Treasury Support for UK Science — [Steve McCabe in the Chair]

– in Westminster Hall at 2:30 pm on 4th November 2015.

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Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge 2:30 pm, 4th November 2015

I beg to move,

That this House
has considered the role of the Treasury in supporting UK science.

First of all, let me say that it is a real pleasure to serve under your chairmanship, Mr McCabe.

I start my speech today with the simple assertion that science is a critical part of our everyday lives. It is important not only because it explains the world we live in—the world we see, hear and feel every day, which we all take for granted—but because it also makes the world of tomorrow. It shapes the future in a way that fascinates most people, and it does so with breathtaking speed. Who knows what will be possible in the future? Without science, our world would be a very different place and many of the things that we take for granted would not exist. We live longer, thanks to science; we live better lives, thanks to science; and we live broader and more expansive lives, thanks to science.

The UK, for its part, has always punched above its weight in science and innovation. Our laboratories, universities, research councils and innovation bodies are world-leading. To exemplify this point, I will refer to the startling statistic that although the UK’s population equates to just 0.9% of the global population, we account for 15.9% of the world’s most highly cited scientific research articles; since the start of the 20th century we have had 78 Nobel prize-winners, 12 of them since 2004.

We are first in the world for the impact of our science. We have built a strong record of converting science-driven discovery into economic gain, with the UK now ranked second in the world for innovation, and for every £1 invested in public research and development, there is a boost of between 20p and 30p per annum in perpetuity. The UK knowledge economy sustains a third of our businesses, with wage rates 40% higher than the average wage in the field. To be fair to previous Governments, investment in science and innovation has delivered impact in many of the areas identified as priorities, such as promoting innovation, growth and—very importantly—improvement in public services.

Maintaining our leading position in science is increasingly difficult, though, thanks to an increasingly competitive global marketplace. With countries such as India, China, and South Korea increasingly competing in the technology stakes, it is becoming clear that we need not only to maintain our research base, but to grow it. To do that, we need a commitment from Government to invest in science. It is time to take stock, to remind ourselves just how important science is to our economy, and to assess how seriously we may be damaged if we fail to support our scientific research base with adequate public funding. In my view, the most persuasive way of making the case for the importance of science to the economy is to seek a simple answer to a simple question—what has science ever done for us?

For a start, let us look at one of the major contributions made by my home city, Sheffield, which of course is where stainless steel was invented, just over a hundred years ago. Stainless steel is a technology that literally changed the world, to the extent that we do not even realise now how widely it is applied in the technologies that we all enjoy. Let not us forget either that Sheffield is also the home of Ronseal, which not only does what it says on the tin, but plays a leading role in developing environmentally friendly coatings for use in the home. Sheffield leads the way even now, with two fine research universities and its Advanced Manufacturing Research Centre, the original model for the country’s catapult initiatives. In joint ventures between Sheffield University and companies such as Rolls-Royce and Boeing, cutting-edge materials are being developed for the aerospace industry, such as the use of carbon fibre blades for the next generation of aerospace engines and lightweight aeroplane bodies.

In the chemicals field, the UK leads the way. Chemical and pharmaceutical products are our largest manufacturing export, with the chemicals sector alone enjoying an annual turnover of £60 billion. It sustains some half a million jobs throughout the country—well paid, for the most part—finds solutions that make life better and more secure for all of us. Let us bear in mind that penicillin is a British discovery that has transformed medicine, saving countless lives. Today, the pharmaceutical industry employs 68,000 people in the UK, with 23,000 of them employed in highly skilled R and D roles.

The work goes on. British scientists from across the spectrum work on projects that impact on every aspect of our lives, helping us to meet the challenges of today—not just the obvious challenges, such as using agri-tech research to help to feed a growing world population or how to use modern science to develop the technologies we need if we are achieve a truly low-carbon economy, but other challenges that are none the less important. For instance, researchers at the University of Leicester have developed new technology that reveals previously undetectable fingerprints on metal objects; the method has been used in more than 100 criminal cases so far and is enabling the reopening of closed cold cases. Also, research into the structure of graphite is extending the lifetime of the UK’s nuclear reactors, resulting in an effective saving of £40 million to date and helping not only to keep the lights on but to reduce the country’s carbon footprint.

As we can see, science is all around us. It gives us hope for the future, for our health, for our security, for our living standards and for the sustainability of our living standards. We are good at science here in the UK—after all, we are the country where Newton discovered gravity and Faraday made early advances in harnessing the power of electricity, fundamental advances that revolutionised our understanding of the world.

Science has done a great deal for humanity and it is precisely because it fulfils such an important role in changing lives that it is also vital to our economy, particularly if we are to maintain and grow our economy and our knowledge base. A modern knowledge economy has to be underpinned by science. For example, my constituency is home to Tata’s Speciality Steels, which works at the top end of high-value steelmaking. Tata knows that it has to stay ahead of the game with its research if it is to survive the challenges presented by developing economies such as China. It almost goes without saying that if steel is one of our foundation industries—I think it is commonly accepted that it is—science is one of the vital foundations of steelmaking itself.

Our position on science has been strong. The UK has enjoyed a powerful public research base, creative innovation mechanisms and a supply of highly skilled workers, who help to drive up our productivity and further develop our knowledge economy. Our position on science has encouraged inward investment. The UK is the largest recipient in Europe of such funding, despite the squeeze on public investment and the long-term neglect of our science capability. However, this rather unbalanced approach to investment cannot continue without damaging both the UK’s reputation and our economy. Government investment in R and D acts as a powerful magnet for industry investment, both domestic and foreign, and the announcement in the comprehensive spending review of any more cuts would risk damaging our overall funding profile even more.

Photo of Andrew Smith Andrew Smith Labour, Oxford East

I am sorry that I missed the very beginning of my hon. Friend’s excellent speech. On her last point, does she agree with me that it would be a great mistake if the tax credit grant element of research help to industry was converted into loans, which has been mooted in some quarters and which businesses that carry out a lot of R and D are very worried about?

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge

I agree entirely with my right hon. Friend that any fiscal levers designed to improve the research profile of UK science should be maintained.

It is worth mentioning that according to a study by the Department for Business, Innovation and Skills, every £1 of public investment secures an increase of between £1.13 and £1.60 in private funding. The importance of public funding for science is underlined by comparisons with our international competitors. The comparisons are not flattering—indeed, since the mid-1980s, our investment in science and innovation has fallen behind, leaving us sixth in the G7 for overall spending and last overall for public investment alone. South Korea enjoys public and private investment in science equivalent to 3.6% of GDP—no wonder it looks likely that South Korea, rather than Forgemasters in Sheffield, will be making the pressure vessels for our nuclear power stations—and in Germany and the USA, the figure is 2.8%. Here in the UK, the figure stands at just 1.7%.

We have punched above our weight, but it is clear that that cannot continue. Comparatively low levels of investment in research and development risk losing any competitive advantage we have over other innovation leaders who are investing more. As we all know, our economic productivity has already fallen by at least 15% from a pre-financial crisis position of steady growth. International studies demonstrate impressive and positive impacts on productivity from increased scientific research and development profiles, and it is clear that our 1.7% GDP investment rate is causing problems.

I acknowledge, of course, that the Government ring-fenced funding during the last Parliament and that that decision helped to keep safe £1.2 billion of private sector investment, but it is also true that the cash limit on research and development represented a real-terms cut of around £l billion. Although that decrease has been weathered in the short-term, if extended, it risks serious damage not just to our science base, but to the economy itself. If this Government and this Chancellor are serious about rebalancing the economy and closing the productivity gap—as a northern MP, I include the northern powerhouse in that—we need to see robust and secure funding plans for science put in place. How can we hope to become, as the Chancellor wants, the highly skilled, highly advanced economy with a healthy export profile and a healthy balance of payments if we allow our science base to slide further down the international league tables?

As we come to the all-important comprehensive spending review, we need to see the Chancellor’s warm words matched with a commitment in the review to tackling the underfunding of science in our economy.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

I commend the hon. Lady on securing this debate and on making a powerful speech. She talks about the forthcoming spending review. Does she agree that we would like to see more than just words about one nation science? The Minister and his colleagues should liaise with the devolved legislatures across the UK, particularly on universities, so that one nation science becomes the reality, rather than just a soundbite.

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge

I thank the hon. Gentleman for that. I agree that wherever in the UK a university is, if it is demonstrating real expertise in a scientific discipline and it comes up with good, robust proposals that are approved by its peers in the scientific community, it should benefit from an equitable spread of funding for research and development.

I conclude by asking the Minister for assurances about future public funding for our science and research base. First, will he commit to maintaining the ring fence for Government science spending over the next period, and will the Treasury fund real-terms protection of the science budget? We need funding stability, and we need to encourage business confidence. We also need to maximise our capital investment. I know that the capital budget has been settled, but too many science facilities remain under-utilised, which is wasteful and damaging to our economic growth ambitions. We need to align capital and resource investment to maximise the return, but we also need to rebuild our science base, as I have already pointed out. Will the Minister therefore also commit to an ambition to increase spending on science when sustained economic growth returns to the economy? Such a commitment in the CSR will send out the right signals to investors and scientists everywhere and ensure confidence that the UK is determined to use its science base to build economic success.

The Minister might also like to comment on the need for a broad spectrum of public investment in scientific infrastructure, from lab bench through to mid and large facilities. Equally, it would be welcome if he commented on the principle of allocating scientific funding according to a gold standard, based on independent expert peer review of research. That was the point I was trying to make to Mr Campbell.

Finally, it would be reassuring to hear the Minister acknowledge the importance of curiosity-driven fundamental research. It is easy to understand the importance of applied scientific research, but some of our greatest achievements—scientific and economic—came from fundamental research. Laser technology is a good example of that and I am sure everyone can think of other examples. Although private investment is important to increasing our science research base, without adequate public support we will see that investment increasingly put at risk. Already we are falling behind our competitors, and in today’s world to stand still is to fall behind.

Today’s debate has been heavily supported by the royal societies and the universities, which I thank for their help and interest, and by numerous organisations spanning food and drink, pharmaceuticals and health. From the British Medical Association and Arthritis Research UK through to the Food and Drink Federation, the interest in the debate has been immense. That all emphatically underlines the sheer extent of the reach of science—I have tried to convey that in this debate—and thus its importance to the economy.

The debate, in title and in application, demanded a response from a Treasury Minister. The fact that the Chancellor’s ministerial team chose to bypass the opportunity to talk about science goes against the spirit of Westminster Hall debates and is deeply disappointing. No blame is apportioned to the Minister here now—we are glad to see him here—but where is the Treasury Minister? The Minister for Universities and Science can do more than repeat the speech—good as it was—that he gave in response to the excellent and well attended debate on this topic that was recently brought to the House by Stuart Andrew. After all, it is official Government policy to support science. They have developed a science and innovation strategy, which states that

“capital investment alone is not sufficient to ensure our research infrastructure is able to continue to deliver world class outputs. We recognise that our science base requires adequate resource funding, and will give full consideration to these requirements when we take a decision at the Spending Review next year.”

On the basis of that statement, I call on the Minister not only to ensure that Treasury Ministers are made aware of today’s debate, but to commit to being an ambassador for science to the Treasury. He needs to go out there and make the case for science funding. I look forward to his response.

Photo of Chris Green Chris Green Conservative, Bolton West 2:48 pm, 4th November 2015

It is a pleasure to serve under your chairmanship, Mr McCabe. I offer my congratulations to Angela Smith on securing this debate on UK science. It is an important subject, and it is great to be able again to make the case on behalf of the UK science industry before the spending review. British science is world-leading in many areas, is highly productive, has the capacity for increased investment while maintaining its productivity and is vital in maintaining our competitive advantage.

As the hon. Lady said, the UK population represents only 0.9% of the world population, but produces 15.9% of the top-quality research findings. A productive research environment must have Government investment in science capital and resource, such as the National Graphene Institute, which will secure Manchester as a leading centre of graphene research and commercialisation. We should not allow the UK’s current and historic strength in science and research to lead to complacency. Having worked in the mass spectrometry industry for nearly

20 years, I know that our science enables world-leading businesses to flourish in Britain, often producing the low-volume but high-value goods that we need. Jobs in science are often the most rewarding and interesting. They also encourage entrepreneurship and the development and commercialisation of innovative technologies.

Photo of Caroline Nokes Caroline Nokes Conservative, Romsey and Southampton North

The hon. Gentleman makes an important point. Research, investment and experience in facilities can often attract investment such as we have seen in Southampton, where Lloyd’s Register has come to the Boldrewood campus of the university, providing the biggest link-up that we have in this country between a university and a commercial enterprise.

Photo of Chris Green Chris Green Conservative, Bolton West

It is always good to hear such fantastic examples of link-ups. I am sure all the Members here will have many other such examples.

Science strengthens economic growth, productivity and the UK’s ability to compete in an increasingly competitive market, as was highlighted earlier. It is a highly effective way to invest public money to drive economic growth. Although we in Britain invest less in research and development than many of our competitors, it is not because of the lack of excellent opportunities for research. We can significantly increase our research investment without reducing the quality of the research. That will then increase the base from which innovation and commercialisation starts.

The past five years were about creating economic stability, and it was right that the Government protected the science budget, but the next five years must be about building upon what we have secured. The science and research ring fence was an important signifier of the Government’s commitment to the value of research. The flat-cash protection has maintained the UK’s position during a time of economic uncertainty. Now we should be planning and investing so that we encourage further investment to build and create the industries that we as a country want. By investing in science through the dual support system with a mix of project-based and institutional-level funding, the Government leverage investment from charities and industry, generating further scientific and economic growth. It is estimated that each additional £1 of public funding has the potential to give rise to an increase of up to £1.60 in private funding for both industry and charities.

A strong science industry is a vital base for preparing for our future needs in many policy areas, such as food security, national security, antimicrobial resistance, health innovation and meeting the needs of an ageing population. Government investment levels must take that into account when we decide what message we want to send to investors in Britain and across the world.

Photo of Craig Williams Craig Williams Conservative, Cardiff North

I commend Angela Smith for securing this debate and for the manner in which she has conducted it.

Some 68% of Welsh universities rely on UK Government funding, and the ring fence that my hon. Friend Chris Green has touched on is extremely welcome. The universities are very much looking to the end of this month. I commend GE Healthcare for the work that it has done in my constituency. It has worked with the university, using the block funding, to build an innovation campus and to work with the public and private sectors, much as he has described. They are working together to invest in the Government’s long-term economic plan, but they are also creating jobs in Cardiff.

Photo of Chris Green Chris Green Conservative, Bolton West

Our national Government have a huge role in ensuring that we have strong science throughout our United Kingdom. There are many great instances in Wales. I used to do a great deal of travelling up and down the country in my previous job, and I recognise that there is investment right across our United Kingdom, as far as the University of Highlands and Islands in Thurso. It is a bit of a long trek up there, but it is fantastic to see investment right across the country. We must reflect on the needs and benefits that exist in our thriving scientific sector.

Several hon. Members rose

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

Order. I do not want to impose a time limit, but if people try to stick to five or six minutes, we can get everybody in with ease.

Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Transport) 2:54 pm, 4th November 2015

I congratulate my hon. Friend Angela Smith on securing this important debate and on her excellent speech.

Supporting UK science should absolutely be a priority in this Parliament and beyond, and I hope the Chancellor will take heed of the points made here today. As Members will appreciate—they have probably heard me say this before—Cambridge is a leader for science in the UK.

Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Transport)

Along with Oxford, of course.

Cambridge is a buzzing hub of research labs, biotech companies and innovation centres, and science is fundamental to both our economy and our collective identity. Nearly 60,000 people are employed in the Cambridge cluster alone. It is thought by some that Cambridge and its leading scientific reputation are untouchable. That is not the case. We must not take our assets for granted. Only with careful future planning and sustained, stable economic investment can Cambridge continue to function as a centre for scientific excellence, attracting investment and expertise from around the globe.

I want to see Cambridge’s scientific stature secured, but I also want to see the knowledge economy increasing across the entire country, ensuring that the UK remains a leader for science on the world stage. This is not a zero-sum game. Cambridge doing well will help other parts of the country. Cambridge going backwards causes the whole country damage. A genuine long-term strategy for science is vital if we want to promote innovation and increase productivity in our country. The Chancellor says that that is what he wants, but the wrong decisions over the next few weeks risk sending us in the wrong direction.

The Government and their cheerleaders helpfully remind us about the long-term economic plan—I see that some Government Members recognise that phrase—but we need that to be a reality rather than a soundbite. The truth is that in the previous Parliament we actually saw a substantial real-terms cut in science funding. The Campaign for Science and Engineering has shown that the resource budget accumulated a real-terms shortfall of £1 billion during the previous Parliament. Data from the OECD suggest that our country’s investment in research and development has been on a downward trajectory for the past few years and is well below the EU average of 0.64%. As Universities UK tells us, the UK comes 27th in the EU27 and eighth in the G8 in total science and research investment as a proportion of GDP.

The argument is familiar. The Minister has told us before that we still do well and that we punch above our weight, but as Nicola Blackwood, the Chair of the Select Committee on Science and Technology, has pointed out on more than one occasion, it may be that we do well because of funding from the past. We cannot assume that with lower levels of public support we can continue to be competitive when other countries are upping their game.

Let me raise one specific worry. Many are talking about it, but I was struck by a representation from a biotech company in my constituency, Discuva. It develops new antibiotics to combat antimicrobial resistance and recently won an innovation award from Innovate UK. Indeed, I believe the award was presented here by the Minister. Discuva received a biomedical catalyst grant in 2012, which helped grow its business enormously, giving it the necessary risk capital to take chances and ultimately sign the world’s largest preclinical antibiotic drug discovery deal with a major pharmaceutical company. Its products will feed into the UK healthcare system, saving lives, reducing the healthcare burden and consequently increasing GDP.

I am sure we will all champion such businesses, but Discuva is just one of many that have expressed alarm over the suggestion that the Treasury is considering swapping research grants for loans. It tells me that this would be disastrous for companies in its sector. It argues that a significant loan on the books of many small to medium-sized high-tech companies would make them technically insolvent and affect relationships with potential investors, presenting a major business obstacle. I hope the Minister can assure us today that those suggestions are just speculative rumour in the wider rumour mill, and that those important grants will not be converted into loans.

I conclude by reminding Members that the Treasury has repeatedly said that it will prioritise spending in areas that drive productivity and growth. Well, 51% of UK productivity growth between 2000 and 2008 was due to innovation, with 32% being attributable to changes in technology resulting from science and innovation. That tells us that we need to see greater investment in mechanisms that support innovation—more, not less.

I have a suspicion that the Minister is largely persuaded by the strengths of the argument, but for reasons we all understand he will possibly have to be circumspect in his reply today. Those of us battling for science and innovation wish him well in his battles over the next few weeks. Funding for a secure, long-term, successful science and innovation sector is vital for the future prosperity of our whole country, and it must not be sacrificed for a short-term political fix. It is important that the Minister is successful and that the dead hand of the Treasury does not win out yet again.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Education) 2:59 pm, 4th November 2015

I congratulate Angela Smith on securing this debate.

I do not want to rehearse all the advantages that come from spending on science, other than to say that we in Northern Ireland have found that it has helped us to increase investment. There is a strong correlation between what a company spends on science, research and development and its ability to export and about two thirds of increases in productivity are the result of spending on innovation, research and development.

In a debate such as this, I suppose the first question people will ask is: a lot of the work on improving science spending in places such as Northern Ireland and Scotland is done by the devolved Administrations, so what are they doing? In Northern Ireland, we have focused on a number of areas. First, £45 million is being spent on research facilities in universities, and by 2020 we hope to be funding 1,000 postgraduate research places a year in local universities. That will not only allow universities to increase their research capacity but ensure that there is a pool of skilled labour for the inward investment that we hope to attract. Invest NI has devoted £80 million a year to bringing projects from the lab to the marketplace.

Those are examples of the positive things that the devolved Administrations can do, but it is important to note that the devolved Administrations are dependent on decisions made by the Treasury and central Government. Their ability to do those things and to be innovative in their policies depends on the core funding that comes to them. That is not to say that they should not or do not look for other ways of attracting additional funding, bringing in their own resources and prioritising their own spending, but because the block grant is the main source of the spend available to the devolved Administrations and since most tax policy is decided centrally, there is a role for central Government.

I have four points to make about central Government’s role in spending on science, innovation and research and development. First, although it was ring-fenced over the five years of the previous Government, central Government spending has fallen by 15% in real terms. That affects the resources available here in England, but also, through the Barnett formula, the amount of money available to the devolved Administrations. I know we have difficult spending decisions to make, but look at the success of science spending. I will not repeat the figures that have been quoted already, but that money translates into a very high success rate, as shown by the many research papers cited as a result of the work financed by that spending. When the Government are deciding on spending priorities, surely the priority should be those areas where the spending is actually seen to work.

Secondly, I want to discuss the distribution of money. I was pleased by the Minister’s speech at Sheffield’s Advanced Manufacturing Research Centre about one nation science. I am sure he will regret ever saying this, but he said that one nation science

“means developing that excellence for the whole country, making sure all areas and all groups of people can reach their full potential”.

That is not happening in practice. If one looks at the money distributed by the research councils, although Northern Ireland has 3% of the population, we receive only 0.7% of funding—indeed, per head of population, seven times more money from the research councils goes to London as to facilities in Northern Ireland. The Minister could well argue that London has greater capacity, but we have proven ourselves. For example, although we account for only 0.03% of the world’s population, 0.3% of the research papers that are cited as being highly significant come from Northern Ireland. We perform 10 times better than our population distribution would suggest. We do need to look at how the money is distributed across the United Kingdom.

Thirdly, there are additional sources of money, especially the Horizon 2020 funding that is available from the European Union. I am no great fan of the EU, but the money is there. A condition of that funding is that there must be collaboration between companies and universities in different member states. What could central Government do to improve performance and encourage that kind of collaboration? It helps to expose companies and universities to new knowledge and markets, and there is value in that.

Finally, Daniel Zeichner mentioned research and development tax credits. There is talk about whether they should be translated into loans or kept as tax credits, but the one thing I know is that those tax credits are an important way of levering in private finance. Last year, their notional cost to the Treasury was £1.8 billion, but that drew down £14.3 billion of research and development, expenditure and innovation. To me, that is a good return for a fiscal measure, so those tax credits should be maintained.

I know that not all the points I have made fall within the Minister’s remit, but the Government should consider them when dealing with this important issue.

Photo of Carol Monaghan Carol Monaghan Shadow SNP Westminster Group Leader (Public Services and Education) 3:07 pm, 4th November 2015

I congratulate Angela Smith on securing this important debate.

There are real anxieties among the scientific community and associated industries about the current scale of science spending. Following the 2010 spending review, the science budget was frozen in cash terms at £4.6 billion, but that meant a real-terms drop of 10% over the Parliament. By 2012, UK public investment in science fell to less than 0.5% of GDP—a lower rate than any other G8 country had invested in R and D in the preceding 20 years. The G8 average is now 0.8%, whereas the UK Government spend a mere 0.44% on science.

Last week, I had the privilege of visiting the University of Glasgow’s Centre for Virus Research. It is leading the world in developing treatments for hepatitis C and is carrying out sector-leading research into insect-borne viruses such as the dengue virus, which could have devastating effects on the world’s population, more than 40% of which currently lives in a dengue area. The centre recently put together a new funding application; it has increased by £3 million since its last award was received, but staff there told me that the additional

£3 million is not required to do anything new or make great steps forward; it is needed merely to keep the centre’s head above water. Flat cash really does mean a real-terms cut. Addressing the Science and Technology Committee recently, Universities UK spokesperson Dr Dandridge stated that long-term under-investment in publicly funded research in the UK is leading to an erosion of capacity. That is a really serious allegation.

The Minister for Universities and Science, who is with us today, has previously stated:

The UK Government is committed to maintaining the strength of the UK’s world-class research base”.

I welcome that, but I would add that we have to balance business innovation with blue-skies research, which, as the hon. Member for Penistone and Stocksbridge said, is research that has no immediate application. It is research for the sake of doing research, and scientists often enjoy it the most, because they have a free hand. When we take from one to the detriment of the other we will have long-term problems.

Sammy Wilson mentioned our science infrastructure, and I completely agree with what he said. In terms of current infrastructure investments, the Treasury has recognised that there is a territorial dimension to the science budget. We keep hearing about the northern powerhouse. In the autumn statement, we heard about the £235 million investment in the Sir Henry Royce Institute, which follows a £100 million investment in Manchester’s National Graphene Institute. That is great news for Manchester, but with the majority of science infrastructure projects remaining in the so-called golden triangle, we have a real issue if we are talking about developing centres of excellence across the UK. There is a need to map out investment thematically and territorially to make sure we make the most of the talents we have available. It is important to identify the governmental structures and Departments that are best placed to optimise investment in a local context.

The Chair of the Science and Technology Committee, Nicola Blackwood, recently asked the chief scientific adviser why the taxpayer should,

“among all other priorities, fund science and research?”

He responded:

“I would…focus resources on the things that so demonstrably contribute to productivity…Against that background, I would back science.”

With his final point, I wholeheartedly agree.

Photo of Jo Churchill Jo Churchill Conservative, Bury St Edmunds 3:13 pm, 4th November 2015

I thank Angela Smith for securing this important debate.

The depth and breadth of the UK science sector belie the UK’s size, but people should make no mistake: the UK is in the midst of the fast growth of a modern scientific revolution. Having started slowly during the first half of the last century, that revolution has gathered pace and, as the Government recognise in their productivity plan, it is driving UK growth. Yet we have heard the statistics, which I will not repeat, and about the sector’s worries. I have met many pharmaceutical companies and agri-tech companies, and they have repeated those worries to me, too.

To turn to the positives, the UK is a leader in Formula 1 racing car development, with seven of the 10 Formula 1 constructors based here. The worldwide revenues of almost £4 billion that we see from the sector are testimony to the fact that Formula 1 has settled here. The industry’s development in the UK delivers improvements not only to our cars and bikes, but to our advanced engineering sector and, more importantly, our hospitals. It delivers innovative design and thinking across sectors. In just five years, the UK has gone from 14th to 2nd in the global innovation index, but it is important that we keep up the pressure. The future of the industry in the UK lies in leading its competitors. We look forward to welcoming the world’s first 1,000 mph car from the British-led Bloodhound Project. That would not be happening if we were not investing in such industries or in other science and research-led fields. If we do not continue to fund the industry, not only will the UK fall behind, but we could well lose its science sector.

We have seen huge medical advances in the last 40 years—indeed, the first test-tube baby was British. Some 380 pharmaceutical companies are based in the UK, employing 70,000 people and with an annual turnover of £30 billion. The medical technology and medical biotechnology sectors employ more than 96,000 people and have a combined annual turnover of a further £20 billion. As we have heard, the life sciences industry is truly a jewel in the crown of our economy. Companies, universities and charities invest hundreds of millions of pounds. Last year, Cancer Research UK alone spent £434 million on research institutes, hospitals and universities across the country.

The Government do provide essential investment in UK science, but we still fall short compared with our major competitors. As the hon. Lady mentioned, we invest over 50% less than South Korea, the world’s leading investor. We need to make sure we are in the premier league. We must support the industry to research, to learn, to fail and to grow. That will ensure that the UK continues the push global boundaries in research and development.

As Members have pointed out, we lead the world in research in many disciplines, and all with a population that is less than 1% of the world’s total. To keep our place at the top of so many fields, it is vital that we do not simply rely on private initiatives, but back our pledge to industry with a commitment. Science has the potential to grow our economy and expand our horizons, giving us far more bang for our buck than most areas.

The science sector can deliver if it is helped, but as in many cases, simply handing over money is not the answer. To ensure that we get the most out of the sector, we must look to schemes that incentivise the best in the field and drive growth. We need competitive bidding processes to reinforce successful organisations and tax breaks to alleviate the load on start-up businesses and to grow cutting-edge enterprises. We also need match funding, especially in the academic arena, for R and D projects. As Sammy Wilson mentioned, assistance through Horizon 2020 is a good idea. Greater input from the scientific community in apportioning grants would also give far greater credibility to funding.

The Government invested £198 million through the charity research support fund only last year. One benefit was that that levered in £805 million from charities, which was then invested in our universities. The Treasury’s investment in science supports breakthroughs in pharmaceuticals and prevents and cures diseases. Spending and saving are a double win in this ageing society.

It is important that we push the boundaries—that we make a real difference to our scientific heritage. However, while the science industry is proving that it can deliver the results, it is up to a strong and committed Government to deliver the security. I therefore urge the Government to continue to protect the science budget across Departments this November, to unleash the full potential of the UK and the science industry.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality) 3:18 pm, 4th November 2015

It is a pleasure to serve under your chairmanship, Mr McCabe. I commend Angela Smith on bringing this issue to Westminster Hall for consideration.

I spoke to the Minister beforehand, so he knows which two issues I shall bring to his attention. I want to take up the issue of Northern Ireland, which was raised by my hon. Friend Sammy Wilson. I want to give two examples of science funding enabling universities in Northern Ireland to move forward with tremendous innovation and long-term vision to create and perfect medicines and research that will benefit people with diseases.

In Northern Ireland, we benefit from funding from a range of sources, including the EU, industry and charitable bodies, and others, including Jo Churchill, have mentioned where moneys come from. A raft of funding comes into play. The key to that is the large amount of funding that comes centrally from the UK Government, which could be at risk if the UK science budget is cut in the spending review.

The UK science budget funds UK research councils, which in turn fund l5% of the research done by higher education institutions in Northern Ireland. The science budget also funds recurrent research funding. When I was about eight, which is a long time ago, I played with dominoes; one hits the next, and so on right round. There is that sort of domino effect with funding. The recurrent research funding covers 35.5% of the research income of higher education institutions in Northern Ireland. In addition to funding from the UK science budget, Northern Ireland also receives money from other UK Government sources that are not part of the UK science budget, such as Government Departments and Innovate UK. That represents some 22% of the research income of higher education institutions in Northern Ireland. A significant amount of Northern Irish universities’ research income is provided for by the UK Government. I am sure that that shows how important the budget is to the Province, to our students, and to innovation.

We need to continue with positive steps that will send out a strong signal of stability to the industry not just in Northern Ireland but across the United Kingdom. Evidence shows that private sector funding of science follows the lead of public sector funding.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality)

The Minister is nodding—in agreement, I presume; and if I am right I will get positive answers later, which is good news. In the UK every £1 invested in public research and development results in an average £1.36 research and development investment by the private sector; spend £1 and get £1.36 in return—that must be good news.

I will give two examples of STEM research in Northern Ireland universities, and the first is at Queen’s University Belfast, which has been doing research on cystic fibrosis and the optimal delivery of antibiotics. Work on cancer and heart research have also been done there. The new drugs being created there, and the advances being made in medical treatment, are world-leading. Professor Cliff Taggart of the school of medicine, dentistry and biomedical sciences has been leading research into the delivery of antibiotics in cystic fibrosis. He has said:

“One of the big problems is getting drugs delivered in such a way that they are effective. Infection takes hold at a very early stage in life and constant treatment with antibiotics through the years will inevitably lead to antibiotic resistance.”

However, with the science funding provided centrally, Queen’s University is building up a drug to respond to the cystic fibrosis lung issues, and the build-up of mucus and other secretions.

Professor Taggart and his colleagues came up with the idea of devising compounds that combine antibiotic and anti-inflammatory entities. That is what they do with the money coming from the Government, along with the other moneys that flow to them. Professor Taggart has commented:

“The life expectancy of someone born with Cystic Fibrosis used to be six months. Now people are living until their thirties, although they need huge numbers of drugs to keep them alive. Our aim is to develop a drug that will dampen the bacterial load and inflammation much more dramatically and allow individuals to have a lifespan that goes beyond what it currently is.”

That is the job that is being done at Queen’s University Belfast. It happens because the Government fund the science budget and help universities throughout the United Kingdom to make advances.

Researchers at Ulster University have taken an important first step towards the first cure for hereditary blindness, pioneering a personalised medicine that targets and repairs genetic damage in part of the eye. The scientists have discovered a treatment that can repair damage caused by cloudy deposits in the cornea, the outer clear part of the eye. That condition, called corneal dystrophy, worsens with age, eventually leading to blindness. Using a novel DNA-editing technology—clustered regularly interspaced short palindromic repeats—Ulster University’s vision science experts have designed a method of targeting the specific DNA or gene in the eye that is responsible for the cloudy deposits, and they are now making progress towards human trials.

I have outlined truly amazing positive developments—world-leading medical advances, to benefit not just for the United Kingdom of Great Britain and Northern Ireland but the world; and I am sure that there will be many others. I hope that the Minister and shadow Minister will take on board the importance of the great work done using the science budget. More such work could be done; a budget cut now would be detrimental to innovation and advances.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

May I ask the Front Benchers to make sure that they leave a few moments at the end of the debate for Angela Smith to wind up?

Photo of Roger Mullin Roger Mullin Shadow SNP Spokesperson (Treasury) 3:25 pm, 4th November 2015

It is a pleasure to take part in a debate under your wise chairmanship, Mr McCabe. I hope that that quality of wisdom will appear in the Minister’s response. I congratulate Angela Smith on raising this important matter. I have a personal interest in the topic, not least because my late brother chaired the science and technology committee of the OECD at one stage, and was also secretary of the Science Council of Canada. Although I am not a pure scientist as he was, I have a deep commitment to the issues that the hon. Lady raised.

I was particularly interested in the hon. Lady’s opening remarks about the pace of change driven by science. It reminded me that several years ago I attended a lecture by Professor Tom Stonier. He related some statistics to the effect that in the last 25 years of the 20th century, more people had been working on pure research than in the entire previous history of the world. That fact, and advances in new technology and computing science that enable information to be processed very quickly, mean that we live in a world where the pace of change is great and accelerating. People at the forefront of that have a great advantage, but that pace of change means that those who do not keep themselves in the frontline can too easily fall behind rapidly. That is my concern.

Several of this afternoon’s fine contributions by hon. Members from various parties have touched on the balance between blue-sky thinking, and thinking that might be said to have a business-innovatory basis. I have felt concern at times reading remarks by the Minister, which seem to show him as heavily biased towards business-related innovative research. It is too easy to forget the importance of true blue-sky thinking, and how often its results cannot be predicted. Nevertheless, some of the most profound scientific effects and advances happened simply because someone with an inquiring mind was interested in finding out more. I have every sympathy with the 30 academics—including four Nobel laureates—who wrote to The Daily Telegraph on 2 June 2014:

“Sustained open-ended enquiries in controversial or unfashionable fields are virtually forbidden today and science is in serious danger of stagnating”.

No one who has taken part in the debate would want British science—or Scottish or Northern Ireland science—to be compromised in any way, or to stagnate because of a failure to understand the importance of blue-sky research.

I was impressed by the speech of my hon. Friend Carol Monaghan, not least because the statistics she gave mean I can glance past two or three of my own paragraphs. A comment I would make on those statistics is that all current measures of research intensity confirm the same thing: that the UK is now a laggard compared with other advanced societies. We are, as she said, at the bottom of the G8, and we lag behind on a host of other measures.

I was interested, as I always am, in the contribution of Sammy Wilson, who spoke about the contributions in the Northern Ireland economy, and the way that funding from the Northern Ireland Executive is geared towards research.

He said that no doubt the same was true in places such as Scotland. I can confirm to him and the Minister that that is only too true. Notwithstanding the erosion of the amount of flat cash in recent years, and the constraints caused by the Scottish Government’s limited powers because of the reserved nature of the spending, they were able to increase expenditure on research and knowledge exchange by 11% in 2013-14, and by 38% since 2007. They did that not because they received extra money, but because they chose to protect the research and science budget as much as possible. Scotland has a long history of supporting science, and I would like to think that the Scottish Government’s willingness to choose to make sacrifices in other areas to sustain scientific research is something that the UK Government will follow in the spending review.

As we have heard from many Members, there is a strong economic case for investing in science, which helps to drive and sustain the economy, but there is much we still need to understand. We need a better understanding of all the connections that are essential to driving progress in scientific fields of endeavour. One of the key means of stimulating progress and innovation is to engage different types of thinkers and researchers though networks, so they can feed off one another—a factor acknowledged by many writers.

One of my teachers many years ago was the late Professor Tom Burns. He was noted for many pieces of research, including a fairly seminal book in the early 1960s called “The Management of Innovation”, in which he pointed to the importance of networks of interacting researchers, scientists and the like. That is something that universities and the academic community are particularly well equipped to do. Hughes and Martin, writing about the value of public sector research and development, captured this pretty well:

“the issue is not so much about isolating and assessing the impact of publicly funded research per se nor about determining its optimal level in isolation. It is instead about analysing how best to understand and manage the connections between differently funded and motivated research efforts in an overall system of knowledge production and innovation.”

A number of Members mentioned scientific infrastructure. Recent work, most notably that of Dr Stephen Watson at Glasgow University, has pointed to the huge significance of the infrastructure spend component of Government investment in science. There is, however, a huge mismatch between UK Government infrastructure spend for the Oxford-Cambridge-London triangle, and the spend for elsewhere in the United Kingdom. National research infrastructure investment is known to play a key role in driving fundamental scientific discovery and attracting business investment. We therefore need to map out such investment, both thematically and territorially—something that no Government have ever done.

In conclusion, I have four questions to pose to the Minister, one of which relates to the tax credit issue, but I am not going to rehearse that argument because other hon. Members have already made it fully. First, what is the Government’s view of my argument that more, not less, investment in blue-sky scientific research is needed? Secondly, will the Government commit to restoring the scientific budget spend to at least 2010 levels, in real terms? In other words, will they undo the cut of the previous Parliament? Thirdly, will the Government commit to reviewing infrastructure spend in science to ensure that the talents of the scientific community in all parts of the United Kingdom are properly supported? Finally, will the Minister confirm that there is no prospect of converting any element of research funding into loans?

Photo of Seema Malhotra Seema Malhotra Shadow Chief Secretary to the Treasury 3:34 pm, 4th November 2015

It is a pleasure to speak in this debate and to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend Angela Smith on securing this important debate.

I am grateful for the contributions of hon. Members from all parts of the UK, including Chris Green, my hon. Friend Daniel Zeichner, the hon. Members for East Antrim (Sammy Wilson), for Bury St Edmunds (Jo Churchill), for Kirkcaldy and Cowdenbeath (Roger Mullin) and for Strangford (Jim Shannon), and others. They raised a range of issues, including the need for a long-term strategy, which is vital for innovation; the need to focus resources where they work; the importance of research through the universities; the need to build connections to ensure we get the most out of contributions and the progress that comes from that; and the need for strong and committed Government action. Notwithstanding the contribution that the Minister will make, it is disappointing that there is no Treasury Minister here today, because this is essentially a Treasury debate.

My hon. Friend the Member for Penistone and Stocksbridge said that the UK has always punched above its weight in science and innovation. We should be proud of our record, and as politicians we should recognise our role in ensuring that success for the future. I thank all the organisations that have contributed in so many ways to the debate, including the Royal Society of Chemistry, the Royal Society of Biology, the National Centre for Universities and Business, the Campaign for Science and Engineering and many others.

Science matters, and Treasury support for UK science is absolutely critical, not least because of the pivotal role of scientific research in driving innovation and productivity and its importance in building the high-tech, high-skilled economy that we need. This issue is at the very heart of the choices and questions facing our country. We need strategic and sustained investment to secure our future prosperity.

Independent analysis suggests that every pound spent by the UK Government on research and development raises private sector research and development output by 20p a year in perpetuity. Even that is an underestimate of the full multiplier effect of public investment in science and research, because Government investment stimulates additional private sector investment. The scale of public sector investment is greater than what the private sector can do on its own, as the lead that other countries have over us shows. Government investment also has a wider role in developing the wider capabilities that we need.

The Chancellor likes to talk about his support for science, but, as in so many areas, there is a gap between what the Government say and what they do. Their record of investment in our country’s future is not as good as we want it to be. They like to boast about the success of catapult centres, which we support—indeed, they were an initiative of the previous Labour Government —but the support that those centres receive under this Government falls short of the amount provided to comparable schemes in other countries such as Germany and France, which benefit from more than 10 times as much public support. We under-invest in the science-industry linkage. Similarly, Finland spends about 10 times as much per capita on innovation funding as our Government do.

The protection that the Government say they are providing to the science budget is only in cash terms, which means that inflation has eaten up about £1 billion of its value over the past five years. The Government’s commitment to science needs to be subjected to critical scrutiny. This is no time for complacency. There are disturbing signs that we are falling further and further behind key competitors when it comes to investment in innovation and technology, which is critical for future business growth and our competitiveness in the global economy.

The previous Labour Government established a target to increase UK R and D, both public and private, to 2.5% of GDP by 2014. The latest official figures from the Office for National Statistics show that R and D expenditure was at 1.67% of GDP in 2013. We are behind many countries and behind the EU average. OECD figures for 2012 show that the US spent 2.8% of GDP on R and D and that new global players, such as China and South Korea, were forging ahead of us. Furthermore, the UK continues to have a lower level of business R and D spending than the OECD average. That has been exacerbated in recent years by short-termism in corporate planning.

A recent report from PwC is clear that the UK lacks the skilled workforce and the necessary skills to complement and drive R and D at scale. As a result, we continue to fall behind our competitors. Recent labour market trends have confirmed the importance of technology-related investment in creating new jobs. As Sherry Coutu’s report for the previous Government shows, we face a worrying scale-up gap, with too many small businesses struggling to access the skills and support they need to grow into global players. Just two of the world’s top 20 companies for R and D spend are located in the UK. One of them, GlaxoSmithKline, is based in Hounslow, which is my borough, and both of them are pharmaceutical companies. We continue to need long-term leadership from Government to ensure that businesses get the support they need to be able to scale up.

All the trends demonstrate that, contrary to the current Government’s outdated laissez-faire attitudes, we cannot rely solely on private sector investment to secure our place in tomorrow’s high-tech global economy, nor can we leave the private sector to fend for itself without the support of an active and strategic state. Although standard figures show that the majority of aggregate R and D investment is undertaken by the private sector, that risks obscuring the fact that the public sector delivers most of the research, so that the private sector can concentrate more on development. Moreover, the public sector has a key role to play in ensuring a smooth division of labour between the two, building the relationships and institutions that can foster horizontal linkages between basic and applied research, or science and industry, to maximise the positive feedback effects between the two.

To get Britain to be competitive, it is therefore essential that both public and private R and D not only rise but work more closely together. We need not only increased investment but greater strategic focus. That is why we have asked Professor Mariana Mazzucato, a leading authority on the role of the state in creating innovation ecosystems in which knowledge-led enterprises can thrive, to join Labour’s council of economic advisors and to contribute to the development of our plans to ensure that the UK can seize the economic opportunities available to us.

I am glad to be able to add the voice of Labour’s shadow Treasury team to the call for support for science and innovation in this month’s spending review. I can reassure my hon. Friend the Member for Penistone and Stocksbridge, all the Members who have spoken today, and all those who care about the future of our science base and our economy that if the Government do not listen, the Labour party will.

Photo of Jo Johnson Jo Johnson Minister of State (Universities and Science) 3:43 pm, 4th November 2015

It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate Angela Smith on securing the debate, which is the fourth on the subject in as many months. The topic is also the subject of an ongoing Science and Technology Committee inquiry. All that activity underlines the great importance of science to our economy and to Members throughout the House. We have had an excellent debate, which has included fine contributions from Members representing all parts of the country from Bolton to Bury St Edmunds and Belfast, from Pudsey to Cambridge, from Cardiff to St Ives, and from Glasgow to Kirkcaldy and Cowdenbeath. Many issues have been raised, and I will try to touch on some of them later on, but all Members have essentially made the same fundamentally important point, which is that science is vital and so is the Government’s role in underpinning our excellent science base.

A reference was made, somewhat disobligingly, to the “dead hand of the Treasury” in all of this. Given that this debate specifically requests the Treasury’s view on our science budget—I am here representing all of Government, including the Treasury—I would challenge that characterisation and point out that the Treasury hand has fed the science base well in difficult times. Let us not forget the financial circumstances that we were in back in 2010 when the decision was made to protect the science ring fence. At a time when we were making decisions that involved discretionary cuts of £98 billion across the rest of Government, the Chancellor decided to protect the ring fence. We can be proud of that decision, and we welcome any scrutiny of our record.

The Chancellor has subsequently followed through on that big statement about the importance of science in our economy. In April last year, he set out his vision in a speech in Cambridge and said that he wanted the UK to be the best place in the world to do science. He has taken action since then to deliver on that ambition with, most recently, the publication of the Government’s productivity plan, which sets out our proposals to boost the UK’s growth and has science and innovation at its heart. We have a track record of demonstrating our understanding of the importance of science to our economy at a time of difficult decisions elsewhere in public expenditure.

Going into this Parliament, we made clear the importance to us of setting out a clear road map on the capital side of science expenditure. We committed to invest £1.1 billion per annum in the UK’s research infrastructure, rising with inflation, from 2015 all the way to 2021. That investment will ensure that the UK stays at the cutting edge of research and will help us to meet some of our greatest challenges. We can see the fruits of that commitment around the country. The Francis Crick Institute, which is almost complete and in which the Government have invested £350 million, will be a world-leading bio-discovery centre that will solve fundamental questions of health and disease. I was pleased to announce the other day that we had entered into negotiations with a preferred bidder for the building of a £200 million polar research ship that will keep Britain at the forefront of ocean science for decades to come. Tonne for tonne, the UK will have the most advanced oceanographic research vessel fleet in the world. I am delighted that the Cammel Laird shipyard in Birkenhead was selected to undertake that important work, which is a real boost for our shipbuilding industry. Earlier this year, I launched a £113 million capital investment partnership with IBM at the Hartree Centre in Daresbury, near Warrington, with the overall investment package from IBM being worth £200 million. There are many more such examples.

The Government’s activity is also evident in the constituency of the hon. Member for Penistone and Stocksbridge. We are building on its rich history of scientific discovery, to which she alluded, including stainless steel and Ronseal. Innovate UK has invested more than £61 million in Yorkshire since 2010, including more than £12 million in projects in the Sheffield city region last year. I recently announced £10 million of funding for a pioneering component manufacturing facility at the University of Sheffield’s Advanced Manufacturing Research Centre. In York, we have invested £27 million in a quantum technology hub to harness the potential of an area in which the UK is a world leader. The University of Sheffield is also home to two nodes of the high-value manufacturing catapult, in advanced machining and materials and in nuclear, with well over 100 industrial partners.

The setting up of catapults, the elite centres that commercialise new and emerging technologies, is another major initiative by the Government to entrench scientific excellence in the regions. Since the general election in May we have continued to roll out our catapult network. In the summer the Chancellor announced a new medicines technologies catapult to be based in Alderley Park in Cheshire, building on a pre-existing centre of excellence. We have also announced a precision medicine catapult to be based in Cambridge.

We have heard contributions from Scottish MPs this afternoon, and I will dwell briefly on Scotland and other devolved Administrations. Scotland is punching well above its weight within the UK, demonstrating its strong science and research base. It receives about 11% of the total pot of research council, Innovate UK and higher education research capital funding, compared with its share in our population of about 8%. I was in Glasgow last week and was delighted to inaugurate the construction of a new £68 million imaging centre of excellence, to which the Government are contributing £16 million as part of the precision medicine catapult. The hub of that catapult is in Cambridge, but an important spoke in the operation is in Glasgow. I have had dengue myself, so I was pleased to hear about the good work on the treatment of that unpleasant disease being funded up in Glasgow.

I can give many other examples of good scientific activity in Scotland that are in receipt of significant public support, but I also want to mention Northern Ireland, as we have had contributions from some of its Members. We want to do more to help Northern Ireland secure support and be more competitive when applying for grants.

Photo of Danny Kinahan Danny Kinahan UUP, South Antrim

I apologise for not having been present to speak earlier, but I want to mention the numerous cuts in Northern Ireland as a result of the overall cuts. Will the Minister look at something similar to what we have in shared education, which is a £500 million loan facility? It could work with businesses and with how we do things in Northern Ireland, but be solely for science. In that way we could turn back the cuts that have happened, from primary schools right the way through to universities, which are still doing wonderful things.

Photo of Jo Johnson Jo Johnson Minister of State (Universities and Science)

We want to help parts of the country that are receiving less than their share of science spend to be more competitive in the allocations of restricted funding. We have recently announced a process of science and innovation audits to enable areas to assess their potential fields of expertise, competence and excellence, so that they may focus on where they have a chance of being world-leading, globally excellent and more competitive. We look forward to helping consortia from Northern Ireland and other parts of the country—including universities, local enterprise partnerships and local authorities— to come together to assess where they can build on existing centres of excellence and become more competitive.

Government and Treasury investment in science goes much further than simply what the Department for Business, Innovation and Skills and its partner bodies do. Research and development tax credits have been mentioned a number of times, and they are extremely valuable and fast-expanding support for business investment. R and D tax credits are now worth £1.75 billion in relief to more than 18,200 companies, supporting more than £14.3 billion of innovative investment, as has been mentioned. In that context, I want to mention the patent box, a key initiative in making the UK tax regime competitive for innovative high-tech companies. It helps to drive growth and investment in the UK, creating high-value jobs in innovative industries. Some 639 companies have received benefits totalling £335 million since the relief was introduced in 2013.

UK science investments must be seen in perspective. We must look at the outputs of, as well as the inputs to, our science base. What I have described thus far is serious, substantial and robust investment, which has been delivering real results. We are the most productive science base in the G7, and our scientific impact on the world is out of proportion to our size as a nation and our level of investment. For every £1 spent by the Government on R and D, private sector productivity rises by 20p a year in perpetuity.

Government funding for science is only part of that story. Research and development in the UK also benefits from the private sector spending that the Government help crowd in. Business spending on R and D has risen by 8% to £18.4 billion. In a recent Westminster Hall debate secured by my hon. Friend Stuart Andrew, we heard about the important role of medical research charities, such as the British Heart Foundation. Charities receive additional support from the Treasury through gift aid on donations. On top of that, last year we spent £198 million from the charity research support fund.

Last year, Cancer Research UK reported gift aid income of more than £34 million. Overall in the past financial year, UK charities received £1.2 billion in tax repayments on gift aid donations. We have to look at direct Government spending through BIS and its partner bodies in the context of the bigger ecosystem that it creates. When we look at the bigger picture, we see that the UK’s overall spending on R and D reached £28.9 billion in the last year for which we have full data—up 7% on the previous year. That is an important context for us to bear in mind.

I will wrap up, so that the hon. Member for Penistone and Stocksbridge can conclude the debate. Debates such as this help to highlight the issues and choices involved in our responsibility to fund science. The UK science base is extraordinary; our cutting-edge research base is world-leading; our universities are world-class; we develop and attract the world’s brightest minds; and we have earned 14 Nobel prizes in the sciences over the past 12 years as a result. Science is one of our clear comparative advantages in the global race. BIS Ministers are working hard on making the strongest possible case to the Treasury. Our case will of course be balanced against priorities across Government, but we are hopeful that we have made the strongest possible case on behalf of science.

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge 3:57 pm, 4th November 2015

I thank the shadow Minister and the Minister for their responses. I particularly thank the Minister for pronouncing my constituency properly, because few people do. I also welcome the debate we have had and the strong consensus on the issue throughout the House, across all political parties. We have had some excellent speeches.

I go back to my big point, which is about how deeply embedded science is in our society and our everyday lives. Some of our most important innovations have become such a part of our everyday lives that we take them for granted. Stainless steel, for example, forms not only our cutlery, saucepans, washing machine drums and microwave oven liners, but hot water tanks and equipment for such activities as catering, brewing, distilling, food processing, and water and sewage treatment. Every part of our lives is affected by technologies such as the one that produces stainless steel. The key question, therefore, is whether as a nation we want to continue to play a leading role globally in scientific innovations that will shape the world of tomorrow, in the same way as our innovations in the past have shaped the world of tomorrow.

The Minister’s response acknowledged the Government’s role in underpinning our science base. He also made it clear that a capital commitment is already in place. The Campaign for Science and Engineering has made the point that if the cash ring fence is maintained, the loss in real funding will rise to more than £3.1 billion by the 2020 election. That amount would pay for four research institutes equivalent to the £700 million Francis Crick Institute being built in London—one for the north of England and one for each of the devolved regions. That point is well made.

According to the Minister, the Treasury has funded the science base well in difficult times. I acknowledge that, but the commitment to revenue to match the capital commitment made by the Government is important. The £400 million ISIS neutron source at Harwell will run for only about 120 days this year, instead of an optimal 180 days, because of the lack of revenue funding. That underlines the fundamental point of the debate. We did not quite get the commitments that we were looking for, but the Minister acknowledged our case implicitly. He has told us that he is arguing and fighting hard for science funding. We thank him for that—

Motion lapsed (Standing Order No. 10(6))