Research Councils

HC Deb 24 March 1987 vol 113 cc298-318 1.11 am

Dr. Jeremy Bray (Motherwell, South)

The Consolidated Fund debate comes at a time that is most opportune for considering what must surely be one of the most important purposes for which it is used— the funding of Britain's research and development.

The funding of the research councils is in jeopardy. It is an appalling indictment of the Government's mismanagement that after a give-away Budget the research councils are virtually having to suspend all new grants for scientific research at a time of unprecedented fertility in the applications of new science.

There are three decision processes that have created the present crisis. The first process is financial management within the current year. The second is the general level of research council funding in relation to other countries. The third is the funding of research and development by Government and industry and the effectiveness of its application.

The Government have muddled all three processes. Thus, when the Prime Minister was asked last Thursday during Prime Minister's Question Time about the Science and Engineering Research Council freeze she replied in terms of the overall level of Government funding of civil research and development as a proportion of national income, as if the research councils were free to juggle their own resources.

When the academic salary increases were agreed by the Government, they made at least some money available to universities to meet the cost of them. Universities can borrow money and carry funds over from one year to another, but research councils cannot do so, yet the Government made no extra money available to the councils for the salary increases that they had no part in deciding. The Government must now make available to the research councils the money that is needed in the current financial year and in 1987–88, or the councils will have no alternative but to award virtually no new research grants for the next six months, and the effect will carry on over into next year.

Starting in October, the Medical Research Council will have to cut the new awards that it makes from the expected 500 to probably about 190. The Science and Engineering Research Council has had a substantial increase in its funding this year. Most of the increases went on the Cray computer at the Rutherford Appleton laboratory, for which the Government had deliberately made specific provision, and also on the increase in the CERN subscription due to the depreciation of sterling. The increase in the CERN subscription swallowed up almost all the Government's provision above previous plans that was announced last November.

What was the Science and Engineering Research Council expected to do? Should it have given notice that it would leave CERN in January 1988, while the European inquiry, set up by the Secretary of State's own initiative, was still in train? That would have destroyed Britain's acceptability as a research partner in increasingly important international collaborative programmes.

The areas that the Science and Engineering Research Council has been able to exempt amount to only 20 per cent. of the grant expenditure that it expected to incur in its third grant round this year. The research councils had made provision for salary increases, but had they provided anything like the 24 per cent. agreed by the Government, the Department of Education and Science and the Treasury would have been the first to stop them. There was no way in which responsible financial management in the research councils could have protected them from the drastic steps that they now have to take.

If the Secretary of State cannot find the money straight away, the heads of the research councils should go, as is their right, to the Prime Minister. They will find that they will first have to educate her, as she is working with quite out-of-date figures. The comparison that she makes is expenditure as a proportion of national output. The latest OECD figures for civil research and development are for 1984 or 1985. The specially collected figures for academic and academically related research in the Advisory Board on Research Councils' science policy study 2 (table 40), conducted by Irvine and Martin for the ABRC, go back as far as 1982. Even then the United Kingdom was well behind France and Germany, but it was well ahead in Government-funded civil research and development as a proportion of national output. It was ahead of Japan and the United States.

The private sector and industry in the United States, Germany and Japan funded, and still fund vastly more research and development than the private sector and industry do in this country. In more recent years since 1982, which is the latest year for which we have systematic data, both the United States and Japan have been taking steps greatly to increase Government funding of civil research and development, and we feel the effect of that in the brain drain today.

The budgetary process in the United States is no model for government anywhere, but federal funding for basic science in universities and colleges in the United States increased by 30 per cent. in real terms in the first four years of President Reagan's Administration, although the Carter energy programmes in the industry were cut. When I quoted that figure of 30 per cent. in real terms in the first four years of the Carter Administration in a debate, the right hon. Member for Leeds, North-East (Sir K. Joseph), the present Secretary of State's predecessor, did not believe it. He thought that it must be in money terms. In fact, the figure was supplied by the President's scientific adviser and confirmed to me by him.

Since 1984, federal funding of basic science in the United States has continued to increase. The National Institute of Health budget for last year has been increased by 17 per cent. this year. The President tried to cut the increase in January, but he has now backed down. Earlier this month the National Institute of Health was told by the Administration to spend the full $6.2 billion appropriated by Congress for 1987.

There is great concern in the United States about industrial competitiveness, just as there is great concern in this country on the part of everyone but, apparently, the Government. The President has sent a competiveness Bill to Congress. It calls, among other things, for a doubling of the National Science Foundation's budget over the next five years, bringing the NSF total to $3.2 billion in 1992. Congress has given the President a rough ride on defence research and development, but it is likely to give him all that he asks for, and more, for civil research and development.

Those two increases alone—the National Institute of Health increase, which has already occurred, and the National Science Foundation increase, which is planned—are putting the United States way ahead of us in the federal funding of basic science as a proportion of national product, whatever happens to the NASA and energy research budgets. And that is on top of the huge increases in private research funding in the United States.

For example, last year the University of Texas at Austin created 24 new chairs in computer science alone. A $24 million increase in oil royalties was matched by $24 million of private donations. The oil royalties disappeared because of the fall in the price of oil, but another $24 million was raised privately to make good the deficit, and the endowment went ahead. Stanford university is embarking on a new endowment appeal which can only be compared with the total of the United Kingdom's science budget. It is such positive action in the United States, contrasted with the negative attitude of the British Government, that has set the brain drain running again at full bore.

While Japan's formidable industry-funded civil research and development forges ahead—now at 2.8 per cent of its national product, compared with our 0.8 per cent.—talk of increasing its Government funding of basic research is gathering the momentum that we should have learnt to respect by now when Japan talks about its science and technology plans. Even in the particular areas where Japan has concentrated, such as physics, I found it quite impossible last week to persuade the Science and Engineering Research Council physicists at Daresbury that total Japanese funding for basic science was smaller than ours as a proportion of national product. They did not believe it. Certainly it will not remain so for long.

What, then, are we to do? Are we to wring our hands, pathetically deploring the fact that British industry is backward in research and development, without noticing that Britain is the only industrial country without serious fiscal incentives to increase research and development? Should we cut our basic science, just when the links between basic science and its industrial application are becoming closer than ever?

The Minister will have read in The Times the account of the extraordinary meeting last week of the American Physical Society at which a flood of discoveries were announced relating to materials that remain superconductive at temperatures that are far and above absolute zero, challenging established theories and promising to transform both electronics and power engineering. The Minister will also have read today in The Times that the funding requests of just two of the British groups that are working in this area will exhaust the very limited funds that the Science and Engineering Research Council has been able to reserve for new work of commanding promise.

The Times may be trying to buy its way back to respectability by its new-found science and technology coverage and its advocacy of a serious national strategy for research and development. But it is accurate coverage and sound policy, and I, for one, would say good luck to it. The rest of the media will catch on soon enough.

It was because of the sheer frustration of the scientific community with the bigotry, barbarism and blindness of the Government's neglect of science and technology that Nature, the leading international weekly journal of science, has taken the unprecedented step of asking me to outline Labour party policy on science at a specially convened forum that it is arranging on Thursday. Apart from the Government, there is a general consensus in Britain on the need for increased support for research and development. Labour policies are a part of that consensus. What I say will be as much a manifesto for science as a manifesto for Labour. There will be nothing particularly partisan in it. What I find extraordinary is that the Government exclude themselves from that consensus. That could be one of the factors that expose the hollowness of the Government's claims to a further term of office.

Lest the Minister chides me with not having thought about or dealt with the economic problem of finding the resources that must be invested in research and development, let me deal specifically with aspects of the research council's work which bear directly on this matter. Since 1971 the Economic and Social Research Council has been funding a research programme which I founded at that time with Lord Peston and Professor John Westcott, who is now a fellow of the Royal Society, on the use of policy optimisation on national economy models. The computer programmes that were produced by that team—which is still at work—are now used on all the main national economy models, including that in the Treasury. It provides the analysis needed to pursue a balanced combination of intermediate targets such as exchange rate stabilisation and final targets, such as stable prices and low unemployment. With help from the Treasury, the ITEM club and the team at Imperial college, I now have those programmes running on a souped-up micro computer on my desk. Incidentally, they are running faster than they do on the Treasury and Imperial college mainframes. If any Minister or official would like to bring along their data I shall be glad to work out with them how the modest increased resources needed for science and technology can be found and what the benefits would have to be from finding them.

Secondly, to go into the economic effects of technological change requires linking micro-economic and macro-economic analysis, setting the firm in the context of its industry and the economy generally. A consortium of the Treasury. the Bank of England and the Economic and Social Research Council is now seeking applications for developing the necessary system. The resources needed are modest, but the work that can be done is limited without the Government updating their rapidly degenerating statistical and management machine, which they have been deliberately dismantling. The rottenness of the Government's management goes deep.

Thirdly, the Government have received an important report from their own Advisory Council on Applied Research and Development on exploitable areas of science, which was prepared under the chairmanship of Dr. Charles Reece, the research director of ICI. This report reached what is for Britain the revolutionary conclusion that research can be organised to deliver an economic return. Instead of funding the necessary further and continuing study, the Government are relying on industry to fund that work. Of course, the money is not forthcoming. Why should industry work out for the Government how they should spend their research and development money when it has such strong proof that the Government are not taking a blind bit of notice of advice on science?

Fourthly, the Government will soon be looking for industry support for the research and development programme proposed by the IT86 committee in the crucial field of information technology. They will look in vain. The Government have not put in the strategic thinking that is needed, nor are they prepared to put up the money that our industrial competitors overseas are providing. Instead, the Minister of State is leading a yah-boo gang going around Europe rubbishing the serious work that is needed in European collaboration in the framework programme in this and other important sectors of research.

On technical change itself, the Economic and Social Research Council has cut off what should be on or our primary think tanks in the Technical Change Centre. Part of the difficulty there is pressure on funding and part the absence of any shadow of interest by Ministers, who seem to believe that the market will provide and that they do not need to bother about the impact of technical change upon society. That is fundamentalism that puts religious believers quite to shame. The Technical Change Centre is well worth rescuing in a field in which we need all the help that we can get.

Far more is needed in an effective research and development strategy than adequate funding of the research councils. But without that, the strategy will lack a prime source of energy. The Government's present vandalism in cutting new research council funding not only misses the opportunity to rebuild our technological competitiveness, but threatens to destroy that most precious asset, our scientific tradition, which is seeking a warmer climate elsewhere.

I beg the Minister, the Secretary of State and the Prime Minister to think again before it is too late. Let the research councils carry on at their previously planned real-term research funding levels for 1987 to 1988 while wider plans are made for the future. It is on those plans that the wider technological competitiveness of Britain will be restored.

1.32 am

Mr. Robert Rhodes James (Cambridge)

I find it intriguing that the hon. Member for Motherwell, South (Dr. Bray) should speak specifically about the United States, and particularly about my old university of Stanford, and about Japan which are successful private enterprise eonomies. It is unfortunate that this important debate is occurring at this hour, but it may be regarded as significant.

I welcome to the debate the hon. Member for Truro (Mr. Taylor). I regret that I did not hear his maiden speech yesterday, but I look forward to his intervention in this debate. Although I do not agree entirely with the hon. Member for Motherwell, South, for whom we all have great respect he has drawn to the attention of the House a major problem—the manner in which we finance research, especially scientific research. I have often emphasised this problem before in the House, and I do so again.

In my period in the wilderness last year, I drew attention to the brain drain in an article in the Daily Mail. The current problem is that, although we have rightly increased university teachers' salaries at a cost of £167 million, there has been no corresponding increase in the research budget. There has been an increase, but not on that scale.

It is evident that the shortfall in the research budget must be met. I hope that my hon. Friend the Minister will press this most vigorously upon the Chancellor of the Exchequer and, indeed, upon the Prime Minister, who is, after all, a fellow of the Royal Society. I make no criticism whatever of Ministers, especially Ministers in the Department of Education and Science. They have made a genuine and enlightened attempt to resolve a very real problem. Perhaps unwittingly, all of us have created another problem, and that is the one that we have to resolve.

One of my key concerns is capital funding. I am worried about current funding but even more worried about capital funding. We have to ask ourselves a key question and we must ask it of the nation. Are we in the first division in science and technology and development—too often neglected—or are we not? If the answer is yes, we have to find the means to remain in that division. If we respond to that, we then must ask ourselves what other priorities have to be pushed aside. In the short term we must bridge the gap that has emerged.

We must have a strategic long-term policy. I hope that the hon. Member for Motherwell, South, for whom I have great admiration and support, will not regard my remarks as being in any way unhelpful or critical. I fully appreciate the problems and priorities that he faces. I do not altogether denigrate or criticise his remarks, but obviously there has to be a balance. The Government's achievement in higher education is remarkable, but there is still a shortfall and an immediate problem that I hope my hon. Friend will do all that he can to meet. When we have resolved that, we can then solve the strategic problems.

1.36 am

Mr. Matthew Taylor (Truro)

I must start in this debate with a general look into research in this country, before turning to the specific problems of the research councils. Certain things stand out. One is that, while it is true that in this country some 50 per cent. of research spending goes on defence, in France it is only one third, in West Germany it is less than 10 per cent., and in Japan it is a minuscule 2.5 per cent.

It is sad to reflect on the difficulties that that great imbalance in the direction of research causes for us in this country, but there has also been a decline in our research compared with that of our neighbours. By 1989, according to The Independent newspaper, the national rate of Government spending on development and research will be down by a full 17 per cent. on six years earlier in real terms.

Of course, the Prime Minister promised to keep support for science research in line with inflation. Indeed, science research, running at about £600 million, has probably kept pace, broadly speaking, with real costs. At the same time, our competitors, the United States, Japan and France, have been increasing spending on those areas. We are the only major OECD country that, taking Government and industrial research and development spending together, has actually seen a decline in recent years in such spending.

In civil research we simply do not compare favourably. It is true that the Government have used as a defence the fact that the United States has, excluding defence, a civil research budget of about 1.5 per cent. of GNP—very similar to ourselves. But the nature of research in the United States is very different. In particular, the non-civil research is much more openly used later on for industrial development and is much more freely created, rather than as it is here, under the rather tired and restrictive control of the Ministry of Defence.

As the hon. Member for Motherwell, South (Dr. Bray) pointed out, the US National Science Foundation budget is set to double over the next five years. General research and development funding in the United States will be running far ahead of our own in terms of GNP. We still find that British research is underpaid, with the resulting and terrifying exodus of talent from this country. The hon. Member for Cambridge (Mr. Rhodes James) asked whether we would still be in the first division—and if we wanted to be in the first division—in research. The Independent said in a recent editorial: One of the definitions of an underdeveloped country is that is exports its raw materials to more advanced nations. Britain's most precious raw material—the brainpower of her top scientists and engineers—is now being drained abroad, mainly to the United States … In all, about 1,000 British scientists and engineers settle permanently in the US each year, as many as from all other Western European countries put together.

The recent 24 per cent. pay increase is undoubtedly desirable, and a move in the right direction. No one denies that; indeed, it is a recognition of the problem we face. Sadly, it will be only partly effective, because it is still not adequate. Let us compare it with the rate in the United States. An academic researcher, fresh from his post doctorate degree, gets some $21,000 to $25,000. Here, even after the increase, the mean level is only £9,000 to £10,000. That is an enormous difference. As a result, it is becoming hard to recruit, particularly in electronics, associated with computers and information technology, and in biology, associated with biotechnology. It is simply hard to fill posts.

The settlement will also be ineffective because the problem is not only pay but security. Most researchers are employed by the research councils on temporary, short-term contracts. The problem concerns also facilities and continuity within research, and policy on research. Research councils employ some 13,000 staff, mostly on short-term contracts—a quarter of all those involved in research—and by their nature research council grants are restricted and uncertain.

Where do we stand? Funding is restricted and there is an exodus. One reason is pay, and I accept that the Government have recognised this and acted. The paradox of the present difficulties of research councils is that, while action is being taken on one problem—pay—the other side of the coin is made worse. Restrictions and uncertainties have increased because insufficient allowance has been made for pay.

The Association of University Teachers has estimated that 60 per cent. of research contracts come up for renewal in any one year, and that is causing fear because, as the freeze intensifies, research councils, often built up over many years, and in the case of the Science and Engineering Research Council, built up with difficulty into a large team, simply do not know whether they will be able to stay together either this year or in future years. Those problems are caused because the Government have agreed a pay rise of 20 per cent., with 16 per cent. this year, but only a 2.5 per cent. increase for the research councils to pay for it. That must be a devastating blow.

The SERC, by far the largest research council, leads the way in the problem, with a shortfall of £8 million. But that is not all. This year's SERC shortfall of £8 million will be £10 million next year. On top of that, in the central non-university facilities provided by the SERC and generally staffed by civil servants, the problem will be taken further, because the Civil Service pay rise looks like being ahead of that 2.5 per cent.—about 4.5 per cent.—and that for scientists will be higher still, approaching 10 per cent. If that comes about, there will be an extra problem of finding a further £1 million to £1.5 million for the SERC. The research councils did not negotiate these increases, the Government did, but it is the research councils and their research that are being hit.

The Government have recognised the difficulties of the universities and have given extra money to cover the pay rises, but have neglected the research councils, and not just the SERC. The Medical Research Council has a shortfall of more than £4 million. The director of the Imperial Cancer Research Fund has described this as outrageous. The Agricultural and Food Research Council see a shortfall of £4 million. The National Environmental Research Council sees a shortfall of £500,000, and I could go on.

It would be easy enough for me, as the hon. Member for Motherwell, South did, simply to attack the Government and the Secretary of State for deliberately running down research and of hiding behind the overall figures the fact that pay increases are being bought at the expense of continued research, and so exacerbating the tendency for scientists to look abroad to seek greater and more constructive support.

I believe strongly that there is room to make such criticism. The problems of the universities more generally are a testament to that. But this case, I believe that there is no delberate intention to neglect research. On the contrary, I believe that the Secretary of State is more sensible and realistic than to mortgage the nation's future by deliberately cutting research. Rather, I believe—it is a suspicion that I know is shared by other hon. Members—that it was a mistake, an oversight. I believe that the Government are having to cover their embarrassment at having forgotten that that pay rise would affect the research councils as well as the universities. That is the only explanation I can give for the different treatment that has been offered. I hope that the Government will not stand on their pride in this matter. I hope that they will admit that a mistake has been made and that when the University Grants Committee, was given the money to cover the new wage costs, finance——

Dr. Bray

I am grateful to the hon. Gentleman for allowing me to intervene in the first speech that I have heard him make in the House; I hope that it will be the first of many. I do not think that his charitable explanation could stand examination, because many people pointed out during the negotiations precisely what the effect would be upon the research councils and spelt out, million for million, the action required, which the Government totally failed to take.

Mr. Taylor

I can only hope that that is not true. I still feel—it is certainly the feeling that the AUT had when I spoke to its members earlier on—that it may well have been simply a misunderstanding, an oversight. If it was, we can hope that the Secretary of State and the Minister will realise and acknowledge the mistake and take appropriate action. If that is not the case, it does not change the argument. That action must be taken to save the research base of Britain.

When the UGC was given the money to cover the new wage costs, the finance should have been given to the research councils as well for they are an essential plank, many would say the essential plank, in building the investment and the new ideas and technologies that Britain needs for the future. I draw attention to the alliance's yellow book, "The Time has Come" which spoke of the problems caused not only by pay but by The frustration caused by arbitrary cuts in research funds. We could have no better example of arbitrary cuts than the current freeze that has been forced on the research councils.

Arbitrary cuts are now being brought in with a vengeance. However, there is time to correct this. In a week when hundreds of millions of pounds have been spent on tax cuts and on keeping down the price of drink and tobacco, the funds, perhaps £15 million, to at least keep research on an even keel, are clearly there. The Secretary of State for Education and Science and his colleagues should, at the very least, admit that oversight and make this small payment.

1.48 am

Mr. David Crouch (Canterbury)

It is a pleasure to hear the new hon. Member for Truro (Mr. Taylor) make his second speech. I am sorry that I missed his maiden speech. He will know that the second speech and the third, fourth, fifth and all those after that will not be treated in the same generous way as his maiden speech was undoubtedly treated. However, I am pleased to hear him make a contribution to a scientific debate. The more hon. Members who take an interest in the science activity of Britain and theVote of money we put to it, the better.

I would give the hon. Gentleman only a word of warning, as one who has been here a long time. He sits in a place often occupied by his hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes), who has spoken on many subjects— almost too many— and I hope that the hon. Gentleman will take that as a warning to be himself and not anyone else in his party, as I am sure he will.

I should declare my interest. As the House knows, I am a member of the Medical Research Council. I want to follow the point that has been raised by the hon. Member for Truro about the funding of the academic pay rise that affects those who work in the research councils.

If I dare, I should like to quote from an article that I have spotted in the small hours of this morning in what I think that I am correct to call tomorrow's Financial Times, of 25 March. There is a long article by David Fishlock on the activities and work initiated by the Medical Research Council into AIDS research. The author refers to the AIDS research programme of £14.5 million over three years, which will not be affected by any changes that may be precipitated by the need to find more money to pay the new academic salaries that are required as a result of the Government's decision. He rightly states that that is a directed research programme.

It is rather novel in academic research to seek to programme research with a clear objective. That means channelling resources into the directions that show the most promise. Academics and researchers sometimes say that that is dangerous because one cannot always be sure what will show the most promise. I refer to that at this stage too because I wish to quote a telling and important point made by David Fishlock, who wrote that the real task for our medical researchers is whether they can define a strategic role for British science in a huge international effort.

That is a reference to the task facing medical researchers in the AIDS international research programme. The Medical Research Council, our universities and British research activity are faced with finding a solution to one of the major problems facing medical science today. Anything that diminishes activity in that area would be a tragedy. I have already said that any decision that must be made in the research councils, and especially in the Medical Research Council, must not diminish the research activity to which we are directing our attention for finding a cure and a vaccine for AIDS.

Today, the Medical Research Council is facing a new financial crisis, which is directly caused by the restructuring of non-clinical academic pay scales that came out earlier this month. As the hon. Member for Truro has said, the universities are to receive an additional 6 per cent. in 1987–88, rising to 10 per cent. in 1989–90 to meet those extra costs. In real terms, that represents an additional £40 million in 1987–88, £56 million in 1988–89 and an extra £71 million in 1989–90. That will provide average pay increases of 24 per cent., of which 16.6 per cent. will be backdated to December 1986 and 7.4 per cent. will be paid from 1 March 1988.

In a written answer, the Secretary of State said: I welcome this settlement. It will reward excellence, enable substantially higher salaries to be paid to a minority of outstanding professors and help to counter the brain drain."—[Official Report, 5 March 1987; Vol. 111, c. 672.] That is an excellent decision, which is excellent news for all of us, and I commend and welcome it.

The Medical Research Council scientists, working in their own units, are paid on the university scale, as are the university staff who are paid from the Medical Research Council current grants. They are all involved in this academic pay award.

The cost to the MRC of this excellent decision is £6 million in the first year. The MRC has been allowed a cash limit for such pay increases of no more than 2.5 per cent. which provides £1.8 million towards that £6 million. Both the MRC and the universities must pay the increased academic salaries. Therefore, the MRC is short of £4.2 million for this year and has been able to provide only £1.8 million from the 2.5 per cent. cash limit. Next year, 1988–89, the MRC will have to find no less than £5.2 million in addition to meet the higher salary scales to be paid. The total for research councils may be more than £15 million and even as much as £20 million.

The Secretary of State provided an extra £40 million for the universities but nothing extra for the research councils. Did the Secretary of State nod? I cannot believe that it was intended to exclude the same people from this proper award which was made after considerable discussion. Nor can I believe that the Secretary of State meant to ask the research councils to reduce their research programmes to pay for these higher salaries.

The new salaries are necessary and long overdue. Last month, before the announcement, I protested at a research council meeting at the salary scales to be paid from 1 April. A professor's salary ranges from £19,010 to a maximum of £24,877. That is a ludicrous salary for someone with experience in industry—and I am not talking about the big bang in the City. No wonder there is a brain drain and no wonder I welcomed the announcement a few weeks ago that the pay scales would be increased substantially. I would have liked to see them increased further, because we should keep our scientists at work in this country and equip them for their valuable work.

If the Secretary of State intends the research councils to find the money from their own resources, the MRC will have to reduce its scientific effort, not on AIDS, because that is sacrosanct and will go ahead, but on research, when everybody knows that we should be increasing expenditure. If the axe must fall, and I hope it will not in the MRC it will fall, not on existing programmes because we cannot do that, but on new project grants under the project grant mechanism.

I agree with the hon. Member for Motherwell, South, who has received the same advice as I have from the M RC, that we in the MRC will be forced to stop all new project grants from this moment until July. From July onwards when we consider the period from October 1987 to October 1988, we shall have to reduce project grants unless we receive additional funds. Normally we would fund 500 such grants, but they will have to be reduced to fewer than 200—probably 190.

Mr. Matthew Taylor

Does the hon. Gentleman agree that the term "new projects" is misleading, because many of those projects will involve current research teams entering new phases of work that require new funding? Therefore, current projects in progress may indeed be affected.

Mr. Crouch

Yes, to a certain extent I agree that that is true.

The Medical Research Council will not cut work in its own units or existing programme grants, but it will be forced to cut future project grants, as I have said. That will mean that new work in the universities and medical schools which we are looking forward to will very largely cease if we cannot get the Government to recognise the seriousness of the position.

I believe that my right hon. Friend the Secretary of State and his Ministers appreciate the position. I know that my right hon. Friend the Secretary of State has today met the secretaries of the research councils. I know that they have not withheld their thoughts about the problems and that they have explained the difficulties. I hope that this debate will help to overcome this difficulty—which we hope will be only temporary—and that extra funding will come from the Treasury so that our research will not be impeded as I have suggested.

2.1 am

Mr. Steve Norris (Oxford, East)

I join my hon. Friend the Member for Canterbury (Mr. Crouch) in congratulating the hon. Member for Motherwell, South (Dr. Bray) on bringing forward this important debate. I have agreed with many of the comments that I have heard tonight. The debate is obviously as vital to my constituents in Oxford as it is to the constituents represented by my hon. Friend the Member for Cambridge (Mr. Rhodes James). I agreed with much that my hon. Friend said.

I want to preface my remarks with an observation that follows on from a remark made by the hon. Member for Truro (Mr. Taylor) about the impact of the brain drain. In comparing salaries in this country with those in the United States, the hon. Gentleman did not perhaps do himself as much justice with his point as he could have. If he had made that comparison, he would have had to take into account the most invidious comparison of all with regard to the brain drain, which is that until the Chancellor's recent move in this budget the top rate of tax in the United States was one percentage point lower than the basic rate of tax in the United Kingdom. If anything will make potential high earners leave these shores for a more advantageous climate, it is our tax regime.

While that may apply to many in business, in the City and, I confess, would be a major consideration for me, it is the unanimous decision of the research scientists whom I have met at Oxford— to this extent I shall improve upon the point made by the hon. Member for Truro, if he will forgive me— that the continuity of funding of projects is more important than salaries. I shall consider pay in a moment, because it is obviously important, but they are vitally concerned to ensure that there is continuity of funding and that there is the ability to take on young researchers to continue programmes or to develop new programmes and avoid the uncertainty that has, regrettably, become attendant upon recent projects or new project initiatives undertaken under the aegis of the research councils and the general university research grants.

There is a point to be made about the brain drain, but ironically it does not refer to pay, nor is it, in this context, a point about tax. It concerns the fact that scientists at this level are infinitely more concerned about their work, and the continuity, integrity and continuation of that work. I am not critical of the Government's record. Spending on research has risen from about £700 million in 1978–79 to about £1.2 billion this year. Those figures are commonly accepted and show a real terms increase above the rate of inflation of about 6 per cent. The £40 million award this year will represent spending about 3 per cent. above inflation. I welcome that.

I also want to consider the three major areas of anxiety which none the less continue to exist. I refer to the funding of the pay award, the effect of cost inflation other than wages on research programmes and our industrial research and development policy.

I shall not repeat what has already been said about pay, but it is clear that the £15 million in 1978–79 and the £19 million in 1988–89 by which pay awards exceed the allocation to the research councils, even taking account of the 2.5 per cent. that is built into their new awards, have to be found by curtailing existing projects. As my hon. Friend the Member for Canterbury graphically illustrated with regard to the Medical Research Council, that will have a serious effect on the initiation of new projects. The hon. Member for Truro made a fair point in his intervention in my hon. Friend's speech, that new projects, and the continuity of some existing ones, will be affected.

If that is the case, and if there is a prospect of our losing about 500 to 600 research grants in 1987–88, irrespective of whether one accepts the extraordinarily generous explanation advanced by the hon. Member for Truro, or the somewhat more cynical one, to which I found myself innately more sympathetic, that was advanced by my hon. Friends and the hon. Member for Motherwell, South, the Government have to take on board the urgent need to remedy the deficit.

I am sure that it was in the minds of those who made this decision that it is right to impose some financial discipline on research councils, but that is not realistic for next year and at such short notice.

As for cost inflation, it is no good arguing that conventional rates of inflation apply to this specialised area in which it is quite clear that prices are rising at a quite different rate. I understand that it is estimated that there will be a reduction of up to 10 per cent. between 1980 and 1990 in the volume of of science that research councils will be able to sustain if we do not take account of the faster rate of inflation for scientific equipment.

I have seen some of the answers proposed by the Science and Engineering Research Council, such as taking international subscriptions and superannuation costs out of the equation, but they are wholly artificial and conspire only to confuse the general principle, which is that. different inflation rates apply to different areas of expenditure.

That occurs with regard to social services benefits. It means that if we do not fund adequately for inflation, we force organisations to cut their base level expenditure. Of course we must look for improved efficiency, but that cannot provide the whole answer.

In terms of industrial research and development, which must be a complement to Government-financed research, I have felt that we British suffered from that appalling malaise which can be summed up by saying that when we were making money we did not invest because it was not necessary, and that when we were losing money we did not invest because the money was not there to invest.

That dreadful indifference by management in the 1950s and 1960s and 1970s— I am not making a political observation; I am sure the majority of those managers would have been loyal supporters of my party—led to a condition in which British industry found it hard to accept a regular intellectual commitment to long-term research funding. As a result they have been falling behind their European and other OECD partners in the contribution that they make.

It is vital for us to give industry a longer view so that it can recognise the value of long-term investment in research and development. Possibly that could be done by the specific tax incentives for investment to which the hon. Member for Motherwell, South referred. Possibly it would be done by considering the implications for competitions policy which were raised in the BTR-Pilkington case.

In that case, one consideration was that if a company was to project long-term research commitments without any short-term pay-off it would reduce its short-term profitability and thus its attraction to investors in the short-term, despite the fact that such research might be vital to the achievement of a technical lead in an industry from the point of view of jobs, and the economy in general, in decades to come. This may mean our looking at the implications of a low tax regime to give industry the opportunity to fund investment, for without post-tax profits there can be no investment by companies in research.

The Government have done much to overcome the second industrial revolution. The first took people from the land into the factories, and the second has taken people from the factories out into the light again. If we are to keep them there, we must honour our commitment to become providers of large numbers of highly technical and skilled jobs, and to do that we must have a dynamic and thriving research programme in the universities and research councils.

I am pleased that the Sussex university study for ABRC showed that we spent a higher proportion of our GDP than did the United States and Japan on Government-funded academic research. That point is not stressed frequently enough, although the hon. Member for Motherwell, South referred to it. Given that greater degree of expenditure by us over some of our advanced industrial colleagues, it is clear that we cannot afford to be complacent. We in this country have the brains and skills, and we have a facility for innovation that is acknowledged to be the best in the world. With those talents, it is clear that we must, for the sake of our future as an advanced industrial nation, as much as for the intrinsic value of the research that is being conducted in universities and research councils, protect and nurture them and give them the kind of future in which we will see British science and ingenuity flourish for the benefit of us all.

2.13 am

Mr. Alan Howarth (Stratford-on-Avon)

It is a pleasure to speak following the thoughtful and genial speeches that have been made in the debate. The House listened with respect to the remarks of the hon. Member for Motherwell, South (Dr. Bray), whose knowledge and concern for the well-being of science is widely recognised. He was not however above a few of those yah-boo touches that he discerned and deprecated in others. The air has been thick with polemic and rhodomantade and special pleading, and it was a pity that we had to suffer some further thickening of it with a few party political touches. All the same, one understands why the hon. Member for Motherwell, South felt it necessary to make those points in the way he did. We should take a cool look at the facts and a cool look at where responsibilities may properly lie. The research community itself should approve of that approach.

I think that we would all agree that the Government have a responsibility to ensure that there is an adequate programme of basic research. My hon. Friend the Minister appreciates that point and, with my right hon. Friend the Secretary of State, has been attending to this necessity. The science budget which, through the research councils, funds the best projects, has increased by 12 per cent. more than the general rate of inflation since 1979–80. I understand that the Government intend to maintain the value of the science budget in real terms.

In the autumn statement the Government added an extra £95 million to science spending. The hon. Member for Motherwell, South referred a little disparagingly to a giveaway Budget. With the close interest that he always takes in public finances, he knows very well that the autumn statement and the spring Budget should be taken together. In fairness, he should recognise that, as part of the overall package, the Government have rightly decided to make an appreciable increase in their funding for science— a 3 per cent. real terms increase between 1986–87 and 1987–88.

The Advisory Board for the Research Councils says that an extra 10 per cent. is needed to take account of the sophistication factor— the tendency of the price of scientific equipment and materials to increase faster than the general rate of inflation. We accept that the sophistication factor is a reality. My hon. Friend the Member for Oxford, East (Mr. Norris) recognised that point rather generously, but he distinguished, rightly, between those costs that inevitably rise faster than general costs and the other costs that science has to face—of restructuring, superannuation and the hazards of the foreign exchange markets. They are common to all enterprises. It is a little specious for those who argue the case for science to brush them aside. It is a "sophistication", in a worse sense of the word, to postulate the possibility of "buying science" separately from the general cost of living. After all, the Government have to take account of general inflation. If they fail to do so in their economic policies, the environment in which science exists will deteriorate to the detriment of science.

Mr. Norris

I should like to confirm that, like my hon. Friend, I do not blame the Government in any way for having to come to terms with, for example, the impact of the exchanges in relation to external contributions. I am sure that my hon. Friend agrees that, faced with the unfortunate reality of the impact of the exchanges on the Budget, it is desirable that at least some way be found to anaesthetise the majority of research rather than let it be affected by a factor that is truly outside the control of those involved in that research.

Mr. Howarth

It is much to be wished that we could all be anaesthetised from adverse economic conditions. There is a dilemma. These extra costs are realities to science budgets and at the same time are realities to the Government who have a responsibility to maintain sound finance. The two imperatives drive in opposite directions, and the Government have to make an uncomfortable decision between them.

We should put pay a little more into perspective. The Science and Engineering Research Council has reacted angrily and publicly to its predicament. It has announced that it is cancelling round three of the current session as a general grants round. In the press release in which that dramatic statement was made, there was a footnote for editors pointing out that each year the SERC awards about £100 million in research grants, but the press release did not mention that the SERC's overall budget is £350 million. The £8 million shortfall was effectively presented as an 8 per cent. shortfall when, in fact, in proportion to the overall SERC budget, it was a significantly smaller figure.

I understand that the total extra pay bill for the research councils in 1987–88 will be £15 million above their budget. That budget is £660 million. A shortfall of £15 million on £660 million budget is an awkward reality, but it should be kept in perspective. It was known that pay negotiations were taking place and it may have been prudent to keep some greater margin available, notwithstanding all the difficulties. It is awkward, but I doubt that it should be presented as a catastrophe.

Dr. Bray

A margin had been kept and that margin was the maximum amount that was allowed by the Department of Education and Science.

Mr. Howarth

I am grateful to the hon. Gentleman and I will not dispute that point.

We should keep this issue in a slightly better perspective than the angry and passionate pleading of the research councils—although understandable—has allowed. It is frustrating for brilliant scientists in a mediocre economy— a rapidly improving economy, but one that is still inferior to those of competitor countries and at a time when there is a rapid increase in exciting areas of research that beckon and require attention, to be short of funds. However, we ought to be calm about these circumstances.

Mr. Crouch

It is not a question of the research councils being frustrated, but rather that the Government have the symmetry wrong between the university pay awards and the pay for those who work in units, in universities on 'research council work.

The letter that I received from the Secretary of State on 5 March on university academic pay stated: Today the Government accepted the proposals for the pay of academic and related staff put forward by the universities. The Secretary of State accepted the proposal put forward by the universities, but there are those who work in the universities and who are university research granted who will not get the pay award. It is a question of a lack of symmetry not one of frustration.

Mr. Howarth

No doubt the Minister will touch on that when he replies.

There is no question of the Government being indifferent to the well being of science. I am glad that two hon. Gentlemen who have already spoken have drawn attention to the Sussex university study. The study terminated in 1982, but it showed that the Government were spending a larger proportion of gross domestic product on science than the Governments of Japan or the United States. That is a remarkable fact that will take many people by suprise and, as has been already said, it deserves to be better known.

The Government have rightly insisted on trying to ensure that there is good management in science and that there is a concentration of resources where they can be most valuably used. We cannot undertake every scientific research project that takes our fancy. We must consider what to do and we must set about doing it well. That is in the interests not just of economy, but of quality. The Government have laid stress on selectivity and on the development of centres of excellence. Inevitably when the Government adopt such a policy those who are not beneficiaries of the policy will be those whose voices we hear. It is commonplace in politics that those who do well out of public expenditure allocations.

Mr. Matthew Taylor

rose——

Mr. Howarth

if the hon. Gentleman will excuse me, I shall not give way as I have only a few minutes left.

Those who do well tend to omit to say so while those who consider that they have lost out are voluble.

The people whom I meet in the academic world know very well that the Government's emphasis on quality, building on strength and selectivity is correct. It was interesting to note a letter published in The Times on 23 January from Mr. Crossland of the Institute of Mechanical Engineers who spoke of the problems, but certainly the problems were compounded by the excessive numbers of engineering faculties in the institutions of higher education. There are some 80; it is impossible to equip 80 faculties, and in his view there should be about 20.

The Government have a responsibility for basic research, but the costs of that can be almost infinite. We have seen that problem presenting itself with CERN, for example. There are other claims. too. The Government are having to allocate between competing claims on the public purse. There are eminently justifiable claims from the National Health Service, for example, which science exists to serve, in part. There are claims made by those who have responsibilities for the education budget. We know that the education service makes science possible at a more advanced level in our academic world. The Government have been right to lay emphasis on promoting science in our schools. They have introduced education support grants at primary level and have been criticised for so doing. That move has been described as centralisation, but if they were not actively taking steps to promote science they would be criticised. There have been extra grants for teacher training in science, TVEI, and provision has been made for computers and software programmes. There has also been the information technology initiative and the engineering and technical programme. There has been a host of other initiatives.

There are limits on what the Government can spend if they are not to wreck everything. The hon. Member for Motherwell, South seemed rather inconsistent in his remarks. He said that the American model of enlarging the public sector deficit as if there were no tomorrow was not one that we could afford to follow. Yet he said that it was terrible that the Government were not spending the money that, in his opinion, they should.

Time does not allow me to talk about the role of industry, but undoubtedly there is an important one for it to play, and the Government have been right to promote it. The Government's policy is to strengthen industry and facilitate the support that it cart give to science, and that is highly relevant. I am sure we all agree there is much more that industry could do, but as we are running short of time I will make way for my hon. Friend the Minister to allow him to reply.

2.28 am

The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden)

Vandalism, the yah-boo gang, rottenness, bigotry and barbarism are words and terms of the hon. Member for Motherwell, South (Dr. Bray). They echo exceptionally hollowly at 2 o'clock in the morning, though they would at any time. That somewhat unscientific terminology corroded the more serious parts of his argument, especially at a time when we need some perspective in dealing with the scientific debate. Therefore, I am grateful to other hon. Members for the tone of their contributions.

My hon. Friend the Member for Cambridge ( Mr. Rhodes James) made a brief, wise and thoughtful contribution to the debate, which was just the job at this time in the morning. I join those who have welcomed the new hon. Member for Truro (Mr. Taylor) to the Chamber. I am glad that he chose science as the subject for his second contribution to our debates, but my mind wandered slightly when he talked about the yellow book and I thought of Aubrey Beardsley, who used to draw in a series of disconnected dots. I am sure that that is not a source of inspiration for alliance policy.

My hon. Friend the Member for Canterbury ( Mr. Crouch) has kindly graced the Chamber with his presence. We know that he brings specialised knowledge to our debates, especially about the Medical Research Council. My hon. Friend the Member for Oxford, East (Mr. Norris) has been as assiduous as ever in the interests of his constituents in science as in other issues. I was most interested in his remarks. Lastly, my hon. Friend the Member for Straford-on-Avon (Mr. Howarth) put matters in a rather wider perspective and helped us all by the soothing influence of his rational intellect.

As I have said, we are greatly in need of some perspective in the debate, so I shall make one or two remarks in that direction. The debate is about the funding of the research councils, and the Government have increased the science budget through which the councils are funded every year since they have been in office from £340 million in 1979–80 to £657 million in 1987–88. That is an increase in real terms of 12 per cent. These are not the actions of a Government who do not value science.

For the universities, the expenditure plans announced last November allowed for a cash increase in universities' recurrent grant of £95 million, or 7 per cent. Subsequently, the Government have announced that they will provide additional funds of £40 million in 1987–88 and, conditionally, £56 million in 1988–89 and £71 million in 1989–90 to help meet the costs of the recently announced pay settlement for university staff. This pay settlement, which amounts to 24 per cent., has wide and deep importance. The deal will give employers greater flexibility over pay. They will be able to take more account of quality of performance, special responsibilities, possession of scarce skills and difficulties of recruitment and retention in particular subjects. Our whole research effort will be strengthened through the ability to attract and retain good quality staff across a range of disciplines. My hon. Friend the Member for Canterbury was right to recognise the significance of the deal.

The university pay settlement will have an effect on the research councils, because their research grants to universities support a number of short-term research staff on university salary scales. But the problem must not be exaggerated. The extra cost to the research councils in 1987–88 is some £15 million out of a total budget of £657 million. To represent that as has been done outside the Chamber, but, mercifully, not here tonight, as if it will bring about the immediate collapse of British science, is absurdly to dramatise. Let me remind hon. Members that the Government will be still investing £1,300 million in the science base in 1987–88.

Mr. Matthew Taylor

rose——

Mr. Walden

I shall not give way. I must plough on.

Having said that, the Government recognise that they do need to consider, with the research councils, the implication of absorbing this cost within their budgets. The head of the largest council— the Science and Engineering Research Council— met my right hon. Friend the Secretary of State for Education and Science and myself last Friday. Earlier today, we met all five heads of the research councils together so that we could further our understanding of the problems they face. The Government have taken note of what the heads of the research councils have had to say, and we shall consider most carefully.

The overriding problem that we all have to recognise is that the rapid growth of science and technology is producing many new opportunities for research at a time when the costs of undertaking that research are increasing. No country—even the wealthiest—can afford to cover the field. Increasingly, all countries are having to opt for a more selective approach in their support of research. During a recent visit to the United States, I was struck to discover that they were most interested in the work that had been done here by the University Grants Committee, the Economic and Social Research Council, and Sussex university on the assessment of the value of research. They, like us, even with a larger budget, have to pay increasing attention to priorities.

With that background, the Government have a clear and stated policy for science. Our objective is to maintain and enhance our support of the science base, to strengthen the knowledge and skills of the United Kingdom in science and technology, and to contribute to improving the competitiveness of our economy. To this end we want to get the best value out of the substantial funds available by selecting the areas to invest in, and concentrating the funds on outstanding research groups. We also want to see closer and better working relations between the science base and industry and commerce.

We also want to see more funding from private sector sources. We want to improve management, get better value for money, and to promote increased flexibility, enabling faster responses to new scientific opportunities.

I am happy tonight to have the chance to acknowledge and commend the positive and constructive way in which the scientific community has responded. Significant progress has been made on each objective—for example, the new UGC policy on selectivity, the rationalisation of sites by the research councils, the steadily growing collaboration between universities and industry, with external funding from industry rising in real terms by over 70 per cent. between 1981–82 and 1984–85, an expansion of research council contracts with the private sector, a sharpening formulation of council priorities as a basis for their published corporate plans, and new initiatives in important subject areas such as molecular medicine, optoelectronics and food science.

I make it clear at this point that, in emphasising the need to harness the science base more to promote wealth creation, the Government do not question the value of scientific inquiry for its own sake.

I am glad that my hon. Friend the Member for Stratford-on-Avon stressed the importance of what the Government are doing for education. Only by having a strategy for science in schools is one able to ensure the continued excellence of British science.

There have been two major elements in this debate—the brain drain and the relationship between science and industry. As for the brain drain, it is important to remember that we are dealing not with a new problem but, with a long-standing one. It is easy to deplore the symptoms but the Government are trying to tackle the root causes. It is time that we were a trifle more honest with ourselves about what some of our scientists are going to, as well as about what the press tells us they are allegedly fleeing from.

Our scientists are going to a country that, as my hon. Friend the Member for Oxford, East pointed out, has a very low tax rate, with 28 per cent. as the top rate. Yet we hear squeals of indignation from the Opposition when any move is made by the Government to reduce our extremely high taxation rate. They are going to a country where there are very close links between business and science, yet when this Government's Green Paper pointed to the need for greater economic awareness in higher education, we were told that we are a Government of philistine materialism. They are going to a country that does not spend one sixth of its higher education funds on the most generous system of student grants in the Western world. They are going to a country where the pay and promotion arrangements are far more flexible than they are in this country. That is why we are glad about the new deal between the vice-chancellors and the Association of University Teachers.

The reforms that this Government are encouraging in higher education and science will make life more attractive, in the longer term, for science in this country. Therefore I was surprised that the hon. Member for Motherwell, South did not allude to that progress.

Industry is at the heart of the problem. Sir George Porter recognised that in a recent speech, in which he drew attention to the fact that our industrial research and development is by no means impressive. He said: Here we cannot blame the government because British firms received a much higher proportion of their R and D funds from the Government—30 per cent. here compared with 16 per cent. in Germany and 2 per cent. in Japan. Sir George Porter has been known to voice a few criticisms of the Government's policy, but in that statement he displayed great seriousness and even-handedness.

What are we to do about it? It is easy to lament this major cultural shortcoming in Britain, but one must have a policy to deal with it. We are trying to change the whole climate of higher education and, to some extent, of science to make it more attractive to industrial investors. That is in the process of becoming a major achievement of this Government—and of higher education and science. We are also building incentives into our pattern of research funding, whether by means of the National Advisory Body for Public Sector Higher Education, or— more significantly, perhaps— by means of the University Grants Committee, to attract more industrial funding by linking it with UGC funding. Then there is the new Link programme— a very significant development. Its objective is made clear by its name. The sum of £210 million is to be channelled in such a way as to attract the maximum amount of funding from industry. The model for that development is the very successful Alvey programme.

The latest DTI figures for the industrial funding of research and development show an improvement of 5 per cent. between 1983 and 1985. Given the increased profitability of British firms, I hope that they will take advantage of the new opportunities that are being provided by higher education and by science.

I am afraid, although this is not an occasion for party polemics, that I must draw the attention of the hon. Member for Motherwell, South to one or two facts. First, it is a matter of historical record, which should be noted, that the science budget declined between 1974 and 1979. Significantly, the biggest decline was in 1976, which was the year of the IMF. It seems that that puts the hon. Gentleman's remarks in slightly different perspective. I hope that when he talks to "Nature" he will ask its editor, Mr. John Maddox, what he meant by the phrase in his article in The Sunday Times that Morale had already slumped 10 years ago, before this Government was elected. It is quite wrong of the hon. Gentleman not to mention the realities of the situation of which all the scientists whom I meet and talk to are aware— the need for greater concentration of effort and more dynamic promotion structures, which we have achieved in the recent pay deal in the universities. It is wrong of the hon. Gentleman not to congratulate the sector of higher education and our scientists on the progress that they are making in highly necessary reforms.

In accordance with MR. SPEAKER'S Ruling—[Official Report, 31 January 1983; Vol. 36, c. 19]— the Debate was concluded.