part of the co-creation and co-shaping, alongside business, of the markets of the future. DARPA has been really good at doing that within its space. It does not matter what the budget is—I would argue for a larger budget for innovation in general in the UK, but even with a fraction of that budget, what is the remit of that organisation? If it is just fixing problems along the way, or asking business what it needs, or being a clear, proactive, mission-oriented shaper of markets, that will definitely impact its success, but especially who will want to work in it with high expertise.

Professor Bond:

I was asked, what evidence is there of issues in UK R&D to which ARIA is a solution? First, we have a wonderful science base but it has largely become incentivised to publish papers in fancy journals—that is how you make your mark and get promoted and respected. That is a fabulously good thing, but ARIA can do something quite different. When you work in industry, your goal is to build or make something or move something forward, not worry about publishing it. In fact, usually you do not bother to publish it. For all that we are a tremendous scientific nation, there has been such a focus on that, but we could focus a lot more on doing things rather than feeling that there should be publications. I am not saying that there should not be publications, but that certainly should not be the focus.

A lot of what happens in academia, for perfectly good reasons, is to move things to some low-level prototype at most. There is often a lack of the kind of engineering that companies are required to do. That is not to wave a finger at academia—that is not what it is there to do. You need to do things differently when you are in industry. There is a role to be played by a group that can do those two things very well. Industry also does not necessarily do everything as well as one would like. There are exemplars where everything gets done very well, I hasten to add. It is absolutely possible, as Professor Mazzucato put very well, to link applied research to develop things and to bring in deep expertise when you need it. We can do more of that, and I think this can be an exemplar of a good way of doing it. If you want evidence, it is that the Americans have done that with ARPA and have been really successful at it. We have not had one. I will use that as the evidence.

Photo of Esther McVey Esther McVey Conservative, Tatton

Thank you. Mindful of time, I call Jane Hunt.

Photo of Jane Hunt Jane Hunt Conservative, Loughborough

Thank you, Ms McVey. It is a pleasure to serve under your chairmanship. My question is to Professor Mazzucato and Professor Bond. In the previous session, it was very interesting what UKRI said about there being almost a language of going through the process of bidding for and gaining R&D funding in the UK, and they do it very well. But they talked about there being an area that could be developed to free up minds. How do we attract fresh ideas and thinking from some of the experts and inventors of our generation who are not always able to engage in the current R&D structureQ ?

Professor Mazzucato:

Wow, that is a fantastic question, and of course it also goes back to the education system. This may be too broad a point, but the more unequal an education system is, the less able a country is to access the full range of potential innovators, so we should always be linking up the two. Education should really be the great leveller. There is this big distinction between private and public, and even within the public and state system there are huge differences. One could even look at the whole A-level system. I once asked myself how many people in the UK study mathematics. Only a few do an A-level in maths. Do you even study calculus? In most countries, everyone, whether they become a poet, an engineer, a geologist or an English teacher, studies calculus as part of their training. Going back to the education system and looking at how it is distributed, in terms of the high quality within a country, but also regionally and by class, is a big point.

On the other part of that question, the first point that I made today is that the discussion about ARIA should not get confused with the fact that we always need curiosity-driven research. The National Science Foundation funding or the Research Councils UK funding in the UK really should reward great ideas because they are great ideas, whether or not they are talking about some big societal challenge. That should always be properly funded. Again, if you compare us with some other OECD countries, we are not necessarily on par with that.

We should have a conversation at the same time about what institutions galvanise the mix of thinking between basic and applied. That is why Vince Cable set up the catapult centres, which were modelled on the Fraunhofer institutes. The difference between Fraunhofers and catapults is not only that the German Government spend 10 times as much on Fraunhofers as we spend on catapults, but also that the same person—the same individual human being—goes from being a civil servant to being a businessperson within the Fraunhofers. There is a much less fuzzy distinction that we tend to make in the UK between the bureaucrat and the entrepreneur. That itself is a really interesting function of an agency, coming back to Professor Bond’s point that we should not have these siloed areas, with academies just doing the academies and then businesses on the other side. Finding those interesting corridors, where there is a basic needs supply but the same person breaks down the false dichotomy between bureaucrat and entrepreneur, is something that is perhaps missing in the UK’s innovation landscape.

Photo of Esther McVey Esther McVey Conservative, Tatton

Thank you. Can I just interrupt and say that there are three minutes left and I have two questions left? Can people be to the point?

Professor Bond:

I think ARIA cannot and will not address every creative mind that we have in invention, but we can do more as a nation for inventors. We can do something like Kaggle, which is a fabulous way of bringing people together. We can do more easy seeding of things, and we can have a lot more Makerspaces. Those are a couple of ideas. I could keep going on, but we do not have time.

Photo of Sarah Owen Sarah Owen Labour, Luton North

It is a pleasure to serve under your chairmanship, Ms McVey, especially in my first Bill Committee.Q

We have heard a lot of evidence in the two sessions about the need for ARIA to identify what it is for. We should also be clear about what it is not for. Professor Wilsdon, do you think that moral and ethical boundaries need to be placed on ARIA?

Professor Wilsdon:

You mean in terms of the research areas it would work in?

Professor Wilsdon:

I am not sure whether one would need to legislate for that. I would expect that most provisions in those areas would apply, but it is a good question and one that bears more thought. It links a bit to my point about accountability mechanisms. As I have said already, the nervousness is that you combine an institution with a fuzzy, ill-defined purpose with very loose mechanisms of accountability. That is a recipe for all sorts of problems down the line, as well as potentially for great things—who knows? It is a model that has very obvious potential flaws. It is not going to work in the defence arena, which is clearly the one, as I understand it at least, that would raise the most issues in that respect. The key thing is the governance structure for this entity, which I see as too loose.

Photo of Esther McVey Esther McVey Conservative, Tatton

I think we are going to hear your question, Aaron, but we will not get the reply.

Photo of Aaron Bell Aaron Bell Conservative, Newcastle-under-Lyme

Q Professor Bond, you said that opacity is useful because it avoids too much pressure being put on people. Does that apply to trying to get new people into the space?

Professor Bond:

Sorry, when you say “new people”—

Photo of Aaron Bell Aaron Bell Conservative, Newcastle-under-Lyme

Q People we are trying to get in through the challenges and so on.

Professor Bond:

Yes, I think so.

Photo of Esther McVey Esther McVey Conservative, Tatton

Perfect. We have come to the end of the time allocated for the Committee to ask questions, and indeed for this morning’s sitting. I thank our witnesses on behalf of the Committee for their evidence. Professor James Wilsdon from the University of Sheffield, Professor Mariana Mazzucato from University College London and Professor Philip Bond from the University of Manchester, thank you very much indeed.

Ordered, That further consideration be now adjourned. —(Michael Tomlinson.)

Adjourned till this day at Two o’clock.