R&D Investment: Government's Role (Hansard, 1 July 1991)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)
My Lords, the prime responsibility for such investment lies with industry. Research and development funded by industry grew by over 50 per cent. in real terms between 1983 and 1989. The Government's role is to establish a climate which stimulates innovation. We seek to achieve this with a wide range of policies including taxation, employment laws and the development of a strong science base. In addition, the Department of Trade and Industry spends around £300 million per annum on various schemes to support R&D.

§ Lord Holme of Cheltenham
My Lords, I thank the Minister for his reply, which is welcome so far as it goes. However, is he aware that industry financed R&D in this country runs at a much lower level than in the United States, Japan, Germany, Sweden and Switzerland? Is the Minister also aware that the British figure for registration of patents in the United States is only 37 per cent. of that for Germany? Is the Minister further aware that ICI is one of the few exceptions to the rule of low investment in R&D, and that ICI spends 18 times more than the figure Hanson plc spends on R&D? Is that factor alone not enough to persuade the Government to relinquish their "hands off" attitude to a potential takeover of ICI?

§ Lord Reay
My Lords, R&D expenditure is a matter for each individual company to decide through its own management. The decision will be determined, among other factors, by the needs of the sector in which the company operates. However, one cannot fail to be struck by the noble Lord's comments as regards the generally higher rates of investment in R&D shown by companies in Germany, Japan and the United States.

§ Lord Nugent of Guildford
My Lords, is my noble friend aware that two weeks ago a small parliamentary party from this House was invited to visit the Glaxo research laboratories at Brentford? I joined the visit and I was impressed to discover that this year Glaxo is spending £480 million on its research programme. That enables Glaxo to dominate the pharmaceutical markets of the world in specialised products. That 766 would seem to indicate that my noble friend's explanation of the Government's policy is fully justified.

§ Lord Reay
My Lords, I am sure the whole House will be impressed by the figure which my noble friend has given. The Innovation Advisory Board of the Department of Trade and Industry has recently suggested the idea of an R&D scoreboard. That was published in the Independent earlier this month. The intention of that scoreboard is to stimulate all those who are interested in R&D to develop their interests in that area.

§ Lord Molloy
My Lords, is the Minister aware that many skilled professionals who have worked in R&D for big organisations, along with a number of skilled artisans, are now unemployed? The first object of the Government should be to try to create jobs to enable people who are specialists in R&D to have something to research into.

§ Lord Reay
My Lords, the Question on the Order Paper concerns R&D and industry. As I said in my original Answer, this is an area in which funding by industry has grown by over 50 per cent. between 1983 and 1989.

§ Lord Ezra
My Lords, in spite of what the Minister said about the help being given by the Government to stimulate R&D in this country, the fact is proportionately we are lagging behind our major competitors. My noble friend Lord Holme of Cheltenham pointed this out. In these circumstances does not the Minister agree that we should review our policy, paying particular attention to further fiscal and other financial incentives that could be introduced to encourage British firms to accelerate their R&D programmes?

§ Lord Reay
My Lords, the United Kingdom Government spend close to £3 billion on civil R? that is 0.5 per cent. of gross domestic product. The percentage of GDP we devote to R&D is at least as high as in Japan and the United States. However, we are not complacent. We fully realise that there is a long way to go.

§ Lord Hailsham of Saint Marylebone
My Lords, is not the expression used in the Question— to invest more in research and development"— slightly misleading in that it pretends that the problem is a purely quantitative one? Is it not the case that all wise industrialists and science institutes know that effective R&D is not purely quantitative but depends upon two concurrent factors: the existence of promising leads and of first-class researchers? Therein lies the root of the problem.

§ Lord Reay
My Lords, I am quite sure that my noble and learned friend is right. That is one reason why the Government concentrate their R&D on areas where industry may find it too risky to undertake R&D on its own. They leave it to industry to fund R&D close to the market where we believe that industry is best placed to take commercial decisions.

§ Baroness Seear
My Lords, the noble Lord agrees with his noble and learned friend. Is it not therefore of great importance for the Government to avoid the brain-drain of the able scientists from this country?

§ Lord Reay
My Lords, the policies which we have pursued over the past 10 years, and in particular our taxation policies, have done a great deal to reverse that trend.

The Earl of Halsbury
My Lords, I welcome the noble Lord's support for research and development in industry. Does the noble Lord remember the old adage that one can lead a horse to water but 20 cannot make it drink?

§ Lord Reay
My Lords, the noble Lord has made a wise remark.

§ Lord Dormand of Easington
My Lords, is the Minister aware that some of us find his answers so far very disappointing? It is all very well for the Government to say that they will set the scene, and I support that view. However, it is obvious from the figures which have been given and which some of us know about that that policy is not working. Further, what has the Minister to say about the excellent reports on R&D which have been produced by the Select Committee of this House? If the Government had taken notice of them, the position now would have been very different.

§ Lord Reay
My Lords, I am surprised at the remarks of the noble Lord. We published our response to the report on Thursday. In our response, we warmly welcomed the report. The committee highlighted the importance of innovation in manufacturing industry and argued that a cultural revolution was necessary to change national attitudes. We entirely endorse those views.

§ Lord Clinton-Davis
My Lords, following the point made by my noble friend Lord Dormand, perhaps I may ask this question. Is the Minister aware that the report to which he referred made two statements: Public expenditure on R&D in the United Kingdom is not growing in line with that in competitor countries"? Furthermore, Failure by Government to maintain the national R&D budget gives the wrong signals to industry about the importance of R&D and the innovation process to the national economy".

Noble Lords
Reading!

§ Lord Clinton-Davis
My Lords, of course I am reading. I am quoting from the report. Such silly interventions do not assist.
Is the Minister aware that those are the objective views that have been set? Are they not far more convincing than the PR exercise in which the Government engage in order to cover the real truth?

§ Lord Reay
My Lords, I am not in any way trying to cover the real truth. The total United Kingdom R&D budget for 1989–90 was £11.4 billion. That is an enormous figure by any standards. As a percentage of GDP it was higher than that of Italy and similar to that of France.

§ Lord Kennet
My Lords, have the Government noticed that they are almost alone in the country in not caring much to whom ICI belongs?

§ Lord Reay
My Lords, that is a different Question.