Class V, Vote 2

HC Deb 14 July 1998 vol 316 cc264-91

[Relevant documents: First Report from the Science and Technology Committee of Session 1997–98, on the Implications of the Dearing Report for the Structure and Funding of University Research, HC 303-I, and the Government's Response thereto, HC 799; The Department of Trade and Industry's Departmental Report: The Government's Expenditure Plans 1998–99, Cm 3905.]

Motion made, and Question proposed, That a further sum not exceeding £719,838,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Department of Trade and Industry on payments to the Science Research Councils, the Royal Society, the Royal Academy of Engineering; OST initiatives; fees payable under the Animals (Scientific Procedures) Act 1986; and Research Council Pensions.—[Mr. Battle.]

8.10 pm

Dr. Michael Clark (Rayleigh)

The Select Committee on Science and Technology is pleased that the Liaison Committee agreed to recommend this debate on the structure and funding of university research. The members of the Select Committee think that it is a very important subject—so much so, that it was the subject of our first report in this new Parliament.

We noted that the Chancellor of the Exchequer, in his statement this afternoon, said that science is an important matter for the country, for the economy of the country and for the well-being of the people. We are delighted that, in this Parliament, more scientists are serving as Members of Parliament than there ever were in the previous Parliament.

The Select Committee, which I have the honour to Chair, consists of six science PhDs, two hon. Members with science qualifications or experience, two engineers and one computer scientist. I do not think that we have ever before had a Select Committee so well qualified to look at the issues of science and technology. Most of the members of the Select Committee are in the Chamber tonight. We have agreed—I hope that I can abide by the agreement—that we will voluntarily limit our speeches so that as many of us as possible can say a few words.

The Select Committee's inquiry started in July last year. We took oral evidence on six occasions from 17 different organisations and individuals representing the Government, the Higher Education Funding Councils, research councils, universities and industry. In addition, we had 53 memoranda. The report was unanimously agreed on 25 March.

We were looking into the recommendations of the national committee of inquiry into higher education, which I will call the Dearing committee as a form of shorthand. That committee was appointed in May 1996 by the previous Government, and it was chaired by Sir Ronald—now Lord—Dearing. On behalf of all members of the Select Committee, I congratulate Lord Dearing on his report and also on his ennoblement—which is a recognition of his considerable contribution to public life in general and to education in particular.

Many of the recommendations in the Dearing report that relate to research have expenditure implications; therefore, the Government felt unable to make a full response until the comprehensive spending review had been completed. Of course, we heard the statement on that this afternoon.

The Select Committee's report deals only with the Dearing recommendations that would impact on the way in which research in universities is directed. We recommended the retention of the dual support system, which delivers Government funds for research from both the Office of Science and Technology and the Department for Education and Employment. However, the Committee rejected a number of Dearing's specific recommendations relating to the way in which funds are disbursed.

Our report calls for a substantial and sustained increase in Government funding for university research and research infrastructure. It also considers appropriate balances between the emphasis put on teaching and research by university departments, but the Committee did not look at teaching per se, because that was not in our remit.

The Select Committee broadly concurred with the Dearing analysis of the problems in university research, but did not support the majority of his recommendations. However, when Dearing concluded that the funds available to support research are barely adequate", the Select Committee went further and concluded: it is our view that they are wholly inadequate and that without substantial and sustained additional public investment the Government will be putting the nation's future prosperity and quality of life at risk. Our report went on: We know that, in sum, our recommendations entail a substantial increase in public expenditure; we make them without any embarrassment. There is an overwhelming case for a substantial real terms increase in Government expenditure in research as an investment in the nation's future. In due course, the Government responded to our report. I was delighted to receive a letter, dated 15 June, from the President of the Board of Trade. She said in her personal note to me: I am most grateful for the detailed and thorough way that the Committee has examined the issues. Your report has been of value during the Comprehensive Spending Review". I hope it has. Yesterday's press release from the Department of Trade and Industry, together with the Chancellor's announcement today, show that the Government have certainly listened, primarily to Dearing and his report, but also to the Select Committee's recommendations. I thank the right hon. Lady for her courtesy in sending me that note.

There is an overwhelming case for a substantial real-terms increase in Government expenditure on research, beyond that which is required to make good the current shortfall. Yesterday and today, the Government have responded and shown that they realise that there is a need for a substantial real-terms increase in funding. Their announcements on the principle, and more particularly on cash, are most welcome.

The dual support system for funding university research should be retained. Indeed, in their response the Government noted that there was widespread support for the retention of the dual support system. Today's announcement seems to endorse that, but we have no indication yet of any cash from the Higher Education Funding Council to pay for research. Therefore, although dual support seems to be approved in principle, so far we have seen funding from only one side of that.

The Minister for Science, Energy and Industry (Mr. John Battle)

I hesitate to interrupt, but the statement today included extra resources of £400 million.

Dr. Michael Clark

I am grateful to the Minister. I thought that that £400 million was for the research councils and not for the Higher Education Funding Council to allocate to research. I am sure that I read the statement thoroughly, and I thought the money was for the research councils.

Mr. Battle

The £300 million in the statement published today is in addition to the money announced yesterday, as will be set out by my right hon. Friend the Secretary of State for Education and Employment tomorrow.

Dr. Clark

I am most grateful for that good news. We have £400 million for the research councils and £300 million—the other side of the dual support—for the Higher Education Funding Council to spend on research. That intervention clarifies the matter.

Mr. Phil Willis (Harrogate and Knaresborough)

Does the hon. Gentleman agree that there is still confusion because £300 million was included as part and parcel of the money from the Wellcome Foundation for infrastructure? Will that £300 million go towards those costs?

Dr. Clark

That is possible, but I hope not.

Mr. Battle

I wish to say simply that there is an additional £300 million. I will do my best to lay out the figures, £100 by £100, when I wind up.

Dr. Clark

Let us move on to funding for infrastructure, which is primarily a matter for the Higher Education Funding Council. The money comes from the Department for Education and Employment, and the corresponding Departments in Scotland, Wales and Northern Ireland.

The Minister has suggested that £300 million will be available. For infrastructure, £300 million is being made available following the generosity of the Wellcome Foundation. Is that £300 million from the Wellcome Foundation free money which can be used as freely as the £300 million that the Government are providing, or is it to be directed to projects in which the Wellcome Foundation takes an interest or pet projects it wishes to pursue?

Mr. Battle

indicated assent.

Dr. Clark

The Minister appears to suggest that it is free money which can be spent as freely as the Government money. That is reassuring.

On the indirect costs which the research councils should bear, the report said that the research councils should pay the full indirect costs, excluding academic salaries, of the research which they fund in universities. The report continued: all increased expenditure incurred by the Research Councils as a result of paying a higher rate for indirect costs be matched by increased Government funding". We do not at this stage have any indication of whether the Government accept that statement with regard to indirect costs, and, if they do, where the money will come from for indirect costs.

The £407 million that the Government are allocating is, they say, for new research. If it has to be used to pay for the indirect costs also, there will not be as much money for new research as the Government had thought or as we would wish.

Mr. Tam Dalyell (Linlithgow)

On the subject of the Wellcome Foundation, the hon. Gentleman used the words "pet projects". Before she retired, I thought that Dame Bridget Ogilvie made it clear in public lectures that the foundation worked closely with the Department, and she certainly would rebuke anyone who accused it of having "pet projects".

Dr. Clark

I heard Bridget Ogilvie say the same thing when the hon. Gentleman and I were together at the Law Society, when she talked about how the money was to be allocated. However, I thought it was right and prudent to check with the Minister that the money from the Wellcome Foundation was not being directed, but was free money to be used as freely as the Government money. The Minister said that that was the case

. If I go on much longer, Mr. Deputy Speaker, I will be breaching the covenant I reached with the Select Committee members to keep my speech short so that they may contribute. I conclude with another question for the Minister—I had three. The first, about the funding for the Higher Education Funding Council, has been answered. The second question was about whether the Wellcome Foundation money had any strings attached, and that has been answered. My third question concerns the indirect costs, and I do not think that that has been answered. I hope that the Minister will refer to that matter when he winds up.

Science is a very important subject, and those who are trained in or studying science think that it should be tackled in an objective, and not subjective, way. The Committee has tried hard to tackle every inquiry we have undertaken on a cross-party basis, as scientists and not so much as politicians—although we are politicians, too. Science is a subject on which we seek truth, objectivity and progress. The Select Committee has done that in this inquiry.

The Minister takes a strong interest in science, and we are pleased he does. Yesterday's statement from the DTI, and today's announcement of the comprehensive spending review, show that the Government also take science seriously. May I say, from this side of the House, that we are delighted that that is the attitude of the Government? We will always think that there is more that the Government can do, and perhaps the Government think so as well. However, it has been a good two days, and I thank the Minister for what he has done to progress funding for science over the last year.

8.25pm

Mr. Alan W. Williams (East Carmarthen and Dinefwr

): I thank you, Mr. Deputy Speaker, for calling me so early in the debate. It is a pleasure to follow the distinguished Chairman of our Committee, the hon. Member for Rayleigh (Dr. Clark). I was on an earlier Select Committee from 1992 to 1997. Half its members were from a science background but, as the hon. Gentleman said, every member of our Select Committee in this Parliament has a good science background. Therefore, our deliberations are well informed.

Our first inquiry was on the Dearing report and its implications for the funding of university research. We were operating on a rapid time scale so that our report would be available to the DTI for its lobbying in the comprehensive spending review. I am delighted that the Government have taken such a positive view of the report.

I have been involved in Select Committees for ten years or so, and therefore have been involved in the preparation of about 20 reports. Generally, when we have the Government's response, there is always something positive—provided it does not cost too much. The only real achievement of those 20 earlier reports was when the Advisory Committee on Genetic Manipulation was set up as a result of one of our reports. On this occasion, I am delighted that the Government have adopted almost every recommendation we made.

The strongest recommendation was on infrastructure in universities—both equipment and buildings—and concerned the general capital rundown that has taken place because of the shortage of money in the last few years. The figure we quoted in the report, as a kind of consensus estimate of how much was needed to make good the infrastructure problem, was between £410 million and £430 million, spread over the next three financial years. Yesterday's announcement exceeded even our highest expectations. Thanks to the Wellcome Foundation, a 50:50 partnership with the Government has produced £600 million over those three financial years. It is wonderful that the Government and Wellcome should have set out to solve the infrastructure problem over three years.

Other elements in yesterday's announcement total £1,100 million—£400 million from Wellcome and £700 million from the Department of Trade and Industry—to be added to the science budget of the DTI in those three years. It took me some time last night to work out how those figures match. Had there been no increase yesterday, the total would have been £4.05 billion for the science vote, but, with the additional £1.1 billion, it is effectively a 27 per cent. increase in science funding over the three-year period-10 per cent. from Wellcome and 17 per cent. from the DTI. That is a superlative increase.

Save British Science, which has been rightly critical of the Government over the years—that is its job—issued a press release yesterday, the tone of which was almost unqualified delight, referring to a good day for British science". This weekend's briefing from the Committee of Vice-Chancellors and Principals mentioned that in the United Kingdom expenditure on science research and development compares unfavourably with other G7 countries, having fallen in real terms by 21 per cent. between 1986–7 and 1997–8. I hope that industry will match the Government's record during the next three years, and realise just how important is science research and development. Today's announcements and yesterday's from the DTI are a good start in making good the shortfall that there has been.

I hope that, when we meet again for our comprehensive spending review, the finances allocated for infrastructure will be consolidated within the science budget for years four, five and six of the Labour Government, and that we can maintain an annual increase of the order of 8, 9 or 10 per cent. for five, seven, 10 or even 20 years. My arithmetic tells me that a 10 per cent. growth over seven years is a doubling of the science budget, over 14 years a quadrupling, and that over 20 years there would be an eightfold rise in the science budget. I do not know whether we shall live to see that.

Over the years, science has been underfunded by Government and industry. I am delighted that the Government have taken such positive steps, and I am pleased with the Select Committee's role in producing an authoritative and detailed piece of research which has helped to persuade the Government.

The hon. Member for Rayleigh referred to several other smaller points in the report. There was some sign that the Treasury was of a mind to change the funding structure. All the representations that we received were strongly in support of dual funding, the one mission-oriented and the other for original seedcorn research. The Select Committee awaits the Government's response to its report on the millennium bug, and we are working on an inquiry into innovation in engineering and on the advisory system.

I hope that we shall be able to develop the good working relationship demonstrated by the positive response to our first report. The Select Committee could be a kind of think tank, to help produce and to spur on Government policy. As the hon. Gentleman said, we work very well in a non-party sense, with science and the future of Britain at the heart of our deliberations, and we look to Britain's long-term prosperity.

Thank you, Mr. Deputy Speaker, for allowing me to make those few comments in the debate.

8.34 pm

Mr. Phil Willis (Harrogate and Knaresborough)

First, I apologise for the fact that my hon. Friend the Member for Cheltenham (Mr. Jones), who is a member of the Select Committee, is not in the House tonight. As the Liberal Democrat spokesman on higher education, I speak on behalf of my party.

First, I congratulate the hon. Member for Rayleigh (Dr. Clark) and his Committee on an extremely good report. I also congratulate the Government on their positive response. That set the tone for the comprehensive spending review. The announcements of the past two days reflect the quality of the work that went in, not simply from the Dearing committee but from the hon. Gentleman and his Committee. It is worth putting that on the record.

There is no doubt that knowledge-based industries will provide the key to competitiveness in the next century. Those industries depend on a world-class science base which not only provides the information and ideas which fuel new developments but, just as critically, the technicians and scientists who man their laboratories. Britain publishes about 5 per cent. of the world's scientific academic papers—a rough measure of scientific output—yet to be able to understand and use the other 95 per cent., industry has to have in-house scientists who are trained in state-of-the-art ideas and techniques.

The benefits from investment in science are well illustrated by the pharmaceutical industry—Britain's major industrial success story of the last 25 years. Here, close relationships between academic science and industry, with substantial investment in basic research by the public sector, matched by high levels of investment in research and development by the industry itself, have helped to make British firms such as Glaxo Wellcome, Zeneca and SmithKline Beecham leaders in the global marketplace.

Those firms have created a magnet attracting top-class international firms, and top-class international institutions, such as the European Medicines Evaluation Agency, to the United Kingdom. The research laboratories of those firms, located in Britain, bring well-paid jobs and prosperity to their local communities. They are just the sort of jobs that we want to create in Britain in the next century, but we will attract them only if we have the infrastructure and the trained labour force that they need. If the Government do not make the necessary investment—they have made a start over the past two days—we shall lose them. That is why the Government's response is as welcome as it is important.

Like so much else, scientific research is yet another example of the way in which, in some ways, we have squandered our heritage during the past two decades. Both in absolute and in percentage terms, the British Government are spending less than any other advanced industrialised country on supporting research in the higher education sector—a mere £61 per head of population, compared with countries such as Switzerland, Sweden and the Netherlands, where spending is upwards of £150 per head.

Among Organisation for Economic Co-operation and Development partners in Europe, only Spain and Ireland spend less than we do, and both are fast catching up. However, that is before the Government's announcement, which clearly means that the calculations must be revised. Britain is also distinguished by the slowest rate of growth of such expenditures—a mere 1 per cent. per annum since 1984—of any OECD country. That is a record of near-criminal proportions, because it has left the future prosperity of the British economy exposed and vulnerable.

Even at those low levels of expenditure, Britain punches above its weight, and our research institutions and universities are a tremendous success story. A recent paper written by the Government's scientific adviser, Sir Robert May, shows that, in relation to population, we are still publishing more top-class academic papers, at lower cost, than any other country.

The Treasury must be well pleased. It has squeezed the pips out of the university sector, and, to be fair, it has worked. Productivity has increased, and costs have gone down. But, as Sir Robert himself warns in his paper, the only reason costs are so low is because academic salaries in the UK are grossly uncompetitive.

In the past, the cream of our graduates chose a research career, but if, as is the case now, at the age of 26, with three years of a bachelor's degree and four years of a doctorate behind them, we are able to offer those high fliers only short-term contracts on salaries of £16,000 to £17,000, it is no wonder that they are opting with their feet and choosing jobs in the City which offer them twice those salaries, and the prospect of Christmas bonuses running into hundreds of thousands of pounds.

It is not just our research fellows who are being undervalued. Like every other sector, the university sector has been living off past capital and failing to renew it. The Dearing report highlighted the cost of making good the backlog of equipment renewal to bring universities up to modern laboratory standards, which are not only necessary to undertake state-of-the-art research but are demanded by the Health and Safety Executive. That cost is now estimated to be more than £1 billion.

The cost of bringing UK Government expenditure on research in higher education up to average levels of OECD countries is a further £1 billion. Britain cannot afford to ignore such investment. The Dearing report and the report by the Science and Technology Select Committee made that clear, and the Government have responded positively.

The story of the pharmaceutical industry should not be neglected. The investment in molecular biology research was funded over many years, with no obvious return except intellectual excitement and Nobel prizes. Today, it supports a multi-billion-pound industry, in which Britain has become a leading player. There are many other potential success stories if we are prepared to make the investment, which is why the Select Committee report was so welcome. It unambiguously says: there is an overwhelming case for a substantial real terms increase in Government funding for the science base as an investment in the nation's future". Yet the Government's response prior to yesterday's announcement was relatively meek. They seek full credit for the half-hearted measure that they introduced last year—the joint research equipment initiative—which, as the Committee pointed out, was mainly a reorganisation of existing research council budgets, and brought only a minimal amount of new money onto the scene.

The £600 million injection of resources jointly by the Government and the Wellcome Foundation has gone a long way to redressing the balance, but it still falls short of the £1 billion needed to re-equip aging laboratories and replace obsolete equipment. It is also a one-off injection of resources.

When the Minister winds up, he must make a commitment to increasing investment in the research infrastructure on an annual basis. Both the Dearing committee and the Select Committee have identified the need for full reimbursement of the indirect costs of libraries, computing, and research support services, but, unless the indirect costs attached to research projects are funded in full, universities will continue to struggle.

Mr. Battle

I apologise for intervening on the hon. Gentleman, but I wonder about his arithmetic. We have invested £700 million, and the Wellcome Trust has invested a further £400 million, on infrastructure alone. That makes a total of £1.1 billion, which is more money invested in science than the sum which some parties have suggested should be invested in education through a tax increase. To say that it is a one-off injection of resources is not quite fair. It is a three-year programme, so that people can break out of the bracket of annualisation and know where they are going.

Mr. Willis

I am grateful to the Minister for his intervention. I do not wish to belittle what the Government have done. Indeed, I have tried to make it clear how much we support what they are trying to do. However, we need not just an injection of resources into our infrastructure now, but a continued incremental injection of resources not only to keep pace with the backlog of repairs and renewals but to provide the best basis for research in the future.

The comprehensive spending review has identified some £407 million for research for the research councils. The Select Committee called for some £400 million of new money to be allocated to that area over the next three years, which appears to be what the Chancellor has delivered. That reflects the fact that the Government have listened to the Select Committee.

We are led to believe that the additional resources for the research councils have not resulted in a dramatic decrease in funding for university research. Indeed, the Minister has made it clear that the other part of the dual funding arrangement will be boosted by a further £300 million. There is general agreement that the dual funding support system should continue.

It would be churlish for Liberal Democrats to say other than that we welcome the Select Committee report and the Government's efforts to address the report and to give our universities and research councils the best basis on which to begin not only the next year but the next millennium.

8.44 pm

Dr. Phyllis Starkey (Milton Keynes, South-West)

I am not a member of the Select Committee, but I wish to expand on one or two points made in its report. I shall keep my remarks brief, in deference to my hon. Friends who want to contribute to the debate.

My first point is about the performance of UK science in the international context. In many areas of science, the UK is "punching above its weight", as the phrase goes. It must be said that our performance is patchy and that there are some areas of science in which we are not punching above our weight. Moreover, our performance is measured in terms of publication output, which is falling in relation to the performance of other European countries. That reflects consistent under-investment in universities, on which the Select Committee report comments.

The Association of the British Pharmaceutical Industry has expressed considerable concern that graduates are not as useful to it as they might be, because, as a result of lack of investment in university infrastructure, they have not had sufficient experience with cutting-edge equipment. There is a real threat that, because of that under-investment, the pharmaceutical companies based in this country might start to think about moving their research and development elsewhere.

Today's announcement by the Chancellor was welcome, and I look forward to hearing my hon. Friend the Minister explain what it means in this context. Important though adequate funding is, other questions need to be answered. However generous funding is, the UK cannot do everything, and must be selective if it is to maximise the effectiveness of its investment.

I have a number of points to make about the dual funding system; they relate not to money—although that is important—but to the way in which the two systems have operated in the past. Essentially, between them the two systems drive university research: the funding councils through block grant, and the research assessment exercise and research councils through the funding of project and programme grants and fellowships. In the past, each system was left to run independently. The result was not what either system desired.

There are clearly faults in the operation of the funding council system. The research assessment exercise decides on a block grant, which provides funding for infrastructure within universities. It is accepted that that funding has been insufficient. Moreover, the money is not necessarily spent by the university departments that win the funding. That has the advantage that it gives the universities some freedom to provide for seedcorn funding for new researchers, but it means that the funding council rewards excellence by giving money to universities to use as they wish.

All sorts of concerns have been expressed about the research assessment exercise, its lack of openness and the low reward for collaborative research for multidisciplinary research and for applied research. I hope that those concerns will be addressed.

The research councils award funding competitively, although they have clear scientific strategies and set out certain priorities for which they invite funding. The result of those two systems operating independently has not been entirely benign. The two systems have certainly been responsible for a huge expansion in the number of short-term researchers in universities. They have encouraged people applying to the research councils for research funding to make an unrealistic and inadequate assessment of their indirect costs in the belief that, if their grant application is not too big, it is more likely to be funded.

The enormous number of people applying for money that does not meet demand means that success rates, certainly for funding in the biological sciences, are about 25 to 30 per cent. That means that enormous effort is put into preparing applications and administering the assessment methods for applications, and an enormous amount of time is spent in the peer review system, using academics who might otherwise be doing research. Hardly any time in the research councils is spent on evaluating research or the other work that they should be doing.

Between them, those two systems are inexorably leading to a concentration of research in a relatively small number of universities. The 10 universities with the highest overall income receive 40 per cent. of the funding council money, 50 per cent. of the research council grants and 60 per cent. of charitable grants. The way in which the research assessment exercise operates means that the funding council grants will follow the research council and charity grants and will further concentrate research. Unless explicit decisions are taken, we shall drift into a situation in which there are 10 or fewer super-universities, and the rest of our universities will carry out limited or specialised research, or will not carry out research at all. Universities are extremely important to regional economic development. A Wellcome Trust study of publications involving industrial collaboration with academics clearly showed that industry tends to collaborate with universities that are geographically close to them. Science parks are another acknowledgement of the need for industry to feed off universities that are geographically close to it. In England, the funding council must have a regional strategy to ensure that centres of excellence are geographically spread, and are not the random result of the way in which the research assessment exercise happens to work out.

We need the funding councils to have policies that encourage co-operation, networks of collaboration and virtual centres so that we can maximise the investment in research equipment and ensure that universities operate in such a way that they encourage regional economic development. For people who work in universities in research, we need to get away from the current situation, which maintains an army of contract staff who have little or no security and no career progression.

I hope that we will have within the research councils a sensible strategy that achieves a proper balance between longer-term programme grants and short-term project grants. We cannot rely on peer review panels to do that, because they are part of the research community and they tend to spread the money as thinly as possible. The results of the comprehensive spending review give a huge boost to university research, but we must ensure that the decisions taken on the underlying problems are the right ones, or the country will not reap the benefits that it should.

8.52 pm

Mrs. Caroline Spelman (Meriden)

I am grateful to be able to participate in the debate. I shall keep my remarks brief and want only to add to the body of information that is coming from members of the Science and Technology Committee.

I concur that it would be churlish to criticise the Government for increasing spending on science and technology, but I was concerned when the Minister appeared rather casually to lose about £100 million. He said that £400 million might be available through higher education, but that has been adjusted down to £300 million. In the fulness of time, we shall all be clear on those details.

I concur with the hon. Member for Harrogate and Knaresborough (Mr. Willis) that the framework to the discussion has to be Britain's competitive position. He made that point clearly in relation to other Organisation for Economic Co-operation and Development countries, but what really counts is the combined total of public and private funding on research and development. The Science and Technology Committee drew attention to the United Kingdom's comparatively weak position in relation to its competitors when those two sources are considered together. I agree with the hon. Gentleman that one would have to adjust those figures in the light of today's announcement, but the percentages of gross domestic product spent should be compared: Japan spends 2.8 per cent., so it is way out in front, the United States spends 2.1 per cent. and the United Kingdom is well behind, on 1.7 per cent

. Some of the Science and Technology Committee's concerns have not been adequately addressed, and I look forward to hearing from the Minister about them. I endorse what the hon. Member for Milton Keynes, South-West (Dr. Starkey) said about the dual support system, which must be adequately resourced. We are also concerned about the indirect costs that universities have to bear, such as those of libraries, computing and support services, which are not adequately catered for.

I want to bring to the debate my personal concerns, especially for universities with a high percentage of science and engineering undergraduates, graduates and research students. Those with a high level of practical and applied subjects bear an especially great burden. Coventry university, for example, has a high percentage of science undergraduates and graduates and serves the surrounding manufacturing industry in the west midlands. Some universities with a strong science base may find themselves in a disproportionately awkward position compared to other universities.

Many of the new universities created since 1992 have risen to the challenge of social exclusion in higher education. They bear the extra costs of access for students who perhaps need additional preparation before entering higher education and going on to do the kind of research for which the funding is intended. If that additional spending is skewed only towards research, however, it will ignore the extra teaching costs which the new universities bear as they try to achieve access. For example, the Chelmsley Wood campus of Solihull college offers a two-plus-two course with Warwick university to ensure that students from underprivileged backgrounds have an equal access opportunity. By definition, it will take such students longer to achieve that.

Has the Minister factored into his thinking on funding the impact of the changes in the student support system? I agree with the hon. Member for Milton Keynes, South-West that there are likely to be changes in the geographical distribution of research centres of excellence. One of those changes may be driven by the fact that students will increasingly enter higher education from home and live with their families to keep down the cost of obtaining their degrees.

Universities in cities may become over-subscribed and those in rural locations—where, by definition, a student has to accept the costs of living on campus—may decline. For example, there is a contrast between a university such as Keele and a university in the centre of Birmingham, and universities are concerned about what can be done about over-capacity and under-capacity resulting from changing geographical distributions.

The effect of that can be seen in the choice of subjects. Aston university is attracting an increasing number of Asian applicants, especially Asian woman applicants, who prefer particular subjects such as optometry, which is a popular choice at Aston. That is resulting in increasing and excessive demand for the subject and in declining demand for traditional core subjects, which are in the engineering base. That factor must be taken into account when funding is ultimately disseminated to those universities.

It was Sir Ron Dearing, as he was then, who recommended in his report that funding should follow the student. That was in recommendation 72—one of the recommendations that the Select Committee considered, and one that I particularly urge the Minister to consider when funds are disseminated in higher education.

There is no doubt that, if we are to achieve and maintain our world-class research base, we must first have a foundation of strong undergraduate training. Let me end with a plea to the Minister that there should be no shortcoming in the preparation of a base on which a research structure can be created.

8.58 pm

Dr. Lynne Jones (Birmingham, Selly Oak)

Often in politics, I despair at the way in which decisions are made not on the basis of the arguments but on the basis of the power of the person advancing those arguments. That is why, for me, one of the delights of being a member of the Science and Technology Committee is that we go about our work in a non-dogmatic, consensual way, looking at the facts objectively and—I think—producing excellent reports such as the one that we are debating.

Sadly, the media pay little attention to our work except from time to time. I believe, however, that in the last Parliament we had an impact in forcing the then Government to set up the Advisory Commission on Human Genetics. I think that, when Dolly the sheep came along, the commission was glad to have taken our advice. I am also delighted by the Government's positive response to our report on the funding of university research.

Some of my colleagues have been at pains to draw attention to the extent of the scientific background of members of the Committee. Lest anyone think that we all have vested interests, let me point out that other Committee members have other life experiences. Certainly it is a long time since I could truly claim to be a scientist, although I am proud to have a scientific background.

A striking feature of the evidence that we have been given, not just in this inquiry but in others, has been the widespread support for publicly funded research. That support has come not just from the usual suspects—the Royal Society, the Committee of Vice-Chancellors and Principals and others with an academic interest—but from industry. Again, I am not referring just to one part of industry—the pharmaceutical industry—but to the Confederation of British Industry and aerospace companies. It is clear that, as Lord Dearing told us, investment in research is the only possible strategy for the advanced world: it is the only way in which we can remain competitive in the 21st century.

That view was endorsed in research by the science policy research unit at Sussex university, which was commissioned by the last Government but, sadly, was not acted on. That research concluded that publicly funded basic research seems to have a substantial impact on productivity". In view of the lag in our productivity, we have a good deal to make up. Nevertheless, the research that we conduct suggests that we are among the most competitive in the world.

Recent analysis by the chief scientific officer showed that British scientists top the league in terms of the number of research papers that they publish—and, apart from published research, in terms of the extent to which their research is cited by other researchers, in the context of the amount that is spent. We should not rest on our laurels, however: much of that finding is based on past funding of research, and much that relates to high productivity is based on the poor conditions under which researchers must operate. I refer not only to equipment and facilities, but to financial rewards.

Professor Jack of the Wellcome Trust told the Committee that, over the past 25 years, the salaries of university employees and researchers had fallen by 50 per cent. compared to the national average wage, and had barely kept up with inflation. In an earlier debate, following the last Government's publication of the White Paper "Realising Our Potential", I pointed out that academic staff are now being paid less than police sergeants. That created something of a scurry in the official Box, but the figure was never denied, and the position has clearly worsened since then.

There is also the problem of the "contract culture". Increasing numbers of researchers are on short-term contracts, which means that their career prospects are very insecure, and that our brightest and most able young people are not attracted to research.

The Science and Technology Committee said: Ensuring adequate funding for the research base in the long term is the only way to reverse the increase in short-term appointments. Clearly, that must be right. Not only has the number of short-term appointments increased, but researchers have to operate under poor conditions of service. It is not that universities want to offer poor conditions of service: it is that financial constraints have been placed on them in the past few years.

It is with absolute delight that I praise the Government to the roof on their announcement, although I may make a few critical remarks. The Committee recommended that, in the next three years, an additional amount of just over £400 million should be put into the research infrastructure. It also said that, when funding research contracts, the funding councils should meet the cost of overheads, which should be about £185 million a year.

With the money from the Wellcome Trust, we have just about achieved the figure. We have had £700 million from public funding, £300 from Wellcome and £100 million for the IT systems. Although the Minister said that the money from Wellcome could be used for any area of science, I should point out that Wellcome has a fiduciary duty to fund medical research which may conduce to the improvement of the physical conditions of mankind. The trust's objects specify medical research, although that can be widely interpreted.

I should like assurances from the Government that physical science will not miss out in the bonanza. I was originally a biochemist, so I am obviously in favour of spending on biological and life-science research, but I have become increasingly fascinated by other research. For example, particle physics may not have an immediate spin-off for the economic good in the short term, but in the long run it produces highly skilled people who can greatly contribute to the skills of the work force. That is beyond blue skies research, and it should be supported.

I should like to deal with the issue of dual support, and to clarify for colleagues what the White Paper said. It states: For both Further and Higher Education extra resources will be earmarked for infrastructure, equipment and an expansion of student numbers. It further states specifically: This will be in addition to substantial new funding for scientific research, complementing additional provision available through the Research Councils. We feared that the Government would give with one hand for the science base, and take with another by undermining the funding councils. I am pleased to say that that is not the case.

Back in the Thatcher years, an organisation was founded called Save British Science. The name conjures up a lefty pressure group whose aim is to undermine the elected Government and the order of things, but nothing could be further from the truth. Save British Science has such eminent supporters as Sir Richard Doll, the Nobel prize winner Harry Kroto, Dame Bridget Ogilvie of the Wellcome Trust, Sir Martin Rees, the Astronomer Royal, and Sir Richard Sykes of Glaxo. Perhaps it is now inappropriate to have a society called Save British Science. Today's announcement has saved British science: the society could keep the acronym and change its name to Support British Science. I congratulate the Government on their announcement.

9.9 pm

Dr. Brian Iddon (Bolton, South-East)

I am not a member of the Select Committee on Science and Technology, but I join other hon. Members in congratulating its Chairman and members on a report that has obviously influenced Government thinking. The announcements yesterday and today will benefit the British science base.

Some of the world's best scientists and engineers are still produced by British universities, and Britain is still at the cutting edge of research in many areas. Those features attract people from throughout the world to study in the United Kingdom. However, over the past decade there has been an increasing number of warning signs that we are losing our world place. Undergraduate and postgraduate students are opting to study in the United States and Japan and in our continental partner countries.

As we all know, the problem has been a shortage of funding. In 10 years, United Kingdom universities have had a 40 per cent. per capita cut in funding, and that is a great deal of money. I was pleased by yesterday's announcement and by those today that were part of the comprehensive spending review. This has been a great week for British science, and I congratulate the Government on that.

I should like to highlight one or two problems in the British science base, and I shall start by examining the research assessment exercise. When it was set up, the publications that were assessed by those who were taking part in it were those that had been published in learned peer review journals. Departments in many universities, such as the one in which I used to teach, carry out equally valuable applied research and publish the results in different ways, often in reports to Government and industrialists.

The problem with the research assessment exercise is that it has never taken account of that important work. Consequently, departments that employ staff to conduct such research either have to give it up or suffer under the research assessment exercise. Many excellent science and engineering departments slipped down the league table while the creamed-off top 12 accelerated up. That is a real difficulty with the research assessment exercise, and I hope that in the near future the Minister will review the process in some way.

Another objection to the research assessment exercise is the way that it creates, to use a football analogy, divisions between universities and even transfers. One university may poach staff from another's excellent science or engineering department, and that was especially prevalent when large research groups published many papers. Even those who conduct the research assessment exercise have recently realised that that is crazy, and have stopped it and started to review departments in a different way.

Researchers who are being judged in a research assessment exercise are reluctant to collaborate either in their own departments or with those in other departments and universities, and they rarely collaborate with industry. Questions such as, "Who was the senior author and who should take the most credit for this publication?" are often asked. I want that to end. Like my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey), I should like to see more collaboration between organisations, because that brings excellence to the science base and, of course, in the past, scientists and engineers have always travelled the world collaborating. We should encourage them to do that much more in future.

The other difficulty with the research assessment exercise, as we have heard, is the amount of paperwork that it generates. I began teaching in universities at Durham in 1964 and I ended at Salford in 1997, at the election. The amount of paperwork that university lecturers have had to deal with over recent decades has been immense, compared with the amount that I dealt with as a new lecturer at the university of Durham. I ask the Minister to review the research assessment exercise and to try to cut out some of its worst features.

The shortage of research money has caused university staff to make more and more grant applications in order to succeed. I have been party to making grant applications to the European framework programme. The complexity of the forms, the amount of paperwork involved and the amount of organisation necessary to get collaborators to collaborate across Europe mean that applications take weeks of work. The burden of paperwork and the shortage of research funding, which makes more grant applications necessary, have burdened university researchers in the past decade like nothing before.

University researchers are expected to justify themselves not only externally, but within the department and the university, which generates piles of paper. That must stop if we are to hold pole position in our research base.

Does every university need to conduct research? That question is often asked, especially as all the former polytechnics have become universities. In my opinion, if one is to be an excellent teacher, it is essential to be involved in research. Reading 30 journals a month kept me up to date and enabled me to enthuse my students when I was teaching chemistry. Those who are not doing research will not have the same enthusiasm to pass on their knowledge to students. I very much regret that many departments in our universities are not conducting research. I am not in favour of teaching universities and research universities. All universities must teach and also conduct some research.

I never supported the previous Government's conversion of all the polytechnics into universities in one fell swoop. It should have been done much more slowly, as each one reached the right quality. Many of the polytechnics that became universities at that time had the right quality. I could name some, but it would be unfair to do so. I know, however, because I examined in them, that some of those polytechnics were not of the right quality at that time. They may be today, but they were not when they became universities. The conversion of all those polytechnics into universities put a huge burden on the funding of the entire higher education sector.

May I put in a plug for university salaries? If we are to attract the brightest people into teaching and research in our universities, the salaries must be available. When I became a lowly Back-Bench Member of Parliament, from being a reader in chemistry at Salford university, my salary went up by more than £10,000. That is not right. If we are to attract the best teachers and researchers, we must be willing to pay them. I have long been an advocate of a pay review body for the universities. I hope that some day the Government will take that on board.

I hope that the Government will look into the scandal of short-term contracts. I shall not dwell on that, as it has been mentioned more than once. Short-term contracts rarely carry pension rights, and one day the people who have been on one short-term contract after another will reap the difficulties that that will cause.

Increasingly, postgraduate students and other staff in universities are taking part in teaching. I have never minded postgraduate students demonstrating in laboratories, but they are not sufficiently qualified to lecture before classes of students.

There are many things wrong with the universities. We have had a weak science base for the past decade, if not 20 years.

I welcome the Government's announcements this week, and I congratulate my hon. Friend the Minister for Science, Energy and Industry on the enthusiasm that he puts into his brief. I am sure that, if he had not fought hard for the science base within the comprehensive spending review, we would not have seen the announcements this week.

9.20 pm

Dr. Desmond Turner (Brighton, Kemptown)

Those of us on the Select Committee started out from the premise that the British science base was in a critical condition and that if it got very much weaker, it could start to collapse. That would be serious not just for the interests of science, but for the whole British economy. If we are to be a technology-based economy and we do not have a thriving science base, we go nowhere. Twenty years down the line, we could become a desperately poor country because our university science base has been criminally neglected.

It has been marvellous over the past two days to see my hon. Friend the Minister for Science, Energy and Industry and his Front-Bench colleagues riding to the rescue like the 7th cavalry. It has been heartwarming and, as members of the Select Committee, it makes us proud that our humble advice has been of service. I am glad that the Minister's joined-up thinking has spread to the rest of the Government. I am now in the happy position of being able to applaud my right hon. Friend the Chancellor of the Exchequer for his important words in recognising the central role of science in the British economy. No longer can anyone dismiss scientific research as stuff that goes on in ivory towers or as an optional extra. It is not; it is central to everything that we do in this country.

Hon. Members have pointed to detailed difficulties that arise under the present system. My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) has criticised the effect of the dual-funding arrangement. I have to take slight issue with her, because my reading of the dual-funding system is that the main thing wrong with it is that there was never enough funding on either side of the dual system. When there is a shortage of funding, all sorts of unfortunate things happen, because people are scratching around and problems arise such as those described by my hon Friend. Once there is adequate funding, the in-fighting can stop and one can take a more distanced look at how the system really functions and ensure that it operates properly.

My hon. Friend the Member for Bolton, South-East (Dr. Iddon) laid a great deal of stress on the research assessment exercise, as does the Select Committee report. The report is highly critical of the current working of the research assessment exercise, which operates against modern research in that it discourages interdisciplinary or inter-establishment collaboration. It almost promotes only those working alone. Modern science is not like that, and is increasingly not like that.

Having settled the immediate financial worries, the Minister clearly has many further considerations. However, I am confident that he will address them. Getting the research assessment exercise right is fundamental, and sorting out the details of the way in which the dual-funding mechanism works is vital. It is a great relief that the research councils are not getting their extra funds at the expense of Higher Education Funding Council for England funding. That is an important point, which the Minister made clear tonight.

What is important about this exercise is not so much the science—although that is important—as the political lessons that have to be learned. The United States has a technologically based economy, which operates from a thriving science base. The United States invests fabulous amounts of money by our standards—about $80 billion a year of Government money—on research and development. We cannot ever hope to match that amount. However, if we are to achieve results, we must ratchet up the amount that we spend, so that it is a reasonable proportion of gross domestic product.

In America, regardless of whether one is a Republican or a Democrat, everyone realises that science is essential. Until now, there has not been such a belief in the United Kingdom. The previous Government may have paid lip service to science, but they never put any money into it, running it down to a critical point. Should Opposition Members ever again have the extraordinary luck of coming anywhere near being in government, they had better not repeat that mistake. If they do, they will once again start to run the UK into the ground. However, now we have a Government who are building up science. Science may not be the primary financial element in the comprehensive spending review, but it is one of the important and central elements.

It is fine to have basic science research, but we must also have innovative processes if we are to maximise and capitalise on the benefits that science can bring to our economy. I am happy to say that, in a few months, the Select Committee will offer the House more sage advice, which I hope will be equally useful to the Minister. If we get things right during this Government, in 20 years, we shall have an economy that would not have been possible without that action. I applaud the Minister and his colleagues.

9.26 pm

Dr. Ian Gibson (Norwich, North)

I should like to go a bit further than to say that I am delighted, because I am ecstatic. If they would take me back, I might even go back to that laboratory and sort out the internal guttering. We may have had some of the best equipment in the world to do molecular biology, but every time it rained, water came through, which we saw on the benches.

Like other hon. Members in the debate, I welcome the Government's action. They are sending a very strong signal not only to Wellcome but to many other organisations, which will realise that the Government are committed to science, technology and engineering. Those other organisations will pile in. I tell those who say that we need more money that I think that that will happen, as the Government's signal is very strong.

I should like to say a few things about science, although I shall be brief, as I know that other hon. Members wish to speak. We live in a very exciting time. Climate change, biotechnology and the burgeoning world of information technology will have to be dealt with, and new ways will have to discovered to solve new problems.

I returned today from a visit with a British parliamentary group to Harvard and the Massachusetts Institute of Technology, where we met parliamentarians from Germany and the United States. Despite all our arguments about global warming, we ended up at a dinner with Newt Gingrich. We did not make much progress with him on the global warming issue. However, he said that he had not realised that we could not use cellular telephones in the United States, and that he would do something about it. My hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) negotiated that matter rather brilliantly.

International competition is what it is all about in science and technology, and we must not fall behind. Although we have come a long way, we must continue to make progress if we are to benefit our economy. I tell the hon. Member for Harrogate and Knaresborough (Mr. Willis) that the Government's action on science and research has not started only in the past two days. A few months ago, the Chancellor provided £50 million for a new initiative to encourage universities to interact with industry and to start thinking—to use that word—entrepreneurially. The Government have shown over time a gradual building up to the commitment that has been demonstrated in the past two days.

Science affects foreign policy. New drugs developed in countries such as the United States and Britain are important in helping countries to overcome medical and economic problems caused by AIDS, for example. Science is therefore part of meeting our foreign policy commitments.

Much has been said about the research exercise, but I would add one thing. Interdisciplinarity is very important. The old words have to change, and we need new types of committees to decide where the money goes, breaking down the old disciplines. As for training, too many young people are stuck in laboratories to do PhDs, and are simply told to get on with them. There is as yet no real commitment to training them to develop in the emerging world of science of which small businesses form a part.

I shall conclude—everything has been said about what needs to be done. Surely we should rejoice about the sudden emergence of a commitment to science and technology, the like of which we have not seen since the white heat of technology. It is something of which we should all be proud. The Americans doubled their science budget, and we are now part of a global culture in which science and technology have rightfully come home.

9.30 pm

Mr. Nigel Beard (Bexleyheath and Crayford)

I welcome the substantial accord between the Science and Technology Committee's report and the Government's comments. Like all my colleagues on the Select Committee, I also welcome yesterday's announcement of substantial funding, which not only gives practical force to the Select Committee's recommendations but demonstrates the Government's commitment to the role of science at the heart of the national economy and our national culture.

The report and the Government's response to it mark an end to an era in which the role and purpose of university research became confused and in which its strength and confidence declined. Yesterday's announcement means that the Government have accepted their responsibility for the essential funding of university research.

The message from the previous Government was that research in universities should be targeted on economic application. As such, it was becoming ever more short-term. That is not what has given this country a reputation for being the creative engine of world science. Moreover, it is not what industry wants. Industry does not want a cheap source of development carried out by institutions that are not designed, staffed or equipped for it. Industry wants universities to be a source of new, creative ideas and new knowledge, and a source of able recruits well trained in modern research methods.

Industry can and should take that fundamental knowledge and understanding and apply it in the development of technology or products targeted at particular markets. That is what industrial research and development is for. Industry is in the best position to understand markets.

Some university research may be in the mainstream towards applications, and some may be driven by the curiosity of individuals. Both elements have to be catered for. We have struck an arrangement in the dual funding system that does just that. The support that has been announced for the Higher Education Funding Council ensures that universities will be able to speculate and generate the new ideas that might not be thought of if we stick within the tramlines of established wisdom.

A major finding of the Dearing report was the parlous state of university capital support for research. For example, many researchers were working on instruments that were inferior to those currently used in industry. The Select Committee's estimate of the deficiency was £410 million to £430 million, and the Minister's generosity has surpassed that with the £600 million joint funding. It was vital that the deficiency should be made good; without it, there was substantial evidence of a likely dramatic decline in the standard of our university research.

The deterioration, once rectified, must not be allowed to develop again. Research councils and all externally commissioned research must bear the full indirect costs of the work they sponsor. Again, the Government's extra funding of research councils will enable them to meet that extra cost without reducing the volume of research that they sponsor.

Not all universities have appeared to be in a position to assess the full cost of their projects. Without such arrangements, the proposals cannot work. If every university works out its own scheme, there will be a prodigious waste of effort. Such a variety of schemes would bewilder external sponsors. I welcome the proposals to develop a common scheme of costing under the auspices of the Committee of Vice-Chancellors and Principals.

I support what has been said about the inadequacy of short-term contracts and the jeopardy in which they put those who are engaged in research, who are the foundation of our scientific capability. They are a national asset. However, those points have been made.

I should like to talk about another aspect of university research—transferring it out into the wider national economy. Although I do not believe that university research should be over-constrained by the needs of industry, it is important that the results from universities can be easily transferred to industry. The chemical and pharmaceutical industries are good at that. The engineering industry is less good.

The major problem lies in transferring results and applying them in small or medium companies that have little technological expertise. In Germany, that is done with the help of the frauenhofer institutes, which undertake contract development for small companies that provide the market targets. That is a spur to innovation in small and medium companies and helps to transfer scientists and technologists from academic research into that sector of the economy—the mittelstand.

We have no such tradition of intermediate institutions. The Engineering and Physical Sciences Research Council is to be congratulated on establishing a few similar institutions, called Faraday institutes. I welcome that important pilot scheme. However, that is not truly the role of a research council. The aim is for research to be commercialised. It would be more appropriate for the Department of Trade and Industry to take the initiative over and expand it, perhaps in conjunction with business links. In that way, this country may better grow internationally competitive technology-based small companies. It would help to ensure that the fruits of the country's major strength in science and technology contribute to our prosperity.

This country has a record of unsurpassed achievement in the sciences that was in danger of lapsing. Yesterday, because the Government shouldered their unavoidable responsibility, that danger is passing. In the 21st century, Britain will return to the forefront of science and technology. The challenge is to ensure that those skills are applied through creative design and commercialisation to create national prosperity. It is for British industry to take up that challenge.

9.37 pm

Mr. Christopher Chope (Christchurch)

I congratulate my hon. Friend the Member for Rayleigh (Dr. Clark), the Chairman of the Select Committee, and Committee members on a thorough and well researched report that builds on the Dearing committee's comments and concludes with unanimous and valuable recommendations. The Government responded on 15 June. That was before the publication of the comprehensive spending review, but there seems to have been some understanding of what the conclusions of the review would be.

We welcome the additional taxpayer resources for science research, amounting to £471 million over the next three years. We do not go as far as the hon. Member for East Carmarthen and Dinefwr (Mr. Williams), who described the move as superlative, or the hon. Member for Norwich, North (Dr. Gibson), who was ecstatic. My hon. Friend the Member for Meriden (Mrs. Spelman) was right to draw attention to the fact that we are talking about not just Government funding for research, but overall expenditure on research and development. One can see clearly from figure 1 of the Select Committee's report that Government expenditure on civil research and development was cut significantly in real terms during the lifetime of the previous Labour Government. The Minister may be embarrassed to be reminded of that, but it is in the report.

The Opposition warmly welcome the generosity of the Wellcome Trust and the £400 million of new money that it will provide over the next three years. Would it be fair to describe that as money that would not otherwise have been spent on research? Would it have been spent in some other way on research unless the Minister had managed to garner it for the infrastructure project? Is it totally new money?

It was interesting to note the terms of the quotation of Dr. Michael Dexter, the director of the Wellcome Trust, in yesterday's Government press release. He said: In proposing this partnership with government, the Trust was quite clear that it would not invest money that would merely substitute for government funds, or leave a bad position on current funding unrectified. We sought assurances that even in the absence of the £600 million joint capital fund, the government would be making significant increases in basic science funding after allowing for inflation. That clearly suggests that the Wellcome Trust proposed the partnership and that the Government were responding to its terms in ensuring that, as a condition of that funding, a significant sum would be raised in addition to allowances for inflation.

Hon. Members will be familiar with the detail of the science provisions set out in a written answer at columns 47–8 of yesterday's Hansard in response to the hon. Member for Hull, West and Hessle (Mr. Johnson). The first point that comes across very clearly is that this year's cash baseline of £1,349 million is carried across in each of the next three years without any increment for inflation. That means that the additional programmes of £61 million for next year, £150 million in the year after and £196 million in 2001–02 can only be at the expense of real cuts in current provision if they are to be regarded as truly additional.

Inflation at 2.8 per cent. will erode the value of the cash baseline next year by £37 million, by £78 million in 2000–01 and by £121 million by 2001–02. Therefore, of the £407 million announced for additional programmes, £236 million will be needed just to maintain the value of the existing cash baseline. An amount of £171 million for additional programmes does not make as good a headline as £407 million.

Mr. Battle

Perhaps the hon. Gentleman will read the detail—and accurately. One of the things that we spelled out when we came to office was that we accepted the previous Government's figures. The previous Government left me a budget increase of 1.9 per cent., which is less than the rate of inflation, with which I have been struggling all year. I hope that he is pleased to note that there will be real-terms increases over the 1998–99 baseline of 7.3 per cent. next year, of 12.7 per cent. the year after and of 14.8 per cent. the year after that. When I studied arithmetic, that added up to an increase.

Mr. Chope

Hon. Members will be able to judge for themselves by looking at the written answer in Hansard for 13 July, columns 47 and 48. The Minister conveniently includes the infrastructure funds in the figures to which he has drawn the attention of the House. Within the much-vaunted £1.1 billion headline figure there is no allowance for inflation. As I have said, inflation over successive years will erode the existing cash baseline by £236 million.

I hope that, in answering the debate, the hon. Gentleman will explain the extravagant claims in yesterday's press release, which I am afraid have obviously taken in some of his hon. Friends, about the £407 million for the research councils. Will that meet the current and capital costs of new project funding in priority areas such as life sciences? If so, how can it be spent without adversely affecting existing provision, for which no separate allowance for inflation has been made?

Does the Minister accept that, if £407 million will really be directed to new project funding, that means cuts of £236 million elsewhere?

Mr. Alan W. Williams

May I explain to the hon. Gentleman something about all the numbers in the table in yesterday's press release—which he is quoting—and in today's statement on the comprehensive spending review? His point about inflation could be made about all those numbers. They are all expressed in real terms, so any inflation from this year to next year, from next year to the following year, and so on, would be added on to those figures anyway. They are real-terms figures.

Mr. Chope

I am sorry that the hon. Gentleman is not following Hansard, which gives a cash baseline and carries it across in actual cash terms. There is £1,349 million for 1998–99, for 1999–2000, for 2000–01 and for 2001–02. There is no allowance for inflation, but there are sums of money for additional programmes and for the infrastructure funds.

I am simply warning people who may be taken in by the Government's rhetoric that an allowance for inflation must be made before one can understand the real value of the extra money.

Page 78 of the comprehensive spending review White Paper says: the Government will invest significant new resources in the Higher Education Funding Council for England (HEFCE) to support research—together with new arrangements to ensure that HEFCE and the Research Councils work together to deliver better value, transparency and targeting in the use of research funding". Reading that, one's natural reaction was to look through the White Paper for the Department for Education and Employment's spending plans and for further clarification of what might be meant. The only information was repetitive. Paragraph 6.13 states: For both Further and Higher Education extra resources will be earmarked for infrastructure, equipment and an expansion of student numbers. This will be in addition to substantial new funding for scientific research, complementing additional provision available through the Research Councils. That is confusing, because, although the Government may have produced what they call a comprehensive spending review, they have not made a comprehensive announcement about its consequences that incorporate the funding that will come from the DfEE through the HEFCE. That is significant, because we know that during the Select Committee's discussions a view was taken that the issue of infrastructure should properly be the responsibility of the Higher Education Funding Council for England and the DfEE rather than the Office of Science and Technology.

Indeed, the Minister himself, in giving evidence to the Select Committee, said that he did not regard it as his responsibility to deal with problems relating to infrastructure. It is a matter for some concern, or suspicion, that we now find that the extra money being made available for the infrastructure funds seems to be under the control of the Minister's Department rather than that of the HEFCE.

I hope that when the Minister gives his response he will deal with the questions about the public-private partnership deal with the Wellcome Trust and tell us whether the £100 million for high-intensity X-rays is part of that public-private partnership. [Interruption.] The Government Whip knows that we agreed to have 10 minutes each for the wind-up, and I have given way on two or three occasions.

I shall conclude with a question. How will the Government ensure that the number of companies established annually as a result of the public sector science base will increase by 50 per cent. by the end of this Parliament? Is it salesman's puff or is there a business plan to support it?

9.50 pm

The Minister for Science, Energy and Industry (Mr. John Battle)

I am grateful to the Chairman of the Liaison Committee for choosing this subject for tonight's debate. The health of the United Kingdom science and engineering base, especially our universities, is essential to the future economic prosperity and quality of life of our citizens as we move forward into the 21st century. I am glad that this topic is on the Floor of the House tonight.

I compliment and congratulate the hon. Member for Rayleigh (Dr. Clark) on his work as Chairman of the Select Committee on Science and Technology. I also congratulate the superbly qualified and dedicated members of that Committee. Its reports are treated seriously within the House, and should be read far and wide throughout the country. The Select Committee has managed to push its work on science and technology out of the Committee Corridor and on to the Floor of the House; indeed, it has pushed it higher up the Government's agenda. I welcome that and congratulate the Committee on doing what I call basic foundational work, which has gone unacknowledged for far too long both inside and outside the House. It is a pleasure to be here tonight, even though we are cramped for time because so many hon. Members wanted to participate in a debate, at last, on science and technology.

Our announcements over the past two days will transform our science and engineering base and modernise the UK's research performance. We have responded positively to the Dearing committee's recommendations and concerns about the research infrastructure in universities. We have also now responded positively to the Select Committee's March report, although we had to send a holding reply in June.

The Select Committee referred to the need for substantial and sustained investment. I hope that the substantial increase in Government expenditure announced over the past two days represents the sort of investment for which it called. It sets the scene for the longer term over the next three years. We have listened to the Select Committee and taken note of its report—but, more than just listen, we have acted positively and firmly.

The fundamental message from the comprehensive spending review is that the Government are determined to ensure that we quite literally invest in the future. Our plans for science represent an innovative step change—a step forward that will take us into the 21st century. Dearing made it clear that university research infrastructure had been allowed to run down. We inherited a backlog of under-investment from the Conservative Government, so I do not take too kindly to Conservative Members quoting reductions and cuts that were the responsibility of their Government. I inherited the position, but we are now making the necessary changes.

Dearing proposed a £400 million loan fund for equipment and a further fund for buildings. As a stop-gap measure, pending the outcome of the comprehensive spending review, far from moving away from commitments to infrastructure, we have boosted the joint research equipment initiative. We agreed with the Select Committee that it was not sufficient to deal with the whole problem and that more funding was required. That is why we and the Wellcome Trust have set up a £600 million fund to provide grants for building new laboratories and refurbishing existing laboratories' equipment and other infrastructural needs.

I stress that, while at least half of the funding will be in the biomedical area, the fund will cover all science and engineering research. It is a ground breaking and, perhaps, the biggest-ever Government-led public-private science partnership. It will make a major impact on university research.

Mr. Dalyell

Will my hon. Friend confirm that all Wellcome funds are independently refereed?

Mr. Battle

Yes, that has been built into the proposal. There are no strings attached.

We are building an infrastructure of opportunity to ensure that our country is equipped and prepared for the competitive scientific and technological challenges of the 21st century. The Wellcome Trust is a major contributor to the funding of biomedical research in this country, and is the largest provider of private sector funds for university research. The new arrangements will be overseen by the Director General of Research Councils and the director of the Wellcome Trust who, together with their staffs, ought to be complimented on the constructive work that they have put into the comprehensive spending review and the joint initiatives. The arrangements will also bring together the expertise of the research councils, the funding councils and the trust.

We also announced additional funding for the science budget for new projects in priority areas such as biomedical research connected with the exploitation of the human genome. That research will lead to new industries, and will transform our lives in what I call the post-genome era of the 21st century, when things will be very different. The Wellcome Trust announced it will provide a further £100 million towards the cost of a new synchrotron x-ray machine, which will be essential to determine the structures of complex molecules and materials in a wide range of subjects—not just in the biomedical area.

Together, those announcements amount to a huge additional investment of £1.1 billion over the remainder of this Parliament. Today, it has been announced that an additional £300 million will be made available from the Higher Education Funding Council for England for research. In total, that makes £1.4 billion of additional funding for research—£1.4 billion more than the plans we inherited from the Conservative party, which was sending science in a downwards direction. We are building it back towards the future. That is good news and a clear vote of confidence by the Government in the UK science and engineering base. More importantly, it is a vote of confidence in the researchers themselves.

We have taken action to put the UK at the forefront of the next generation of scientific research and the scale of investment will make a dramatic difference. Our researchers will be able to compete more fully and collaborate more effectively with their overseas colleagues. We can now look forward to a significant contribution to those key areas of scientific research that will be important for the next century, especially in the life sciences—but not only there—which hold out so much promise in terms of transforming our health service and creating the industries of the future.

The Dearing report made it clear that there was a need to improve the management accounting within universities, to identify the full cost of research and to enhance the transparency of research funding. The Dearing report argued that universities did not have enough funding to cover the indirect costs of research and proposed that the science budget should be increased to enable the research councils to increase their contribution to overheads from the 46 per cent. of staff costs on their grants to full overheads. It is argued that that would require the universities to put in place proper cost accounting, which would ensure that they could properly cost their research contracts with industry and Government Departments.

Dearing also suggested that the infrastructure problem should be dealt with through loan pools, requiring universities to pay back the loans. Dearing saw that as a way of improving the management of research within universities. We considered the infrastructure situation to be so serious that it needed immediate action. Today's plans do that in no short measure by means of direct grants, rather than loans. In other words, we have taken action now, and it has been warmly welcomed by the House today.

Nevertheless, the Government are no less anxious than Dearing that there should be better accountability and transparency in university research funds, which must be used as cost-effectively as possible. My right hon. Friend the President of the Board of Trade announced that there would be a review of the funding arrangements for research. The review would ensure that the funding councils complement the research councils, and that they all work together to develop and deliver the best value for money, transparency and targeting in the use of research funds. Therefore, she has asked the Director General of Research Councils to take that forward in the funding councils to ensure that all those affected have a say in how the arrangements are devised. At this stage, there will be no change to the balance of the respective responsibilities for overheads between the funding and research councils. The dual support system remains in position. It is secure and strengthened.

In every debate that we have had on science and the development of science policy, a continuing theme has been the need to ensure that we exploit to maximum effect the huge benefits of our science and engineering base. We need to ensure that we make best use of our science and that the work of our universities is carried forward not only to improve the quality of life but to deliver wealth and to ensure the jobs of the future. That is why we recently launched the university challenge fund in a joint venture to provide the seedcorn for universities and to enable parts of the science and engineering base to develop the commercial potential of the research.

On a wider issue, in March, the DTI and the Treasury issued a joint consultative document entitled "Innovating for the Future". We sought replies to that consultation to ensure that we back up the work done in universities and see it into productive work in future.

We came into government saying that we would accept the brackets of the budgets that we inherited from the previous Government until we carried out a comprehensive spending review. The purpose was to set out our priorities—

It being Ten o'clock,

the debate was interrupted.

Question deferred, pursuant to paragraph (4) of Standing Order No. 54 (Consideration of estimates).

Mr. Deputy Speaker, pursuant to paragraph (4) and (5) of Standing Order No. 54 (Consideration of estimates), put the deferred Question on Estimates and the Question necessary to dispose of proceedings on the other estimate appointed for consideration this day.