My hon. Friend makes an important point about acknowledging research taking place outside the university sector. I said earlier that foreign investment is driven significantly by countries with strong research capacity and strength, but it is driven equally by countries that commit to the development of skills. The cuts in the adult skills budget that my hon. Friend mentions, and particularly in further education, will weaken our capacity and our potential for economic growth.

We could do much more than is being done in the examples I have given. We could build partnerships in developing infrastructure for low-carbon energy, which we could then export to the world. If we shrink away from such a challenge, China will pay for the new generation of power stations to be built and we will miss out on the opportunity to help shape our own future. We will have little leverage in insisting that some of the investment is spent on creating jobs in the UK, and we will pay for it through increased electricity bills for decades.

What should we do? I have three suggestions. First, let us stop making things worse. We should recognise the damage done to the UK by the structural shortcomings of our economy. Research and development is a national asset and we must not incentivise companies to do less of it, or make it harder for our universities to transform our economy.

Secondly, we must certainly not threaten the important stream of research funding that comes through our membership of the European Union, because as I am sure the Minister knows—I am sure he will endorse it—the UK does disproportionately well from European Union research funding. In 2013, for example, the last year for which data are available, we won €1.11 billion out of the €9.6 billion allocated under the seventh framework programme, FP7, which was the predecessor of Horizon 2020. Were we to exit the EU, that would clearly be at risk, at enormous cost to our universities and the communities in which they are driving economic growth. Similarly, we must not undermine the flow of talent into our country by the types of measures that we have already seen affecting students or by new restrictions on tier 2 visas. I am sure the Minister agrees with me on that point as well, although whether all his colleagues will is another question.

Thirdly, we should recognise and maintain our strengths. We should build on what we have that is positive and do more of it. The UK catapult centres, where universities and industry work together, are making an important start. At the Advanced Manufacturing Research Centre in the Sheffield city region, more than 100 companies partner with university research to win jobs and orders for the UK. Some of them are giant companies, such as Rolls-Royce, and others are the high-tech supply companies that support them.

It is not only the companies that benefit. Research demands skills, and more than 600 young people are now training as advanced apprentices at catapult centres. They are fully funded by companies, as recognised by Times Higher Education in its widening participation initiative of the year award. Those people are working in a research environment and have the opportunity to progress to degrees, even MBAs and PhDs, all within a research setting. How was the AMRC in Sheffield built? By universities and industry working together, and through European funding and regional funding under the old regional development areas.

We should invest in other areas too, with a sense of national purpose. Our ageing society will face huge human and social costs as incurable neurodegenerative diseases such as Alzheimer’s become even more common. Social, technical and medical innovations are urgently needed to deal with this, as the NHS struggles to deliver more with more limited resources. Places like the Sheffield Institute for Translational Neuroscience will make that possible. We know that we need to decarbonise our energy supply, but the existing low-carbon alternatives are just too expensive. Research and innovation will change that.

We also need to build capacity. The Chancellor has talked about our economy needing an “extra gear”. That extra gear is research and innovation. We need more capacity in our industry, but it will not happen if we do not support the research strengths of our universities. Every industry, every city and region needs transformational research to drive the growth and wealth that we all need. In the last Parliament I served on the Business, Innovation and Skills Committee, and we highlighted that challenge in our report on business-university collaboration, in which we recommended unanimously—in a cross-party Committee dominated by Government Members—that the Government aim for 3% of GDP to be spent on R and D by 2020. Above all, I would welcome the Minister’s response on our Committee’s challenge.

We are at a crossroads. The erosion of the UK’s capacity to technologically innovate was not inevitable; it was the unintended consequence of a series of choices made over decades. But we can reverse it. If we do not, we will be condemned to continue on our current trajectory of low growth and poor trade performance and will ultimately lose power over our own economic destiny. I urge the Government to recognise the vital contribution of research innovation to the UK, to ensure that we can thrive in a globally competitive environment.