HL Deb 23 May 1991 vol 529 cc331-79

11.32 a.m.

Lord Flowers rose to move, That this House takes note of the Report of the Select Committee on Science and Technology on Science Budget 1991–92 (3rd Report, 1990–91, HL Paper 37).

The noble Lord said: My Lords, today we are debating three reports of the Select Committee on Science and Technology. Two of them represent work mostly carried out last year. The third was produced in record time, thanks to high technology, earlier this year. A common thread unites them.

The noble and gallant Lord, Lord Carver, will introduce the report of his sub-committee on definitions of research and development. We often have to ask whether in Britain we spend enough on R&D, and on civil R&D in particular; and how that compares with what other countries spend—because, as your Lordships' committee has pointed out many times, international comparison is the most useful indicator of whether the spending level is about right. But before such comparisons can reliably be made, one first has to set up appropriate definitions that everybody both here and abroad will abide by. The report is important in the present context because it shows that in this country we spend less on R&D than is often stated to be the case.

The noble and gallant Lord, Lord Carver, will also present his sub-committee's report on how the United Kingdom responds to proposals for new international scientific programmes. That report is important in the present context because, as certain kinds of science get more expensive, international collaboration—often desirable in its own right, to be sure—becomes the only way to continue in the field when money is short. One therefore hopes that proposals for international programmes can be dealt with quickly and fairly. We found teat appropriate procedures exist for considering most kinds of collaboration, but they should work better than they sometimes do. As we shall see presently, however, international collaboration has one drawback, which is that it introduces a strong element of inflexibility into the affairs of the funding bodies; namely, the research councils.

The Third inquiry was chaired by me, and I shall introduce it now. It was concerned with the science budget for 1991–92. As your Lordships will readily understand, we have been methodically gearing ourselves up to examine the level of spending on basic research by bodies such as the research councils—the science budget, as it is called, to distinguish it from the total spending on R&D of which it is only a part. The precise budget for next year is something of a detail, your Lordships might think. We decided to look at it because of the shoal of anguished letters addressed to us during January and early February bewailing the drastic measures of retrenchment mooted by the Science and Engineering Research Council to circumvent a serious financial problem. There was talk of closing the unique Nuclear Structure Facility at Daresbury, of withdrawing from the European high flux neutron facility at Grenoble and of severely reducing the funds available for research grants and studentships in order to balance the budget.

However, it was not just the letters. In a public statement, the recently appointed chairman of the SERC, Sir Mark Richmond, did not mince matters; he thought that the settlement was "lousy". Moreover, the chairman of the Advisory Board for the Research Councils, Sir David Phillips, was reliably reported as having complained to the Secretary of State that the whole budget allocation was, substantially less than the sums needed to sustain the health of the UK science base".

Clearly, many believed that there was a crisis in the funding of science this year. We decided to find out to what extent this was so and how it had come about. However, while looking at the science budget, we tried to find out more about the likely effects of changes that the Government propose to make in the dual funding system; that is, the system whereby general support for research comes from the Universities Funding Council in addition to the more selective, and often more massive, support of the research councils.

That is a topic addressed by your Lordships' committee on many occasions. It is also referred to in the White Paper, which was published on Monday, but not in terms that add anything to what we already know in this particular respect, whatever the merits of that document may otherwise be. I hope that the noble Lord, Lord Dainton, will have more to say about it than I have. I shall say only that had the proposed transfer of funds from the UFC to the research councils taken place as originally intended, the resulting difficulties facing university research would have been even more severe.

Well, was there a crisis? Yes, there was; but although I shall not weary your Lordships by quoting too many figures, one first has to look at the longer-term financial envelope. Here I must thank our Clerk, Dr. Walters, our specialist adviser, Professor Roger Williams, and our special assistant, Dr. Ian Harrison, for their analytical skills and presentational flair.

The Government asserted, and we accepted, that there had been in real terms a 23 per cent. increase in the science budget in the 10 years since 1981-82. That budget is almost entirely allocated to the five research councils, of which in financial terms the SERC is easily the biggest and, it appeared, the hardest hit. It is allocated by the Secretary of State on the advice of the Advisory Board for the Research Councils.

However, the total money available for research also includes substantial amounts allocated by the Universities Funding Council specifically for the support of research under the dual funding convention. That sum has been shrinking, so that when the two allocations are added together—something that the DES apparently never does—the total increase since 1981-82 is only about 10 per cent.

Moreover, when allowance is made for the fact that the average costs of scientific research increase a little more than the overall inflation rate because of its increasing sophistication—say, 1 per cent. or 2 per cent. more—then the increase in the science budget is small or even negative over that 10-year period.

Even if that argument is rejected on the grounds that there is but one index of inflation and the Treasury deflator is its name, the Government have consistently underestimated the going rate when settling the current value of the science budget. Hence, there has been in effect a continuing squeeze for many years on the money available for scientific research, so that there is by now no fat left in the system to absorb or disguise short-term shortages unless drastic measures are taken to reduce still further the volume of research supported.

It is against that longer-term background that one has to see the allocations to the research councils this year. The DES argued that the additional money made available to the ABRC for 1991–92—£60 million in total—when appropriately massaged to allow for a variety of changing circumstances was equivalent in cash terms to an increase of 6 per cent., equal to the Treasury estimate of the rate of inflation. But much of that £60 million was not new money! It included £23 million capital expenditure that became available for general spending during this financial year. ABRC, however, had assumed that this money was in the baseline and had already committed it. When that is allowed for, this year's increase is more nearly 4.5 per cent. The precise analysis is given in the report and I shall say nothing more about it. Whether or not it is normal practice to treat baselines in that cavalier fashion, it seemed clear to us that the Treasury had pulled a fast one because the ABRC and the research councils had expected, and had been led to expect, otherwise.

When that reduced sum came to be shared out among the research councils some fared very badly. The SERC was given a cash increase for the year of just 2.9 per cent., much less than any realistic estimate of inflation. Under its former chairman, it had quite reasonably assumed that it would be treated more generously than that. Unfortunately, it had already acted on that optimistic assumption, a very unwise thing to do. I speak as a former chairman and accounting officer of that council. It should have known better than to run the risk of what in business terms would have been called bankruptcy. In effect it so committed itself to large items of expenditure from which it could not rapidly withdraw—international and other collaborative projects —that the only way it could escape a serious overspend resulting from the inflexibility of the budgetary allocations it had made was to cut the research grant and studentship budget. It cut it from £44 million to £25 million, leaving many of our most innovative young scientists with no means of support. If that is not a crisis I do not know what is. To escape from the ongoing situation, it precipitately proposed to withdraw, without adequate scientific reviews, from some of the big facilities I have mentioned.

Some indication of the gravity of the consequences for university research will be given by my noble friend Lord Porter of Luddenham, whose maiden speech we eagerly await. He is a most distinguished chemist and former president of the Royal Society. Indeed, I am tempted to describe him as "the Nobel Lord" for that is what he is. We are delighted to welcome him as a full blown Member of this House today, knowing that he intends to be a very active Member hereafter.

What has been the government reaction to this unhappy series of events? Mr. Clarke vehemently denied that there was a crisis, but he seemed not to have understood that there was really no other course open to SERC, once the position I have described had been reached, than to do what they have done. He seemed to wish to punish it by refusing to help in any way. Perhaps the officers responsible for such rash policies deserve some admonishment, but if no help is forthcoming the only real sufferers will be the disappointed research grant applicants from the universities who comprise so much of the science base of this country and who are in no way responsible for what has happened.

The SERC claims that it has been done out of £40 million which it was confident it would get. Be that as it may, we have done our sums too, and we reckon that on a conservative estimate it should be given, through the ABRC, the greater share of an extra £12 million for 1991–92, presumably from the contingency reserve. That would ameliorate somewhat the position on research grants and would enable the research councils, especially the SERC, to seek a better balance of expenditure so that difficulties of the kind which have occurred this year will not occur again. I hope the Minister who is responding for the Government today will be able to give some encouragement on that score. I hope too, that she will be able to offer some relief by way of recompense for increased VAT which, by raising the Treasury deflator from 6 per cent. to 7 per cent. amounts in effect to a further cut of £9 million.

The Minister may refer to the Written Answer that most conveniently found its way into the Commons Library early this morning. It appears to give the research councils more money. It does nothing of the kind. It merely announces the allocation for planning purposes of notional sums already agreed by government, but held back by the ABRC, for the two years following the one in which we claim that there is a crisis. At best it allows the research councils to proceed on level funding thereafter. It does nothing to reduce the crisis in their present funding.

That is almost the end of my tale but not quite. In our report we have been critical of Government and critical of SERC. But our chief concern as a Select Committee is, of course, with the health of science and technology in this country and the uses to which they are put in industry and elsewhere. At the start of my speech I said that there was a common thread uniting our three reports. It is the shortage of funds for research and development resulting from the fragmentation of responsibilities. On the one hand, the Government insist that industry should pay for what they are pleased to call "near market research". On the other, more and more voices are declaring that a healthy industrial performance presupposes a stronger science base. At best there is a huge gap in between that nobody wants to fund; at worst, neither side has been properly funded for years.

On 28th January, a group of us were privileged to he received by the Prime Minister, who wished to discuss our concerns about the organisation and funding of science. He said that he intended to ask the appropriate Cabinet committee to form an overview of the science and technology of the nation so that in future particular issues such as the size of the science budget can be judged in that wider context. We were impressed and delighted, but have heard no more since. Perhaps the Minister can report on the latest progress because something of the kind is sorely needed. If co-ordination cannot be made to work, the only alternative —and in my view it would be a retrograde step—may be to centralise responsibilities in a new department of science and technology. We cannot go on with the piecemeal approach any longer.

Moved, That this House takes note of the Report of the Select Committee on Science and Technology on Science Budget 1991–92 (3rd Report, 1990–91, HL Paper 37).—(Lord Flowers.)

11.48 a.m.

Lord Carver

My Lords, I have to introduce two reports. The first is Definitions of R&D and the second, International Scientific Programmes. First, I wish to express my thanks to all the members of the sub-committee which produced the reports, to those who gave evidence to us and to our specialist advisers, Professor Roger Williams for both studies and Dr. Mick Lomer for the second, and to our invaluable Clerk, Dr. Rhodri Walters.

As the noble Lord, Lord Flowers, said, a common thread runs through all three reports that we are considering today: it is the Government's policy towards and support of, or lack of support of, research and development, or to use another phrase, science and technology. Definitions of R&D, I must admit, is not an exciting title. I do not pretend that our report makes fascinating reading, but it is important. The reason why we embarked upon it was due to the concern that the Select Committee felt, and had expressed in its reports on civil R&D, that neither the Government nor industry were devoting sufficient effort t3 it. Also, Ministers had made statements which purported to show that all was well and that both the Government's and the nation's record compared well with that of our principal economic rivals in the field. The committee believed that this was not the case and that the arguments that Ministers used—of which we quote examples in the report—were distorted by including the Government's expenditure on defence R&D or what the Ministry of Defence calls R&D. That accounted for almost half the Government's R&D expenditure and was much higher as a percentage of GDP than that of Germany and Japan and slightly higher than that of France. However, the percentage of GDP that we devoted to civil R&D was significantly less than that of France, Germany and Italy, and much the same as that of Japan. In Japan, the effort devoted by industry to civil R&D represents a much higher percentage of GDP than in this country.

I have used the past tense because we carried out our study in 1989, working on figures related to 1987 and 1988. There have been changes since then, but not such as significantly to affect our conclusions.

If one is to use international comparisons in this field, one must try to compare like with like. That is not easy. The methods of support for R&D, both defence and civil, vary a good deal from country to country. The best means of comparison is to observe the manual produced by the Organisation for Economic Co-operation and Development, OECD, called the Frascati Manual, which I have in my hand. I believe that I am one of the few to have read it.

The first rule to observe is that everyone in the business should follow the definitions in the manual as closely as possible. We were concerned to find how few people either observed it or even seemed to know about it. It is at present being revised and we made suggestions for its improvement which we hope will be included in the new edition which is due next year.

One of our main complaints was that a large proportion, certainly more than 50 per cent. and perhaps as much as 80 per cent., of the large sum which the Ministry of Defence classified as development did not fall within the Frascati definition of experimental development as, incorporating an appreciable degree of novelty". When one considers how large a slice of government expenditure on R&D that represents, your Lordships will appreciate what a degree of distortion is introduced if defence R&D is included when making international comparisons. We were glad to note that in their response, which took over nine months in gestation, the Government went some way to recognise this. They told us that work was in hand to improve the Ministry of Defence figures. We look forward to the results and hope that they will not be even longer in gestation.

The other important reason for having agreed definitions of R&D and observing them is that government policy is said to be based on giving financial support to some kinds and not to others. In theory, they accept responsibility for the support of basic research through the research councils, and, hitherto, the Universities Funding Council, and, both in their own laboratories and extra-murally, support for their own activities, such as defence, and their statutory responsibilities in other fields. They are also prepared to give encouragement, preferably on a shared basis with industry, to what has been called strategic research. The trouble is that people mean different things when they use that term. In their annual review of government R&D, the Government define it as: applied research in a subject area which has not yet advanced to the stage where eventual applications can be clearly specified". That is close to the definition adopted by your Lordships' Select Committee in a previous report. However, in some fields, such as the medical field, it is used to describe the accumulation of knowledge, including data collection, as a general scientific background from which new ideas may spring. What is clear is that the Government believe that anything more applied than that, which they describe as "near-market" research, should be financed by those who expect to profit from it: that is industry. The result of vagueness in this area, as the noble Lord, Lord Flowers, said, is to leave a grey zone of considerable importance which is not well financed either by government or by industry.

One of our important conclusions was that although a more detailed breakdown may be useful for certain national purposes, when making international comparisons definitions should remain broad. More detailed ones have a spurious appearance of accuracy which they do not merit. Defence should be excluded and perhaps all development also. Attention should be concentrated on the effort devoted to research. The best comparison is gross expenditure on civil R&D—that is by both government and private sources—as a percentage of GDP and growth of that expenditure as a percentage of GDP. For those of your Lordships who are interested in the subject, I commend not only our report but also that produced by the Science and Engineering Research Council in July last year entitled, Research in the United Kingdom, France and West Germany: A Comparison. It came to the same gloomy conclusion as did our report. We said, that, as a nation, we arc investing too little in civil R&D and the situation is getting worse. Our national expenditure (particularly in the private sector) is not in line with our competitors". The other sub-committee's report on innovation in industry had something to say about that.

I turn now to our report, International Scientific Programmes, published in February of this year, to which the Government have not yet made an official response. We embarked on this because we were told that there was general dissatisfaction about how the United Kingdom responded to proposals for international scientific programmes. We ourselves had been much concerned, when studying marine science, about the unsatisfactory situation at that time over United Kingdom participation in the ocean drilling programme. That was subsequently resolved. It was suggested to us that the procedures for considering participation in international scientific programmes and for evolving a co-ordinated response were not well known and involved serious delays. As a result the international scientific community gained the impression that although British scientists were highly regarded abroad, the Government were not interested in international scientific co-operation. Our study led us into a wider consideration of the subject than the narrow one of how, as a nation, we responded to other people's proposals.

It became clear to us that there are many different kinds of international scientific co-operation, varying from mutual co-operation between scientists working in the same field—perhaps each working from his own laboratory, requiring no bureaucratic structure to support that co-operation—to major international laboratories, involving considerable expense, of which CERN, the European Centre for Nuclear Research, is the most obvious example. Science in space is another.

There are also many different reasons for international co-operation. Advancement of science by exchange of ideas and experimental results is one; the need to make observations at many widely separated points of the globe or in different natural circumstances is another. That applies very much to the environmental sciences. The desirability of building up scientific expertise in other countries, particularly in the developing world, is another. Finally, the expense of creating and maintaining expensive facilities which few nations could afford on their own, such as the need to have access to space and to sources of neutrons and to study particle physics, is important.

We found ourselves classifying programmes as, first, informal and personal; secondly, formally co-ordinated, multi-centred and without funding, which does not mean that one does not need money for them—each participant finds the money from some source in his own nation—and thirdly, the same kind of programme, but with funding, where there is an international arrangement for funding. Finally, there are the large centralised programmes and facilities. We stressed the importance of the informal and personal which we saw as growing in importance as the nation's relative position in world science continued to fall. We expressed concern that the transfer of funds from the Universities Funding Council to the research councils should not result in a reduction of funds for travel, especially for young researchers.

We found no great problems with the second category in which we noted that EUREKA worked well, as indeed does the International Energy Agency. We commended the Department of Trade and Industry for the part it played in promoting EUREKA. We suggested that the research councils should expedite their machinery and procedures for responding to proposals for co-operation from our own sciences and should make the procedures more widely known.

In the third category we were inevitably much concerned with the European Framework Programme. However, we tried not to go over the ground that had already been covered by the European Communities Select Committee whose report entitled A Community Framework for Research and Development was the subject of a debate in this House on 28th January. We found the Treasury's attitude to additionality and attribution—once we had struggled to understand it—as unsatisfactory as the European Communities Select Committee did. I know that my noble friend Lord Sherfield will have more to say about that. We drew attention to the need for wider participation from the scientific community in considering proposals for that programme, and for regular evaluation of projects once they had been accepted. One cause of the attribution/additionality problem is the success that scientists in this country have achieved in attracting funds from the programme, to the envy of the French as we learnt when we visited Paris.

In the difficult category of large, centralised programmes and facilities, we did not support the suggestion that a new co-ordinating body was needed to consider proposals. However, we concluded that closer liaison was needed between the Cabinet Office science and technology secretariat and the Advisory Board for the Research Councils, and between the latter and chief scientists of government departments when they were significantly involved. We recommended that the Cabinet Office's document Guidelines for Future International Collaboration should be made widely known to the scientific community as a whole.

We made two observations. First, we deprecated the Government's negative attitude to hosting large scientific facilities in this country. That is a great contrast to the view taken by the French and German governments. Secondly, we noted that there is no supra- lational forum which takes a strategic overview of the development of large facilities in the context of the activities of national facilities. It could sometimes be preferable to convert a national facility into an international one rather than develop an international one from scratch. The Joint European Torus at the International Atomic Energy Authority's laboratory at Culham is a successful example of that.

Finally, I wish to make a personal observation arising from this study. I fear that we may not be thinking internationally enough in the scientific field. There is a danger in regarding the primary role of science as underpinning economic competition, whether in national terms or in making the European Community competitive with Japan and North America. That is to take too narrow a view and it will not produce the best science for the benefit of mankind. We sometimes forget that mankind includes ourselves.

12.3 p.m.

Lord Nelson of Stafford

My Lords, I am glad to speak to the three Motions which have been put forward. I shall confine my remarks to the two Motions tabled by the noble and gallant Lord, Lord Carver, about which he has just spoken. I shall frame my remarks primarily from the point of view of an industrialist but also as a member of the Select Committee of the noble and gallant Lord, Lord Carver. I had the privilege to serve on that committee and I commend the able way in which the noble and gallant Lord conducted the two inquiries. As he himself said, definitions are by nature a dull subject. I agree with him, but I must emphasise how important definitions are for all that. They are particularly important from industry's point of view.

R&D is an important factor in maintaining the competitiveness of industry, as all noble Lords will be well aware. The issues that were brought out in the reports are important and deserve the close attention of Her Majesty's Government. I shall touch briefly on one or two reasons why the two reports are so important. As the noble and gallant Lord said, definitions of R&D are often used for comparative purposes. There is no doubt that there was a wide divergence of view as regards the definition of R&D and as regards whether we were comparing like figures with like. Clearly we were not, and therefore there was a danger of becoming misled in using figures for comparative purposes.

I wish to pick out four reasons for the importance of this subject. First of all, there is a need for industry itself to record its R&D spend in a meaningful way so that the figures can be used in company accounts and can be studied by all interested parties. Those figures can then be used as part of our national statistics for comparative purposes on a national and international basis. Secondly, the figures are important because the DTI needs to associate the figures collected by industry with the Government's relative spend in similar fields. This would enable the DTI to take a meaningful overview of the position of this country's industries relative to those in other countries. I hope that not only will the DTI take such a meaningful overview, but that it will also use the figures for discussions with industry as regards what measures are necessary to maintain the full competitiveness of our industries in the international field. I hope that that will form part of the new activities outlined recently by the Secretary of State for Trade and Industry.

Thirdly, I wish to emphasise the point made by the noble and gallant Lord, Lord Carver, relative to the dominating position of Ministry of Defence expenditure in this field. That can be misleading if it includes a lot of expenditure which does not constitute research or development. Having worked in this industry, I am aware of the large sums of money which are spent, for example, on aero-engine testing, on flight testing and on aerospace equipment. That expenditure is extensive and it does not necessarily constitute either research or development directly. The situation must be clarified if the figures are to be meaningful.

Fourthly, it is frightfully important that our financial institutions and finance houses also take note of the figures and reconsider them in a meaningful sense so they can satisfy themselves that companies are adequately taking care of their future. The financial institutions can also give credit where credit is due to companies that are doing just that. We have received the Government's response to the report on the definitions of R&D. I, for one, welcome it as constructive and helpful. I hope that the Government will take further note of the recommendations.

I turn now to international scientific programmes. Again, I emphasise how important it is to consider these strategically and to ensure that we are taking the maximum opportunity to develop our science base through such programmes. I urge the Government to look closely at this matter for the reasons which the noble and gallant Lord, Lord Carver, mentioned.

I wish to make four points from an industrial point of view. First, participation in these programmes enables us to participate in high technology programmes which we would not otherwise be able to involve ourselves in due to the high expense involved. That should be taken very much into account. Secondly, it exposes the scientists and technicians who participate to high technology fields and also enables them to make contact with their peers in other countries. That can be extremely stimulating and rewarding and its value is not to be overlooked.

Thirdly, there are wide gains to be achieved from the acquisition of new technologies, new methods of measurement and instrumentation, new materials and so on, all of which will feed back into the more general field of R&D and make a very valuable contribution to our industrial research and development base.

The fourth point, which came out very clearly in our inquiry and which has already been made by the noble and gallant Lord, Lord Carver, is the opportunities represented through hosting major projects. When one hosts a major project in the country it widens exposure beyond the scientists and technicians participating directly and reaches many other scientists and technologists, giving them access to such a facility. Wider still, there are opportunities for students and others to participate and see something of the work. Hosting such projects also provides opportunities for our industrial companies to participate in the development and supply of the advanced equipment required.

It has been mentioned by the noble Lord, Lord Flowers, that government decision-making procedures in this field are very diffuse. That was brought out very clearly in relation to the question of decision-making on participation in and hosting of major projects. It seemed to be nobody's job to look at projects constructively and strategically and decide whether or not they would be worthwhile. We were left with the impression that they were judged largely on financial considerations by the Treasury. The criterion appeared to be whether they would pay on a direct financial basis rather than whether they would be worthwhile on a broad basis, taking into account the advantages that I have mentioned of participation, which can be much more important than the direct financial gain.

I hope that the Government will recognise that: we are at a disadvantage. We should face up to it, and the Government should face up to it. We are at a disadvantage in not having a Minister of science or some such arrangement to oversee science activity. I do not advocate that we should have such a Minister, but I believe that the Government should recognise the weakness of the present position and take conscious steps to ensure that the weakness is taken care of in some way which ensures that we are not at a disadvantage vis-à-vis our competitors.

I hope that the Government will take note of the recommendations. They are extremely important to our R&D effort and to industry. I commend them to your Lordships.

12.13 p.m.

Lord Shackleton

My Lords, it is with some hesitation that I take part in this debate, having recently come out of hospital and therefore not having served on the committees. However, it gives me the opportunity to pay tribute to the two chairmen who introduced the reports. I do not think that the House of Lords or many people outside it are aware how much work is involved in the chairmanship of such a committee. There is a prodigious quantity of paper to read. Whereas very few of the members of the committee can claim to have read all the papers, the chairman has to read them all.

These are brilliant reports and it is unfortunate that the Government have been so slow in making it possible to hold a debate. I know that the noble Lord, Lord Flowers, has views on that. If the Government had only reacted more quickly to the report on R&D we could have had a debate earlier. Each of the reports would have warranted a whole day's debate.

I echo the tribute that has been paid to the clerks, and in particular to the new clerk. However, let us also remember the original clerk who was responsible for the R&D report, Mr. Paul Hayter, who has gone on to higher things and has set an example which will be very difficult to follow. Mr. Rhodri Walters has done a very good job, as have the officials.

It is also unfortunate that this debate takes place when the Lord Privy Seal is unable to be present. Once again the noble Baroness, Lady Blatch, is landed with a tremendous chore, which I am sure she will carry out very well. She has done the same already in previous sessions of this Parliament and I am sure that she will do her best. I have received a letter of apology from the Lord Privy Seal in which he says that he greatly regrets not being able to be present on this occasion.

It is a formidable range of subjects which we have to debate today. Luckily the debate on atomic energy has been moved elsewhere, but we are still trying to carry a great deal. If it was not for the fact that this is nearly the Chief Whip's last day, I should have had something rude to say to him. However, the complaint is not so much against our people as against the Government and their indifference to the requirements of the House of Lords. I say that with good temper and I intend no reflection on anyone in this House.

The report on definitions of R&D, which we could with benefit have debated a long time ago, is a formidable one. It is worth recording—because we have had a very good introduction from the noble and gallant Lord who chaired the Committee—that the Committee recommends that the practice of quoting combined defence and civil R&D figures in the UK should generally be discontinued. Some comments on the subject have been made by ACOST. The Government could be a great deal less defensive. They go on defending a totally indefensible position on the grounds that they do not have an up-to-date estimate of what ought to be done. It is quite clear that putting defence R&D with civil R&D is greatly misleading. I am sure that my noble friend who will speak from the Front Bench will have something to say on that.

It is a very valuable report. It may not have a very exciting title Definitions of R&D—but it is a very important report. I commend noble Lords who have not had a chance to look at it at least to read the conclusion and the section on defence R&D. The problem is a very difficult one. How far the noble Baroness will be able to satisfy us I do not know, but I live in hope. She has satisfied us so often in the past when we did not expect to be satisfied that we still have hopes on this particular occasion.

I want to say something more about international scientific programmes. I should also like to say how very glad we are to have a past President of the Royal Society and past head of the Royal Institution in our midst. He served with great distinction in the Royal Institution and it is a wonderful thing to have him in this House. I do not believe that any committee in any country in the world has among its members such tremendous expertise as the Select Committee on Science and Technology. There are a few of us along for the ride because we are politicians and we sometimes help, but the distinction of members of the Committee is very great.

I should like to say a few words about the subject of international scientific programmes, which the noble a id gallant Lord, Lord Carver, introduced very clearly. As he explained, the committee undertook its investigation following allegations by the Royal Society that there was a procedural vacuum in the United Kingdom for assessing proposals for international programmes. We found that the United Kingdom's response to proposals did not raise such problems as to merit a radical departure, but we thought that the procedures were capable of being improved. I should like to say a few words on the aspect of the machinery of government.

In the United Kingdom, responsibility for the conduct of research and for research spending is diffused. We have no ministry of science and, in the absence of such a ministry, we look to the Cabinet Office science and technology secretariat and to the Chief Scientific Adviser. At one point during one of the meetings that I attended, we interrogated the Chief Scientist almost as if he were the Minister. He is a substitute for a Minister, and very good he is, but we should not—in any case, this is not the occasion—turn lightly away the idea of a ministry of science. It has worked exceedingly well in France, Germany and Australia, although there are criticisms even there. The subject needs to be considered. I am not totally committed to the idea of a minister for science. A great deal would depend on such a minister having the right status in the Cabinet. If he is a junior Cabinet minister, it may not be very good. The account of the meeting of some of my colleagues with the Prime Minister was encouraging and we look forward to hearing a little more, but there is no doubt that the Cabinet Office secretariat is a crucial institution in that respect.

As the noble Lord made clear, there are certain things in which the Cabinet Office does not need to be involved, such as some of the climate research programmes under the World Meteorological Office and the International Council of Scientific Unions, which rely on applications for research council funding. That might cause difficulty, often because many researchers have unrealistically high expectations of research councils' ability to respond quickly. That is a matter for potential collaborators and research councils to sort out between them, and we recommend that they do so.

The other problem that we identified was that of expediting UK responses to proposals for large centralised programmes and facilities such as the ocean drilling programme, the European synchrotron radiation facility or the James Clerk Maxwell telescope. Much of that decision-making involves the research councils, the ABRC, the DES and, ultimately, the Cabinet Office. Decision-making can be paralysingly slow. Sir Herman Bondi wrote to tell us how important it was to come to an early decision on the principle of such programmes. We resisted the siren voices which suggested that we should have another layer of bureaucracy, but we recommend that existing Cabinet Office machinery be made to work rather more expeditiously. There should be earlier contact between the Cabinet Office and the ABRC as soon as such proposals for collaboration are mooted, whether "top-down"—to use an extraordinary piece of language—by governments or "bottom-up" by research councils or groups of scientists.

Where proposed collaborative projects are supported by a government department rather than by a research council, the Chief Scientific Adviser should direct the department—again, I am talking about him as if he were a Minister—to take advice from the ABRC wherever a proposal might have a significant impact on financing. The Cabinet Office Guidelines for Future International Collaboration should be given a dissemination that goes wider than government departments. We thought that the Department of Education and Science might helpfully append to those guidelines practical procedural advice to a scientist wishing to advance a proposal as rapidly as possible. Perhaps the Minister who is to reply to the debate will have something to say on those matters.

The report raises other important issues, but I wanted to concentrate on the machinery aspect because it is a sensitive matter. Some of it works extraordinarily well in difficult circumstances and some does not. In this age of "steady state", which is sometimes called "shrinking state", international scientific programmes are an essential feature of the progress of our nation. The least we can do is to oil the wheels so it works rather better than it has done.

12.25 p.m.

Lord Kirkwood

My Lords, I wish to comment first on the Science and Technology Committee's Report on R&D definitions and then to say something about its report on the science budget.

As the noble and gallant Lord, Lord Carver, outlined—the noble Lord, Lord Nelson, also referred to this point—the first report has dealt with the importance, as far as possible, of obtaining accurate and consistent data; of obtaining agreed and clear definitions on what constitutes R&D and what does not; of avoiding the selective use of statistics; and of comparing like with like. It warns about the difficulties involved in classification when there are too many subdivisions of R&D. As has been mentioned, it warns particularly about including defence costs when making international comparisons because much of the expenditure in that area is not strictly R&D, according to Frascati definitions. When making comparisons with Japan and Germany, that can be misleading because of their small investment in defence R&D. As we have heard, the report's recommendation is that total civil R&D as a percentage of GDP should be used as an international comparitor. On that basis, it is shown from OECD statistics for 1987 that France and the US spent somewhat more than the UK, but also that Japan, Sweden and West Germany all spent about one third more than us.

The report is rightly critical of the selective use of statistics to suggest that UK investment in civil R&D is up to the level of our industrial competitors. We have recently been treated to a further example by the Secretary of State for Trade and Industry who stated that the British Government spent a higher percentage of GDP on civil R&D than Japan. That is strictly true: 0.55 per cent. for the UK as against 0.42 per cent. for Japan. I am sorry to throw figures at your Lordships, but that is the nature of the debate. However, it is only part of the truth and therefore dangerously misleading. It ignores the fact that Japanese industry invests a huge amount in civil research—four times as much as their Government—making a total of 2.8 per cent., as against our total of about 1.8 per cent. It is the total investment in civil R&D that is crucial for the health of manufacturing industry and the country, not necessarily its source.

If we wish to compare government funding alone, it would be wiser to compare with countries that have a more similar scientific and economic structure to our own. Government-funded R&D is 0.75 per cent. of GDP in Italy, 0.86 per cent. in France and as high as 0.92 per cent. in Germany, which is almost double the amount that the Government spend in this country. As I said, our figure is 0.55 per cent. Selected comparisons of statistical data chosen to make a political point, ignoring contrary data, is at best short-sighted. It is the nation which is the real loser when the facts are manipulated to conceal the truth.

Perhaps I may now turn to the report on the science budget. We have a crisis, to which the noble Lord, Lord Flowers, referred, as a result of the funding of research councils falling short of their expectations. In particular, the SERC, which is the main provider of research funds in universities, received £40 million less than anticipated, which will have dire consequences for the availability of research grants for new students this year.

The Government claim that there has been a 25 per cent. increase in real terms in the science budget since 1979. On the face of it that appears indisputable although, as shown in the science budget report, a more realistic inflation factor would provide a less healthy picture. Whatever the reason for the disastrous situation in which the research councils find themselves, whether it is the result of their own mismanagement or whether the DES is responsible in not making the situation clear enough, what needs to be stressed is that government spending on academic research in science and technology in this country is abysmally low in comparison with other nations.

The Committee of Vice-Chancellors and Principals has produced its own statistics to show that the United Kingdom spends 49 dollars per head of population compared with about 60 dollars in Germany, Holland, France and the United States; in other words, they pay 20 per cent. more. We should need to spend another £300 million to bring us into line with our European neighbours. I think that this places into perspective the shortfall of £40 million in the SERC budget. It shows contempt for the value of scientific research in this country.

If the Government should challenge with their own statistics the figures produced by the CVCP, I hope that they will do so in the spirit of the report of the noble and gallant Lord, Lord Carver, in making more complete comparisons of like with like. We all know that, in the hands of the unscrupulous, statistics can be made to demonstrate almost anything: lies, damned lies and statistics, as Disraeli said. But for honest truth-seeking folk such as your Lordships, taken with a pinch of healthy scepticism and some intelligent interpretation, they can be a very useful guide.

12.32 p.m.

Lord Porter of Luddenham

My Lords, in rising to address this House for the first time I should like first to thank noble Lords for the very great kindness that they have shown to me since I came here last year. In particular I should like to thank the noble Lord, Lord Shackleton, for his most gracious words about me this morning. I was hesitant to ask your Lordships' indulgence in hearing me until I had time to benefit from the great wisdom which is to be found—indeed, abounds—in this House. But being mindful of the fact that by definition a life Peer is not immortal, I shall tempt fate no longer.

Over the past months I have been privileged to serve on your Lordships' Select Committee on Science and Technology and today is something of a feast day for us as we take note of three of its recent reports. I am grateful to my noble friend Lord Flowers for his kind reference to me. I shall confine myself to a few remarks about the report on the science budget, which he summarised so clearly for us. I hope that what I say will not be controversial. I shall speak about the way in which the budget is spent rather than its absolute amount, as that is, or at least should be, a matter for scientists as much as, if not more than, politicians.

A first glance at the graphs in the report which show trends in funding over the past 13 years might indicate to noble Lords that, apart from an ominous recent downturn in the funds coming from the Universities Funding Council, support for the universities is not so bad after all. But if funds provided over this period by the Government to the research councils have stayed roughly constant in real terms, why has support for so many university research workers almost dried up? It is because only a very small proportion of those funds ever reach the university scientists who work in the basic sciences of mainstream physics, chemistry and biology.

As one of those poor research workers, perhaps I may declare a personal interest. I and my colleagues at Imperial College—a group of nine young research fellows and students—are trying to unravel the fundamental processes of photosynthesis. It is an important and competitive area of research and one that is moving rapidly. In order to move even more rapidly into the fast time domain of femtoseconds where the action now is, we need an instrument called a copper vapour laser. This is made in this country by Oxford lasers.

Four years ago we applied to the only funding body available to us for this purpose, the Science and Engineering Research Council. Our work had just been rated excellent for scientific merit and also cost-effectiveness and placed in category 1 by that council. Our application was unsuccessful. We resubmitted the application four times over the next three years. In one case the reason for rejection was given; it was on the grounds that—to quote the letter: it is not the Committee's policy to provide lasers directly to academic groups, but rather to encourage the provision of lasers at the Rutherford Appleton Laboratory". That is an in-house establishment of the SERC. Our other applications were rated alpha but unfunded and the most recent one was graded top of all the applications to the committee considering it. One might therefore have grounds for hope that a fifth application would be successful. But now, as my noble friend Lord Flowers explained, there has been a cut of nearly 50 per cent. by the SERC in the amount available to its science board for research grants, and the funding of research applications will be further delayed

Over this period we have had to use old and inadequate equipment. We spent an inordinate amount of time filing applications and borrowing apparatus, including the laser itself, which we managed to borrow from the manufacturer. I estimate that I and, much more important, my young colleagues have lost at least two years, they at the beginning of their careers, by this saga. There is nothing unusual in our case; it is just about par for the course.

How has this state of affairs arisen? The £40 million, which we have heard referred to several times and to which the SERC overcommitted itself is less than 10 per cent. of its total budget and might have been accommodated were it not for the fact that most of its expenditure is on expensive, in-house establishments and prestigious big projects which it is almost impossible to run down. Almost the only flexibility margins available for cuts are those allocated to small, responsive mode applications (I apologise to the sensibilities of noble Lords for that awful jargon). The £25 million which we have heard remains this year to fund all these important applications in all the universities of the country is less than 6 per cent. of the £450 million which the SERC receives from the Government.

The long-term solution is surely to have a long-term solution. The funds available for the support of scientific research must be planned over a time which is commensurate with the time taken by the research itself. Otherwise how can the scientists plan? Furthermore, to avoid a recurrence of what seems to be a natural drift away from responsive mode funding (bottom tip funding) to top down direction, we need a separate funding body—or better still, several of them, a plurality of them—for these small grants. The Royal Society has operated a small grants scheme over the past three years and it has been a life saver for many of our best young scientists. Without some ring-fencing of this kind matters are likely to get worse as the remaining research funds under university control are transferred to the research councils, never, many of us fear, to be seen again by the universities.

Most of our great scientific discoveries of the past have come from individuals and small groups working within or very closely associated with our universities. This country has been proud of its science and has given its scientists encouragement, if not bounty. Today support seems to be given not only sparingly but grudgingly, with all sorts of strings attached.

Throughout history all great civilisations have pursued the arts and the sciences while their industry and trade flourished. These activities are inseparable, and if one is diminished, so are the others, and so is the country itself. Britain had, and still has, a leading place in the development of modern science. I believe that we should maintain that.

I thank noble Lords for hearing me on this subject which is so important to all of us.

12.40 p.m.

Lord Walton of Detchant

My Lords, I regard it as an exceptional privilege to have the responsibility, on behalf of the whole House, of congratulating the noble Lord, Lord Porter of Luddenham, on his outstandingly lucid, erudite and arresting maiden speech. It has been an even greater privilege to listen to him. No one could possibly speak about British science with greater authority. He is a most distinguished scientist, jointly receiving the Nobel Prize for Chemistry in 1967. He holds a clutch of honorary degrees. He holds the Faraday, Davy and Rumford Medals of the Royal Society, of which until recently he was such a distinguished president. He presided with equal distinction over the affairs of the Royal Institution. We all listened with great attention to what he had to say. I have noted from Dod's that his recreation is sailing. I would simply like to congratulate him on his maiden voyage in your Lordships' House. I feel sure that we shall look forward to many such interesting and exciting voyages with him in the future.

I make no apology for turning briefly at the outset, because of the research element of the debate, to the present position of the National Health Service. The only reason why I do so—some noble Lords may feel that the topic has been exposed; some may even feel that it has been overexposed in your Lordships' House —is because of the situation facing medical research today in many of our NHS hospitals. It was accepted in last week's debate that between 1979 and 1990 the Government have increased the funding of the NHS by 50 per cent. in real terms based upon governmental estimates of the rate of inflation. However, throughout that period nationally agreed salary increases for nurses, doctors and other members of staff have never been fully supplemented and health authorities have been required to find the extra money from efficiency savings.

Medical costs, like many science costs—to which reference has been made in this debate—have risen some 30 per cent. faster than the retail prices index and other factors upon which the government estimates of inflation are based. We know that the demands for health care for a progressively ageing population have increased costs by about 2 per cent. per year over the same period. There have been major additional costs resulting from the introduction of new and effective drugs and from the development of advanced medical technology.

Thus, despite the hugely escalating costs of our National Health Service there has been a general agreement among most health authorities and the majority of the medical profession that the NHS remains significantly under funded. Research has inevitably suffered. Last week the Committee of Vice-Chancellors and Principals expressed the gravest concern about the funding of our universities, pointing out that with increased costs arising from the VAT increase in the last Budget, they are now in seriously straitened financial circumstances, unable to pay anything more than a token increase in salary to their staff, and that they will be unable to pay to clinical academic staff—who in the past have been guaranteed comparability with their NHS colleagues—the pay award recommended by the Doctors' and Dentists' Review Body. That could be the final nail in the coffin sounding the death knell of the declining discipline of clinical academic medicine, in which segment of our universities some of our most able and innovative research workers are employed. We are told that, after suffering major cuts in resources over many years, universities now need £500 million extra this year simply to stand still.

About two weeks ago the medical subcommittee advising the Universities Funding Council expressed grave concern about the future of clinical teaching in the light of recent cuts in services in the teaching hospitals. Now we have before us these carefully argued statements in the excellent report so ably introduced by the noble Lords, Lord Flowers and Lord Carver, indicating that government support for science is in an equally, if not more, parlous state.

I shall not repeat the arguments that they have adduced, nor the many which are so dispassionately but forcefully argued in the reports of the Select Committees. Can it really be right that the Science and Engineering Research Council should have been compelled to cut its new research grants by 50 per cent. and its research studentships by 15 per cent.? Is it right that the Medical Research Council, like that body, should have rejected on purely financial grounds first class research projects so that all around us we hear the same: "Approved, but not funded".

These matters are the lifeblood of British science and of university research, upon which not only the scientific but also the future economic and industrial well-being of this country, and improvements in the health of its people, depend. We spend less on government support for science in relation to our gross national product than virtually all of our major competitors in Europe as well as Japan and the United States. Even Australia, despite its recent national economic problems, has made the positive decision in the interests of that country's future to increase government funding for science, including medical research.

I fully understand the Treasury's wish to restrict public spending. However, its almost obsessional preoccupation with that objective could well destroy the seed corn of future scientific discovery in the UK, just as it could have similar disturbing consequences in relation to medical care and education.

Perhaps I may express my especial personal concern about the present position of medical research, upon which the Department of Education and Science, through its Medical Research Council, spends more than £200 million annually—an amount which nevertheless, I am told, is less than the tobacco companies in the UK spend annually on advertising. Speaking as a former member of that council, and as the former director of a laboratory concerned with research into neuromuscular disease, but also as the current chairman of a charity, the Muscular Dystrophy Group of Great Britain and Northern Ireland, which funds substantial research in the neuromuscular field, I can only echo the rising tide of anxiety and deep concern being felt by my medical and scientific colleagues.

As several noble Lords have pointed out, the dual support system under which research in this country has for many years been funded in this country requires that there should be provided in our universities, hospitals and other appropriate institutions of higher education, an infrastructure consisting of well-found laboratories with a full range of basic equipment and services, and secretarial, technical and library support. As a former medical school dean, I can say that, in my medical school years ago in some departments in clinical medicine, that infrastructure, though minimal, was nevertheless crucial. In my own department of neurology, which had an annual research grant income when I left it in 1983 of about £350,000 a year, all the technical staff were paid for on "soft" money for over 20 years until we achieved university support from the dual support infrastructure, some admittedly provided by private endowment. It was an index of the loyalty and dedication of our staff that they stayed despite the personal insecurity involved in moving from one short-term appointment to another.

There is irrefutable evidence to the effect that the dual support system has crumbled both in the universities and in the National Health Service. Because of the financial restraints to which I have referred, the research expenditure in each of those areas has often had to be cut in order to preserve teaching and patient care.

The noble Lord, Lord Flowers, referred to the extraordinary proposal through which it is intended to remove the financial component providing the research infrastructure of the dual support system (the so-called DR component) from the university grant and to transfer it to the research councils. While my comments probably come far too late, I must say that I cannot imagine a more ill-conceived proposal. Now that, according to the recent Government White Paper, the polytechnics are to become universities, many more institutions will compete for these shrinking research funds. There is evidence that the DR money will be spread thinly across the entire higher education structure.

There is, of course, a suggestion that much of the funding may be restricted to favoured universities and departments of proven research achievement. But my experience as dean of a medical faculty—in some respects like a university in microcosm—led me to recognise that one never knew where the next rising research star would emerge from. Sometimes such individuals appeared in the most unexpected departments or quarters of the faculty. Only when a core research infrastructure is available is that emergence from the chrysalis likely to be nurtured.

Above all I am deeply concerned about the position of the charities, which for some years have provided more money for the direct costs of research than has the Medical Research Council. It is perfectly proper that universities and health authorities should charge commercial organisations overheads when they commission research. However, the informal agreement of long standing with the charities to the effect that, in view of the dual support system, they, like the research councils, do not pay overheads has been a crucial component of research support in the UK for many years. I cannot believe that it is right to suggest that hard-earned funds collected by these charities and their innumerable supporters through a variety of fund-raising events throughout the country should be spent upon providing that basic infrastructure of the research environment which should be a part of the provision of the well-found university and of the National Health Service.

The seriousness of the position cannot be overestimated. I urge the Government to think again and, first, if it is not too late, to overturn their remarkable decision about the DR component; and, secondly, to review as a matter of urgency in the country's best interests their science funding policy.

12.53 p.m.

Lord Sherfield

My Lords, after hearing the opening speeches in this wide-ranging debate I rise to make only a couple of points and to venture a general comment. First, I shall comment on the way in which the Treasury deals with the financing of the European Framework Programme, with particular reference to the practice of attribution and additionality. Do not be alarmed, my Lords; it is not my intention to discuss the merits of that arcane subject this afternoon. However, there is a point which is perhaps one of substance as well as of procedure.

As was said by the noble and gallant Lord, Lord Carver, the subject was first addressed by subcommittee B of the Select Committee on the European Communities whose report was debated in this House on 20th January. That committee, on to which I and other members of the Select Committee on Science and Technology were co-opted for this item, heard some lucid and well presented evidence from Treasury witnesses. In the debate the noble Lord, Lord Hesketh, went to great trouble to expound the Treasury policy and his speech was much appreciated.

Owing to absence abroad I was unable to be present at the debate. However, I understand that as the report came from the Select Committee on the European Communities, the noble Lord's speech was the substantive reply to the committee's recommendations. That is different from the Select Committee on Science and Technology, which receives written responses from the Government to the recommendations that it makes.

I also gained the impression that the Treasury felt that its elucidation of the policy would in itself suffice to convince your Lordships of its merits. That is not so. In its report on international scientific programmes, introduced today by the noble and gallant Lord, Lord Carver, the Science and Technology Select Committee returned to the subject. It may be thought that too much committee and official time has already been devoted to the subject. However, your Lordships' Select Committees must take account of the evidence that they receive and there is a great deal of unhappiness in the scientific community about this subject.

Of course no one expects the Government to depart from the fundamental principles for the conduct of public finance, especially in respect of what they probably regard as non-cost-effective units. It is also understandable that the Treasury, having laid down the guiding principles, is happy to leave the departments to deal with the fall-out. However, there are still unresolved questions and the effects of the system appear to be arbitrary and difficult to justify. For example, we were told in evidence that overall the net additionality which came out of the system was 30p to 35p of the total sum. The noble Lord, Lord Hesketh, said in his speech that the amount was more than that. The noble Lord, Lord Ezra, picked up that point. However, the way in which the additional sum was made up and what it amounted to was not at all clear, at least to me.

Not many people will have read and digested the speech made by the noble Lord, Lord Hesketh. Much more transparency and flexibility need to be applied to the procedures. More explanation is required. I hope that the noble Baroness, Lady Blotch, will be able to assure the House that such a detailed written response to the committee's recommendations will be forthcoming.

I recently left the Select Committee which the noble Lord, Lord Shackleton, and I were instrumental in setting up and on which I served for 12 years. I believe that it has done some useful work and it has seen some of its recommendations accepted. However, it has not yet succeeded in changing the Government's negative attitude to the vital importance of a strong science base—the infrastructure to which the noble Lord, Lord Walton of Detchant, has referred.

In its report on the definitions of R&D the committee was perhaps rash to venture into the minefield of comparative statistics. I suggest that the Government's response to it is a masterpiece of bureaucratic obfuscation with a sting in the tail. But—and again I shall not weary the House with the detail—there is no doubt that the United Kingdom is at the bottom of the first league table in the level of its support for R&D. That was pointed out by the noble Lords, Lord Flowers, Lord Kirkwood and Lord Walton, and is borne out by other independent inquiries.

Of course one can do almost anything with statistics. In paragraph 27 the response refers to the indicator of comparative performance known as bibliometric data. It says, In these output terms the UK's record is excellent". What it does not say is that the recovery is due, after a steep fall in previous years, to the increased volume of papers on applied research. The volume of papers on basic research has fallen, and basic research, as has again been said this afternoon, is the seedcorn of scientific achievement.

I have one more example. A Minister recently drew attention to the fact that the United Kingdom has won more Nobel prizes than any other country except the United States. That is true but rather misleading; 94 per cent. of those were awarded before 1981. Since that time the score is the United States 32, Germany 8, the United Kingdom 4 and Japan 2. But I must say that I do not believe this to be a particularly useful measure of a nation's general performance in science and technology.

It is not surprising that the committee made so little impact on the fundamental attitude of the English towards the relative importance of scientific and technological proficiency. It is well known that for over a century warning voices, from the Prince Consort onwards, about the dangers to British industry from the competition from Germany and other European countries have been disregarded.

I came across an example recently which I hope your Lordships will not regard as wholly frivolous. In the 1880s there was a row between geologists about the rocks in north-east Scotland. One of the protagonists was the celebrated Sir Archibald Geikie. The row spilled over into the press and the public arena and, fed by the poor performance of British industry in the international exhibitions of the period, was used as peg for a vociferous demand for more money for scientific research and development; compare our debate today. But the Government were not to be moved.

One Ralph Lingen was then Permanent Secretary to the Treasury. He was so strongly opposed to government money being used for scientific research that he managed to curtail any extra spending on it throughout the 1870s and the 1880s and the Royal Society's government grant remained static throughout that time. One wonders on whose shoulders today the mantle of Ralph Lingen has fallen.

I should add that I do not overlook the fact that after World War II, when scientific research and development was much better resourced, it was foreign rather than British industry which in general reaped the benefit. That encouraged the view that research and industrial performance are not related. Our competitors certainly do not appear to agree with that opinion.

In November 1989 I received a letter from the then Prime Minister in response to a brief interim report of the Select Committee of which I was then chairman. It was the one year in the decade in which the Government had made a significant increase in real terms in the science budget. The Prime Minister wrote: The Government notes the Committee's warm welcome for the substantial enhancement of the science budget for the current year. The increased resources will sustain top quality science across a broad field of basic and strategic, directed. and curiosity-motivated research programmes. They will enable important new scientific opportunities to be grasped and underpin the excellence of UK science into the 21st century". Fine words; alas they have buttered no parsnips.

Though on the one hand the Government continue to maintain that they are increasing the science budget, on the other hand they have undermined any increase by clobbering the universities. I find one of the saddest features of the present situation to be the stand-off between the universities and the Government. I am sure that the Select Committee will continue to bring these issues before the House and one day perhaps the penny will drop.

1.5 p.m.

Baroness Platt of Writtle

My Lords, I was delighted to have the privilege of listening to the maiden speech of the noble Lord, Lord Porter. It is not often that we have the opportunity of welcoming a former president of the Royal Society into this House. He may not be immortal but we hope that he will contribute to our debates for many years to come.

Today we are debating three closely allied reports of our Select Committee on Science and Technology. As I was only involved in the inquiry into the science budget by the noble Lord, Lord Flowers, I shall confine my remarks to that area. Our scientific and engineering research and development are crucial to the maintenance of our competitive position in world markets and therefore to our future prosperity. As technological developments accelerate more rapidly, that will become more important in the future, not less. Historically, as the noble Lord, Lord Sherfield, outlined, science and engineering, whether pure, applied or in their subsequent development, have had to fight for the budget.

This month we celebrate the 50th anniversary of the first flight of a jet-propelled aeroplane of the war-time era. Frank Whittle battled unsuccessfully for many years for Air Ministry backing for his research. Fortunately, with war looming, he finally received support for the prototype aircraft and it flew successfully. Where should we be today without his scientific and engineering breakthrough in the field of jet propulsion and gas turbines? His brilliance founded a peace-time industry that powers the airlines of the world.

As Margaret Thatcher appreciated when she said, when opening ISIS in 1985, Basic research can be a springboard to the creation of wealth". We all know that it then needs substantial persistence and industrial commercial encouragement if it is to proceed into the international market successfully. But the initial breakthrough in pure research must be made and needs to be funded at a time when its success is by no means guaranteed and when it might be labelled "blue skies" research.

Not surprisingly, Sir Frank Whittle, with his past experience, joined with over 70 other distinguished scientists and engineers, fellows of the Royal Society and the Fellowship of Engineering—the two most prestigiaus institutions in Britain in these fields—to protest that more money needs to be put towards research and development in science and engineering.

Many people today worldwide are anxious about global warming and the Government are committed to making a United Kingdom contribution to combating its possible disastrous effects. The report of the noble and gallant Lord, Lord Carver, who chaired our Select Committee on the subject, emphasised the uncertainties of future prophecies without knowing the effects of thermal inertia within the oceans.

Recently the parliamentary and scientific committee had a most interesting lecture on proposed research in that field. It is a worldwide problem and should be financed worldwide. But we have the expertise in the United Kingdom and we will want to be involved. It is very expensive research that will need to be financed in the future. Already the National Environment Research Council is having to cut back on the expenditure it wishes to allocate to global, environmental and oceanic research. Other councils covered by the survey are cutting back expenditure and research relevant to this field, too. That does not augur will for the future of this vital field where time is running out. The Government need to plan ahead for substantial expenditure to demonstrate their international commitment to the solution of complex global environmental problems.

The Government have scientific advisers, but I feel that the majority of civil servants are not sufficiently scientifically qualified. That has an unfortunate effect on the science budget. We need more expertise in these matters throughout the Civil Service and especially in the Treasury. I hope that the Government will take that very much to heart. The principle of annuality puts scientific budgets very much at risk, whether it be big projects, such as I have mentioned, or the small ones such as studentships and grants. The Government have allowed 2 per cent. flexibility. I was glad to see that my right honourable friend the Secretary of State for Education and Science, Kenneth Clarke, said that he would watch the situation and review it We heard in evidence that an increase in flexibility would be very much appreciated. There is nothing worse than sudden spending on less worthwhile projects at the end of the financial year in order no to underspend. Scientific and engineering budgets reed above all to be carefully quantified and planned ahead over a period of say three to five years with an expectation of stability in funding. That way money should be spent wisely. I hope that the Government will investigate ways of moving to that more stable mode of operation.

That brings me to my second point. In our report we refer to the policy of SERC under its previous chairman in, over-committing available resources in the expectation of settlement for 1991–92 at a level which simply did not materialise … we roundly condemn the practices and policies which have put so much at risk—whatever the excuse". Scientists and engineers are realists. They know that they live in a finite world. They are supremely numerate. They must put into action that numeracy and judgment which they undoubtedly possess wherever they are operating. I know their feeling of frustration. I was chairman of education in Essex, later chairman of finance, and finally chairman of the Equal Opportunities Commission for a number of years at a time when successive governments of both political parties were cutting public expenditure. We could not do all the worthwhile—and to us essential —things that we wanted to do. Full allowance was not made for inflation or for wages and salaries negotiated elsewhere. We felt hard done by, especially on behalf of those we aimed to serve. Nevertheless we had to take note of expenditure agreed in previous years and how it committed us in the annual budget under consideration. We had to make the difficult decisions of putting cherished projects, both large and small, into orders of priority. We did not like it, but we knew that in the spending of public money we had to grit our teeth and do it.

There is never enough public money. The competition for its allocation for many—one might say a myriad of valid sources will continue. We must never forget that it comes from millions of small taxpayers who also have cherished projects of their own that they have to postpone. In David Copperfield Mr. Micawber said that annual income of twenty pounds and annual expenditure of nineteen pounds nineteen shillings and sixpence resulted in happiness while annual income of twenty pounds and annual expenditure of twenty pounds and sixpence resulted in misery. The figures are different but the feelings are the same. I am glad to say that the present chairman of the SERC is determined to take a tough line in controlling expenditure and I admire him for it. But because of past action his job will now be much more difficult. I was also shocked to read a report in The Times this month that the Public Accounts Committee of the House of Commons felt that the SERC had been "insufficiently rigorous" in the sale of Herstmonceux Castle for £8.1 million in 1988 despite offers which it rejected of £9.25 million and £14 million.

Such action undermines our confidence in the complex arguments about statistics and how the science budget is allocated. That is unfortunate, as I believe that scientific and engineering research is vital. We all rely on the intelligence, care, judgment and integrity of those who negotiate it on both sides of the equation. This time it is the young people, the studentships and the grants, which seem likely to suffer. That is not right as they are the seed corn of our future success. The other designated victim in future is the nuclear structure facility at the Darsbury laboratory about which we have received a great many letters in support of the need to retain that important facility for which there is no alternative in the United Kingdom.

The situation is aggravated by our eternal enemy, inflation, but also by the fact that our support for a number of international scientific projects is calculated with reference to the UK GDP and other national currencies. Exchange rates and fluctuations in GDP are entirely external to the scientific world. It would be of great assistance if the science budget could be protected against these factors, as we recommend. I hope that the Government will consider the matter very seriously.

In conclusion, I hope that the Cabinet committee on science and technology, with the Prime Minister's encouragement, can find a better solution to the problems laid out in our report, if possible this year, but certainly in the future. We need a top level committee with the necessary overall clout to sort out the difficulties in the science and engineering budget which is so vital to our country's future prosperity and standard of living. I hope that the Government will act decisively.

1.18 p.m.

Lord Kearton

My Lords, I had the privilege of serving on two of the committees which produced the reports now under discussion. One concerned the science budget and was chaired by the noble Lord, Lord Flowers, and the other was on the definition of research and development and was chaired by the noble and gallant Lord, Lord Carver. They have very cogently summarised their reports and I do not propose to go into great detail about the recommendations. They are well thought out and considered. The Government would be very well advised to give full weight to what has been said.

s As regards the science budget, my impression is that the present dual-funding system is not working very well. In particular I believe that the SERC has got itself boxed into a corner with great rigidity in the way it spends its money. It has enormous overseas commitments. For example, I believe that at CERN it is spending £60 million. The SERC has enormous other commitments in astronomy and in its own major laboratories. Its single most important function is to support the universities in getting younger scientists and to give them their opportunity. At the end of the day it has fallen completely behind in that function.

It is absolutely ludicrous that the most important function of supporting young scientists and new ideas is the one provision that is cut. The report, under the chairmanship of the noble Lord, Lord Flowers, stated that a relatively trivial sum of money could put that matter right for this year. In spite of the lack of response from the Government so far, I hope that they will give us some encouraging news today about that. I would not mind if they coupled it with a determination to find the money from future SERC spending on some of their so-called fixed expenditure.

The whole business of our universities is under threat. Last year I took part in a debate in Cambridge with Mr. Robert Jackson who was then responsible for higher education. If my memory serves me right, at some stage he said: As far as the Government is concerned —and he was the Minister for higher education science is just another lobby". How damned stupid can you get? It was an absurd thing to say and I am glad to see that he has been moved.

One of the most interesting documents published in recent times—and I do not know how many of your Lordships have had an opportunity to see it—is Innovation, Competition and Culture by the right honourable Peter Lilley. It is a most encouraging document and one of the most important documents on policy that the Government have produced this Session. I should like to congratulate Mr. Lilley and the Government on it. Even so, Mr. Lilley puts on record some of the misconceptions about our universities and science. Under the heading "Academic Snobbery" he says: Since Victorian times our educationalists have attributed esteem to subjects inversely to their practical and vocational content. Thus pure science was accorded more esteem than engineering. And engineering, when finally allowed into the university curriculum, was taught with a more theoretical bias than abroad, and usually with no commercial content in the course at all". A little later on he said: Business was not attracted by the academic bias of engineering and science degrees nor by the anti-business attitudes often imbibed with them". He went on: The idea that Government expenditure on 'ivory tower' research automatically generates industrial spin-offs is decisively refuted by our experience". I think that that is sufficient evidence of a deep-seated feeling on the part of the Government that universities have been letting us down. I believe that they could have legitimately taken that point of view up to the beginning of this decade. However, partly because of the Government's actions and very much because of the universities' self-examination and reforms, in the 1990s the universities are a very different kettle of fish indeed from the universities of the 1980s, 1970s and 1960s. The famous Robbins expansion looking back was much too generalised and gave a lot of people too much freedom of action to spend money how they wished on things of interest only to themselves and was not a very good investment from the point of view of the country. I think it is right that the universities should have a look at what they are trying to do and how they are trying to do it.

There are at least four chancellors taking part in this debate—and I am one of them—and they will all tell you that universities today are absolutely marvellous institutions, operating under enormous difficulties. They desperately need some help and encouragement from the Government. Reference was made by the noble Lord, Lord Walton, to this extremely sober document, The State of the Universities, which was published a few weeks ago by the Committee of Vice-Chancellors and Principals. It is very moderately phrased and very cogently argued, and it comes down to the fact that unless of the order of £500 million a year is injected into our universities, our university system is in danger of collapse. It is always easy to cry wolf. It could be said that we have cried wolf before, but anyone concerned with universities will now be absolutely at one that it is not crying wolf this time. Unless the Government take this belief very seriously indeed, nationally we are heading for disaster.

It is extraordinary that the Secretary of State for Education and Science refuses to meet a delegation from the Committee of Vice-Chancellors and Principals, saying, "What is the point? There is no money anyway, so why should I talk to you?" I do urge the Minister to change his mind. In all sorts of other aspects Mr. Clarke has shown himself to be an extremely realistic, an extremely able and an extremely energetic man. However, I do think he has got hold of the wrong end of the stick with regard to universities, and the sooner he changes his mind the better.

I should like to see much more money going to universities directly under the dual support system rather than through the ABRC. Most university people were very worried by the ABRC attempt a few years ago to grade universities as first-class universities doing a lot of research, middle universities doing a bit of research, and teaching universities doing no research at all. That was argued against and defeated, and has not come to pass. Under the new education reform'; announced by the Prime Minister this week there are indications that it could still be another rather indirect way of achieving the same objective.

The university departments, of which I have first hand knowledge, are now the most useful tool we have for the future to introduce economic prosperity into our country. We have all been studying what has been happening in Japan, Germany and other countries which are moving ahead of us, and it all comes down to the fact that it is the proper exploitation of science and technology on which our whole future depends.

It was a great privilege to hear the noble Lord, Lord Porter, make his maiden speech. The noble Lord is probably the most distinguished scientist alive in Britain today. I knew the noble Lord in the early 1950s when h was the Assistant Director of the Rayon Research Association. That is pretty practical. Rayon made a great deal of money for various companies in the early years of this century, but by the 1950s it was in retreat against all the new so-called chemical fibres like nylon, the polyesters and so on. During the 1960s and 1970s, and to a certain extent the 1980s, rayon has continued its retreat but research has continued. Rayon now has a revival. In the recent figures produced by all the major fibre companies, it is ironic that probably the most profitable fibre is again rayon. The only fibre on which large sums of money have been spent to build new plants at the present time is the new variety of rayon derived from recent research. In other words, great advantage comes from research. If something fades, you can, with a new development, bring it lack again. The recent story of ICI, which is vulnerable to a bid by what might be called a non-scieiltific company, shows how we need new products the whole time. ICI's new products have been in pharmaceuticals and that is producing more than half its profits. It spends about £600 million a year on research—I think the last published figure was £640 mill ion—and it is still trying to find new products to take the company forward. The secret of the Japanese success when we looked into the whole Japanese economic miracle a couple of years ago, was in bringing forward new products new innovations.

s They were not always brand new products hut, as in the case of rayon, they improved existing products very considerably.

We now have the opportunity to send a signal to the universities that we believe in them, that we want to encourage them, and that we want to take away from them all these pettifogging constraints with which they are currently occupied. There is a chance for a major revival in this country which is university-based and which will go straight from the university to the industry. The new partnership between universities and industry has been one of the most encouraging developments in my lifetime. We want to nurture it and encourage it. A very simple way to do that would be that every time industry gives a grant to a university the Government should either double or treble the money and so show that there is a partnership between the universities, government and industry.

We are having this debate at the end of the Session. It is one of the most important debates for the future prosperity of this country. I ask the Minister to give us some encouraging news.

1.27 p.m.

Lord Lewis of Newnham

My Lords, may I say how much I valued and appreciated the excellent maiden speech by my noble friend Lord Porter of Luddenham. I have been privileged to know him for many years and have recognised in him a man of supreme ability and knowledge in science, which has clearly been stated by a number of our previous speakers. Rarely can anyone have claimed to have put science into a new timescale, but his work on flashphotolysis did just that. He has scaled the highest heights in science, and I certainly, and I am sure I speak for all of us, look forward with great anticipation to the very valuable contributions that I am sure he will make in this Chamber.

Today we are considering a wide range of problems of science contained in these three excellent reports. If I may, I should like to turn to one aspect of the topics of debate today; namely, the report of the Select Committee on Science and Technology relating to the science budget 1991–92. Owing to the limited amount of time available, I should like to restrict my comments to some aspects of an area that has direct impact on my role as a Professor of Chemistry; namely, the budget of the SERC, with particular emphasis on the position over the cuts in studentship awards and research awards. In so doing I think noble Lords will find that I have a lot of sympathy with what my noble friend Lord Porter has been saying.

The new chairman of the SERC, Sir Mark Richmond, has inherited a difficult problem and I should like to record my appreciation of the way he and his council have tackled this impossible situation. The council of the SERC has directed 10 per cent. savings from its four boards, with a very important proviso that the basic philosophy is to try to protect the research grants and studentships.

The science board, with which chemistry is primarily associated, has a budget of approximately a quarter of the total SERC allocation in other words, of the order of £120 million. This is broken down to research grants, studentships and about one-third for the establishments. It is with the last category that the savings are intended ultimately to be associated. However, this is clearly the most difficult area to make the instant savings required by the present financial allocation. So in the short term the soft targets of the research grants and studentships are to be cut.

I should like to make some personal observations on what I believe this will mean within universities. I can assure the House that the universities are in considerable turmoil about these factors.

In chemistry we are under considerable pressure this year for studentship places. The cut of 5 per cent. to 10 per cent., although not appearing too severe, could not have occurred at a more difficult time. The position in the chemical industry—I remind the House that the chemical industry is the No. 1 manufacturer/ exporter in this country, with a balance of payments surplus of £2 billion—is not at the moment healthy. Recruitment directed to industry has been reduced this year, with a preference being shown for Ph.D. students. This has placed the present generation of graduating students in a difficult situation. That is to be coupled with a decrease in enrolment from the City, a significant recruiter in the immediate past.

For a given student graduating this year, this is his year; there is little hope or consolation in the knowledge that the studentship position will be resolved in two years, as we are led to believe. We are at risk of losing very able students at a time when I believe the country needs them. I remind the House that these will be the Ph.D. students three years from now when we hope industry will be back on the recruiting scale. There will be many disappointed first-class graduates this June/July who had hoped to do research. They will look in directions other than science —certainly chemistry—to fulfil their needs. A number of them will go overseas.

On the research side, the problem is even more acute. In the projected cuts, the allocation to the research grants is to be cut by around 50 per cent. I should like to emphasise a statement made by my noble friend Lord Porter. The grants have not been able to satisfy the needs of the community, in the immediate past anyhow. Thus, for inorganic chemistry, an area in which I am involved, there have been 120 applications this year to the appropriate committee. This is over two rounds of the committee, one for a September submission and one for a February submission. For the first time to my knowledge, arising presumably from the financial crisis, the two have been considered as one, so that people submitting in September have been left in suspense and have not been given the results of their applications. This makes planning, particularly for an October entry, extremely difficult.

It is compounded by the fact that when the grants are to be announced there will be a delay in many instances for a January funding. A discontinuity of this nature is extremely difficult. One cannot expect people to go away for three months and then come back and start up again. I have been told by the chairman of the committee that approximately 10 awards will be made-10 out of a total of 120—and the probability is that they will not be fully but only partially funded. Seventy-five per cent. of the awards —a total of 90—were at the alpha grade. I return now to the point made by my noble friend Lord Porter.

This will result in many of the applicants being told that their grant was graded alpha but was unfunded —the infamous "alpha-unfunded" award. When I was chairman of the chemistry committee we funded not only the alphas but were able to get down to the betas on certain occasions. I am sure that this reflected the better form of funding available in those days.

I should like to put this into more personal terms. We can talk about large figures, but at the end of the day it is people who matter in this issue. I have a young lecturer who over the past three years has submitted grant applications to the SERC. He has had six alpha awards, all being unfunded. I ask you, what can one say? Although he has received some support from industry, if it were not for the dual funding operation, which is also under threat, I do not know what we could do to maintain his research.

With reference to the potential changes in the dual funding, I must agree with the statement of Sir Mark Richmond to the committee, at paragraph 3.12, that "very bright young potential researchers, in parts of the higher education system that do not attract research support through research councils are less likely than now to be able to fulfil their vocation".

The position is compounded by the fact that when I was a young researcher there were many alternative sources for grants. This point was alluded to by my noble friend Lord Porter. The range has been drastically reduced. However, the reintroduction of the small grant scheme by the Royal Society, primarily due to the efforts of my noble friend Lord Porter, is a welcome change and has helped considerably to maintain a certain morale among the younger members of universities. The changes in the dual research funding to the universities will further reduce the flexibility and ability to sponsor the independent research worker. Research councils normally sponsor areas of research within subjects. These are often established areas or areas where potential is proven. The presence of alternative funding allowed the less popular areas—potentially the areas of the future—to be funded. That point must be emphasised again and again in our consideration of the dual funding operation. How will a young university lecturer who suffers this treatment react to a lucrative offer to go to the USA? My problem with the brain drain is not one of quantity but of quality.

Thus I strongly support the suggestions in paragraphs 2.38 and 2.40 of the report—essentially, the £12 million to which the noble Lord, Lord Flowers, referred in his speech. We are concerned with a crisis of confidence in many chemistry departments throughout this country. I hope that the Government will respond quickly and effectively to the above and other recommendations in the report. The immediate needs covered by paragraph 2.40—the £12 million —is a minimal level of support.

1.38 p.m.

Lord Dainton

My Lords, I join in the chorus of welcome to the noble Lord, Lord Porter of Luddenham, and congratulate him on his maiden speech. It is an especial pleasure for me to see him in this House because he is not only a fellow physical chemist but our lives have been linked in various ways over many years. He, like myself, is a Yorkshire man; he was educated in chemistry at the University of Leeds where I spent 15 very happy years; and he did much of his seminal work in the University of Sheffield with which I have enjoyed a close connection for about 12 years. I am sure that he will make a splendid and distinguished contribution to your Lordships' House, even though, as he said himself, he is unlikely to achieve that immortality which he thought the title Life Peer by definition would deny to him.

I appear at the end of the list of speakers as a member of all three committees whose reports are under discussion today. I reflect that if one great British statesman from the past could shed light, perspective and wisdom on the issues under discussion today, it would be Lord Haldane of Cloan. As one of the founding fathers of the research council system, who learnt much from his observations as a student in Germany, a country whose scientific policies today we could do well to emulate, he understood better than most that science policy has two major elements; namely, policy for science and the use of science to serve public policy. I do not want to talk about the latter. That us not because it is in any way unimportant; it is because what is done in that sphere is defines by the objectives of individual government departments which pay for the scientific work that they need and to that extent are responsible for formulating priorities and for managing that policy. Moreover, its benefits are generally more immediate than that which concerns us today.

In contrast, the devising and management of a policy for science are much more subtle and complex processes. That difference arises from two causes. In the first place, it is in the nature of scientific inquiry and progress that, if it were not resource limited, it would auto-accelerate. That is simply because the more a scientist knows about science, the better placed he or she is to gain more knowledge more quickly. Unfortunately, that also means that the costs rise rapidly accordingly. For many years now no advanced country has been able to allow expenditure on scientific research to grow proportionately to the demand of its scientists. Consequently, each country sets a limit on what it will spend. The critical policy problems lie in deciding that limit and in what areas the money within that limit shall be spent, including the increasingly important contributions to international scientific programmes about which the noble and gallant Lord, Lord Carver, has already spoken.

The second cause of difficulty is that the objectives of work in basic science—by which I mean, in order to get our definitions clear according to the committee of the noble and gallant Lord, Lord Carver, that which is self-chosen or curiosity-oriented scientific, sometimes called "blue sky", work—are manifold. The practical benefits of the inception of the work are often unforeseeable, although there are many examples which I could cite to show that the return on the investment in basic science has been quite enormous. For example, one can immediately cite such British discoveries as the antibiotics, penicillin and cephalosporins, the magnetron valve, the non-invasive imaging of the human body, and so on.

That unpredictability of outcome, at the time when one begins work, but confidence that scientific work is never wasted and the fact that some of it pays many times over for its cost and also for the cost of other scientific work, was very well encapsulated many years ago by a distinguished American scientist who, when challenged as to what the value of his work for the future was, said: "Damned if I know. But sure as hell they will tax it one day!"

The various objectives of basic research include many things: first, the general advance of scientific knowledge and understanding; and, secondly, the production of well trained lively minded young people, many of whom will be needed in society in the future as teachers, as leaders within science-based industry—as mentioned by the noble Lord, Lord Kearton—and who, because they contribute to knowledge acquisition in their fields, are uniquely alert to developments in those fields which are made outside the United Kingdom. They are therefore ready to enable this country to profit from what is discovered elsewhere. They are the seedcorn from which future harvests will come.

The best places for carrying out such basic scientific work are the autonomous universities or those institutes embedded within them when one has the added benefit that able younger people are inspired to become apprentices in the scientific enterprise simply because they are taught by those who are engaged in research. They are highly sceptical and self-critical and the young scientist becomes imbued with the same scientific and very important attitudes.

As I said at the beginning, Lord Haldane saw these matters very clearly over 70 years ago. He was chairman of the proto-University Grants Committee. Incidentally, I wonder where the chairman of the University Grants Committee, the noble Lord, Lord Chilver, is today; one might have thought that he would have had something to contribute to the debate, or that he might possibly have learnt something from it. What Lord Haldane knew 70 years ago, and what history has subsequently confirmed, is that universities must have money of their own which they can spend as they think best on research, in particular to provide resources in well-equipped libraries and laboratories which can both sustain the work of the young researcher and be the basic infrastructure for those senior colleagues who need extra resources in manpower and equipment for their own researches and which they can win from the research councils in open competition with others.

From those basic ideas of Haldane put forward so long ago, the United Kingdom's dual support system has evolved over the years to its present form. I must emphasise the fact that for many years that dual support system, which this country can take pride in having invented, has worked admirably. But now it is crumbling and this causes dismay in the scientific community. Moreover, as we have heard, it is discouraging to the able young. It makes Britain a less satisfactory partner in international scientific programmes and bodes ill for the future of our country. The noble Lord, Lord Flowers, referred to the widespread anxiety in the scientific community about the situation. I can confirm that observation from my own knowledge, but I shall not elaborate further.

The primary cause of that malaise is that Britain has set the limit of funds that it is prepared to provide for those purposes at a level which is too low. It is not in dispute that, expressed either as an amount per head of population or as a percentage of the gross domestic product, it is less than those of the USA and major European countries, as the noble and gallant Lord, Lord Carver, reminded us. Moreover, even using official deflators (which notoriously underestimate the true inflationary index for scientific research) the trend in the total of the sums available for research from the combined university and UFC resources has been very significantly downwards since 1987. I know that the Government will argue that international comparisons are irrelevant and that we in Britain arrive at our expenditure limits in other more sophisticated—some may say, more mysterious—ways. I remain quite unconvinced that we in this country are right and that all the others—that is, the Germans, the French, the Americans and so on—are wrong. I am worried that a country like ours, with a splendid past record of producing good science and scientists, should be willing, for the sake of a relatively small sum, to surrender its proud place and so disadvantage itself in the increasingly scientific and technologically competitive world which we shall continue to inhabit.

The second reason for the current malaise is that government have chosen at this juncture, of all junctures, to tamper with the delicate balance between both sides of the dual support system by switching money from the Universities Funding Council vote to the research councils so that the latter can pay the indirect costs—or, as most of us understand them, the "overheads"—incurred by universities when research grants are made to their scientists; and which universities were accustomed to meet out of their own block grants. It is said that the effect will be neutral. That is obviously true in the crude mechanical, arithmetical sense; provided that all the money so transferred finds its way back into universities, the university system as a whole will not lose money.

However, what is patently absurd and very worrying is the fact that the principle of transfer and the amount to be transferred were decided before any investigation had been carried out to assess the magnitude of the indirect costs and therefore to know whether there was any problem at all for which such a step could be regarded as a solution. But it has recently come to my notice—and very reliably so—that research councils estimate that the cost of effecting this unwanted change is about £800,000, money which could be better spent, as we have heard in the eloquent pleas which came from the Benches behind me, on much needed studentships and fellowships. Last Friday, in a rare display of agreement, the vice-chancellors voiced their opposition.

No less significant is the fact that our inquiry revealed that this step gave the recently retired chief executive of the Universities Funding Council, Sir Peter Swinnerton-Dyer, great anxiety and, moreover, since the establishment of the new style ABRC, which had deprived him of his former ex-officio place on that body, he had no formal locus standi to make his views known in the forum where such matters are discussed. Having myself been, at various times, chairman of the UGC and also of the ABRC (indeed a member of the latter for some 15 years, if my memory serves me correctly) I am at a total loss to know how the latter body can function effectively without top level representation from the UFC and I hope that this defect can speedily be remedied. If it is not, we may have far more of the unfortunate situations I have described. Meanwhile, I am not reassured that such discussions as have gone on between the universities and the research councils have led to any kind of agreement either as to the magnitude of those indirect costs, or as to the advantages and disadvantages associated with such a transfer, and whether safeguards can be built into any new system to protect money from leaking away—I use that fashionable phrase—from the universities where it ought to be placed. In particular I should like to see safeguards which ensure that enough non-teaching resources are available to all the universities to enable them to meet the costs of the research of able young scientists, even in those universities which do not have many research contracts, and therefore have less of that kind of money restored to them. I say that based on many years of knowledge of splendid developments in smaller less prestigious universities. One recalls what everyone sees every day now—the effect of liquid crystals on our lives, which have their origins in a small university which I shall not name for fear of embarrassing it.

I too was one of the small group that saw the Prime Minister on 28th January, and I also was encouraged by the careful attention which he gave to what we had to say to him about science policy. I hope that it is not too much to ask that he, his Cabinet committee and his advisors give some consideration to both the level of overall spending from UFC and ABRC sources on basic research, and as to whether the proposed transfer is justifiable in logic, sensible use of resources or practicality.

1.53 p.m.

Lord Peston

My Lords, in speaking for the Opposition in this important and interesting debate, my first pleasant duty is to congratulate the noble Lord, Lord Porter, on his maiden speech and to welcome him to our deliberations. I was interested in his description of his experience in trying to obtain a piece of laser equipment. That cheered me up a great deal because, after all, he is the winner of a Nobel prize. What he experienced is what people like myself have experienced throughout our academic working lives when we are turned down for almost everything. I speak as the only social scientist contributing to the debate. That is the normal experience. I remember applying for a piece of equipment many years ago. The Social Science Research Council merely told me that I was mad and that it did not give equipment to social scientists. Things have now changed a little. I am sorry that the noble Lord did not obtain his piece of equipment, but it put my experience into perspective.

The noble Lord is a chemist. I hope your Lordships will allow me to say a word about Helen Sharman who is orbiting the earth every 90 minutes.

Lord Dainton

My Lords, she is a Sheffield chemistry graduate.

Lord Peston

My Lords, I was about to say that she is a chemist. I had not realised that she is a Sheffield chemistry graduate. That makes her even more distinguished. She works in food technology and is a member of the Royal Society of Chemistry. We should be proud of her performance. I shall add a slightly acerbic note. She will not be performing any chemistry experiments while in space, because no funding was forthcoming from any source in the United Kingdom to finance or sponsor the Juno space mission. I hope that those Ministers who decide that the best thing they can do when she lands safely, as we hope, is to be photographed next to her, will bear that fact in mind.

While I am in a congratulatory mood, perhaps I can take the opportunity to congratulate my good friend, the noble Baroness, Lady Blatch, on her promotion. She and I are of the same vintage—as I suppose. I should call it—but she has far outdistanced all of us who were created peers on that list, and deservedly so.

There are many topics that could be discussed, but I must confine myself to one or two. I should like to start with the definition of R&D. I disagree with the noble and gallant Lord, Lord Carver. I thought his report fascinating. It is overwhelmingly correct in the sense that if we cannot satisfactorily define research and development, we do not know what to measure. If we do not know what to measure we cannot measure. If we do not measure we cannot put any of these matters into any quantitative perspective. What the noble Lord seeks to do is overwhelmingly right. We must take these matters seriously.

I am not saying that the noble and gallant Lord's report--he does not claim this—or the present state of knowledge enable us to come up with a hard-and-fast classification system. There will always be blurrings at the edges, and I shall say a word about that aspect in a moment. That we need to undertake such work and do it seriously is right. In that connection, I shall say something about paragraph 1.35 of the report which states: Then: is general concern in industry about the lack of feedback from the DTI on the question of data collection. I find that worrying. It is surely an area where one needs all the time to check whether what industry and others are delivering is what the DTI expects to receive and what it believes that it is receiving. There is the major problem of whether the system of data collection is correct. I hope that the Government will take that paragraph seriously.

I shall say a word about the classification of R&D. I understand the difference between basic science and basic research and applied and strategic research and all such matters. It is not because I am ignorant of the natural sciences as opposed to the social sciences, but I find it hard to understand the concept of someone not doing basic research. That has always puzzled me. Whatever applied work one does, one is somehow drawn inextricably into thinking about fundamentals. I have never understood how anyone ever does research without thinking about fundamentals. That relates in particular to the MoD question.

The first article on economics that I wrote was financed by the Office of Naval Research in the United States. I have never found out what it thought that it was paying for, as I have said to your Lordships before. I believed the research to be basic research. If it had been asked what it was paying for, it would have said that it was paying for applied research. That has always led me to need to distinguish what the payer believes he is paying for and what is done. That leads to a further result. Although there are some people doing work in this field, we need more research into what happens in research. It is a difficult subject but we know far too little about what happens from the moment a research contract is awarded until the outputs are delivered.

As the noble and gallant Lord, Lord Carver, is chairman of the committee, I can say that I did my share of military service as a member of something called the Army Operational Research Group. I assume that operational research is applied research. I spent a proportion of my time doing theoretical work on games theory, because that is what I found to do. The MoD may be under the impression that it never finances any basic research. My view is that it probably finances a great deal of basic research without knowing or without anyone ever telling it that is what researchers are doing.

More generally, on the value of research and international comparisons, I am aware of all the difficulties of looking at and interpreting ratios, time trends and all of that. It is a complicated matter. I may add that the definitions which apply to R&D apply more generally to investments. The real point on international comparisons towards which the noble Lord, Lord Dainton, leads us is that at least they pose relevant questions. Let us assume that other countries spend more of their GDP on R&D than we do. We do not have to say that they are right and we are wrong. We must ask why they do it. That may lead us to the answer that they are right and that we are wrong. If the Germans spend more, do they do so because, for example, they are less efficient than we are? Do we spend less because we are much better at it? Even to say that sounds rather unconvincing to me. Are the Germans spending more because R&D is more productive in Germany? That may be the correct answer, but if so it needs to be examined. The reason for looking at international comparisons is not to jump to conclusions but to ask the right questions.

Therefore, I believe that the noble Lord, Lord Dainton, was right to guide us towards that conclusion.

On the benefits of R&D, if we examine all the economic research evidence rather than specific evidence, putting all the strands together, we get a picture of R&D as overwhelmingly contributing to the economy. If we enlarge the picture to start from basic science, the point holds a fortiori. There is much evidence that innovation is enormously helpful to exports and therefore to the balance of payments. There is not much innovation without R&D and we do not get suitable R&D without basic science. Each part carries on the previous stage. To put it differently, do those who doubt the economic benefits of R&D and basic science, suggest that as concerns the economy we could stop all that and only do it for the sake of our scientific traditions? I can find no one who would logically support that conclusion.

I believe that the case is overwhelming. The report on the science budget brings out clearly that the case that we are funding the science base at too low a scale is overwhelming. To revert to the subject of chemistry, which interests me, reference has been made to ICI. Such a firm ultimately depends on the chemists whom we produce in the country. We shall not have ICI without them and that is why they are important. More generally, pharmaceuticals happens to be one of the industries in which we are world leaders. There are multinationals, but our own firm is a multinational. Without basic university science plus R&D we shall lose that position.

It worries me and always has worried me in everything to do with higher education that we erode the system. The word "crisis" has been used, but there is no crisis. What happens is that 20 years later we ask, "Whatever happened to higher education in Britain?" or, "Whatever happened to science?" It does not come about instantaneously; it happens over time. That is why the scientists who are accused of being boring and going on too long are right to do so. They are right to point to the dangers because those dangers affect our long term future.

As concerns measuring the funding, one of the biggest mistakes the Government made in their period of office was to say, "We will look at the so-called real terms solely in terms of an RPI or GDP deflator". I do not say that the deflator is irrelevant. The RPI measures nothing of value. However, the GDP deflator is more useful and to some degree will measure the value of resources forgone by science. The question is not what the value of the resources forgone was but what could have been bought with the money that the scientists would have been given. There we need a different deflator. The standard decision, which existed until the Government came to power, distinguished real terms in cost terms and real terms in so-called volume terms. We need to revert to a proper deflator to measure volume terms in science.

The reports we looked at have tried manfully but obviously arbitrarily to adjust the deflator by one or two percentage points. There is a broad brush view that somehow science becomes relatively 2 per cent.

more expensive according to the GDP deflator. The authors of the report, I believe, would agree that that is quite arbitrary. We do not know whether that is so. There is need in an important area of research—one which the CSO and the Department of Trade and Industry will seriously take on board—for proper price indices. The Government do not have to commit themselves to more resources; they need to know the correct figures in order to debate the subject rationally. That is the plea I put forward. I believe that we ought to put more resources into science, but before reaching that conclusion I wish to know what we are doing.

I am not sure that I shall have many friends in your Lordships' House in what I say next. Of course I accept the value of international scientific cooperation programmes. We know the arguments on division of labour, economies of scale and scope, the need to avoid excessive duplication and the value of the direct exchange of ideas and experience. All those are reasons why I favour international scientific collaboration. Nevertheless, having spent most of my life in university, I think that my colleagues spend too much time on international scientific collaboration and too little on science. They become besotted with international scientific collaboration. I cannot remember which noble Lord mentioned the subject—it may have been the noble Lord, Lord Porter—but there is a symmetry, a ratchet. We can build projects up but we find ourselves in an incredible battle when we ask whether we need to go on doing something. I am not against international scientific programmes; quite the contrary. I do not believe that they are sacrosanct.

If the Treasury agrees to finance such programmes, it should finance them properly. It should not play silly games, especially with exchange rates. I hope that we do not reach the stage where social science, or more importantly the SERC, operate in the forward exchange market in order to hedge against future subscriptions to projects. If we are going to do it, let us do it properly.

I wish to make two other points. First, in terms of resources, another concern to me and many is what has been happening to salaries of scientists and researchers, and, more importantly, their conditions of employment. It seems to me—I assume this is as true of the natural sciences as it is of economics—that far too many people are on short-term contracts where their working lives are constantly in peril. That also leads to a distortion of research priorities. One ends up saying, "I must find some research money so that X does not get fired" rather than asking oneself what research one wishes to follow. In other words, one is constantly having, quite rightly, to take human beings into account, but that may distort one's research judgments. We must reconsider the question of salaries and career structures. I believe that the dual support system is the right way forward. One needs to meet the teaching costs in higher education and then the research and scholarship costs for all academics. I still believe in the old-fashioned view that every academic should be a researcher or a scholar. Further, there must be additional institutional and departmental funding of a dual kind and specific moneys must be provided for the research councils. We should not be doing what the noble Lord, Lord Dainton, warned us of, that is, solving a specific crisis in one area by pinching a little of the available money and allocating it elsewhere. We must look at costs systematically.

I strongly support dual support but my main question concerns the polytechnics. It was on Monday, I believe, that we were told that polytechnics are about to become universities, or at least they will call themselves universities. I was rather shattered to read the newspaper reports. If the polytechnics are to go in that direction, we must have some general principles of finance that fund the polytechnics on an equal basis with other institutions. In other words, if dual support applies to the universities, it must also apply to the polytechnics. That is my view. I should like to know the Government's policy.

I conclude by again congratulating all those concerned both with the reports and with the debate today. We have learnt a great deal from the debate but what we all require is not merely a general chat about these matters but some policy and some moves in the right direction. In this case overwhelmingly, moves in that direction mean in the first instance providing more funds for the science budget.

2.10 p.m.

The Minister of State, Department of the Environment (Baroness Blatch)

My Lords, I first wish to extend the profuse apologies of my noble friend the Leader of the House for not replying to the debate. I note happily that he is now in his seat. I also join with all other speakers in welcoming the maiden speech of the noble Lord, Lord Porter of Luddenham, whose reputation came far in advance of his arrival in this House. With respect to all scientists, eminent and otherwise, both in this House and outside, it is not an understatement to say that the noble Lord reigns supreme in the world of science. His knowledge, wise counsel and powers of communication in matters scientific are boundless. It is my privilege to reply to a debate in which the noble Lord has made his maiden speech. I speak with great trepidation as my speech comes at the end of a most distinguished line of speakers. The whole House will look forward enormously to hearing much more from the noble Lord, Lord Porter.

I also thank the noble Lord, Lord Peston, for his kind remarks about my promotion. Noble Lords will have to forgive me for sounding a little self-effacing today in replying to such an exciting and stimulating debate. It is good to see the noble Lord, Lord Shacklelon, out of hospital and in his seat in the House, making contributions to our debates.

The noble Lord, Lord Flowers, and many other noble Lords have referred to the interest shown by the Prime Minister in this subject. I assure the House that the record of this debate will be reported fully to my right honourable friend and brought to the notice of the Cabinet Committee.

I have listened with interest to the debate on the three reports produced by the Science and Technology Committee. Before commenting on them I should like to congratulate the noble Lord, Lord Flowers, and the noble and gallant Lord, Lord Carver, and their committees on their painstaking investigations into these very important subjects. If I may say so, it is an excellent example of the contribution this House makes to national affairs. The Government welcome this opportunity to discuss their findings and will of course be formally responding to the two more recent reports in the normal way.

A number of important points on the individual reports have been made in the discussion and I hope to cover these during the course of my speech. I would first like to set them in the context of the Government's arrangements for funding strategic decisions on science and technology, and hence to answer some of the points raised by the noble Lord, Lord Flowers, in his concise introduction to this debate. In 1987, in their response to an earlier report by the Science and Technology Committee on civil research and development, the Government noted that Ministers would collectively consider science and technology priorities under the leadership of the Prime Minister—and that the Government would determine in the context of the annual Public Expenditure Survey process their priorities for the contribution which science and technology can make to national economic success while satisfying wider government objectives. Since taking office, the Prime Minister has confirmed that those arrangements will remain in force and has maintained the strong interest shown by his predecessor, as he told the noble Lord, Lord Flowers, and others at their meeting on 28th January. Ministers have been considering science and technology issues under his chairmanship, and that will continue.

However, science and technology cannot be considered in isolation. Decisions are firmly set in the context of the annual PES process and the potential contribution to the nation's well-being. That means, quite rightly in my view, that science and technology priorities have to compete with all other demands on government resources. Although we have heard much concern expressed in the debate today, I believe that the Government's record in support of science and technology over the past decade is a good one.

On that note I should like to comment on the first report under consideration today, Science Budget 1991–92, and in particular on the Government's record in support of the science base. When this Government came to office the science budget stood at £329 million. It now stands at £920 million. That represents a substantial real terms increase of 22 per cent., keeping pace with the growth of GDP over the same period. That is a record any government would be proud of. It provides convincing proof of the importance which the Government attach to a proper level of science funding.

The noble Lord, Lord Flowers, and others drew attention to the fact that the DES supports research through two sources, the science budget and the UFC block grant, which together make up the science base. It has been suggested that public funding of the science base has increased more slowly than funding of the science budget. That may be so, but the difference is smaller than has been claimed.

The problem over science base statistics is that UFC funds are provided as block grants and so the actual spend on research is known only in retrospect. The latest firm figures we have are for 1989–90, when the total science base spend was about 16 per cent. above the 1979–80 level. However, in the two years since 1989–90 UFC recurrent funds distributed on research-based criteria have risen by 10 per cent. in each year, keeping well above inflation.

The noble Lord, Lord Porter, past President of the Royal Society, made a number of important points in his erudite maiden speech. He stressed in particular the importance of supporting researchers at the bench, especially young scientists. I acknowledge that there has been difficulty over new grants this year from the Science and Engineering Research Council. However, in a longer-term perspective there has been a 68 per cent. real terms increase since 1979–80 in the value of research grants made by research councils to higher education institutions, even taking into account the temporary problems this year.

As to the future, my right honourable friend the Secretary of State announced yesterday additions of £15.8 million to the 1992–93 indicative science budget allocations for SERC. Those sums were recommended by the advisory board specifically to support the SERC's grants programmes. The noble Lord, Lord Flowers, asked whether that was new money. While a total distribution of funds was announced last November, the SERC's evidence to the Committee was made on the basis of funds already allocated to the council. Hence this is a new allocation to the SERC and should have a significant impact on the grants programme.

I listened with interest to the anxiety expressed by the noble Lord, Lord Porter of Luddenham, about the difficulty of obtaining funds from SERC for his laser project. I promise him that I shall draw his concern to the notice of my right honourable friend the Secretary of State for Education and Science.

We must not concentrate on inputs only. The object is to produce good science and good scientists. Proof that the science base in this country is in excellent condition is provided by the scientists themselves. They have continued to carry out first-rate work over the past decade, with the result that in many fields the UK's record in terms of scientific achievements is world class.

The noble Lord, Lord Sherfield, referred to the highly specialised technique of bibliometrics. I can say only that, like other statistics and indicators, bibliometric data should be used only to indicate broad movements and volumes. Attempts to derive conclusions from small changes in soft indicators are inappropriate.

The changes in the dual support system announced by the Secretary of State for Education and Science last November will make for the more efficient use of public resources made available for scientific research undertaken by the research councils in higher education institutions. They will make more explicit the funding of research in higher education. They will encourage better management of limited resources. That must be good for the taxpayer and for our researchers.

Perhaps I may now refer to the specific points that have been raised with regard to the reason for the reform. The new arrangements announced in November clarify lines of responsibility between the research councils and higher education institutions. Those changes will take effect in 1992, but there are no plans for further changes beyond that. We shall check to see that funds are not lost to the universities. We shall arrange to monitor the volume of research that councils sponsor at universities. In practice. I do not foresee any difficulty in ensuring that overall the councils maintain at least the present volume of research that they sponsor at higher education institutions. The councils collectively have increased their real terms investment at universities by 78 per cent. since 1979.

The ABRC's 1987 paper, A Strategy for the Science Base, drew attention to the increasing muddle in the operation of the dual support system. We believe that the changes will help to solve that problem by making it much clearer who is to pay for what. With regard to the final point on the dual support system raised by the noble Lord, Lord Lewis, the transferred funds from the UFC will be associated only with the funds that at present provide the dual funding of research council-supported work. There will remain the funds to support other research funded entirely through the UFC grant.

Of equal benefit to the funding of research in higher education will be the new framework foreshadowed in the Government's White Paper on higher education, published earlier this week. This proposes that for the first time there should be a single body to distribute teaching and research funding to the whole of higher education. That should enable scarce resources to be divided both selectively and fairly to those institutions—be they currently universities or polytechnics—carrying out research of the highest quality.

Turning now to the second report on definitions of R&D, the Government's response, published in March this year, expressed full agreement with the Select Committee on the importance of accurate statistics on research and development. They are an essential tool for the setting of priorities and informing all other policy considerations in this field—

a point that was very well made by the noble Lord, Lord Peston. The widely acclaimed annual review of government funded R&D, published by the Cabinet Office, provides a substantial centrally collated body of information on government expenditure on research and development. Over the years its coverage has been extended and improved. The Government are grateful to the Select Committee for its investigation into the difficult area of R&D definitions and the uses that they serve.

One of the Government's prime concerns is to facilitate international comparisons by using the same definitions as other countries, in this case, the OECD Frascati definitions. The Government have been an active participant in the discussions to improve Frascati and the Select Committee report provided material for its contribution to the international debate. With revised Frascati definitions in the offing, there is little point in making interim changes, thereby eroding one of the most useful qualities of statistical series—the ability easily to make comparisons over time. The Government will consider the use and definition of the term "strategic research"—one of the issues raised in the report—following publication of revised Frascati definitions.

Another question raised in the report—that of the classification of defence R&D—is a complex one. If there had been any easy solutions, we should no doubt have found them by now. The heart of the problem is that the, MoD, as well as funding programmes of research, is a major purchaser of military equipment and consequently engages in programmes for the development of specific items of equipment. Most of such development work is carried out under contract in industry.

The basic criterion for inclusion in R&D under the Frascati definitions is whether the work contains an appreciable element of innovation or novelty. Clearly, there c-.n be considerable variations in the degree of innovation involved within a given development contract and the customer has only limited visibility of the point at which it ceases to be significant. We make no secret of the fact that there is an element of uncertainty here. Nevertheless, Frascati is indeed applied by the Ministry of Defence on the basis of the best cur rently available data.

Lord Shackleton

My Lords, perhaps I may ask the noble Baroness a question as she is going rather fast. Will she comment on the committee's recommendation that defence expenditure should not be combined with civil in the estimates for national R? that is, recommendation 2.11?

Baroness Blatch

Perhaps, my Lords, the noble Lord will forgive me if I leave that particular question on the table for the Government's written response to the report. Does the noble Lord feel unhappy about that reply?

Lord Flowers

My Lords, we have had the response on that report.

Baroness Blatch

Then I fear that that is a point that I missed in the brief. I shall make sure that there is a written reply to the question of the noble Lord, Lord Shackleton.

If I repeat a little of what I said before, perhaps noble Lords will forgive me. We are not complacent about Iris matter. As the government response to the Select Committee's report makes clear—the noble Lord, Lord Flowers, is confirmed in his view—the Ministry of Defence has set in train a number of initiatives directed at narrowing the area of uncertainty, one of which involves a joint study with representatives of industry, and that has begun. I should make one final point on defence R&D. The present studies bear primarily on the classification of government spending rather than on the figures for total national R&D effort. The reason is that the latter are built up from data supplied by those carrying out the work rather than those commissioning it, and applying Frascati to R&D work carried out in-house as distinct from that contracted out is relatively straightforward. Noble Lords may take some comfort from that.

With regard to civil R&D, about which the noble Lord, Lord Shackleton, is concerned, the report states that we as a nation are investing too little. That is not so. Industry's own funding of R&D increased by nearly 50 per cent. in real terms between 1983 and 1989. An increasing proportion of UK government funding of civil R&D is through the European Commission's R&D programmes. Through that route UK companies receive levels of funding for collaborative research similar to those received from the DTI.

The noble Lord, Lord Flowers, spoke of a huge funding gap between basic research and near market research. But much of the Government's financial support for R&D in industry as well as work carried out by the Government themselves is targeted on that strategic area. Better definitions of R&D will help to present a truer picture of UK R&D spend with better international comparisons.

The noble Lord, Lord Flowers, and the noble and gallant Lord, Lord Carver, were concerned about the gap between basic and industrial research. The Government consider that industry should be responsible for funding near market research aimed at producing specific, profitable goods and services. They acknowledge and discharge their responsibility to fund basic science in the research councils, universities and polytechnics. There is a need to encourage innovation in industry, including the transfer of technology from the science base, and the DTI in particular maintains major programmes, including notably the LINK programme of cooperative research, to encourage the vital process of technology transfer.

The third report deals with international scientific programmes. The Government will publish their response in due course so I shall touch now only on the main issues. First, let me deal with those international scientific programmes in which our participation is voluntary. I shall then consider the European Commission framework programme, which requires separate consideration as our financial contribution to it is mandatory. Proposals for major new programmes are usually developed within the international scientific community before being brought to the attention of government. For a given proposal there is almost invariably a clear lead funding body, either a government department or research council, which assesses the proposal in relation to its overall scientific objectives against possible alternative national approaches. The assessment of those guidelines provides advice on assessing the programme and, where necessary, the Cabinet Office co-ordinates interdepartmental interests.

The noble Lord, Lord Shackleton, was concerned about delays in reaching decisions on international projects. By their nature major proposals raise difficult questions for a number of interests and involve major commitments. Powerful national and subject lobbies always urge speedy decisions and tend to exaggerate the speed with which our partner countries reach firm decisions backed by money. In no country, not excluding the United States of America, are hard decisions taken quickly and decisions do not involve solely national considerations. But I agree that there should be no unnecessary delays. As the report notes, there is such diversity in the nature and organisation of international scientific collaboration that no single approach can cover all needs. Flexibility is the key.

The committee's report draws attention to the problem of exchange rate movements in funding international programmes and in particular CERN. The new arrangement for calculating members' subscriptions to CERN have greatly reduced the UK's exposure to fluctuations in the value of the Swiss franc. For European Commission currencies, our membership of the ERM evens out the movement of sterling against European currencies.

The Government welcome the constructive comments on the European Commission framework programme on research and development and are pleased to note the Select Committee's satisfaction with the wide uptake of funds in the UK under the second framework programme. I am confident that this trend will continue under the third framework programme. The Government actively promote UK participation.

The Government note that certain members of the research council felt that they did not have sufficient influence on the European Commission R&D framework programme. I am confident again that that is a minority view. During negotiation of the third framework programme the Cabinet Office consulted closely with the relevant departments—notably the Department of Education and Science—and through them with the research councils.

The Government wholeheartedly agree with the committee that the evaluation of the European Commission's research programmes should be given higher priority. The Government continue to press the Commission at both ministerial and official levels to improve the scope, rigour and quality of its evaluation procedures.

The committee's anxieties on public expenditure arrangements for Community R&D are similar to those expressed in the European Community's Committee's 1990 report on the Community's 1990-94 framework programme. A detailed response on those attribution arrangements was given by my noble friend Lord Hesketh on 28th January. Those arrangements are designed to give an equal basis for assessing UK and European Commission expenditure on R&D.

The noble Lord, Lord Sherfield, was concerned about the issue of attribution and the arrangements for the framework programme. I confirm that the Government will address the questions raised on attribution on their written response to the report on international scientific programmes.

The noble Lord, Lord Flowers, made a request for additional funds in 1991-92. He also asked for compensation for VAT. On additional funds for the current year, it would be inappropriate for me—even in my new position—to anticipate the Government's response to the Select Committee's report.

In summing up, I should like to reiterate my thanks to the Select Committee for three valuable reports which make major contributions to the continuing dialogue on science and technology policy. With learned and constructive criticisms of such force, there is little possibility of the Government becoming complacent in this field.

By their nature, Select Committee reports and debates such as we have had today tend to concentrate on areas of concern. That is normal and healthy. However, it pays to stand back occasionally to take in the overall picture. I should like to balance our considerations today by noting one or two salient points on the current state of science and technology in the UK.

Government support for science and technology in the current financial year will be £5.5 billion; and total industrial innovation science and technology expenditure by Government will be £104 million—a 24 per cent. cash increase on 1990–1. Over this Government's period in this office, the science budget allocation has risen in real terms by 22 per cent. Expenditure on environmental research and monitoring and on R&D into renewable energy sources have together increased over 17 per cent. in cash terms this year.

I believe that these figures illustrate the Government's strong commitment to the vigour of R&D in the UK and that effective mechanisms to direct funds to priority areas are in place and functioning well.


Lord Flowers

Lords, the debate has been fascinating and somewhat encouraging. There is no need for me to add to it and still less need to try to reply. After all, some of us have yet to try to find some lunch. I thank all noble Lords who have taken part; everyone has done so most effectively. I thank especially our maiden speaker, the noble Lord, Lord Porter of Luddenham. His speech was exactly right for such an occasion and we greatly enjoyed it.

I wish to thank in particular, first, the noble Lord, Lord Walton of Detchant, who reminded the House that the situation in the medical sciences is just as serious. If he had not done so there might have been an unfortunate bias in our debate. Secondly, I thank the noble Lord, Lord Dainton, who clearly spelt out our anxieties about the future of the dual funding system. Thirdly, I thank the noble Lords who gave support and encouragement to young university scientists whose work has been placed in such jeopardy by the present funding situation. I warmly thank the noble and gallant Lord, Lord Carver, for presenting his two reports so elegantly. He will presently move them himself.

I thank most warmly the noble Baroness, Lady Blatch, for responding on behalf of the Government. She gave us a little encouragement, for which I am grateful, though not much. We shall examine closely the figures that she gave and the comments that she made n order to see what we can get out of them.

The noble Lord, Lord Sherfield, encouraged your Lordships' committee to persist in the hope that one day the penny will drop. The committee's members will persist in the hope that it will be a pound that will drop. The £12 million of extra money for which I begged for the year 1991–92 is needed to meet a crisis. It is no good saying that when in six months' time the Government reply to our report they might have something to say about it. By then I fear that the crisis will have passed into something much worse.

On Question, Motion agreed to.