Civil Research and Development

HL Deb 18 November 1987 vol 490 cc196-260

3.3 p.m.

Lord Sherfield rose to call attention to Command Paper 185 on civil research and development and to the consultation paper A Strategy for the Science Base; and to move for Papers.

The noble Lord said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. I make no apology for moving this Motion today. In the discussion of the Autumn Statement in another place, the Chancellor of the Exchequer referred to science as, and I quote, "the fashionable cry". If the subject has become fashionable it is because of the concern which the Government's policies for research and development have created among the academic and scientific communities. It was indeed this concern which led your Lordships' Select Committee last year to produce its report on civil research and development.

Although it may seem like yesterday to the Government Front Bench the subject of science and technology was last debated in your Lordships' House nine months ago, within a day or two. The committee's report was published in January of this year and received wide and generally favourable publicity. It was then debated in the House on 17th February. This debate gave noble Lords an opportunity to give their views on the report, but I did not ask and certainly did not expect the Government to make any substantial reply on that occasion. They undertook to give a considered reply to the committee's recommendations before the Summer Recess. They were as good as their word and presented Cmnd. Paper 185 at the end of July.

I wish to express my appreciation on behalf of myself and the members of the committee for this full and constructive reply to the committee's recommendations. I shall not go into detail. Noble Lords will have read the response. Suffice it to say, as regards the objectives for science and technology policy and the organisation needed to pursue those objectives, the Government accepted the main thrust of the committee's report; not, of course, precisely in the manner that the committee proposed—that was too much to expect—but in a way which satisfies me at least that policy for science and technology will now be given the priority in government thinking which it ought to have. I am glad that that is recognised today in the fact that the noble Viscount is to speak next in the debate.

I welcome particularly the establishment of a high-level Cabinet committee under the Prime Minister's chairmanship, and the setting up of a fully representative advisory council on science and technology, already dubbed ACOST, with which the Prime Minister will meet from time to time. I note, too, that ACOST will establish working arrangements with departmental advisory bodies, including the Advisory Board of the Research Councils. I am also glad to see the strengthening of the position and authority of the chief scientific adviser in the Cabinet Office, and the widening of the remit of the Committee of Departmental Chief Scientists.

As regards the research councils, the Government again welcomed the main thrust of the committee's report, but in paragraph 15 of their response they drew particular attention to the paper by the Advisory Board of the Research Councils entitled A Strategy for the Science Base, which was published on the same day as the Cmnd. Paper. This contains some far-reaching proposals, in the words of paragraph 15 of the Cmnd. Paper: for strengthening the framework within which the funding and management of interdisciplinary research in institutions of higher education can flourish".

Some of those proposals have proved to be highly controversial. The paper is a consultation document, and obviously I do not expect any substantive reply from the Government in this debate. But it seemed to me to raise issues of such moment for the organisation of scientific research in universities and polytechnics and is so closely linked with the Government's response to the Select Committee, that I thought it would he useful to draw attention to it in the Motion. I understand that the time limit for consultation expired last week.

The Select Committee in other circumstances might well have wished to make a report to the House on the ABRC's recommendations but the duration of the recess has made that impracticable. I hope, however, that several noble Lords will give their preliminary views on the report's recommendations, and I have no doubt that it will not be too late for the Government to give due consideration to them as part of the consultative process.

I now turn back to the new central structure for the formulation of policies for science and technology, and I should like to ask one or two questions about its progress. First, I understand that the advisory committee, ACOST, has been constituted, and I can only wish it well and express the hope that the Prime Minister will take the first opportunity to meet with it and demonstrate publicly the close ties with the Cabinet Committee which should be, and I am sure will be, established.

Secondly, I assume that by now the Science and Technology Assessment Office in the Cabinet Office is fully staffed up and running, and I should like confirmation of this. Thirdly, I ask about the health of two important adjuncts of the central structure. First, how about the LINK initiative to encourage collaborative programmes between the universities, government research establishments and industry, and, in the White Paper's words, to foster strategic areas of scientific research directed towards the development of innovative products, processes and services by industry"? In the earlier debate the House was informed that one such programme had been approved. To what extent has this initiative gathered momentum since then?

The second adjunct is the new national Centre for Exploitation of Science and Technology. It was announced last week that the headquarters of this organisation will he in Manchester, but the staffing and modus operandi of this centre are, I understand still being considered by a group under Sir Robin Nicholson.

How is this getting on? It seems important that the centre should be set up as soon as possible since its views will be urgently needed by the advisory committee and indeed by the Government. This project had the endorsement of the Select Committee. It is essential that it should be a success. The fate of the Technical Change Centre, admittedly a somewhat different animal, will no doubt be much in the minds of the sponsors of the new body.

Paragraph 21 of the Government's response deals with the application of the so-called customer-contractor principle laid down in the Rothschild Report of 1971. Lord Rothschild recommended that a surcharge averaging 10 per cent. should be added to contracts to provide for general research; that is, some contractors would receive more and some less than 10 per cent. According to our evidence this surcharge was seldom, if ever, added to contracts by departments, so I find the government response mildly encouraging because it seems to indicate that the surcharge is being awarded in accordance with the report's recommendations. But have I correctly construed the paragraph? Perhaps the Minister would confirm the position.

Lastly, I should like to ask whether the Government have anything fresh to say about paragraphs 32 to 34 of the command paper dealing with the civil implications of defence research and development, and in particular whether the inquiry which was being conducted by ACARD is continuing under the supervision of the new Advisory Council on Science and Technology.

Of course it takes time for a new structure to be set up, to acquire authority, and to show results, and in the meantime the world marches on and decisions have to be taken without the benefit of it. A prime example has been the Government's space policy. This is a current subject for inquiry by the Select Committee and I shall leave it to the Chairman, the noble Lord, Lord Shackleton, to deal with it if he wishes to do so. But it illustrates the delays and confusion to which the present system of policy making can give rise.

The other main issue raised by the Select Committee was the funding of civil research and development. Here the position is much less satisfactory and my welcome muted. The committee concluded from its evidence that research and development was in many cases underfunded, and in some cases seriously underfunded. It made a number of proposals for increasing resources on the part of both government and industry and not, as was stated by a Minister in another place in reply to a question on 28th October, by industry alone.

The government response outlines what the Government are contributing in various fields, but without making a commitment to the provision of additional resources which the expanding and evolving nature of scientific research and development requires. In this connection there is a need for clarification of the projected financial provision for 1987–88 and 1988–89 referred to in the Chancellor of the Exchequer's Autumn Statement in another place on 3rd November. He said initially that there would be an additional £45 million for science in 1988–89 and £65 million in 1989–90. Later on, in reply to a question, he said that the science figure he had given was for university research and that in fact the total extra government spending on civil science and technology was an extra £200 million a year.

On 4th November the Save British Science Group published an analysis of the provisions in which they claimed that in real terms the money available for research would actually decrease by £19 million in 1988–89 and by £10 million in 1989–90. There have been other press reports giving various accounts of the position.

If the Save British Science figures are anything like accurate, the Government have ignored the most recent and urgently worded recommendations of the Advisory Board for the Research Councils and the thrust of the Select Committee's report, and apparently may not even have adhered to their policy of maintaining the level of the science budget in real terms. It is most important that the position should he clarified for the benefit of the House and the public. The figures given for the increased provisions for the universities are equally difficult to penetrate and also need to be elucidated.

I shall now venture a few preliminary comments on the document, A Strategy for the Science Base. Your Lordships will doubtless have seen that a central recommendation of this paper is that institutions of higher education should be graded into three groups, or strata, and that this has met strong opposition from the Committee of Vice-Chancellors and Principals, from the Royal Society, from the British Association for the Advancement of Science and from other interested bodies—and there are really quite a number of them which I have here.

Some of your Lordships may not be aware that a sighting shot at the same target was fired earlier this year in a report commissioned by the University Grants Committee on the future organisation of teaching and research in the earth sciences produced by a group under the chairmanship of Professor Oxburgh of Cambridge University. This recommended, inter alia, that earth science centres should be set up in universities at three levels roughly equivalent to the three strata recommended in A Strategy for the Science Base. This proposal was also strongly criticised and has now been abandoned in favour of another method of bringing about a concentration of teaching and research resources in this discipline.

It is my view that this precedent should be followed in the wider context. I believe that it is not feasible to give formal gradings to institutions as complex and diverse as universities, each of which will have elements of relative strength and weakness. For my part, I think that it is desirable that the required restructuring should proceed organically with the minimum of central regimentation and the maximum of discussion and negotiation between departments or groups of departments.

There is a general consensus that a concentration of resources in science and technology, teaching and research is needed. There is a considerable difference of view as to how this concentration can best be achieved. Although in the time available it has not been able to comment on the specific proposals contained in A Strategy for the Science Base, the Select Committee has identified some principles and formed some broad views based upon its previous reports and experience. Those have been communicated to the Secretary of State for Education and Science.

I have spoken for long enough, but I should like to make one final observation. If national spending on civil research and development by the public and private sectors were adequate, some of the choices proposed by the Advisory Board on the Research Councils would be unnecessary. If public expenditure on the science base matched that of our competitors, and was rising instead of lagging behind and falling, some sacrifices contemplated in the ABRC report could be avoided. In the circumstances, there is a clear need to be selective between fields of research and to be selective between institutions at departmental level. I shall leave it to subsequent speakers to enlarge upon those themes. I beg to move for Papers.

3.22 p.m.

The Lord President of the Council (Viscount Whitelaw)

My Lords, I should like to thank the noble Lord, Lord Sherfield, for introducing this important Motion, and also for chairing the Select Committee which produced the full and considered review of civil research and development to which the Government replied in July in Command Paper 185. I am sure that I do not need to remind your Lordships that the noble Lord also chaired the Select Committee which produced another major report five years earlier on science and government. The main thrust of that report was accepted by the Government in July, 1982, and has largely determined science and technological input to government policy-making since then. As the noble Lord, Lord Shackleton, has taken over the chairmanship of the Select Committee on Science and Technology from the noble Lord, Lord Sherfield, we also look forward with particular interest to hearing his contribution in this debate.

I shall be addressing the first part of the Motion which concerns the Command Paper, while my noble friend Lady Hooper will largely concentrate on the Advisory Board for the Research Council's consultation paper, A Strategy for the Science Base. I very much regret that a longstanding prior engagement prevents me from staying until the end of the debate this evening, although I hope to be present for the greater part of it. I shall certainly read the remainder of the debate in Hansard tomorrow.

I am grateful to the noble Lord, Lord Sherfield, for the warm welcome that he has given to the announcement in the Command Paper of a strengthening of the Government's central machinery (with collective ministerial consideration under the leadership of my right honourable friend the Prime Minister) for science and technological priorities, and the establishment of the Advisory Council on Science and Technology known as ACOST. The council, chaired by Sir Francis Tombs, has been given a very wide remit. It will advise across the whole of scientific and technological endeavour, international as well as British, with the membership drawn from the business and academic worlds. The council has now met twice, the second meeting being yesterday. The Prime Minister will hold periodic meetings with ACOST and she hopes to hold the first of these early in 1988.

The Government's purpose in strengthening the central machinery for science and technology is, as the Command Paper states, to increase the contribution of government-funded R&D to the efficiency, competitiveness and innovative capacity of the United Kingdom economy". This gives a new emphasis to establishing priorities for science and technology. The new machinery is now getting underway and the Government are conducting a searching review of their R&D programmes, with a view to decisions being taken on the level and distribution of R&D expenditure in the next public expenditure round and announced in a year's time. One decision that has already been taken for the future is to increase civil R&D's share of the total. The plans announced two weeks ago in the Autumn Statement will mean civil R&D increasing to more than 50 per cent. of planned R&D expenditure in the next few years. The main additions are for universities, research councils and launch aid. Spending on civil science and technology will rise by some £200 million a year, including increases already announced, compared with the plans in the January public expenditure White Paper. Launch aid is expected to account for about half the increase. In reply my noble friend will say more about the points raised by the noble Lord, Lord Sherfield, and will deal particularly with the figures that were published questioning what the Government were doing.

The noble Lord, Lord Sherfield, also asked about the Centre for the Exploitation of Science. I know that the Select Committee welcomed the establishment of this centre in July. The centre, which is a national agency independent of government and largely funded by industry and commerce, will help identify at an early stage scientific developments which look likely to become commercially significant. The centre will develop a close relationship with ACOST, with the Advisory Board for the Research Councils and with the Department of Trade and Industry. Sir Robin Nicholson, who is chairing the steering committee of founder members, announced last week that the centre will have its headquarters in Manchester where a consortium of universities, polytechnics and companies will offer the support of a range of facilities and additional expertise. I think that your Lordships will agree that that is an excellent development which should be used to the full.

Both the Select Committee's report on civil research and development and the Command Paper put considerable emphasis on industrial R&D. My noble friend the Secretary of State for Trade and Industry is currently reviewing his department's policy in supporting and encouraging innovation. The prime need is for industry to increase the level of R&D that it funds and the department's policies will promote this. UK industry still spends too little on R&D in comparison with its competitors. In 1985 UK industry's own funding of R&D was only 1 per cent. of our gross national product, compared with 1.3 per cent. for the United States, 1.6 per cent. for Germany and 1.8 per cent. for Japan.

The noble Lord, Lord Sherfield, also asked about progress on the LINK programme under which the Government will support up to half of the cost of collaborative R&D programmes between the scientific community and industry. Five programmes developed by departments and research councils are at an advanced stage of preparation. They are in the fields of industrial measurement, electronics and biotechnology. More details will be given when my noble friend the Secretary of State for Trade and Industry announces the results of his review of innovation policy in the New Year. Proposals in some 20 other areas are presently under active consideration.

In the Command Paper we also welcome the Select Committee's support for international collaboration in R&D. The international dimension has always been important in science. We can learn much from our colleagues in other countries and an element of competition with the best minds from overseas can prove a healthy stimulus. However, as must always be the case where questions of the allocation of government funds—taxpayers' money—are concerned, we must be certain that collaborative projects make the best use of scarce and valuable resources.

The Government have been accused of having too tough an attitude in the negotiations over the European Community's framework programme for research and development. Certainly the Commission's initial ideas were far too ambitious. But we have always supported the fundamental concept and we believe that the tightly monitored programme that has now been agreed will make a real contribution to industry in the Community.

The Government have also taken a firm stance in the European Space Agency negotiations at the ministerial meeting in The Hague last week. While our commitment to European co-operation has not changed, what has changed is the scale of the European Space Agency's aspirations. Of course, we recognise that space research is expensive. However, the huge increase in cost of some of the European Space Agency's programme proposals relating especially to manned space does not appear justifiable on scientific, commercial or financial grounds. We have made it clear that we shall support those parts of the established programmes which give due weight to such considerations. We also put forward a case for greater involvement of industry and users in the planning and financing of programmes. Other member states supported our aims to the extent that several of our points were incorporated in the final resolution.

The Government agree with the Select Committee that it is important to increase the civil spin-off from defence R&D, which brings me to another of the questions raised by the noble Lord, Lord Sherfield. I should like to give your Lordships the latest figures from Defence Technology Enterprises Limited, which is the private sector company jointly set up in 1985 by the Ministry of Defence and the City. That company has privileged access to the four largest defence research establishments and looks for exploitable ideas. The company now has some 500 items on its database. In addition, some 35 licences/options for exploitation have been let or are in the final stages of negotiation. I hope that the noble Lord will feel that this is encouraging progress, at least as a start.

I should like to conclude by once again thanking the noble Lord, Lord Sherfield, for initiating this debate. I should also like to thank the noble Lord, Lord Shackleton, and the other members of the Select Committee for its continuing work. I have sought to give answers to some of the points raised by the noble Lord, Lord Sherfield, and also to give some further information to your Lordships' House. I have tried to do that very carefully within the 12 minutes allotted to me. I am very well aware of the theories of red lights and other ideas that have been put forward in recent debates. I shall not offend. Therefore I end by saying simply that the field of science and technology is one in which your Lordships' House makes a most valuable contribution to the policy-making process and to the encouragement of improvement and innovation.

3.34 p.m.

Baroness David

My Lords, we are indebted to the noble Lord, Lord Sherfield, for initiating this debate on civil R&D and to the efforts that he and his committee have consistently made to direct the Government's attention to the need for better co-ordination and more purposeful direction in the management of R&D and to the need for increased funding for science and research if this country is to maintain the high reputation that it enjoys worldwide on account of its scientists, their discoveries and the benefits of those discoveries.

As the noble Lord, Lord Sherfield, said, the committee's recommendations have been partially accepted, but I do not believe that its efforts to achieve substantially greater financial backing have been rewarded as they deserve. I doubt whether the timing of this debate, which is just after the Chancellor has announced the Government's public expenditure plans in his Autumn Statement, is right for the furthering of the committee's objectives in that way. Sir David Phillips, chairman of the Advisory Board for the Research Councils, described his reaction to the Statement as one of acute dismay. Even so, I hope that today's debate may have some effect in persuading the Government to reconsider their attitude towards science and the universities.

Before I turn to the two papers that we are to consider, I should like to echo the remarks made by my noble friend Lady White in February when the report of the Select Committee on Science and Technology, to which these new papers are the response, was debated. Hitherto, this House has had the benefit of many speakers with specialist knowledge in the field of science. I am not one of them and therefore I shall not speak for very long. However, in the words of my noble friend Lady White: we are in real danger of running short of Members who have the knowledge of science in its very rapidly changing modern manifestations—knowledge which is needed to enable this revising and advisory Chamber to do its work as effectively as we all wish".—[Official Report, 19/2/87; col. 1290.] This House tends to see the same list of speakers time and again and, though the recent addition to our ranks of the noble Lord, Lord Dainton, and my noble friend Lord Peston, is welcomed, this Chamber, as well as the universities, needs an infusion of new blood if it is to keep in touch with a field of knowledge which is as rapidly developing and as vital to the interests of the country, and indeed of humanity, as science is today. I hope that the noble Viscount the Leader of the House, whom we are lucky enough to have speaking in this debate today, will make sure that that message gets through to where it matters.

Of the two papers that are before us today, the White Paper is the Government's response to the Select Committee's report on civil R&D which was issued last November; the ABRC's paper entitled A Strategy for the Science Base is supplementary to the Government's paper and is a detailed plan produced at the request of the Secretary of State to enable him to support and amplify his answer. I am somewhat confused, as was the writer of an article in last Friday's Nature, about whether the strategy advice was considered when finalising the budget. Two rather contradictory statements from the Secretary of State are quoted. Perhaps the Minister can enlighten us on that point when she replies.

However, the Government seem to be saying that British science can expect no additional funds from them—if it needs more funds they must come from industry, from an internal source, from economies and from improved management. The plan expounded in the ABRC's report is a suggestion on how that could be managed, but the report adds that additional funds to the tune of £103 million are necessary to put the plan into action. My noble friend Lord Peston will be going into the details of finance when he winds up the debate.

Although there seems to be general agreement on the need for more concentration and more purposeful direction, the ABRC's proposals have met with widespread criticism. The Royal Society, the Council for Industry and Higher Education, and another 19 distinguished bodies, as well as eminent individuals such as Max Perutz, have come out against those proposals, and particularly the suggestion that there should be a three-tiered range of universities—types R, T and X.

I am not a scientist and I shall not go into details, but laymen can appreciate that the liveliest teachers will be those who themselves are at the leading edge of research in their subject and that the suggested separation of teaching in universities and research in universities is not a useful or even a realistic concept. The rigid division into first, second and third class scientists which would follow that plan is unlikely to improve either teaching or research. Universities are dynamic not static institutions and circumstances change. Today's standard university could be tomorrow's centre of excellence. The three-tier structure is too rigid to allow for this dynamism.

The proposal for inter-disciplinary research centres has had a mixed welcome. The Royal Society suggests it would work in some areas, in some subjects, but not in all; and that not more than 10 per cent. of the science budget could go into them. They say, "It is vital that the responsibility for determining the direction of the IRCs research programmes should not be imposed from above by the research councils. There must be the opportunity for an input by the ground level scientific community and the universities in order to ensure a healthy balance between directed and curiosity-driven programmes". Some IRCs, as I understand, have already been set up, and we shall watch them with interest.

On another tack, is there no possibility that universities could fuse with polytechnics when they are in the same town and therefore concentrate effort? Incidentally, I regret that polytechnics get very little attention in the documents that we have before us. We on this side of the House accept that there has to be some concentration of effort and that good management of ultimately limited resources is essential. The UGC has already made a start by classifying departments—not exactly a popular exercise in some quarters—and their grants follow a highly selective pattern; more than half go to 12 universities and only 10 per cent. to what the Royal Society calls the bottom 15. As a member of the UGC said to me last week: "The exercise of trying to concentrate excellence into a limited number of departments is difficult, and if it is done clumsily it could concentrate them into Southern California."

The research councils also have distinguished centres of excellence and have funded them accordingly. But these policies, to quote the Royal Society's admirably crisp and pointed submission: Whilst beneficial in some respects, have also disadvantaged some individual research workers and some areas of research. We are concerned that a further concentration would prejudice the quality of curiosity-initiated research". I should like to raise the question of the need for more explicit policies for the management of research manpower—that comes in paragraph 140 of the ABRC Report. It refers to over 10,000 research assistants in universities in 1984, which is a 70 per cent. increase over 1974. They work on short-term contracts and there are difficulties in recruiting in certain fields because of lack of prospects. The report sees the need to keep talented young scientists in play until permanent academic posts become available. It says that in the physical sciences and engineering there is an urgent need to develop a limited number of opportunities comparable with those in the biological and environmental sciences, through AFRC, MRC and NERC. Perhaps more thought should be given to the plight of the talented people who are on those short-term contracts. One suggestion made to me was that just as the business schools keep records of achievement of former students, the research councils also should keep a record of their post-doctoral employees. There is at the present time no personnel department or staff development function which could provide very useful information.

A more revolutionary idea was suggested to me at the week-end, and I thought I would try it out on your Lordships. It was that there should be two tiers of pay: first, low pay with tenure given indefinitely; and, secondly, five-year contracts, without tenure, but with significantly higher pay, perhaps 50 per cent. higher. These non-tenured jobs should be open to competition; those finishing their contracts could re-apply. As the person who suggested this said, "Lords Rutherford and Raleigh would have had no difficulty in being re-appointed". Those who were bright would be in no danger of being lost. However, I suspect that this suggestion would not meet with AUT approval.

The thing which ultimately determines the quality of scientific research is the quality of the people engaged in it; and, likewise, the quality of their training. A few really gifted individuals will not only he inventive in themselves but will also inspire the others with whom they work: without such team work few solid advances are usually made. Organisation and concentration are all very well but they must not be allowed to stifle individual flair, discourage morale and cramp basic training. The Government, in their policies for science, seem to be doing just this. Many potential leaders, seeing their prospects so limited in this country, are being lost to other countries which are prepared to devote a larger share of their GDP to university research; for the rest, what should be an adventure becomes a chore. Restrictions on universities and polytechnics, although both have made valiant attempts to provide more places despite the cuts, mean that the supply of properly-qualified scientists—to say nothing of science teachers and the skilled technicians so desperately needed by industry—is still woefully inadequate.

In this sphere, as in so many others, the Government seem to remain obsessed by what I may call the battery technique: design your coop. pack the hens in and they are bound to fulfil all your requirements. However, the general view is that battery hens do not poduce good eggs; or, at any rate, they produce eggs which are not as good as those laid by free-ranging hens.

3.46 p.m.

Lord Flowers

My Lords, we are all grateful to the noble Lord, Lord Sherfield, for initiating this very timely debate. Your Lordships' Select Committee asked that science and technology should be given a higher profile, both pure and applied and both civil and defence. We also asked for the personal commitment of the Prime Minister. In the new Advisory Council on Science and Technology we have been given, essentially, what we asked for and are delighted that the Prime Minister, herself, is to take such a close interest in its work. That has been confirmed today by the noble Viscount, Lord Whitelaw, and it is most encouraging. From these Benches I should like to wish Sir Francis Tombs well in his new responsibilities in the chair of ACOST.

The first public pronouncement of ACOST concerned the long-awaited Centre for Exploitation of Science and Technology, which has already been referred to. It is a discussion forum created by government but to be led by the private sector, which will encourage industry and higher education to develop shared perceptions about priorities for scientific research. This is to be in Manchester, in their science park. As a competitor myself—having hoped that it might be associated, somehow, with the University of London—I should like to congratulate my friends in the University of Manchester who have formed such a powerful and promising partnership with industry and the other universities and polytechnics in their region.

I would pass now to paragraph 18 of Cmnd. 125 which makes a very clear commitment about overheads being chargeable on research contracts. This is not, however, quite the same as the surcharge referred to by the noble Lord, Lord Sherfield. May I ask whether that paragraph does represent government policy and. if so, why certain departments —MA FF in particular—are still unwilling to pay appropriate overheads?

The response of the Government to the Select Committee relies upon the discussion document, A Strategy for the Science Base. This document has generated a lot of discussion and the ABRC are to be congratulated on that. It would be wrong, however, to assume that it contains newly-revealed truths, attention to which will result in miraculous benefits to the pursuit and application of science in this country. I well remember taking part in the writing of somewhat similar documents 20 years ago or more. We were keen then, as now, to select fields of timeliness and promise—to use the jargon of those days—and to concentrate resources upon them in order that scientific advance, technological development and economic benefit should follow (as, indeed, in some cases they did) when our competitors with greater resources or a sharper sense of profit did not get there first as they often did and sometimes do today.

Of course, much has happened since that time. Nowadays many universities are winning substantial research income under contract to industry. Only this Monday, at the conference centre in Parliament Square, we heard how universities as disparate as Cambridge and Salford had succesfully tackled the problems of industrial exploitation of academic research; the one with the science park, and the other with its campus company, and there are many other examples.

If a policy of selectivity and concentration has been advocated and practised so long, why does it need to be re-emphasised today? It is not merely that money for research is nowadays much harder to come by; nor is it because in comparison with our competitors abroad we are still slow to exploit our discoveries. Of course these are both important factors. But it is also because a centre for exploitation selected for some particular purpose is not especially likely to become a growth point for some later purpose. And that is especially so with the precisely targeted interdisciplinary centres so strongly advocated today, not least in the ABRC document, and now being promoted by the research councils in the guise of university research centres. New groupings of basic disciplines have continually to be sought and new policies promulgated accordingly.

The ABRC has gone completely overboard, however, when it advocates that whole universities should be classified as referred to by the noble Lord, Lord Sherfield. It has been roundly condemned by almost everybody, including your Lordships' Select Committee. We do not want permanent centres with brass plaques proclaiming their predetermined excellence. We accept the need for selectivity, but want centres of genuine opportunity determined in accordance with the merits at the time of the decision.

I can put it no better than my distinguished colleague, Sir James Lighthill, Provost of University College London. He said: [The] Advisory Board … is concerned whether exellence should be recognised at the level of the individual department or subject or subject group (a scientist would call this 'high resolution' discrimination) or whether excellence should be recognised for an institution as a whole. On this issue we … believe we have the efficiency argument on our side: such 'high resolution' discrimination must tend at any one time to direct research support most precisely into areas which are successfully achieving excellence at that time". Therefore while we applaud the creation of interdisciplinary centres when projects are manifestly ripe for exploitation or when techniques are ready for wide application, let us not suppose that they are any substitute for the generous support of basic scientific discovery in well-established disciplines. How convenient it would be if one could always predict which fields were the most useful to pursue. Unfortunately, science is not so obliging. The ABRC document quotes a revealing passage from the earlier Kendrew Report. It states: It is not meaningless to assert that research on black holes is less likely to provide utility by the turn of the century than research on self-organising systems". No, not meaningless, but possibly misleading.

In the early years of this century one might have have said that Einstein's explanation of certain planetary observations was less likely to provide utility than research on the chemistry of combustion, but within 40 years, through the relativistic equivalence of mass and energy, these observations were to lead to nuclear power. Science moves faster nowadays, so while trying hard to be intelligently more selective let us be humble about it and remember that nature provides more unexpected opportunities than any of us will ever imagine. Selectivity has its limits, a point which, to be fair, the ABRC itself proclaims before hastily passing on to less perplexing matters.

Most of the work for which the ABRC is responsible is performed in or in close association with the universities. As the first academic to speak, I must remember that university reactions to government policy have been said by a DES Minister to range from hysterical opposition to extreme sycophancy. Well, they would (would they not?) fall somewhere within that wide spectrum?

Pressing on regardless, then, I will first compliment Mr. Kenneth Baker for having squeezed out of the Treasury a little extra money for the universities. We are grateful for his encouragement. Much of the extra money will have to go towards managerial objectives, especially the funding of early retirements, if we are to balance our books by reducing still further our recurrent expenditure. But however difficult it may be, as the noble Baroness has emphasised, some of it must go towards the recruitment of young people destined to become the future leaders of teaching and research—and there are plenty of excellent candidates. To do otherwise is a certain recipe for ossified mediocrity.

Mr. Baker's efforts on behalf of the science Vote have been less commendable. When due allowance is made for prior commitments, such as agreed salary awards and the effect of currency movements on international subscriptions, only about £5 million, according to my calculations, remains for new science, which is what it is all about. That is a truly paltry sum if research in this country is to maintain comparability with that of other countries. I should like to know whether the Government consider it enough to cover even the cost of the new university research centres that we have all worked so hard during the summer to qualify for, or whether they are to be covered by still further reductions in the money available for normal grants.

Our international commitments, as has already been said, bear upon us especially hard when, contrary to the practices of our partners, they are treated in competition with domestic expenditure. Nevertheless, they represent the inevitable and indispensable summit of a policy of selectivity and concentration. We have many difficult decisions before us at the present time: whether to remain in CERN, as I profoundly hope we do, whether to be excluded from the European space programme and so on, none of which can endear us to our partners in Europe who must see us as increasingly unreliable.

And now we have a fine new opportunity also to take part in the proposed European synchrotron radiation facility which has been under intensive study for several years. This is a machine that produces intense radiation and in the X-ray region is ten thousand million times more effective than the best X-ray tubes available. It is to be used for the study of condensed matter, not least of biological materials, by physicists, chemists and biologists. It is too expensive to provide except on an international basis, but it offers immense advantages to those who will use it and the time is ripe. I hope we may be told today that the Government are giving it their urgent attention.

3.58 p.m.

Lord Dainton

My Lords, the concluding sentence of the Government's response to your Lordships' Select Committee's report on science and technology includes the phrase: They"— by which is meant the proposed changes— will not be effective without the support of the scientific community". It is no exaggeration to say that the members of that community have been anxiously awaiting this response and have carefully scrutinised it and the simultaneously published ABRC report A Strategy for the Science Base. Both those reports have been the subject of intense discussion in laboratories, common rooms, learned societies, university senates and academic planning committees. There is a remarkable convergence of opinion.

It is generally felt that there is much to applaud in the response, including especially the proposed ministerial consideration of science and technology under the Prime Minister's leadership, the establishment of ACOST—the Advisory Council on Science and Technology—which has already been referred to, with higher status and wider terms of reference than any precedent body, the acceptance of the idea of a science budget, the attempt to identify exploitable areas of science for national economic benefit and the exhortation to industry to spend more on research and development. However, there was little in the Government's response to reassure those scientists who have noted the steady decline in the past 15 to 20 years in the percentage of the gross domestic product of this country which is spent in support of research and development.

There have been many indicators of the consequential diminishing quality and quantity of UK scientific research. Indeed, the last of these was published in Nature less than a week ago. In the early summer many of these scientists were also recipients of letters from a research council telling them that although their research was regarded and ranked as being of alpha quality, which is the highest quality, it could not be supported financially. However, they received some comfort three days later, after the government response was issued, when the ABRC published its advice to the Secretary of State for Education and Science and gave cogent reasons for reversing the decline in funding for the science base. It stated categorically: The ABRC believes this [financial] constriction runs entirely counter to the increases necessary to meet national needs". The ABRC asked for increases in funding of £100 million in the first year, 1988 to 1989, £130 million in the second year and £165 million in the third year. Alas, any such hopes that that hid may have engendered were dashed just 15 days ago when the Secretary of State announced in another place what the grants would be. Not only were the increases less in cash terms than those which the ABRC had requested, but, to the expert eye, when allowance is made for special factors such as AIDS research, the British Antarctic survey, the transfer of responsibility for the Natural History Museum from the science Vote to the Office of Arts and Libraries and when those sums are done, it is plain that the remaining increases in cash will be insufficient to meet price inflation, some of which is already built in through pay settlements. As regards an expert eye, having been a member or chairman of the ABRC over a period of 15 years and chairman of the University Grants Committee, I think that in these matters I can claim the requisite degree of visual acuity.

Such financial parsimony as this settlement represents does not accord with the fine sentiments of the Government's response. Nor is it likely to elicit that support from the scientific community which the Government so explicitly desire. It will be a tragedy for this country if, once again, able scientists, their morale still further reduced by what they judge to be their prospects here, should seek their futures elsewhere and carry away from this country the benefits of their education, experience, skills, creativity and, possibly even more important, their ability to instruct, educate and enthuse younger scientists. As Sir John Harvey-Jones and fellow industrialists commented only recently, those young scientists are now in such great demand and in such short supply.

It will no doubt be argued that the money sought by the ABRC cannot be afforded. Given the buoyancy of the United Kingdom economy to which the Chancellor constantly alludes, and the great magnitude of the sums displayed in the Autumn Statement, I find it difficult to accept that a mere £100 million extra which the ABRC sought for the first year cannot be found. Indeed, I would go further and assert that the damage which the present grant will inflict on the science base is out of all proportion to the money saved.

At this juncture in our history, when the success of much of our industry depends increasingly on recent scientific advances, when the time-lag between publication in scientific journals and patent applications is diminishing—in critically important areas this has become as low as two years—what we cannot afford is this false economy. I hope that even at this late stage the Government could be persuaded to change their mind and grant the ABRC those extra resources it so desperately needs to enable basic science to make its contribution to the national wellbeing.

I have great sympathy for the ABRC and a fellow feeling for its current chairman in the predicament that it has had to face in trying to do better and more with less. It was wise to try to develop an explicit strategy for the science base. It had to cut its coat according to the financial cloth, and since merely to reduce funding uniformly is to produce general debility all round the only course open to the ABRC was the dual strategy of greater selectivity in funding and concentration of expensive resources in either national or international centres. Those are strategems with which the scientific community is already familiar and to which it has successfully adapted in many so-called "big" sciences such as particle physics, radio and space astronomy and others.

The secret of success in those fields has been the accessibility of those research facilities to researchers interested in a field, whatever their parent institution. Participation in research at scientific frontiers has the added benefit that the enthusiasm and the knowledge which the researcher consequently brings to his teaching at his home base kindles the enthusiasm and strengthens the motivation of his students in a uniquely beneficial way, a way which is not open to the academic whose contact with his subject is only through the printed word.

That there should be more such centres, especially in burgeoning multidisciplinary fields, and that wherever possible these should be located in institutions of higher education is undeniable. But it is not necessary to do this in every field. There are many areas of "small" science in which intellectually significant or industrially important advances can be achieved by small groups for which the relatively inexpensive experimental work needs to be not episodic by visits to a centre but continuous and carried out in the home base.

The value of such curiosity motivated blue-sky research, as it is sometimes called, impelled by gifted individuals has been fully recognised by the United States National Academy of Sciences in my own subject of chemistry. To make that point clear perhaps I need only remind your Lordships of that product of such inexpensive work in a small, relatively undistinguished university which is to be found in the liquid crystal display on your Lordships' watches and clocks and in the pocket computers of those noble Lords who have them.

Alas, the ABRC has gone much further than this. It proposes that institutions of higher education should be graded into R for research institutions, T for primarily teaching institutions and X for a kind of in-between category. It is perhaps not without significance that the letter X, which is traditionally reserved as a symbol in mathematics and science for an unknown and yet to be determined quantity, was chosen for this intermediate, amorphous being.

In making such a classification the ABRC made a cardinal error. It forgot that universities are not homogeneous collections of departments of uniform quality, high or low, but comprise a variety of departments of differing qualities. Moreover, the quality of a department fluctuates over time as staff change. Therefore if selectivity is to be exercised then, first, choices must be based on the quality of departments or research groups within them and not on the institution as a whole. Secondly, those who make such decisions must be prepared to withdraw support when, as not infrequently happens, the chosen research has declined in importance or in opportunity for advancement or the quality of the staff has decreased.

To classify whole institutions, as the ABRC proposes, is likely to induce an entirely undesirable rigidity into the higher educational system, denying today's lowly institutions the chance to improve and undeservedly preserving departments in highly rated universities whose intellectual arteries have hardened.

Furthermore, it is certain that the costs involved in restructuring universities and polytechnics on that scale to achieve such a stratified classification would be high. What the ABRC proposes is a remedy which is worse than the disease. I ask the ABRC to withdraw the proposal. It is a drastic mutation of the dual support system. When it reconsiders its policy, perhaps at least the biologists will remember the maxim that in evolution large mutations are usually lethal.

In these hard times, the money that will have to be found for restructuring will be far better spent in making the best use of the science departments which we have by continuing in an intensified form the policy of selectivity based on the demonstrated ability of individuals or groups of researchers, as well as by encouraging interdisciplinary research, more effective links between university departments and industry and augmenting the existing LINK programme.

4.13 p.m.

Lord Beloff

My Lords, unlike most speakers taking part in debates on science, I am not a member of your Lordships' Advisory Committee on Science and Technology. That is not of my own choosing. However, it gives me the opportunity to approach the subject in a way which implies no collective responsibility.

There is widespread agreement both in your Lordships' House and in the scientific community on two matters. The first is that this country spends too little on the sciences as a proportion of its wealth and income. Whether one believes that that expenditure should be Government money or industrial money makes little difference. After all, the money which the Government have is, in large degree, money derived from taxing industrial properties.

The second matter has been referred to by more than one noble Lord speaking in the debate and it is that we are increasingly a net exporter of scientific talent. That is a matter of great importance to the future of the country and perhaps the single most damaging symptom of our present plight.

If those two facts are agreed, one has to ask how we got into that state. Why are we alone among advanced industrial countries in facing that dilemma? When some future historian looks at the tragic story of Britain's decline in this and other fields, he will not point to a lost battle, an Act of Parliament or a treaty. He will point to a Treasury circular dated 19th September 1919. By that circular the grip of the Treasury was fastened round the throat of every other domestic department. Since then this country has been ruled by the Treasury.

What is the Treasury?—it is, if you like, a bunch of promoted bank clerks who think that they are mandarins. That is their illusion, because the mandarin was appointed to run Imperial China on the basis of the breadth of his knowledge and the depth of his experience. But we are dealing here with a very narrow field of knowledge— namely, bookkeeping—and often no experience at all.

It is possible for someone to transcend that system. Indeed, the noble Lord, Lord Sherfield, to whom we owe this debate, has done that, having been promoted from being Permanent Secretary to the Treasury to running something really serious such as our atomic energy programme. We are grateful to him for once again giving us the benefit of his experience.

However, that is a very serious matter from two points of view. The first one is relatively mundane and appears in the report from the advisory board which points out that even the limited resources available to the research councils cannot be properly used because of the continual interference by the Treasury in the way in which they manage their own limited funds. That is a page in the report which is certainly worth reading and to which I do not think any previous speaker has referred.

There is also something more important: namely, the attitude of that dominant department to science. There is the constant refrain that science can only be justified in terms of very short-term achievements. Those cannot be, in the nature of things, achieved by much scientific research. That attitude inspires the reply to the suggestions of your Lordships' committee, to the suggestions made in the advisory board report and indeed to every representation made from the scientific community through the Committee of Vice Chancellors and Principals and other such bodies.

Until we have a national voice for science which can impress not only Government but also the public at large with the importance of this facet of our national life, we shall go on suffering the kind of difficulties we read about in the report and which we are hearing about this afternoon.

In my view, the second major disaster—as I said at the time and may therefore say again—was the decision in the early 1960s to abandon the idea of a Minister for Science. I believe that my noble and learned friend Lord Hailsham was the last holder of that post. That broke the link with the Lord Presidency of the Council, and science was made part of the responsibility of the Department of Education and Science. That was a tragic error. No Secretary of State can be responsible for two basically different kinds of work and do them both successfully. It is no criticism of the present Secretary of State or indeed of his distinguished predecessors to say that inevitably, given the size of the budget and the number of people involved, they have spent more time on schools than on universities and research.

I agree with the Select Committee when it states that a Minister for Science and Technology is not appropriate. What would be appropriate would be a Minister for higher education and science. If we were fortunate enough to have that attached once again to the Lord Presidency of the Council, that would mean that in this House, where such scientific talent as Parliament has is largely concentrated, we should have the responsible Minister before us with full knowledge of the subject and the ability to deal with it.

What we have at the moment, despite the proposals for the new central organisation which the noble Lord, Lord Sherfield, has mentioned, is a situation in which science, alone of the major occupations and interests of this country, has no independent voice in the Cabinet. The armed forces, health, the social services and education have a voice. But to say that the Prime Minister, with all her other responsibilities—bearing in mind that the first meeting that she is to have with this new body will not take place until next year—can also be the voice of science in the Cabinet is to ask us to believe the impossible.

It seems to me to be essential that Her Majesty's Government—and I speak as one of their political supporters—should understand that there is no confidence in their present handling of science and the science budget. The arguments given for those economies, which lead inevitably to making absurd selections of priorities that the Advisory Board for the Research Councils suggests, are not acceptable and do not do us credit either nationally or internationally. The Government must begin by thinking again. The primary concern should be with the central machinery of Government where responsibility lies for Britain's place in the world's scientific community, for preventing our talented young people having to seek careers overseas and for understanding the way in which science operates. It is clear from the kind of language that Ministers use that how a university works, how scientific research is done and how scientific discoveries are made is a field totally alien to them.

To take up the opening words of the noble Lord, Lord Sherfield, if the Chancellor of the Exchequer thinks that science is a fashion he really should think again.

4.20 p.m.

Lord Gregson

My Lords, we are once again in debt to the noble Lord, Lord Sherfield, for initiating a debate on science and technology in the House. Now that the froth has been blown away from the financial sector, it has exposed the extent to which we as a country depend on the manufacturing sector to support our underlying economy. Although that underlying economy shows some of the short-term manifestations of strength, in the medium long-term there are already danger signals strongly indicating the potential disasters that lie ahead. The most important danger signal is the drastic deterioration in our overseas trade figures as demonstrated in the excellent report of your Lordships' committee chaired by the noble Lord, Lord Aldington.

All the activities that support wealth creation, which is the essential factor that provides the underlying strength of our economy, rely absolutely on the United Kingdom's comparative position in science and technology. That is true of agriculture and it is true of the abstractive industries—whether they be concerned with the coal mines or the North Sea—but, more than all, it is the absolute essential to the manufacturing industries of the country.

As I have said before in your Lordships' House, I believe that the country is becoming technologically obsolescent. Compared with our position over the past 200 years, we lead in fewer and fewer of the important branches of science and technology and I believe that we are heading for the day not too far distant when we shall lead in none of them. That is what I mean by obsolescence. It will be a sad day indeed for the country both economically and scientifically when we reach that point. Wealth creation needs technology; technology feeds on research in science and those two components are inseparable. I accept the Government's suggestion that industry is the place where development of technology should take place. I do not accept that. unlike every other country in the world, we can prosper without the Government supporting science in the universities and other institutions of higher education.

I welcome the Government's response to its Select Committee on Science and Technology in setting up ACOST and the other structural changes that they have since put in train. I hope that the Prime Minister will take the earliest opportunity to chair ACOST and provide the leadership in science and technology that we so desperately need.

I also accept that the policy of total equality among institutes of higher education is misguided because it has certainly led to the emergence of the lowest common denominator when we are desperately in need of excellence. We must therefore concentrate our efforts and our financial support on creating centres of excellence whether they are based on institutions in Japan or on departments as is more closely followed in the USA and Germany. I do not believe that it is important to differentiate between the two. What I believe is important is that they should be brought into being just as soon as humanly possible.

I have no doubt that to recover from our overall state of gradual obsolescence both industry and Government must spend more money than is projected at present. One of the Government's defensive tactics when looking at their spending on science and technology compared with other countries in the world is to include the £2.4 billion which is supposedly spent by the Ministry of Defence on R&D. I believe that the Government have been sadly misled by this figure. Other countries in the OECD comparisons have very strict definitions either by the use of the Frascati definition or by the use of strict accounting standards required by the Government in the case of Japan and Germany or by the Stock Exchange Commission in the case of the United States.

It is now becoming recognised that by these definitions less than half the £2.4 billion spent by the Ministry of Defence is spent on R&D that would be included in the statistics produced by the countries with whom the Government are comparing our spending. I believe, because it is so important and because these figures are used by so many politicians on both sides of the House, that the Government should inquire into this on an urgent basis and report back to the House. I should point out also that launch aid is not—I repeat, not—included in the international definitions of R&D.

It is axiomatic that to increase our real spending on science and technology we shall need more scientists and technologists. I therefore believe that it would be totally misguided to suggest that one can create centres of excellence in our institutes of higher education by robbing Peter to pay Paul. It will cost money to create excellence in the selected departments of our institutions, but it must not he at the expense of the money expended on all our institutions to provide scientists and technologists of the highest calibre, which cannot be done without combining research with teaching.

It is also extremely shortsighted to think that industry should contribute more to our science spending when what it should be doing on an even more urgent basis is spending more of its money on developing technology to create new products and new processes. It is also wrong-thinking to suggest that industry can conjure up this spending out of thin air when it is dominated by the "short-termism" of its shareholders in the City of London irrespective of the CBI whitewash. Almost every other country in the world provides tax incentives for R&D spending by industry. Despite, or perhaps because of, that dreadful little paper produced by the Revenue as part of the Government's response to the Select Committee report, the Chancellor must reconsider and introduce tax incentives at the earliest possible opportunity.

We shall not halt and reverse the comparative decline of this country's standard of living unless we halt and reverse the decline in our science and technology. It will require the strongest possible leadership from the Prime Minister. It will require a great deal of effort from many, many people. It will require more expenditure from the Government for science and more expenditure by industry to be drawn through into technology and subsequently into products and processes. If this does not occur our children will never forgive us.

4.30 p.m.

Lord Kearton

My Lords, like the noble Lord, Lord Sherfield, I welcome the thrust of the Government's White Paper. I hope that when ACOST is fully functioning its deliberations are fairly transparent so that we know not only the results of its discussions but also the reasons for its decisions. Although the Government accept the thrust of the report of the Select Committee it is very coy on the question of finance. The hamburger customer would say, "the bun is very nice, but where is the beef?"

The ABRC report is also a very excellent analysis. It makes specific recommendations. There is room for a great deal of argument and even disagreement on, some of its suggestions. As suggested by many previous speakers, the three-tier university proposal is really a non-starter. I have some doubts whether we should rush ahead too fast with multi-disciplinary units and go overboard on targeted research.

Like many speakers, I have had some experience of multi-disciplinary units. They tend to have a limited life. A unit with a large building, a large establishment and a brass plaque is not really the sort of thing we want. I have doubts, too, about targeted research. I suppose that the military have done more targeted research than anybody. And, by jove, have they not had some colossal bloomers? One needs only to recall a recent example like Nimrod to realise that throwing money away in billions of pounds does not necessarily give results in connection with targeted research.

Reference has been made to the later report from the ABRC on science and public expenditure. The reply from the Government is very disappointing. The Government must think the scientific community a hunch of nestlings—mouths always wide open. It is an enormous selection of mouths. There is hardly any scientific endeavour that is not asking for more money.

The Government may have been right to restrict money in the last few years. Anyone with direct experience knows that most research establishments in receipt of government funds, and, for that matter, most universities, are much better run, much better organised and more tied-in to the real world than they were nine or 10 years ago. There is better management, better choice of priorities. In fact the universities, commerce and industry are probably closer together now than they have ever been. The contribution of the universities has probably never been greater.

In paying this tribute to the universities, I should like to say that the UGC has done a wonderful job. For that matter, so have the principals and vice-chancellors of most of our universities. For nearly 10 years, they have been under more pressure than almost any other body of people in the country. And, for the most part, they have responded magnificently. They have gone out to get industrial support; and industrial support has increased. The dialogue has led to much closer identification of research activities with both local and national industry.

Something that strikes me is that nowadays there is a shortage of spectacular benefactors among today's rich men. Patronage has always been a powerful underpinning in the past of scholarship and research, universities and colleges. One only has to think in one's own lifetime of the effort of the Nuffields, the Wolfsons and the Robinsons to see that there is still a major place for rich patronage.

One of the Select Committees dealing with medical research at the present time had reason to note the extraordinary run-on from Sir Henry Wellcome's benefactions of two or three generations ago which are even now producing one of the great contributions towards medical research in this country. One hopes that some of our extremely rich men—I am told we have more millionaires and billionaires than ever before—might like to think about carrying on with the traditions of the past.

It is very pleasing that the big companies (including nowadays the financial institutions) are also becoming much more closely involved with management and organisation of research in universities and institutes. We all welcome the centre for exploitation of science in Manchester. It is on the same lines as the new institute for information technology set up at Milton Keynes which again was sponsored by industry and managed by Cranfield Institute of Technology.

I see that the noble Lord, Lord Kings Norton, is in his seat. Cranfield was the child of Lord Kings Norton's initiative 40 years ago. It has grown to be one of the most prestigious establishments for technology and the development of technology in this country. Under the leadership of our absent colleague the noble Lord, Lord Chilver, it, has now reached world status. When one visits Cranfield, one finds that it is almost entirely financed by outside contributions. These contributions come from America, Japan and Europe. It has become a centre of world excellence.

Perhaps I may make a reference to the extraordinary achievement at Warwick University of the noble Lord, Lord Butterworth. Warwick University is almost unique and a model of the kind of university which the Government wish to see in the future. Many years ago the noble Lord, Lord Butterworth, saw what was needed. He has built up a university which comes out top of the assessments made by the UGC, and others in recent years.

I should also like to mention one of the newer technology universities; namely, Aston. That has been transformed by Sir Frederick Crawford. Sir Frederick Crawford came to Aston after 20 years at Stanford University, one of the great private universities of America. Stanford was, as it were, really the parent of silicone valley; and nowadays, when one goes to see it. it is almost the parent of everything going on in molecular biology. Sir Frederick Crawford's intent is that Aston should become the Midlands' Stanford.

I mention this to show that we are in many ways now moving in the right direction. Having said that, I feel it is high time that we encouraged some of our universities for what they have done, and most important of all, rewarded them.

We have no shortage of talent in this country. Statistics show that we do not have the same proportion of people going into higher education as is the case with many of our rivals. But the standard of entry of the people going into our higher education is probably the best in the world. If one looks at the recent report of the University Council for Admissions one can see that the standard of admission has gone up appreciably in the past eight years. It has gone up to the present level which is the highest it has ever been.

I occasionally have to look at examination papers, and although I am a university graduate, as most of your Lordships are, I think that a great many of us would have trouble in gaining entry into university today. The standards are really extremely high. What has underpinned our universities has been the dual support system. It has worked well in the past; it is working better now than it ever has done. But both the universities, the UGC and the research councils are bedevilled by a most acute shortage of funds. The fruit has been squeezed and the pips have squeaked. It is time to stop the process of death by a thousand cuts. We have the most valuable single asset in this country in our universities. I appeal to the Leader of the House that the Government must act to restore morale.

How much money is going to be needed? A figure of £100 millions for research and a figure of £100 millions for the UGC would absolutely transform the situation and would suffice to give the whole of our university system a great leap forward and a great increase in morale. After the developments of the past few years, the money would have been very well spent.

The Government may say: "We have not got the money". I agree very strongly with my noble friend Lord Dainton who said that if we are doing so very well, as the Chancellor keeps on telling us, it is a shame that we cannot find a comparatively paltry sum to keep the universities flourishing and in good heart.

Assuming one is challenged and is told "We haven't got the money" what does one cut if one is not going to get the extra money? I spent a lifetime in atomic energy research. To go on spending £100 million a year at Dounreay on a fast reactor when it has been announced that we are not going to build a fast reactor within the next 20 years is mad. That expenditure really is mad. Equally, I think that technology, the science and the engineering, at Culham and JET is out of this world. I repeat the phrase; it is out of this world. Its practical use may be 50 or 100 years ahead. If we are saving money, I would save some there. CERN has been mentioned. It ranks with Culham as one of the great intellectual wonders of the world. No one is going to tell me that finding out more about quarks and bosons, and all the rest of it, will do much in the next 10 or 20 years for the industrial wellbeing of this country or Europe. CERN should continue; but I think we should reduce our subscription and get more people to share the burden.

More than anything else, I hope that the Government will finish this debate by saying that in view of the strength of feeling in all parts of the House, yes, they will provide the university system with more money.

4.40 p.m.

Lord Trafford

My Lords, I hope that the noble Lord will forgive me if I do not follow his remarks directly, but I wish to comment upon one or two other points. Paradoxically, I feel that one of the areas that needs research is that of research and development itself. We mean a number of different things when we refer to research. The Select Committee and both papers that we are discussing broadly follow the division into fundamental, strategic and applied research.

One of the questions that we have not been asking ourselves is: what is the value of the basic research (the most expensive research)? I trust that none of your Lordships would dispute the virtue of science; the virtue of the acquisition of knowledge for knowledge's sake, even if there were no obvious end product. A classic example of how wrong one could be was given to us by the noble Lord, Lord Flowers, who pointed out how many of us might have made the wrong decision if we had sat on a government committee considering Einstein's theory of relativity and an alternative which seemed to be a more immediate prospect in the earlier part of this century. That is not the question we are being asked. The question is: what is the value that the Government and the public should put upon their support of fundamental research? It is not a question of the virtue of that research.

Unfortunately, we do not have the answer to that question. The Select Committee, with considerable courage, looked at that question. I am sure that the noble Lord, Lord Beloff, will not be surprised to know that the Treasury said that there was no relationship between the amount of money put into basic research and the subsequent economic and social benefits to the nation. That is what one might expect the Treasury to say. But the committee looked further than the Treasury answer. A few other answers were studied.

One can only say that they were equivocal. It is extremely difficult to put a quantitative value on such a price. The committee came to the conclusion, after considering the representations made to it, that the consensus of opinion was that basic research was of great value. That is not surprising because of course the committee was talking to the people involved. It was talking to scientists. If we ask generals whether they think an army is of any value, the answer would probably be "Yes". We might even ask the clerics whether they think the Church is of value. The answer would be "Yes". But to the question: of what value? I have no doubt that they would have different answers.

However, there is one disturbing historical analogy, Japan. Japan never spent much money and was not especially renowned, during the earlier years from its renaissance to its economic success, for its basic research. It has since changed some of that expenditure, but in the earlier years, when all the dramatic results came through in terms of the Japanese economic and social success, it did not spend much on basic research. It has always been exceptional in the field of development and, to a certain extent, in applied research but not in basic research, which is the most expensive.

In one sense we could say that the Japanese opted for a different approach. They decided to buy in—most of it American—rather than to do the research inhouse. The argument put forward by many of your Lordships today has been that we should have been doing more research inhouse. The Select Committee concluded that basic research, on the balance of probability, was a Good Thing. That is what one might term, a "1066 and All That" remark. It is a good thing. I must confess that I have the same gut feeling—it must be a good thing.

However we must always bear in mind the division of the science budget—the element that goes on fundamental research and the element that goes on strategic and applied research. I shall say no more about that subject now.

This country is bad in the development, marketing and making of products. The story is as old as the hills—the penicillin, the jet engines and everything else that someone else develops, and someone else eventually markets better than we do. Even in more direct fields we are still left asking one question. Please articulate to us as taxpayers if you want our money pumped into this exercise: what is its benefit, or, if we do not do it, what is it that we miss?

I listened carefully to all the protagonists of the European space programme. The arguments lasted about an hour last week. At the end of the day, I could not have said what on earth it is that we are supposed to be missing if we do not put in all this extra money. What will we gain if we do put in all this extra money? We were told that we would lose out in terms of space and all the spin-off technology for the next 30 years. That cannot be true, because at the same time we were told how well we were doing with satellite technology, and how effective we are in industrial terms in that connection. I was not convinced by such an argument.

Having made those remarks about the question that we should always keep before our minds, not of the virtue, but of the value of what it is we are trying to buy, it is essential that we have a proper, central direction for our research efforts. I therefore especially welcome the development of a central Cabinet committee—and we hope that the Prime Minister will attend it as frequently as possible—that will enable considerable drive and direction to be given in this field. I hope that it will also help to overcome some of the criticism of the ABRC by some of the research councils for the way in which it was putting forward many of its proposals and acting, in some respects, almost as a super research council.

There are difficulties in the research councils' bureaucratic structure. Anyone who has had the experience of applying for a research grant will he aware of how one is inundated with paper and how thick is the volume one has to fill in even for the most minimal research and the smallest grant. In the end, one is probably better off trying to obtain it from somewhere else. I shall add, in answer to the noble Lord, Lord Kearton, that there are plenty of sources—not necessarily rich men—of what one might call "minor money".

The research councils are somewhat stereotyped in their responses. They tend to back those who are already in position without considering the coming people in the universities or other places who might merit a little support at the right time.

Another criticism could be that the Medical Research Council is too fond of pumping money into institutions. Once that is done, how do we know—although we have a continuing commitment—that the value we expect to obtain (if we obtain it at all) from that institution will continue? So it goes on.

I know more about medical research than others, and I should have said that most of the valuable advances in medicine have come not from MRC foundations or universities, but largely from research, sponsored, funded and supported, by the pharmaceutical industry which has not received much credit for that aspect of its activities.

I turn to the question of the universities and the necessity for developing what the ABRC called exploitable sciences. Everybody agrees that this requires restructuring in universities. It requires flexibility, new blood and a change in morale. But what do we do? We shoot ourselves in the foot.

If we require flexibility in the restructuring of universities then we need to tackle other problems in the universities: the problems of tenure and a fairly rigid structure. One can do it by means of a rather brutal knife; it happened to Salford where it lost, I think it was, 33 per cent. of its grant in fairly sharp turns. As a result of such a threat, it made a massive change. We need to build into this flexibility. However, I have not yet heard of any suggestion, except the most minimal tinkering with the problems of tenure, that is likely to come forth in the expected Education Bill. This is a weakness. It means that it will be years before one can effect the restructuring necessary to give the emphasis to the exploitable sciences idea.

I turn again to the question of the three-tier university system. I do not like this system. I share the views expressed by my noble friend Lord Beloff and other noble Lords who have spoken, and in particular the noble Lord, Lord Flowers. There is no place in a university system for a teaching university without research. It is not a university at all. It becomes a limited college with limited abilities.

There is an argument for saying, "There are 50 centres of excellence which are called universities. Do we really need 50? Are we not spread too thinly"? Perhaps we are. Perhaps we should get rid of 10. Then let us have the courage to say so. Get rid of 10; get rid of 15, my Lords. Do not call them universities and give them a role contrary to the fundamental task of a university.

There are many points that I should like to raise here. Before I sit down perhaps I should declare an interest in this subject. I happen to be the chairman and Pro-Chancellor of a university. I make the plea therefore that whatever universities we keep should remain universities. Let us have the courage to change those others into whatever it is we wish them to be. Noble Lords can say that is a plea in part with a vested interest. That is a matter I criticised earlier when I was commenting on the army and generals.

In summary, we always need to keep before us one major question. Are we talking about the return on the value of the money we are spending in the social and economic context, or are we talking about the virtues of knowledge for their own sake? These are two quite different things and it is the former to which the Government should address themselves.

4.53 p.m.

Lord Perry of Walton

My Lords, I must first apologise to the House as I very much regret that I shall not be able to stay to the end of this fascinating debate.

My colleagues on the Select Committee and other noble Lords have already covered many of the points that I should have wanted to make, but many of them bear repetiton. I do not think that I or any other Members of the House have said a word about the welcome that we all give to increased concentration on the exploitable areas of science. It seems to me that it is being done at the expense of neglecting the non-exploitable areas, or the non-immediately exploitable areas.

I suppose what bothers me most about the proposals for more selective funding is that I believe that funding has always been selective and in many ways is already selective enough. There has always been a large measure of selectivity in the research funding of individual departments. This has stemmed not only from the research grants from research councils which are subject to peer review but also from within universities, because universities in my experience support their better departments rather more than they support their weaker ones.

The critical fact about this variability is that the pattern can change extremely quickly. Just as a new headmaster can make or mar a school very quickly, so a new professor can make or mar a department. Good research is, I believe, more dependent on people than on anything else.

When I was a young man—it is a very long time ago now—I was fortunate enough to work in the National Institute for Medical Research in the laboratory made world famous by Sir Henry Dale. In it there was a constant excitement, an exhilaration, a ferment of ideas. It was impossible for anyone to work there and fail to be enthused. Indeed, every one of my colleagues at that time have gone on to achieve great distinction in their own fields, to make great contributions to research, and they have fired the enthusiasm of those in the departments that they headed in the various universities in the country.

Neither in these departments nor in the national institute was there any massive expenditure. Research was not "big" in that sense, but it was basic. It was not felt necessary that it should have any immediate exploitability, but it often did. I believe passionately that to lose that atmosphere is to lose something of extreme value and immense importance. Despite the fact that the noble Lord, Lord Kearton, has suggested that the management and organisation of universities have improved a great deal in the past eight years, I observe nothing but a loss of enthusiasm and an increase in disillusionment and bitterness about the cuts, not only in the university budgets but in the budgets that are available from the research councils.

What worries me is that the drive to make research more exploitable—a thoroughly admirable drive—may well make matters worse. The ABRC report states in paragraph 1.25: We recognise that Councils wish to support good science wherever it arises and that, in departments with an overall rating"— that is the UGC rating— of only average or below, there may well be one or more outstanding individuals or teams who merit support. But this kind of approach. while we can understand the reasons for it, is not conducive to the concentration of effort which we believe generally to be in the national interest". That frightens me silly. That the research councils should turn their backs on outstanding individuals is extremely dangerous and ignores the most precious of all the resources of the country—those very outstanding individuals.

Turning to selectivity between institutions, if we look carefully we find once again a very large measure of selectivity. There are already alpha institutions, or, to use the new ABRC terminology, R universities. This has happened quite spontaneously without any categorisation or management at all.

If noble Lords will forgive me—I seem always to do it in this House—perhaps I may refer to the Open University yet again. There was a case—it was made very strongly, in particular by the Treasury—that the university should not have a research base at all but should be a teaching institution. It should be a T university. I fought this extremely hard for many years. We advertised jobs as though they were in a proper university, with the encouragement of the government of that time. However, obtaining the facilities to back that up became extremely difficult. Despite all that, one of my colleagues, Professor Gass, had the enthusiasm about which I talked and succeeded in bullying not only the research councils but also me to such an extent that we gave him more and more money. His department of earth sciences is now one of the most distinguished in the country; one that is referred to in the report mentioned earlier. So it turned out to have been a worthwhile fight to insist that the university be not a T university.

It is worth pointing out that if it had been categorised as a T university the following sequence might well have happened. We should not have been able to attract staff of quality from the existing universities. Perhaps I should also mention that the earth sciences department was not only a good research department but it turned out some of the best teaching material now used all over the world. We probably should not have been able to provide good teaching materials and we probably should not have become a reputable university or achieved credibility in the academic world. There would have been even fewer science and technology graduates in the country than the number which is already said to be too few. Finally, there would have been fewer Open University systems throughout the world which have needed science and technology graduates.

In paragraph 1.32 the ABRC report says of the proposal overtly to differentiate universities: In proposing this differentiation … we recognise that it may give rise to concern about the creation of a rigid hierarchy of institutions". It goes on to claim that this need not be the case, but the arguments to this effect are far from convincing. I believe there are very good grounds indeed for concern. My plea is for a continued flexibility, even if it costs more.

My second point refers to paragraph 29 of Command Paper 185. This concerns technology transfer. It says: The Select Committee urge the Government to expand their present effort in aiding the inward flow of technology". There was a time not so long ago when a large proportion of all the major advances in science and technology originated in the United Kingdom. The provisions made for research in the United Kingdom were looked on with envy by the rest of the world, but while this was true of the R it was not true of the D. As others have said, there was little tradition of industrial investment in development and little government stimulation of it.

Much of British industry at that time continued to rest on the lead it had established in the industrial revolution. In the United States, in Japan and in Germany there was lots of money for development, so the fruits of British research were developed abroad to the commercial advantage not of the innovator but of the developer. This was a net outward transfer of science and technology from the United Kingdom and it depended on two things for its successful exploitation in the United States and elsewhere. It depended on lots of money for development being available, but it also depended on enough people being able to understand and to exploit the research that was imported. Since neither of these was true in the developing countries, there was no net transfer of technology to them.

Paragraph 29 proposes a net inward transfer to the United Kingdom of research done abroad. I am afraid that we in Britain are now in the same position as the developing countries were in some years ago. We still have far too little industrial investment in development and we are already approaching a point where we have too few people trained to understand and exploit the research that we hope to import. This is because of restrictions in university support and because of the renewed brain drain.

This is a devastating situation that must be put right. There may be a case for the Government to claim that development must be funded by industry. But it still is not. Research is now so depressed that in the United States, where they are very aware of our new situation, they look on the provision for British research not with the envy of former times but with frank pity. Research funding is a responsibility of the Government, not of industry. It desperately requires more support.

5.5 p.m.

Lord Hunter of Newington

My Lords, the noble Lord, Lord Sherfield, was as stimulating today as he was when he chaired the Select Committee. The House owes him a considerable debt. As has been said, two of the substantial successes of your Lordships' Select Committee on Science and Technology have been to get government agreement, some years ago, that there should be an annual report and publication of departmental research and more recently, that there should be annual consideration of R&D across the board as part of the public expenditure survey by ACOST and the Prime Minister's committee on civil science. Today we are looking at the response and the question of the science base which is substantially in the universities and in the research council institutes.

But other things are happening which are relevant to the situation we are debating. There is the Croham Committee report, which has been debated in the House, on the future of the UGC and university funding. That committee was right to take as its starting point the political and financial realities of the day rather than an idealised situation based on the universities' view of themselves on their aspirations of yesterday. One matter I should like to return to later is the recommendation regarding collaboration between the Department of Education and Science and the health department in relation to the science base in medicine.

There has been a series of reports by the ABRC and, importantly, one which I do not think has been mentioned this afternoon, the ABRC/UGC report on university research published in 1982. This report pointed out: general support of university research has allowed academic staff to keep in touch with their subjects, has enabled new researchers to become established, has provided continuity of research support and has enabled 'a wide spread of initial and innovative investigations to be carried out from which future growth points will emerge'. On the future funding of the research councils and more recently as strategy for the science base, the ABRC makes radical proposals on the future of universities, far exceeding its original role of advising the Secretary of State on research council expenditure. It is now proposing the radical changes which have been mentioned in the science base which conflict with its own views in 1982, and one wonders why those views have changed.

Before one considers this further—with special reference to the medical science base—one must emphasise the undoubted success of the system of funding research in the universities for well over 50 years. It cannot be stressed too often that the success of the research councils has, to a substantial degree, depended on picking up bright ideas and bright people in the universities who have begun their work with UGC funding, encouraging and exploiting them and then when they begin to falter sometimes dropping them. The first victim of university cutbacks was the sacrifice of the well-founded department staffed and equipped by UGC funds to carry out this primary role. In fact, universities had already begun to accommodate change by linking departments and by aggregating resources into larger units. They are not against rationalisation or competition, but they have strong views as to how this can be done to preserve the research base.

Universities are also acutely aware of the necessity of getting value for money but they recognise that in basic research resources must be cast upon the waters or sometimes used to back up a promising individual. They recognise that in these circumstances the result may be disappointing and the resources apparently wasted, but they recognise very clearly in the field of basic research the ineffectiveness of peer review, as well illustrated by the UGC's awards of new blood posts to the universities. More than half the time the priorities they gave were different from the universities' own. They tended to back established developments, which is one of the consequences—some would say dangers—of peer review.

Loss of this flexibility is the overwhelming effect of the ABRC's proposals. As I have already said, the new blood schemes of the UGC of a couple of years ago substantially supported the established, not the new, ideas. There is widespread concern that, with the new proposals, the Universities Funding Council would be unable to cope with this situation.

The Croham Committee said of the UGC: Dual leadership by a non-excutive Chairman and a executive Director General would ensure that the Council was able to speak with authority to the Government, the universities and their customers". It also stated: It is essential that the post of Director General should have equivalent status to the present post of UGC Chairman, should carry at least an equivalent remuneration, and should be filled by a person of the standing and experience of successive Chairmen of the present Committee". Where does this take us? Most would agree that the chairmen of the UGC over the years have been an outstanding success. Why are the ABRC proposals about grading being introduced at this time? Would it not have been reasonable to consult the new chairman of the universities funding body? Universities will support the UGC's present activities in examining vigorously the different disciplines in the universities but not the labelling of universities which may be good in engineering and appallingly bad in another area such as physics.

In evidence in recent weeks to the Select Committee looking at medical research, the DES emphasised, the need to ensure that there is a healthy foundation of basic science and an assured programme of strategic research". The department did not say that so impoverished is the MRC that the resources provided to train medical students in science are now practically non-existent. Then the department said: The best way forward is evolutionary change within the present system rather than radical changes in either organisation or funding". If that is the Government's view, one awaits with great interest their response to the ABRC's science base proposals.

Because the Government have obviously departed from the traditional situation with the well-founded departments, the question must be asked: where are the vital resources going to come from? This has been mentioned. Will they he provided by industry or research foundations, as is substantially the case in the United States? That the UGC is no longer in a position to do so will doubtless increase the emigration of young scientists to the United States and elsewhere where substantial funds for their training are available. Many may not come back.

The ABRC report states that the strength of the Research Council Institute of concentrating effort in areas of strategic national importance needs to be built on. It also says in paragraph 1.39: Schemes should be developed to enable talented young academics to concentrate on research". All this sounds wonderful but none of it has been costed. One does not see how different parts of the report fit together.

One has also to consider the time-scale of changes of the kind that have been proposed. The Todd Report recommendations of 1968 come to mind. Following the recommendation that London medical schools should be merged and the postgraduate institutes moved to the medical centres to concentrate resources—somewhat similar to the present proposals—I prepared the first plan of the UGC to do this. What happened? Four plans and two inquiries later, as the noble Lord, Lord Flowers, will know, the changes proposed 20 years ago are now taking place. The ABRC proposals will give rise to controversy and no savings in the lifetime of this Government or the next. The only immediate way of making savings, as has been hinted at or suggested by the noble Lord, Lord Trafford, so that there is money to create new developments, new flexibilities and aggregations is to shut five or six universities and spend perhaps £100 million next year to fund the changes. Can the Government face this practical possibility?

Against the background of all this uncertainty and failure of the support system, the medical schools face an additional complication. Twenty years ago it was government policy to embed medical teaching and research facilities provided by the UGC in NHS teaching hospitals. These hospitals were run by boards of governors directly responsible to the Secretary of State. The Pater formula dealt with costs. The Croham Committee noted this and recommended it should continue but that it should not he itemised.

What it did not say was that the board of governors disappeared in 1974. The teaching hospitals carry out most of the National Health Service research and development. In fact, having regard to the constant battles of recent years about academic clinical salaries between departments, one wonders whether the costs of clinical medicine teaching and research and development should be funded by the NHS through hoards of governors. This would eliminate a number of other difficulties. The NHS staff have very generous removal expenses; university staff do not. The disappearance of the well-founded clinical department funding of the UGC makes the matter urgent if National Health Service research and development is not to falter.

If my suggestion was implemented there would be no difficulty in ACOST knowing exactly how much money was spent on research and development in the clinical schools and in the National Health Service. This could be accurately accounted for in a way that is quite impossible at the present time.

5.17 p.m.

Baroness Lockwood

My Lords, as a member of your Lordships' Select Committee on Science and Technology, I should like to thank the noble Lord, Lord Sherfield, for introducing the debate and to endorse much of what he has said, particularly the welcome that he gave to the Government's response in Cmnd. 185 in relation to restructuring central machinery for government policy on science.

The response has also taken up positively the Select Committee's recommendation that approximately 1 per cent. of all Government R&D expenditure should be devoted to evaluation. We understand that the Science and Technology Assessment Office will discuss with all public funding bodies of research and development the need for adequate resources to be devoted to the assessment process, including ex-post evaluation. This is to be welcomed. The Select Committee saw this process involving not only programme and project efficiency but economic, social and scientific returns and the relevance to explicit policy goals—in other words, the value about which the noble Lord, Lord Trafford, was speaking.

The committee was keen to see the evaluation process accepted as a discipline and not as a threat. If these objectives can be achieved, they will make an essential contribution to both the focusing of our research effort and to a more effective outcome. While I welcome the structural changes and the Government's apparent understanding of the crucial importance of science and technology to our country's future, like the noble Lord, Lord Sherfield, and others, I regret that the Government, who apparently will the end, do not appear prepared to will the means.

Your Lordships' Select Committee was concerned with two aspects of funding. The funding of basic research, which is largely dependent on public funding, and the application and development of that research, which is largely the responsibility of industry. The noble Viscount the Leader of the House referred to the very strong case that there is for more industrial investment in R&D, and I am sure that we would all agree with him.

A paper presented to the annual meeting of the British Association in Belfast this year examined the decline in British R&D expenditure as a proportion of GDP between 1967 and 1983. It also examined the ratio of profit devoted to R&D compared with other countries. It shows the decline of the United Kingdom's share of European patenting in the USA. This all indicates how Britain's position has deteriorated not only in relation to the United States and Japan (with whom we are often compared) but also in relation to our European partners as well.

Among other causes, it ascribes this to the weak commitment of British management to increase its share of profits and of growth to R&D compared with foreign competitors. But the fact that industry, with some honourable exceptions, has failed to invest in R&D to the extent that it should, should not provide a shield behind which the Government can hide for their failure to provide adequate resources. We have heard, however, that there is a chink of light. Other noble Lords have referred to the establishment of the Centre for the Exploitation of Science and Technology, which is largely industry funded; and one hopes that this body, together with ACOST, will be able to help change the direction of British investment policy. But I enter onecaveat about CEST—as I understand it is to be called.

In competition with other universities, as the noble Lord, Lord Flowers, indicated, Manchester has been successful and its science park will house the centre. Manchester, with its former pre-eminence in industry and commerce and, I hope, with the prospect of restoring that pre-eminence, and with the support of the strong academic base in the North-West, is a sound choice. But as one who had the responsibility for setting up a national body in Manchester (the Equal Opportunities Commission) I recognise the problems. Establishing a high profile for a national agency in the provinces requires extra effort on the part of the agency itself and those who support it. This new agency will depend on companies, large and small, academic institutions of all kinds, and government departments throughout the whole of the country, south of Watford as well as north of Watford.

I turn now to some aspects of the ABRC's consultative document. In my experience, universities have recognised the need to bring more direction and concentration in our scientific effort; but it must surely give us pause that the university community as a whole, and many of our eminent societies, have all reacted critically to the proposal of a three-tier system in our universities. I must say that I share their concern. It seems to me inappropriate to classify institutions on the proposed RXT basis for the purpose of funding research, and that the only sensible way seems to be on a subject basis as the UGC attempted to do in its first research selectivity exercise.

Like the noble Lord, Lord Perry, I should like to look at this by illustrating the possible consequences for one of the universities with which I am associated. Bradford is one of the new technological universities. It has a high proportion of sandwich courses and has strong links with industry. It ranks second in the list of the top 10 universities with the highest percentage of graduates entering long-term jobs as at 31st December last.

But Bradford is acutely conscious of the fact that if it were rated on the basis of its income from research councils alone it would not stand very high. On the other hand, the proportion of its external funding coming from industry is higher than the average for universities as a whole in the country. This, one would have thought, would be regarded as a plus; but as many universities close to industry have also found, it does not rate substantially high in relation to calculating UGC recurrent grant.

My noble friend Lady David and others referred to the fact that universities are not static. They are dynamic organisations. In the UGC research selectivity exercise Bradford, a small university which since the 1981 cuts has under 30 departments, had three rated above average—that is, chemical engineering, modern languages and management. All three are recognised as ranking among the best in the United Kingdom, and all three are relevant to the known priorities of the Government. What would happen to these departments if the university were not given an R ranking? Would they continue to attract the same top quality academic staff and the same high level of external financial support? It is doubtful.

Another danger to which the ABRC report refers, and somewhat glibly passes over, and one which was referred to in paragraph 1.32 by the noble Lord, Lord Perry, relates to rigidity. Arranging universities into these three types of institution would, I believe introduce a quite inappropriate degree of rigidity into the system. It is not realistic to assume that institutions could move between the different types of category given the great investment that is proposed in the R type university.

I give another illustration of what might happen. Bradford University's civil engineering department was given a below-average rating by the UGC; but in 1985, because the university recognised that as a technological university it could not afford to have a weak link in its engineering school, it decided to invest from within its recurrent grant (as the present system allows it to do) in the civil engineering department. A new head of department, Professor Littlejohn, was appointed. He moved from a directorship in industry. A new team has been recruited and brought together in the department.

In two years the department's publication rate has quadrupled and is still rising. Its annual income has increased over 15-fold with half coming from industry. The number of research students has risen from seven to 34. It has an impressive programme of continuous education for industry, and it has established academic links with many countries throughout the world and also with many industries throughout the world, making opportunities for British industry to follow it.

Such a transformation of a department would be almost impossible if the rigid structure envisaged were to be adopted. I suggest that we need to build on the strength that we have and that this must be done by building and developing our present departments in all the institutions rather than imposing on them a rigid system.

5.30 p.m.

Lord Swann

My Lords, given the present unhappiness of the scientific and academic world, the initiative of the noble Lord, Lord Sherfield is particularly timely. I regret having to apologise to your Lordships for the possibility that I may have to leave before the end of the debate.

There are some things in the Government's response to the Select Committee report and in the Advisory Board for the Research Councils' discussion document that I welcome; but there are some features in both that I do not welcome at all. It is these that I want to talk about, touching inevitably from time to time on points that various noble Lords have made.

When I left the academic world of Edinburgh for the BBC I soon discovered that governments, of no matter which party, cannot resist tinkering with the BBC. In order to inform them how to tinker, they set up committees of inquiry, large and small. Over the past 30 years, believe it or not, they have been set up at the average rate of one every year-and-a-half. I begin to think that science looks like suffering the same fate. Twenty years ago we had the ACSP, superseded by the CSP, superseded in turn by the ABRC with, at about the same time, the invention of ACARD. Now, the Government promise ACOST instead of ACARD, fortified by CEST and assisted—I do not think that this has been mentioned so far—by STAO, the Science and Technology Assessment Office. For good measure, the UGC is to be replaced by the UFC.

Will all this tinkering with the acronyms make things better? Will research flourish and become more relevant? Will industry leap ahead? I am not at all sure. On the contrary, I fear that things could become worse for two simple reasons. From the papers before us, it would seem that neither the Government nor, more surprisingly, the ABRC, show much understanding of how research works nor of how industry makes use of. or rather does not make use of, research.

Research, by definition, is finding out things that we do not know. It follows that it is unpredictable and, hence, not amenable to tidy planning for the future. It is, moreover, notoriously difficult to judge how valuable any research will actually prove to be.

The history of science is littered with examples of research ignored and unvalued which, in due course, proved to be crucial. The most extreme and classic case is Mendel whose experiments on the breeding of peas laid the foundations of genetics and now molecular biology—hence the vast benefits to medicine that we now enjoy. But Mendel's paper, despite the fact that he sent it to all biologists of consequence in 1860, was totally ignored until 1900.

Mendel retreated to his monastery in what is now Czechoslovakia. But what, I wonder, would happen to a modern Mendel? He would certainly not be recruited to some new high-profile, selective, concentrated, interdisciplinary research group in a research university. At best, I suppose he might hope for a modest job in one of the ABRC's proposed teaching-only universities.

The only conclusion one can draw from such cases is that the very best research is liable to pop up in the most unexpected places and that carefully contrived, concentrated centres for research are, by no means, necessarily the best way forward. By definition, they would tend to think on pre-determined lines and, while this may not matter where one is hoping for advances on pre-determined lines (that is to say, research that is derivative rather than boldly innovative) it is by no means a sure route to major advances.

There are a few conspicuous exceptions, of course, but it is no accident that many concentrated research institutions have not been a great success. A multiplicity of smaller centres and, where possible, a multiplicity of sources of funding (at least one of which may make the wise decision in any given case) is a more promising way forward.

It follows that I, like many noble Lords and others, deplore the ABRC's ideas about establishing three grades of university, ranging from substantial research activity throughout to teaching with a little research, or, in reality no doubt, practically no research at all.

As every academic knows, university departments go up and down, and so do universities. Even the supposedly best universities have their dim corners. I recall that when the present chairman of the University Grants Committee retired from being Vice-Chancellor of Cambridge University, he said, rather boldly, that even that great centre of learning had its share of dead wood. It has even been rumoured that this indiscretion had something to do with his being made chairman of the UGC.

Human nature being what it is, it does not require much insight to guess what would happen if a university were to be firmly labelled as top grade and, thereafter, automatically funded accordingly or, conversely, firmly labelled as third-class. It must surely pass belief that a government devoted to competitiveness in the industrial scene could ever agree to anything so foolish. Universities need their competitive pressures as does industry. To exempt some from having to try, and deny others even the chance of trying, is a sure recipe for universal stagnation.

I should like to turn briefly to one of the Government's concerns set out in their response to the Select Committee. They want, quite rightly, more research that is relevant to industry both in the short and longer term. But their solution seems to be a proliferation of committees pointing the way and a clutch of accounting measures to persuade industry to spend more on R&D.

For reasons that I tried to explain a moment ago, I am none too hopeful that committees will necessarily choose the right areas for exploitation. I fear that, on the contrary, they may dissuade people from working in unfashionable areas that might well yield to individual inspiration. In short, once again, I believe that the best hope of progress will stem from having the greatest number of research workers pursuing their own ideas in a wide range of environments. Committees impose the ideas of a handful of people; progress stems from the interplay of ideas of a lot of people.

I believe that a further misunderstanding underlies the Government's ideas. It is not so much the amount of R&D that determines industrial efficiency and competitiveness, it is the use that managers make of R&D. Indeed, without managerial understanding and enthusiasm, money spent on R&D benefits one's competitors and not one's own company. I believe that managerial attitudes are just as important, if not more important, than spending on R&D.

What ideas have the Government in this area? So far as I can make out, none. A few groups in universities and a few private bodies are carrying out good research in this crucial area. One small research organisation, mentioned briefly by the noble Lord, Lord Sherfield, with which I was connected, and which did some excellent research on these problems, was the Technical Chain Centre. It was recently closed down by its governmental funding body, the Economic and Social Research Council. It is a disgraceful little story on which I hope the last word has yet to be heard.

What, then, do we do in this difficult area of improving R&D in universities, in government laboratories and industry, whether funded by government or industry? More money is needed of course. But there is no simple answer. For the reasons that I have tried to explain, we certainly do not want a lot of centralised decision-making, but rather a system which allows able researchers to see the opportunities and to develop their own ideas, preferably within supportive environments.

As I said earlier, we shall do best with a range of research groupings, large and small—preferably, not too many of them large—and a range of sources of funding in the hope that good ideas that are turned down by some may be taken up by others. In this context it is clear that the private charitable foundations have a crucial role to play.

Lastly, I believe that we should stop worrying quite so much about the amount that industry spends on R&D. We should worry a good deal more about managerial competence in industry and the blindness of the City to the factors that make for long-term industrial success. Without any doubt, all those areas need to be researched. I can only hope that the Government will cease uninformed tinkering and fund much more practical research into making the whole system work better. That is what the social sciences are about and if there is any area in which more money and more wisdom are needed, it is that one. Yet, astonishingly, it secures scarcely a mention in either of the documents that we are debating today.

5.41 p.m.

Lord Butterworth

My Lords, I should like to deal with three points raised in the document A Strategy for the Science Base: selectivity, the research centres, and the proposal to transfer research funds from the UGC to the richer research councils. Those three points are very closely related.

I think it has emerged this afternoon that many noble Lords agree that selectivity should be applied not to institutions but rather to individual departments after subject review. However, that is precisely the approach now being adopted in the new UGC allocation process and the research assessments which form a crucial part of it. The present chairman of the UGC recently gave an interesting example of that when he said that by 1989 a department which had been rated as outstanding would attract a research component of UGC grant which was three or four times as large as a weak department of the same size in the same subject.

I am not a scientist and it seems to me to be rather arrogant on the part of the scientists in the ABRC that they should propose that whole institutions should be shorn of their research when maybe in a given university at least one-half of the academic activity takes place in the humanities. In some universities the proportion devoted to the humanities rises to almost two-thirds.

In so far as the ABRC proposal rests upon the escalating costs of science, it must be remembered that scholarship and first-class research can be conducted in most subjects in the humanities with quite modest resources. Indeed, the same is true of many science subjects. It is true, for example, in many areas of mathematics.

I should like to take up a point made by my noble friend Lord Trafford, with whom I agree entirely, that if at some stage a government were to decide that the universities were becoming too expensive, the remedy would be to reduce the number of universities. Universities should not be cut down indirectly by a masquerade which divides them into different types or categories. There is an important reason for saying that. In many subjects the quality of teaching, even at undergraduate level, is influenced by the research undertaken by the academic staff, and in many subjects the teacher who is involved in research can influence an able undergraduate, thus enabling him to develop an analytical power and depth of intellectual penetration which can be achieved in no other way. In short, remove research from an institution and immediately there is introduced a different kind of teaching. In my submission it would be misleading to continue to call such an institution a university.

I turn to a point touched upon by the noble Lord, Lord Hunter. It seems to me that the proposals of the ABRC come near to being a constitutional "foul" because they trespass dangerously upon the area which is the responsibility of the University Grants Committee. The Jarratt Committee and the Croham Committee showed how better quality and greater efficiency could be achieved in universities, but that it entails a delicate balance. Boards and committees should be discouraged from assuming the role of the University Grants Committee. The University Grants Committee is crucial to the health of a university system which has succeeded by protecting the reasonable independence of universities and by placing real responsibility upon those who undertake research and those who teach.

I come to the second point of research centres. There is no doubt that in suitable instances research centres would have an important part to play in the concentration process. The advice of the ABRC on this year's public expenditure survey further elaborates its proposals; namely, six university research centres in each of the next three years, making a total of 18 centres, presumably with many more to come. Indeed, in A Strategy for the Science Base the ABRC envisages that: a large part of Council support for university research should eventually be channelled through these inter-disciplinary centres". A little later the report suggests that most centres would have a director in whose appointment the relevant research council would be involved, and that each centre would employ: a small core of research and support station a mix of short-term and career (not tenured) appointments". Most of the research would be undertaken by what are called visiting research teams of university scientists whose salaries would be met by their own universities, which is a novel extension of the dual support system. It is pointed out that new money will be needed for equipment and capital facilities and that some centres will even need new buildings. No precise estimates can be given but it is clear that the system would involve very heavy expenditure. It is expected that in part the cost will be met by redeploying expenditure on existing programmes.

I suspect that we should all agree that there has to be more selection and that we should encourage the councils to move to what is promising and what is exploitable. But concern has already been expressed about the management and funding of these centres. If they are to proliferate in the way that was suggested in the ABRC's advice, there is a danger of them consuming too high a proportion of the resources available to the research councils. All too often in the past attempts have been made to solve real problems by creating structures. Once structures exist they take on a life of their own and are often difficult to close down when priorities and opportunities change.

The councils should not try to manage science. It is wiser to leave the responsibility for science to the scientists themselves and the universities because often, when an attempt is made to manage science centrally, we find that we do not have enough first-class administrators who are willing to operate such a bureaucratic system.

My final point—my third point—is the proposal to transfer some of the research support from the UGC grant to the research councils. I should like to point out this evening the whole range of services which universities must provide from UGC funding for the essential underpinning of good research. For example, the provision of libraries, specialised laboratories and computer and animal facilities as well as providing the relevant portions of the central administration. In addition, UGC funding allows universities to support new research initiatives and to undertake the commercial exploitation of discoveries and inventions. But much more important, it enables the universities to train the scientists needed for the future and to sustain and train young staff until they are experienced enough themselves successfully to apply to the research councils for research grants. Furthermore, if—as I think it is probably right, and as the ABRC project—there are to be fewer individual grants, the burden of supporting and nurturing young scientists during their early training will fall more exclusively upon the universities for an even longer priod.

Selectivity and the concentration of research are vital but they should not require further funds to be removed from the universities and transferred to the research councils. Any funds that are needed by the research councils could, in my submission, be obtained by improving the management of the councils restraining them to their missions and generally sharpening the focus of the present system.

5.53 p.m.

Lord Thurlow

My Lords, it is perhaps rather a cheek for a layman, such as myself, to intervene in this discussion among such a galaxy of academic distinction. Far be it for me to seek to comment in any way on the difficult questions of structure that are covered in the two papers before this House.

Perhaps I may in passing say on structure that on one general point, as a former civil servant, I was greatly attracted by the suggestion of the noble Lord, Lord Beloff, that we should take away the central responsibility for financial control from the Treasury and transfer it back to the Lord President of the Council. I welcome our movement into the enterprise culture. But, what does the enterprise culture require? First and foremost, it requires creativity. How are we to get the creativity which our research and industry needs? Creativity cannot, by definition, be planned; it comes from a form of inspiration: you cannot get creativity by pre-selective programme direction or any other of the high-sounding, and no doubt admirable, processes that have been recommended.

I am associated with a small research foundation which, after some 20 years of pure research, came up with an application of one of the ideas which I hope and believe is going to be of the utmost value to the industry in this country and may even escalate into a billion dollar industry. This was spun off from pure research, and I venture to ask your Lordships to give your blessing to pure research as the fundamental requirement of the whole of our research process.

In coming to this debate, I look back at the report of the Select Committee and the very disquieting general statements in the early part of the report. During the past five years, the general state of science and technology has not improved; in some areas it has become even worse. Morale is low in the scientific community and a brain drain among the best graduates is again evident. Therefore I picked up the two papers which are before this House full of hope that now we would have a response which would hold out to the lay public, such as myself, the prospect of a reversal, a breakthrough and a real fundamental change.

The noble Lord, Lord Sherfield, in introducing our debate, was very restrained. He welcomed the general thrust of the report having been accepted. Another noble Lord has referred to movement in the right direction. However, I am afraid that looking through these papers and, even more, listening to your Lordships this evening, my conclusion is that we are nowhere near the breakthrough that is required and these kinds of structural changes can help.

It is splendid that the Prime Minister is going to associate herself with the direction, and this may result in far reaching changes in the future. But they are not in sight yet. So I ask that the Government should pay great attention to the request for more resources that has been made this afternoon.

I was impressed by what I think was a comparatively modest quantification given by a noble Lord who is well qualified to form a judgment—that is, £100 million to the UGC and £100 million to the research councils. That may sound quite a lot of money; but it is not a lot of money in the context of what the Chancellor has just told us he has. This is a time in which unusually there happen to be available resources. So I hope that the Government will give the most serious consideration to the request for a really substantial increase of resources.

There is I think an entirely false antithesis between pure and applied research in the context of what the taxpayer supports. The noble Lord, Lord Flowers, referred to this point. But the Government's responsibility covers, above all, the long-term, and creating the right kind of environment. There is, I suppose, an analogy between the onset of a deep-rooted illness and the long period that may ensue before any of the serious symptoms of mortality show themselves. In some illnesses it may be 20 years. I suspect that there is a very real analogy here with the condition that we may be in in that, as the Select Committee's report stated, there are the most alarming possibilities, and there is a need for really vigorous action in the fields that have been recommended; but, above all, in the field of additional resources.

6.3 p.m

Lord Tedder

My Lords, I am concerned with a very small feature of the recommendations in the paper before us. One of the two papers, A strategy, for the Science Base, covers a very wide field. I wish to restrict my comments to the organisation of research in universities and to a particular type of research. The paper reports in paragraph 1.15 that the councils are beginning to place less emphasis on the traditional small project grant awarded for a fixed three-year period in favour of longer-term, larger programme grants. Project grants are typically widely distributed, going to individual scientists working in relative isolation, and usually providing only enough funds for one or two research assistants and a modest investment in scientific materials and equipment. The same point is made again in the next paragraph.

However, it is just not true that all the major developments are made in large departments. I could give a lot of illustrations of very important developments that are taking place in small universities, but I think your Lordships all know that that is true. So often what happens is that, having made a reputation, a distinguished scientist goes to one of the big universities and people forget where he made his name.

The division of departments into three types of institution is full of difficulties and the report is not consistent. Broadly, the three classes suggested in the paper are R, the privileged, with research funds across the board; X—I am not sure why "X"—research supported, but not across the board; and T, no research. As regards the possibility of an association of academic staff in group T with more advanced research centres elsewhere, do the authors of the report really believe that good scientists will be willing to become second-class hacks? I hope that no one in your Lordships' House really believes in anything so preposterous.

The real difficulty, so far as I am concerned, lies in trying to apply research criteria suitable for the large sciences to chemistry and similar small sciences. An organic chemist requires access to a 300-mHz nuclear magnetic resonance spectrometer, and a mass spectrometer will probably cost £120,000, which is a lot of money. However, this apparatus is not used just by one group but by everyone doing organic chemistry in the department. If this apparatus is so expensive, which it is, then universities can share. It is not terribly satisfactory, but they manage to do it and I think that that must be the way. For the rest, the majority of the current research in organic chemistry is carried out on a conventional bench with conventional apparatus and is done by quite small groups.

Your Lordships may say that there are big groups in some of the big universities but on the whole they are called big groups because they are led by a particular professor; and if you investigate you find that the professor is a general supervisor and members of the staff are doing the actual day-to-day direction. As an aside, the response of the Committee of Vice-Chancellors and Principals, which I only received late on Monday, is an excellent document which I hope people will take notice of.

The future of Britain will depend more and more on the quality of its scientific research. We must do all we can to see that the glamour of big science does not direct funds away from useful small-scale science.

6.8 p.m.

Viscount Caldecote

My Lords, two main themes run through this debate—scientific research to expand knowledge and use of that knowledge by industry and government to increase national wealth and prosperity. On the first, three important questions arise. Are we doing enough research and devoting adequate resources to it; are the resources that we devote to it used to the best advantage, and are we training enough research workers to meet future needs?

The first question—the "enough" question—is difficult because there is no clear measure of what is enough. But there are several indications that suggest that we are not doing enough, as has already been mentioned by many noble Lords in this debate. There is the comparison with competitors, the loss of talented people and, above all, the grave difficulty often impossibility—encountered by too many promising young research workers doing first-class work in attracting support, even on the very small scale which is adequate in the early stages of research.

I have some personal experience of that as chairman of the Research Corporation Trust, a charity which makes small grants to promising young research workers. Over the past two years, we have had applications amounting to some £7 million in value. These are evaluated by distinguished panels of engineers and scientists. They rate 50 per cent. good, 25 per cent. outstanding and most worthy of support. That adds up to a value of £1.75 million. But owing to limited funds over two years we have only been able to make grants of about a quarter of a million pounds. Those have been mainly subscribed by founding partners of businesses who have invested in industry and a research corporation of America which has generously contributed. We very much hope that we can raise more money over the next few years and increase the percentage of support for those very excellent young research workers who have been disappointed. It seems a tragedy in the present circumstances that such small amounts are not available and that the Government restrictions on expenditure in this field have had such a deplorable effect.

My second question concerning whether we make the best use of available resources is another difficult one. It is related to my third question which concerns the training of research workers. As other noble Lords have pointed out, the Advisory Board for the Research Councils has been struggling to make ends meet. A great restriction has been imposed on its funds. Sometimes a restriction on funds is healthy because it ensures that the wheat is separated from the chaff. No doubt the ABRC has done its best. But I believe that the restrictions on funds have gone far too far. They have driven the ABRC to make proposals the wisdom of which is gravely in doubt.

Like other noble Lords, I refer particularly to the segregation of universities which leads to minimal research support in some of them. Selectivity is no doubt desirable, for standards vary; but to restrict so drastically support for research in whole universities on a long-term basis surely cannot be wise. As the noble Lord. Lord Sherfield, has indicated, standards of faculties and of departments vary both at one time and at different times, and people come and go. Although the link between good teaching and research may perhaps have been exaggerated in times gone by, I very much agree with the noble Lord, Lord Butterworth, on this issue. The abandonment of support for research in many universities (which will lead to those universities being stripped of almost all research) will make them exceedingly dull places which are unlikely to attract or bring out the best in either teachers or students.

What of the need to train the next generation of research workers? We have had many warnings and clear evidence that the supply of trained research workers is inadequate for self-sustaining purposes let alone to meet the requirements for future growth. This is a very serious and urgent problem, for it casts its shadow so far ahead. Any action taken will take a long time to become effective. I cannot believe that the creation of teaching-only universities will contribute anything at all towards solving that very urgent problem.

I now wish to turn to the use of scientific knowledge and to the fruits of research in industry. I do not always agree with the Government's comments on the reports of independent organisations and Select Committees; but I am wholeheartedly in support of the comments in paragraph 4 of Command Paper No. 185. The Government states: The primary problem, however, is the low level of industry's investment in R&D. That sadly is very true.

As indicated in that Paper, it is industry's task to devote adequate and far greater resources to the design and development of new products and processes through exploiting scientific knowledge. In spite of the growth in the economy, it is a sad fact that our share of world trade in manufactures has declined very seriously over the past 20 years. It is now I believe showing a sign of levelling out which is encouraging, but we still have a growing deficit on manufactures between imports and exports. In general, there is some evidence that our exports are of lower added value than our imports.

We cannot be satisfied, however much the economy grows in economic terms, until those trends are reversed. No doubt there are many factors causing industry to invest inadequate resources in innovation and in design and development for world markets. There are many reasons, some of them historical, as to why that is so. We still have a little of the shadow of the tied markets of the old Commonwealth and Empire which were convenient and easy. But that applied a long time ago now. We have had too low a return on capital employed. We have had high inflation and inflexible trade unions but those excuses are no longer relevant or significant.

It is true that interest rates still remain too high and they provide some disincentive to risk investment in innovation. I hope that they will come down again soon. However, I believe that the main disincentive is still pressures on managers for short-term performance and continuous profit growth. Expenditure on innovation creates problems for both of those.

The response of the CBI's task force to that problem was not sufficiently robust. That task force recommended that the disclosure of R&D expenditure in company accounts should be voluntary. I prefer the Government's much more positive statement in Command Paper No. 185. They state that they: welcome the publication by the Accounting Standards Committee … of a revised Statement of Standard Accounting Practice … requiring companies to disclose in their annual statements the amounts they spend on R&D. Assuming that this leads to the accountancy institutions' adoption of a SSAP substantially along these lines, the Select Committee's objective will have been effectively achieved without the need for legislation. Some oppose that requirement on various grounds, but I wish to point out that it is the current practice and has been the practice in the United States for many years to disclose expenditure on R&D. That has a very beneficial effect because when money is spent on innovation and R&D profits go down. In this country that almost always has a depressing effect on share prices. It makes a company a possible and sometimes attractive target for a takeover. That deters managers from making the investment. In America however, the expenditure on innovation and research and development is compulsorily shown. When that figure increases, the analysts look at it and consider that the company concerned is a good company because it is forward-looking and it is investing in the future. As a result, the share price goes up. Therefore that is an incentive to invest.

The sooner that change is made in company accounting practice in this country the better. I very much hope that we shall adopt that practice soon. If the accounting institutions do not carry through this exposure draft into practice I hope that the Government will take whatever action is necessary —either through amendment of company law or through amendment of taxation law—to ensure that that becomes effective.

In my humble opinion there is nothing more important for British industry than the increase in investment in innovation and in the design and development of new products and processes for world markets. Only in that way shall we recover our share of world trade and put British industry, and particularly manufacturing industry (which plays such a big part in employment and in our prosperity) on a sound footing.

6.18 p.m.

Lord Adrian

My Lords, this evening I intend to confine myself to the document from the Advisory Board for the research councils, A Strategy for the Science Base. But before I do so may I say that I am very much in agreement with what the noble Lord, Lord Sherfield, said in welcoming Command Paper No. 185 on Civil Research and Development. A Strategy for the Science Base was published in the summer and comment on it was asked for by the end of October.

We do not yet know how far its proposals will be adopted and there has hardly yet been time to grasp its very wide implications which are a radical grading of universities and the setting up at some universities of interdisciplinary research centres managed by the research councils.

Almost as soon as the ABRC had published A Strategy for the Science Base, the Science and Engineering Research Council asked universities to submit bids for university research centres in a number of subjects. Those bids had to be with the SERC at the end of September—or in one case by mid-September. In effect, universities were asked to apply for centres for which there seemed to be no money, which had no clear structure and whose relationships with the universities was wholly vague. The universities may be forgiven if they feel that the research councils are not serious about consultation and that their management of the science base is less than skilled, at least in this matter.

I make that point because a basic premise of the ABRC document, and one that the ABRC hardly bothers to document or to support with argument, is that universities have failed to manage their scientific endeavour. Since management, it says, is what is necessary, funding and responsibility for managing university science should be transferred from universities to the research councils.

Research council institutes at universities are familiar enough, have been very welcome, and in certain fields are an entirely appropriate mechanism for supporting research. But I am wholly unconvinced that they should form the main element of research council support for university science. Basically, the trouble is money. The research councils and the universities are short of it and the research councils see the universities as a possible source of more. There is in A Strategy for the Science Base more than the hint of a claim to control the whole basic science enterprise and to reduce the role of universities simply to teaching.

There is a seductive logic to such a division. It was the path adopted many years ago in Soviet Russia, with consequences which they now regret and are attempting to reverse. The Russians recognise that their universities and especially their research institutes have become both rigid and isolated. To be sure, the ABRC recognises that danger. Siting its research centres at universities may initially avoid some of the dangers of mission-oriented research institutes. But little thought has been given by the ABRC to the effect of their proposals on universities.

The noble Lord, Lord Butterworth, has mentioned paragraph 1.46 which states: a large part of Council support for university research should eventually be channelled through these inter-disciplinary centres". In this context, council support must be understood to include at least a part of funds now going to universities for science directly via the DES and the UGC. It is very unclear how much money will be left over for research in university departments, even in Type R universities. But if funds for research in university departments are severely curtailed, there will eventually be few university staff with appropriate experience and training to man the council's university research centres. The notion that the universities will provide cheap but expert manpower to work as "visitors" from time to time on a grace-and-favour basis in university research centres and be expected to retire gracefully to their teaching departments when no longer needed, is simply unrealistic.

But what saddens me most about A Strategy for the Science Base is how far its authors seem to have forgotten that science is an intellectual endeavour, with its own traditions and excitements, and that scientists have their own reasons for doing science; and how far it seems to have forgotten the traditions that have sustained science in this country and made it one of our great achievements.

The ABRC has been persuaded to believe, as do the Government, that, as is stated in paragraph 2.38: The primary justification for public support for the science base is to provide knowledge and trained people needed to develop useful applications across the whole range of public life—for example better informed management of the economy, improved clinical practice, new products and industrial processes, and more efficient agriculture". However true that may be, it is also true that such are not the primary aims of most of those who face the considerable rigours of a training in science and subsequently the relative disadvantages of university salaries. To them, teaching and finding out how things work is much more important than finding better ways of making things for someone else to sell.

The best basic science is driven by curiosity and not by profit, even if profit may ultimately be made by someone with the wit to see how. The Government may lament that scientists think in this way and it is entirely reasonable for them to seek to spread the transfer of ideas from universities to industry. But the ABRC should have warned much more clearly that by insisting too much, in respect of the science base, on exploitability, on central management, on selectivity, on big science, and too little on the originality and drives of individuals, it will run the risk of making an education and an academic career in science even more unattractive than it seems already to have become. If science, as the practice by individuals of finding things out, is to be seriously reduced in universities, the supply of scientists to teach and eventually scientists to do science, whether in the science base or in the economy, will dry up.

Instead of having a first-rate record in basic science and a mediocre record in exploitation by industry, we shall finish up with a poor performance in both. If we are to improve our ability to exploit in the future, we had better have something to exploit and people in industry who can understand what they are exploiting.

6.25 p.m.

Lord Shackleton

My Lords, like the noble Lord, Lord Thurlow, I feel that it is a slight impertinence on my part both to take part in this debate and even more to succeed the noble Lord, Lord Sherfield, as Chairman of the Select Committee on Science and Technology. I was comforted at one point when I thought that most of our distinguished scientists and Fellows of the Royal Society were unable to stay the course. However, I see that some of them have returned.

I am also comforted by the quite admirable speeches of the noble Lords, Lord Butterworth and Lord Beloff. I have the impression that your Lordships understand what we have been hearing in the most eloquent and pleasing speech of the noble Lord, Lord Adrian. Those of us who are not scientists have an obligation, whether we are politicians or distinguished historians from Magdalen, to make our contribution.

I should like to query some of the remarks made by the noble Lord, Lord Swann. It was because of our view, that some of the earlier institutions, such as the advisory council, were perhaps more effective than the dispersion of responsibility and advice through too many institutions that we recommended the setting up of ACOST. We do not know how ACOST will work. It has had only one meeting and it has yet to be chaired by the Prime Minister. Nonetheless, we think that that development in structure is a desirable one.

I should like to say to the noble Lord, Lord Beloff, whose speech I very much enjoyed, that I agree with him on the matter of ministerial responsibility. The Select Committee opposed the idea of a separate ministry. However, it was in favour of designating a specific Cabinet Minister to speak for science and technology, possibly in conjunction with other activities. It is absurd, delighted though we are that she is taking an interest, to expect that the Prime Minister can give the attention that these issues require.

I would point out to the noble Lord, Lord Swann, the powerful passage in the report on the subject of the role of shareholders and management. We concluded that what must be changed is the attitude of shareholders and the outlook of management in average and below average British firms. We pointed to the responsibilities of the management schools—responsibilities that they have been slow to recognise. We await with interest the result of these changes.

As the noble Lord, Lord Sherfield, made clear, a major part of the recommendations of the committee was for more finance. As several noble Lords have made clear, the Government have not come clean. They have implied that there has been a real increase. Even if we do not accept the figures of the Save British Science organisation, the fact remains that at most it represents an increase of £5 million. I hope that the noble Baroness will deal with this in her reply.

I am concerned about the number of ignorances—I shall not say dishonesties—about the whole question. It is the role of the House of Lords, of the Select Committee and of Parliament to scrutinise the activities of the executive and to help put it right when it has gone wrong. The noble Lord, Lord Beloff, made some interesting remarks on the Treasury. As the noble Lord, Lord Gregson, said, the report of the Inland Revenue on incentives is a rather despicable one. It admits that the evidence is thin and proves nothing at all. I hope that the Minister will consider this in her reply.

The general level of R&D in industry is too low, as the noble Viscount, Lord Caldecote, has said. On that the Government and your Lordships' House agree. The Select Committee has been seeking ways to increase this expenditure, not by long-term subsidy but by help for a limited period. The Inland Revenue concluded that other countries that give tax incentives have got it wrong. Have the Government any other suggestion on tax incentives?

That leads me to another point on which there is some misunderstanding and to which other noble Lords have referred. As your Lordships know, the Government's line is that industry must invest more in R&D. We are all agreed on that. The committee said that neither the Government nor industry is spending enough on R&D. Here I take exception to something that has been said, as some noble Lords have already done. I hope that the Minister will deal with it in her reply. A government Minister much involved in government support for industry said, in reply to a prepared Question in another place that, the main responsibility for spending more on civil R&D should continue to rest with industry, as the House of Lords Select Committee on Civil R&D recognised in its recent report". The committee said nothing of the kind. We said that the main responsibility for funding development rests with industry. If the Department of Trade and Industry does not know the difference between development and research, it offers little hope that the Treasury will get the message right.

I turn briefly to the Rothschild Report which has not yet been mentioned. There is a lack of understanding of the Rothschild 10 per cent. The committee recommended that a 10 per cent. surcharge should be added to all government contracts for commissioned research. Failure to implement rigidly the recommendation made by the noble Lord, Lord Rothschild, has been one of the chief failings of the customer-contractor principle.

Command Paper 185 at paragraph 21 stressed the need for flexibility in applying the surcharge. The Government were obviously thinking about flexibility on the part of customer departments. That was not the purpose. It is the contractors who need the flexibility and facility that the surcharge can permit. A recent report takes this up with the Department of Transport. The point has clearly been missed altogether. It is said that departments have evolved different arrangements with their research contractors in response to the recommendation and there is concern that the Road Research Laboratory will not be able to spend the money properly. The whole purpose was to give researchers a degree of flexibility to do their own thing and to have the freedom that researchers need. Perhaps the noble Baroness will note the point, although the committee, having taken up the matter, awaits a reply from the Minister. There is clearly a message for the Chief Scientific Adviser in the Cabinet Office and all those who have responsibility for the methods by which the Government commission research. I hope that that message is clear.

While on the subject, I should point out that one of the failures of the Rothschild principle related to the field of geology. One of the tragedies is that the contractors, depedent on contracts from departments, were not forthcoming, which had the most serious effect. I imagine that it led in part to the Oxburgh report and, subsequently, to the ABRC report. It is interesting to note that the Butler report calls for independence for the British Geological Survey. I hope that the Government will give the matter consideration. Some of my geological friends have expressed the fear that it will be ignored and swept under the table.

I had not intended to speak about space as the Select Committee has yet to report. Once more we find a lack of understanding. I urge the Minister, if she has not already done so, to read the excellent evidence on the subject of space submitted by the University of Southampton.

As a committee we are not anxious to spend all our time nitpicking and chasing the Government. But it is worrying to note the praise for certain projects—the development of remote sensing—when we know that all the available money is committed. Some work in relation to the ground stations for ERS I and ERS II already may not be available, which is worrying. I ask the Lord President to consider this. We shall be happy to forward copies of evidence submitted to the committee on the subject.

I am grateful to the noble Lord, Lord Sherfield, for his chairmanship of the committee and for the valuable report. I wish to make one point on which all members of the committee would surely agree; that, despite the minute resources available—a matter that has been raised in another debate—we have been well served by some very able people.

6.40 p.m.

Lord Kirkwood

My Lords, I shall not apologise for referring again to the matter of funding for civil R&D, because it seems to me to be crucial both in the ABRC discussion document, A Strategy for the Science Base, and in the report of the Select Committee on Civil R&D. It is a matter which, shamefully, the Government have chosen to ignore in their response.

The report of the Select Committee gave some useful statistics on the comparative spending on civil R&D by various competitor countries in the EC. Whether one calculates this on the basis of absolute amounts spent, on per capita spending or on the more pertinent basis of the spending as a proportion of the GDP, the United Kingdom comes behind both France and West Germany.

I think the last figures of government spending on civil R&D as a proportion of the GDP are worth highlighting. According to the report, Germany, France and the Netherlands all spend about 1 per cent. of their GDP as compared with 0.7 per cent. in the United Kingdom. In other words, we need to spend about 50 per cent. more to catch up with our competitors. As an industrial and manufacturing nation which makes so much of its wealth by selling products of high technology, can we really afford to spend less than our competitors on maintaining and improving our scientific and technological infrastructure?

In A Strategy for the Science Base the ABRC complains of continuing under-indexation and the steady contraction of the science base. It suggests that in order to maintain at least the current levels of scientific activity the science budget should be linked to the GDP. I think this is a suggestion which merits very serious consideration. Furthermore, I should like to see this link much closer to the 1 per cent. of GDP that other nations which are strong both in science and in technology have maintained.

If the science budget is linked in this way it can hardly be argued that we cannot afford it. Of course it would deny the Government the annual opportunity of haggling over funding and remove the power which this position can give. In the last resort, the amount of funding must be a decision made by the government of the day. In establishing a norm through a link to the GDP they would then be required to justify any deviation that they intended. I think that such a policy would give much-needed stability and continuity to the funding of science.

Finally, there is another concern which is voiced by the ABRC in its discussion document and with which I have strong sympathy. That is the emphasis which has been put upon the exploitability of R&D, rightly in my view, which has clearly been endorsed by the Government. This has left basic science in a vulnerable position since by its very nature it cannot defend itself on these terms. I speak as an applied scientist. The consequences of this vulnerability worry me very much because of the effect this might have on the general quality of all research carried out in the UK. I also have in mind the possibility of losing out on future exploitable technologies which always seem to emerge from fundamental curiosity-driven science.

The nurturing of vigorous habits of thinking and of careful experimentation required to test imaginative theories are essential to good basic science. They should not be undervalued in themselves or in their influence on other activities in research and development. The document itself calls for an explicit policy to protect basic science by providing an agreed minimum level of funding. I think the Government would be wise to accept that recommendation.

I did say "finally", but perhaps I may indulge in a second "finally". I should like personally to support, as has the noble Lord, Lord Shackleton, the suggestion put forward by the noble Lord, Lord Beloff, for the creation of a minister of higher education and science who would be a Member of your Lordships' House. I know that my noble friend Lord Flowers supports this suggestion as well. I believe this could be a most valuable contribution. Perhaps the Select Committee itself might find time to look at that proposal.

Much has been said on the need for selectivity in research and development; the need for priorities to be established; and the need for good management if we are to use the available funds effectively. I am certainly all for this. It makes good sense, particularly for a nation of limited means as we are now. The long-term prosperity of our nation requires a healthy, thrusting, scientific and technological base to be developed and maintained. This itself requires adequate and proper investment in civil research and development.

6.45 p.m.

Lord Peston

My Lords, our debate today has been about such mundane matters as finance and the economic impact of science. It has been a debate in which some six Fellows of the Royal Society have spoken. I feel I must echo very strongly what the noble Lord, Lord Adrian, said; namely, that we must never forget that science is valuable in its own right. It has played a great part in the glorious intellectual history of our country. Even in the present conditions of adversity it will surely continue to do so.

More generally, I believe in the virtues of knowledge for its own sake. In Victorian times when we were very much poorer than we are now, all but the most vulgar would have accepted that. Surely there is no need to apologise for reiterating such values today.

On a peripheral matter, perhaps I may also say as someone who is about to take early voluntary retirement that I strongly believe in tenure in the higher education system. I believe it to be an indispensable ingredient of a serious and successful university system.

My noble friend Lady David said that I would deal with the resource side of this matter. As someone who used to fancy himself as an expert on public expenditure "deal" is not really the right word because I am as puzzled as anybody about the factual situation concerning available resources. I have scrutinised the figures as best I can and I really cannot determine precisely what is the real position.

I can more or less put the figures together to suggest that perhaps next year at best we will have level funding. When we take out the wage element I do not believe what the figures say. I think that we shall have real cuts next year. The year after there might just be an epsilon more than level funding so to speak. I feel that if this debate is to continue over the years then a government department should accept responsibility for providing us with a full table of all the public sector sources for at least the nominal figures for expenditure on scientific research. If the department will give us at least the nominal figures I can assure it that at least some of us are capable of converting them into real resource figures for ourselves.

For some reason these days the Treasury wishes to operate just with cash budgets or to deflate by the so-called RPI. If one wishes to ascertain what happened to the volume of resources available for science it is necessary to deflate by a science-price index. I understand from scientific colleagues that the evidence is that the prices of the kinds of things which scientists buy have risen faster than the RPI. Therefore deflating by the RPI is seriously misleading.

I should like to make one other point in connection with what we ought to be spending on resources and which follows what the noble Lord, Lord Kirkwood, said. We have to see ourselves in a competitive situation in two senses. We are in a competitive situation in terms of economics and we are in a competitive situation in terms of science itself. In order to stand still as it were, we have to use resources on much the same scale as our main competitors in science. That is again another way of seeing the right perspective in which to place the budget.

I must apologise to the noble Lord, Lord Beloff, for not being present to hear his important remarks. He made one significant point with which I strongly agree and upon which I have changed my mind. Post-Robbins, I was one of those who felt that higher education and science should come under the DES, where the noble Baroness is our Minister. I still just about believed that when I was an adviser at the DES. I am now convinced that the noble Lord, Lord Beloff, is right and that the right place for higher education and science is no longer the DES. There is a serious point to make about having a major Cabinet level voice for higher education and science.

I shall now turn to finance from industry. I wonder whether anyone in this country at present seriously believes that major funding for basic research could come from British industry. From my experience—and most noble Lords agree with this point—I have found that it is almost impossible to persuade British industry even to invest in research which is of direct benefit to it and its profit margins. The notion that industry would start to invest in fundamental research—much as it is desirable—is preposterous. It therefore follows that if fundamental research is to go ahead, and bearing in mind that we are told—although on other occasions I have disagreed with this—that the economy is doing so well, surely we can afford a properly-funded public sector science budget.

I am one of those who strongly support the concentration of effort. It does not seem to me that the definition of a university must be one which covers every conceivable academic topic known to mankind. I believe that universities can specialise. The main criterion for where resources should be put will then be at the individual department level and not at university level. Indeed, there is nothing more misleading than the halo of the university as a whole being translated into individual departments, some of which are often distinctly second-rate.

Almost all noble Lords are agreed that we should reject the proposal that we should judge "research worthiness" by the university itself, but that we should look more specifically at what the individual departments are doing. On the whole, I like the idea of research institutes and of concentration, but I follow the noble Lord, Lord Dainton, and agree that those places where the concentrated effort is to be found must be open and accessible.

One of the dangers is that many universities may think that once they have a particular activity it is somehow theirs. That would be an unsatisfactory state of affairs. I do not say that it happens to a great degree; but it is a danger that we must always bear in mind.

On science and the economy, there is no doubt that with most of the rather pathetic research that us economists do we find it difficult to find a causal relationship between science and economic performance. If one stands back, one finds that the position is paradoxical. I would not jump to the conclusion that science does not make an economic impact merely because at the moment we find difficulty in establishing that causal relationship. I come more to the conclusion that economics might need to become rather more effective as a research science to discover it. Following that, let me say that of course, as an economist, it was music to my ears to hear the noble Lord, Lord Swann, suggest that we should pay some attention to the social sciences when we consider further developments in funding.

The relationship between scientific research and economic performance is a subtle one. We will not obtain the answer by looking for a crude correlation from one to the other, especially as we all accept—it is made clear in the history of science—that so much happens by chance and serendipity that we must create the circumstances in which those beneficial effects can occur.

I am not one who is against asking what value we get from specific projects. On the contrary, I have always believed that we should scrutinise such matters. However, close management of research effort in which we are constantly asking what we are getting out of it—especially in the short term—will be immensely damaging to science.

On that, I shall echo one or two remarks about what I am almost inclined to call amazing research, which claims to show that there are no benefits from providing tax incentives to the private sector to engage in research and development. I have scrutinised paragraph 27 of the Government's response. The sentence that is missing is again, as it were, the scientific questioning sentence from the Government themselves, "Perhaps this result is not right", because in a curious way—I do not say this to be even more annoying than usual—given the Government's own philosophy, tax incentives should work and be extremely effective. If they are not, it should be a puzzle for the Government. They should not sit back and say, "That is all okay". I am most disappointed in the Government's response to that point.

I do not speak as someone who believes that everything science and scientists do is right and must never be questioned. I agree with my noble friend Lady David that we should scrutinise more closely what the research councils do, and in particular ask what happens to some of the post-doctoral fellows whom they finance and some of the research that they undertake. I am not entirely convinced that the present structure of the research councils is satisfactory. If we are to have these multi-disciplinary operations going on, I do not see how they will fit into all the separate research councils. We should also look at whether research councils might change, not necessarily to be replaced by an overall research council but by someone to do something of a broader kind.

Another area in which we should monitor scientific research spending—I agree it is a sensitive one—is in defence. A great deal of the money we are talking about goes on defence. I accept that potentially there are positive spin offs from research in defence; but I should like to believe that someone was deeply scrutinising what was going on. If we are talking about obtaining value for money, I should like to see that we obtain it there as well as everywhere else.

I shall utter one more gloomy remark before concluding. I shall draw your Lordships' attention to an extraordinarily interesting article in the current number of Nature, "The continuing decline of British science". It is devoted to the publication and citation record of science and states: One can see that the areas of strength—whether judged in terms of publications or citations—are almost entirely in medical and biological specialities, although geology and electrical-electronic engineering are also quite strong. In contrast, the weaker subfields are generally in industrially related scientific and engineering specialities such as metals and metallurgy, chemical engineering, solid-state physicis and so on. The article points alarmingly to the considerable and rapid decline in several of those areas.

Such evidence should not be thrust on one side. We hope that 50 years from now people will not be discussing why Britain became an even more backward nation, despite the evidence available in 1987, because I hope we shall have taken it into account.

I strongly believe in our future as a nation, in terms of our intellectual and economic endeavours on science and our investment in human capital. I can think of no better way to close my remarks than to quote the remarks made by the Secretary of State in the debate on the copyright legislation only last week when he said: Intellectual property is of substantial economic significance. It forms the foundations of major industries … Our future prosperity depends on the people who make things happen, the people with ideas, and those who apply them".—[Official Report, 12/11/87; col. 1476.] The people with ideas are overwhelmingly our scientists. They provide the science base without which industry and commerce would be ineffective. They deserve more and better than we are currently offering them.

7 p.m.

The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper)

My Lords, I should like to add my thanks to those already expressed to the noble Lord, Lord Sherfield, for introducing this very valuable debate. It has been both interesting and stimulating, and I am most grateful for the many positive and constructive contributions that have been made from all sides of the House.

When your Lordships last discussed civil research and development in February the Select Committee's comprehensive and carefully argued reports had just been issued and noble Lords were seeking to impress on the Government the need for change in the way they approached their responsibilities for these matters. As Command Paper 185 has since demonstrated, as has been acknowledged by many noble Lords today, and indeed as my noble friend Lord Whitelaw indicated in his opening address, your Lordships' views have been taken very seriously by the Government and considerable change has occurred in the direction advocated.

I am glad that much of that change and of the Government's response has been welcomed and I can reassure the House that equally careful note will be taken of the many points raised in today's debate.

My noble friend Lord Whitelaw spoke mainly about issues arising from our July White Paper. I propose now to address issues which arise in connection with the consultation paper "A Strategy for the Science Base". In the course of the debate your Lordships have raised many interesting questions on both these papers and on some matters outside, and I shall also seek to answer these as best I may in the time we have available.

As your Lordships are aware, the Advisory Board for the Research Councils offers advice each year to the Secretary of State for Education and Science on his responsibilities for civil science. This advice has usually taken the form of advising, first, on the overall size of the science budget and later in the year, when public expenditure decisions are known, on the distribution of the science budget between the councils and other science budget bodies. I explain this because it is perhaps common knowledge here but with the wider public this may not be so. However, this year the board decided to supplement its annual advice with strategic advice about the future organisation of the science base. The term "science base" covers all the research for which the Secretary of State for Education and Science provides funding; that is to say, in the universities, polytechnics and higher education institutions generally as well as in the research councils.

Why did the ABRC decide to offer strategic advice? It was certainly not to cause the constitutional foul co which my noble friend Lord Butterworth referred. I hope that this may go some way to answer the question raised by the noble Lord, Lord Hunter of Newington. It was primarily because the board had become very concerned that the present distribution and organisation of funds for the science base was not appropriate to the level of funds available. The board was aware of course that the scientific community believed that the Government should increase their funding for the science base. But it was also aware that the Government were providing more money for the science base, after allowing for average inflation, than they had ever done before. It is not difficult to find reasons for this apparent paradox. First, in some areas of science at least the costs of pursuing research at the frontiers of knowledge are rising much faster than average inflation. This has been recognised in the course of the debate. Secondly, the number of opportunities for undertaking important research are also increasing very rapidly, giving rise all the time to further calls for funds. But as has been recognised by some in the debate, there is always a limit to the funding for anything and this applies equally to funds available for science.

Industry's role in this respect is of great importance. That has been referred to by a number of noble Lords. In referring to industry, perhaps I may take up the point raised about my right honourable friend the Chancellor of the Duchy of Lancaster's remarks in another place. I can reassure the noble Lords, Lord Sherfield and Lord Shackleton, in particular, that they may rest on the fact that in the Government's response to the Select Committee's report the Government agreed with the committee's conclusion that the main responsibility for the funding of the "D" in R&D rests with industry. I can reassure them that this remains the case and I regret that the remarks of my right honourable friend may have given rise to misinterpretation.

The ABRC presses the case for more funds on the Government, and not without success. It would not surprise me if it continued to do so. But the board came to the conclusion that it could not reasonably plan on the expectation that the Government would be able, or be prepared, to provide all the funds which scientists wanted. The ABRC recognises that the rapid growth in science funding in the 1960s and early 1970s will not recur in the foreseeable future. No government, of whatever party, would be likely to find the vast sums involved. The board believes therefore that a new positive and declared strategy is needed. The main elements of the board's strategy are for greater selectivity and concentration, more interdisciplinary research, greater attention to the potential for exploitability and applicability, and more purposeful management of research. There are other elements to the strategy and I hope that I have not done the board a disservice by this oversimplification of its detailed and carefully argued document.

The Government welcomed the ABRC's initiative in preparing strategic advice, and decided to issue the document as a consultative paper in July this year. The closing date for comments was the end of October. We have received over 200 responses, many of them addressing the ABRC's arguments very carefully and at some length, and with a clear dedication to the cause of maintaining the health and enthusiasm of British science. We are very grateful to those who have responded in such a committed way. Not surprisingly, perhaps, the replies concentrate heavily on the board's proposal for differentiation of higher education institutions by research role types R, T and X, as indeed have many of the contributions from your Lordships today. It will not surprise you to know that a substantial number is not attracted to that proposal. But in spite of some requests I hope that noble Lords will understand if I do not seek to express a government reaction to the ABRC's proposals today.

The noble Lord, Lord Adrian, said that it was not clear how many of the proposals will be adopted. I can assure him and other noble Lords that we wish to consider all the responses very carefully and to take account of the many valuable contributions in today's debate. These include the points made on the proposal to transfer funds from the UGC to the research councils to improve selectivity. I can say, however, that the Secretary of State for Education and Science attaches great importance to the ABRC recommendation for interdisciplinary research centres and believes that there should be scope for a worthwhile start on these within the science budget settlement he has recently announced.

This brings me naturally to the question the noble Lords, Lord Sherfield and Lord Shackleton, asked about the breakdown of the increase announced for the science budget. I should first make clear that any increases in the science budget from previous planning figures can be justified only if the Government are convinced that important science would be lost unless additional funds were made available. Such losses might occur because of the need to curtail programmes in order to absorb cost increases, or because important new opportunities have arisen which justify support from new funds rather than redeployed funds. The Government must then balance any increase they are prepared to consider for the science budget against their overall policies on public expenditure, and the call on taxpayers' money.

It cannot be assumed in advance that new money will be found. In particular, there can be no expectation that the Government will automatically make available additions to the science budget to cover rising costs, whether of pay or anything else. In response to the noble Lord, Lord Kirkwood, and other noble Lords who raised the question of funding I should like to repeat what my noble friend Lord Whitelaw said concerning the new central machinery. He said that it is just, getting under way and the Government are conducting a searching review of their R&D programmes, with a view to decisions being taken on the level and distribution of R&D expenditure in the next public expenditure round". The Government look primarily to the ABRC to advise it on the case for any increase in funds in relation to the science they believe should be supported. The Government take the ABRC's advice very seriously, and as a result have made significant additions to the science budget in recent years—although I accept that these have been less than those asked for by the ABRC. The increase in the science budget for 1988–89, compared to plans published in the last public expenditure White Paper, is £47 million, giving a science budget for 1988–89 of £696 million. The planning figures for 1989–90 and 1990–91 are now £729 million for each year.

Within the increase of £47 million for 1988–89 is an increase of £6 million for AIDS research, which had been announced previously, and an increase of £8.6 million for the research programme in Antarctica. The planning figure for 1989–90 is £65 million more than previous plans. This increase includes £8 million for AIDS research and £17.7 million for research in Antarctica. The planning figure for 1990–91 is £48 million more than previous plans, including £3.7 million for research in Antarctica, but no addition for AIDS research. As my right honourable friend the Secretary of State said in his statement on 3rd November, additional provision for AIDS research in that and later years will depend on the agreed evalution of the programme.

Such provision will not, however, have to be found from within the science budget baseline. The increases, net of AIDS and Antarctica research—on the distribution of which the ABRC will be advising the Secretary of State in the coming weeks—are thus £32 million, £39 million and £44 million, for the years 1988–89, 1989–90 and 1990–91 respectively. Taking account of projected average inflation, this will provide roughly level funding for the science budget. This therefore confirms the validity of the analysis of the noble Lord, Lord Peston. I trust it goes in some way to reassure other noble Lords who raised that question.

The Government consider that this is a very fair settlement, especially considering that they have yet to reach their conclusions on the ABRC's proposals for reshaping the science base. As some of your Lordships have already observed, this may seem at odds with the calculations made by the Save British Science society and widely reported in the press. These purport to show that the effect of the settlement, as the noble Lord, Lord Sherfield, mentioned, is to make available £19 million less for research in 1988–89 than in 1987–88. That is not the case and my department's examination of the SBS figures reveals that it is not comparing like with like. In particular, in making its various deductions from the increase in the science budget between this year and next, in order to give what it calls the real increase, the SBS in effect deducted certain sums related to pay increases twice.

I refer at this point to the question raised by the noble Baroness, Lady David, and echoed by the noble Lord, Lord Dainton, and others as to whether the additional funds for the science budget announced on 3rd November constitute the total response of the Government to the ABRC's proposals. As I have already said, the Secretary of State for Education and Science made clear in his statement that the ABRC's proposals are still under consideration. He wishes, however, to take careful note of the consultations and will announce the Government's response in due course. The hope he expressed that a start could be made on interdisciplinary research centres does not in any way preclude this further response.

Turning to the university settlement for a moment, perhaps I may remind your Lordships that the recurrent grant to universities in the current financial year, 1987–88, is 10 per cent. higher in cash terms than that in 1986–87. The Government statement on 3rd November announced a further cash increase for 1988–89 of 8 per cent. That figure includes provision to help meet the costs of the 1987 academic pay settlement and is therefore conditional upon satisfactory progress in improving arrangements for staff appraisal, promotion and probation. In total, however, the additional funds provided are well ahead of inflation. Additionally, over the period 1988–89 to 1990–91 the Government are providing some £155 million for a targeted programme of restructuring in the universities which will benefit both teaching and research.

In view of the discipline of everybody else on the matter of timing, I can deal with a number of specific points in addition to the more general ones. In response to the question of the noble Lord, Lord Flowers, about overhead payments in research contracts with universities, I can confirm the Government's view that institutions should not subsidise their clients. The Committee of Vice-Chancellors and Principals proposals are still subject to consultation and the Government are prepared in principle to give those proposals sympathetic consideration in relation to research which it commissions from universities. I hope that industry will do likewise.

The noble Lord, Lord Gregson, questioned the accuracy of the Government's statistics on R&D.

The Organisation for Economic Co-operation and Development does not share his doubts. Indeed, its figures for 1985 show that the Government's total R&D funding as a percentage of GDP was higher than that of Japan, Germany and the United States. I hope this in some way goes to reassure the noble Lord, Lord Peston, also.

On tax incentives, a matter which the noble Lords, Lord Gregson and Lord Shackleton, and other noble Lords raised, I must point out that R&D expenditure is already favourably treated in the United Kingdom for tax purposes. Over 90 per cent. is allowed against tax in the year incurred either as revenue expenditure or under the special scientific research allowance. I shall of course give special consideration to the ideas for economies put forward by the noble Lord, Lord Kearton. In relation to CERN, I should say that we do not question the scientific quality of the work at CERN, but the United Kingdom's subscription is a significant proportion of the budget available for basic and strategic science and engineering research, as the noble Lord pointed out.

Both the Advisory Board for the Research Councils and the Science and Engineering Research Council have recommended that the cost of staying in CERN should be reduced. At the United Kingdom's request the CERN council set up a review under Professor Abragam and we are expecting a report within the next few weeks. We shall then be considering future United Kingdom relations with CERN in the light of that report's conclusions.

The noble Baroness, Lady Lockwood, and other speakers referred to industry's reluctance to invest in R&D on the same scale as our overseas competitors. The Accounting Standards Committee's proposals to companies to disclose the amounts they spend on R&D should, we feel, help to emphasise to shareholders and managers the value of R&D, an incentive supported by my noble friend Lord Caldecote.

The noble Lord, Lord Swann, also mentioned the importance of changing managerial attitudes to R&D. We believe that if the accountancy profession adopts the proposals—the Government are optimistic that it will—R&D will have to be disclosed in companies' accounts. This will achieve one of the aims of the Select Committee without, as was pointed out, the need for any legislation.

It is difficult to know what to say to the suggestion of my noble friend Lord Beloff to remove science from my department. I shall offer to draw his remarks to the attention of my right honourable friend the Secretary of State, although I do not think his suggestion will be too popular with him.

In the course of his defence of the dual support system of research funding, the noble Lord, Lord Hunter of Newington, mentioned that universities were not against rationalisation and were aware of the need for value for money. The Government recognise the efforts made by the universities and the research councils to restructure their operations. Many noble Lords have referred to individual universities and their successes, stimulated, as I think noble Lords will recognise, by government policies. The noble Lord, Lord Dainton, said that the Government wanted to have the support of the scientific and academic community in their reforms. I can confirm that we want that support and that we are conscious of the successful efforts that individual universities are making.

The noble Lord, Lord Shackleton, criticised the amount spent by the Government on space. The Government currently spend some £112 million a year on space R&D. We have to balance the longer-term benefits of expenditure on space against alternative uses of the funds in support of other areas of research. I am glad to be able to say that industry has responded to the call by my right honourable friend the Prime Minister for further resources in this respect, and discussions will be taking place between government and industry about space funding.

Lord Shackleton

My Lords, I am not arguing about the amount. I am just saying that the Government have locked themselves into an impossible position. The present level of funding is all committed and yet there are areas which they would obviously like to go into. It is a fact that they took a decision without examining the details of how the money was already committed. I do not ask the noble Baroness to comment further, but just to note that.

Baroness Hooper

My Lords, I am grateful to the noble Lord for clarifying his remarks.

The noble Lord, Lord Peston, and the noble Baroness, Lady David, referred to the Nature article on Britain's declining world share of scientific publications. The article confirms the outstanding record of Britains scientists. The volume and impact of their work remains second only to that of the USA, with its vastly superior resources. The main reason for the decline in Britain's share of scientific publications is the increase in output by other countries. I especially welcome the fact that Japan is now making a fuller contribution to the advancement of knowledge worldwide.

Lord Peston

My Lords, while I accept that point, it reminds me so much of the apologies that have been put forward over the past 20 years for almost everything else to do with our relative decline. It is always to do with the relative expansion somewhere else. In some sense, as it were by definition, it is, but that does not mean it is not a serious matter.

Baroness Hooper

My Lords, we fully recognise that this whole area Of research and development is a serious matter.

My noble friend Lord Whitelaw has responded to many of the questions raised by the noble Lord, Lord Sherfield. I should like to add briefly that the Science and Technology Assessment Office is fully staffed and running, that the ACARD defence R&D study is continuing with the same chairman, Dr. Charles Reece, under ACOST. The study is scheduled for completion by October 1988. The noble Lord also asked about CEST. Announcements on senior posts at CEST are expected before the end of the year.

I fear that I may not have responded to each point made in the course of the debate, but I trust that I have covered a fairly representative selection. After studying Hansard tomorrow, I shall write if necessary, During the past year a number of important initiatives have been taken which will improve the position of British science. Many have been referred to during this debate. They will take time to develop fully but there is no doubt that we are moving in the right direction. The Government have stated on a number of occasions that they value greatly the contribution that science and technology makes to national life and the economy and that they intend to maintain and enhance the strength and quality of the science base. That will remain their intention as the strengthened leadership and new initiatives stimulate the changes needed for success in the 1990s.

7.25 p.m.

Lord Sherfield

My Lords, I should like to begin by expressing my appreciation of the action of the noble Viscount, Lord Whitelaw, in speaking first for the Government in this debate. I ask the noble Baroness if she will be so kind as to convey that appreciation to the Leader of the House. Secondly, I should like to thank all noble Lords who have taken part in this debate. We have had some interesting and constructive speeches. Some valuable suggestions have been made, and I welcome the noble Baroness's assurance that these observations will be taken into account in the consultative process which is still I think in progress.

The noble Baroness, Lady David, drew attention to the fact that many of the speakers in this debate belong, so to speak, to a stage army. I should like to say two things about that. First, I agree with her fully that the more fresh blood that is brought into these debates on important subjects, the better. Secondly, I had hoped to persuade a couple of noble Lords to make their maiden speeches in this debate, but unfortunately both my candidates could not manage the date. Nevertheless they are waiting in the wings.

We have had some interesting speeches from noble Lords, who are not members of the stage army. I especially enjoyed the speech of the noble Lord, Lord Thurlow. I wish that more noble Lords who are not directly connected with the specific subjects of the Select Committee reports would add their observations and make contributions to these debates.

The noble Lords, Lord Beloff and Lord Peston, referred to the transfer to the Department of Education and Science of the responsibility for science policy. I remind noble Lords that it was Lord Haldane who laid down the principle that responsibility for science and science policy should be non-departmental. For that reason it was given to the Lord President of the Council. It was a kind of turning point when in 1965 that practice was discontinued and the responsibility was made departmental. That was an important change. I shall make no further comment on it.

I should like to thank the noble Baroness for a full reply to the debate. We shall look at her figures with a great deal of interest. I have only one comment to make on what she said. Even if the ABRC's recommendations in its rather urgently worded request for additional funds had been met in full instead of being virtually ignored, it could not by any stretch of the imagination be described in her words as a "vast sum". It may be more than the Government think they can afford but it is not a vast sum.

I will say no more except again to express my thanks to all the speakers in the debate. Might I just perhaps say as a concluding remark that I hope that the Government will pay more attention to the recommendations of ACOST than they have in the past to those of the ABRC. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.