Scientific Research (Hansard, 13 May 2002)

§ Lord Peyton of Yeovil
asked Her Majesty's Government:
Whether the present arrangements for passing the results of government-sponsored scientific research to British industry are satisfactory.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, as well as increasing substantially the funds for basic research the Government have taken a number of major initiatives to encourage knowledge transfer. These include the University Challenge competition, Science Enterprise Challenge, the £140 million Higher Education Innovation Fund and a major extension of Faraday Partnerships.
7 These initiatives are beginning to produce an exciting cultural change in our universities. In 1999–2000 there were 199 spin-offs from our universities compared with an average annual rate of just under 70 in the previous five years. But, working with industry, there is much more that we can do.

§ Lord Peyton of Yeovil
My Lords, rather unusually, I thank the Minister very warmly indeed for that encouraging and useful Answer. Is he aware of the need to press his colleagues to understand the importance of scientific research, the speed at which it goes and the value of its results? Will he particularly keep a weather eye on the Treasury, which has never yet been persuaded that you cannot tell the value of scientific research until you know its results, and that you are unlikely to know its results until the work has been done?

§ Lord Sainsbury of Turville
My Lords, I thank the noble Lord for his supplementary question. To receive compliments from him in circumstances where I normally receive the odd criticism about holes in the road is very welcome indeed. I take his point. This is an extremely important area. We are doing work in this area and, as I said, we can do much more. We have introduced the two R&D tax credits for large and small companies and, as part of the DTI review, we have set up a new innovation group to work very closely with industry to try to raise R&D and the rate of innovation. I continue to press with colleagues the importance of this subject. I believe that even the Treasury is now persuaded of its importance.

§ Baroness Warwick of Undercliffe
My Lords, I declare an interest as chief executive of Universities UK. Tomorrow, at the headquarters of HSBC, Universities UK launches a report which shows how much knowledge transfer takes place between universities and industry. Does my noble friend agree that the performance of UK universities in knowledge transfer compares well with that of their international competitors, particularly the United States? Does he further agree that, as helpful as recent investments of £100 million are in building up these links, more investment is needed through SR 2002 if that growth is to continue?

§ Lord Sainsbury of Turville
My Lords, I agree with my noble friend that, interestingly, our record on spinoff companies stands up very well in comparison with the situation in America. I produce these figures only because people are constantly saying that compared to America and MIT we do not have a good performance. If one compares the size of the two countries, UK universities do very well. We have one spin-off firm for every —8.6 million of research expenditure; Canadian universities in 1999 spun-off one firm from every £13.9 million of research expenditure; and in the US the ratio was one for every £53.1 million. So the story that British universities are not entrepreneurial is no longer true. In America, 8 universities such as MIT have magnificent records, but that is not true of all universities. We shall continue to push for extra funds for both basic research and knowledge transfer as part of SR 2002. Whether or not we have persuaded the Treasury will become clear at that point.

§ Baroness Sharp of Guildford
My Lords, as the Minister and other noble Lords have indicated, the record of universities in this country has been extremely good. As much as 12.9 per cent of their research funding now comes from business as compared to 10.1 per cent in the US. This is a figure that many people do not know. However, in many countries universities have been at the core of highly dynamic regional clusters of development. One sees it in countries such as Spain, the United States with MIT, and in our country at Cambridge, which has spun-off a large number of small companies. Does the Minister believe that the initiatives taken by the Government are too top-down in that they come from the DTI? Is enough being done to link up with regional development agencies and to get the core support networks developing out of the universities to the local regions?

§ Lord Sainsbury of Turville
My Lords, on the contrary, all our action now is mainly to support clusters through the RDAs, which have been working very closely with clusters of hi-tech businesses, not only in Cambridge but in Oxford, Bristol, York and Manchester. This is not only about Cambridge. We operate mainly through the RDAs because this is a local activity. Over the past three years, £150 million has been given specifically to the RDAs to support incubators and working clusters.

§ Lord Tanlaw
My Lords, is the Minister happy with the percentage spent in R&D on hydrogen-based fuels to replace carbon-based fuels, particularly in the automotive industry?

§ Lord Sainsbury of Turville
My Lords, this is a very important question. The Chief Scientific Adviser has recently made a study of the energy research carried out across government. This has disclosed some areas where more research should be done, including the area of hydrogen research. That is one of the areas which I believe will receive more support in the future.

§ Lord Haskel
My Lords, is the money spent on transferring the results of government-sponsored research to business and industry in addition to the budget for basic science, or has it been at the expense of that budget?

§ Lord Sainsbury of Turville
My Lords, the money spent on knowledge transfer is in addition to the expenditure on basic science. We have increased enormously the budget for basic science in this country. It is now in the region of 10 per cent up in real terms on what it was when the Government came to 9 power. If we are to have knowledge transfer it must be on the basis of a strong basic research base. It is interesting that a recent survey of universities revealed that most spin-off companies and knowledge transfer come from the world-class research universities. One would expect that kind of indication.

§ Lord Ezra
My Lords, as the chairman of a Faraday initiative I can testify to the increased efforts now being made to stimulate knowledge transfer from universities to industry. In terms of the amount of money put into civil research, has the gap which used to exist between this country and other major developed countries now been closed?

§ Lord Sainsbury of Turville
My Lords, there is a considerable way to go in terms of the amount of money—not only government research money but, more importantly, business research money—that is put into research. As I said, since coming to government, we have increased the basic science budget by 10 per cent in real terms, and that should be seen in relation to the 17 per cent real terms net decrease which occurred in the previous decade. Consequently, we still have a long way to go to catch up. As regards total expenditure, we are behind France and Germany, the two countries whose performance we would most like to be comparable with. Germany is ahead of us because German industry does much more R&D than we do, and France is ahead because the French Government do much more research than the British Government do. Either way, in making comparisons with those countries, we have to make certain that we treat each country's R&D expenditure as a percentage of GDP.

§ Earl Russell
My Lords, can the Minister continue the attempts, in which I believe him to be already engaged, to explain to Her Majesty's Treasury the distinction between government-sponsored research and government-controlled research? Is he aware of a report in the Independent on Sunday, on 5th May, that the Treasury is now attempting to approve the science councils' research budgets on a line-by-line basis? Does he agree that that is the ultimate proof that the Treasury regards public money as a form of barium meal? Does he agree that the results are about as appropriate as if we should transfer our economic forecasting to a committee of microbiologists?

§ Lord Sainsbury of Turville
My Lords, I think that one should always be rather careful about making statements based entirely on newspaper articles. In this case, however, I was concerned by the report. I therefore spoke to people at the Office of Science and Technology, who, in these circumstances, might be expected to be deeply concerned. They have had no discussions with the Treasury whatever, let alone on a line-by-line basis; they have simply submitted their application for funds under SR 2002. I think that, in this case if no other, the Treasury is utterly blameless.