Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40-59)



  40. You think you have now resolved that?
  (Professor Sir George Radda) That problem has now been resolved.

  41. Are they commercially competitive?
  (Professor Sir George Radda) We have to offer commercially competitive salaries to get the sort of professional staff we need to do that work. This is not work for the scientist, this has to be done by professionals.

  42. I know these are people who are experts in commercialisation. What about scientific researchers, give me an idea of the sums we are talking about? What is the highest amount money that a public researcher might be earning with all of incentives, and so on, in one of these areas?
  (Professor Goodfellow) What level are you talking about, a director of an institute?

  43. Or some leading researcher into antibodies?
  (Professor Sir George Radda) I can answer that, in fact we have been able to negotiate with Treasury over the last two years a substantial increase to the salaries of all our scientific staff, particularly non-clinical scientific staff and we are now able to offer salaries, not only ones that are competitive but also salaries that reward people for outstanding science.

  44. What is the highest salary, roughly?
  (Professor Sir George Radda) A Director of one of our major laboratories would be earning £100,000.

  45. How does that compare with a pharmacist?
  (Professor Sir George Radda) It compares extremely well with the university sector, but it does not compare that well with the private sector. In terms of the academic salaries our salaries are now very competitive and we are able to appoint people at a level of salary that can compete with some of best academic institutions round the world. Commercial salaries are quite different. (Professor Goodfellow) We have had to look very carefully at salaries and we have a specific Remuneration Committee chaired by the chairman of our Council. We look very carefully at salaries. We have just recruited somebody who came from California to head the John Innes Institute for Plant Research. There we did have to offer a higher than normal salary, and we are up to about £95,000, about the same order. If we want people with commercial experience, like this person had, we have to pay.

  46. Is there a different kind of person who would instinctively go and work in a public research council, such as the ones you operate, compared to the kind of person, the kind of graduate who works for a big commercial company? Are you attracting different people here? Obviously because you are not offering the same salaries people must have a reason for going into public sector research, some reason other than the salary reason? Is the danger of this process that you are going to erode the difference but not keep track with the salaries and, therefore, people are not going to do this public-spirited research in the future?
  (Professor Lawton) Given that a great deal of NERC science is science for the public good we do attract scientists who do it because they love doing the science and they understand the aims are benefit to the public and not to make a profit. Most of the environment we live in has to be managed and the science we do helps to manage the environment more effectively. So, yes, scientists who come into my area of science do not come in to make a lot of money, that is absolutely true. Interestingly, the best scientists often also enjoy turning the science they have done into either research that somebody wants to commission, which is numbered three in Table 5. It is often positively correlated. The best scientists are often also the ones that turn out to be particularly good at spotting commercial opportunities.

  47. Can I ask the other two heads of these research councils if that is their experience because it is a different kind of person who comes to work for you as opposed to working for a big private company, maybe even a tobacco company!
  (Professor Goodfellow) I have just moved two months ago from the university sector where I was training graduate students and I would say there is not a particular difference. I think the ones that stay certainly in the university sector are absolutely driven by the science, they will go to an institute and they will be driven by plant science. That is what we are asking the institutes to work on commercially, we are not asking them to change to something completely different. The worry would be if they were in industry they would be moved between projects which they were not totally focussed on.
  (Professor Sir George Radda) I have no doubt that the people who are going to do medical research in our institution want to do it partly because of the intense interest they have in the rather exciting science in the biomedical field at the moment and partly because they want to do something good for the public, which is our primary aim.
  (Dr Taylor) If I can add a footnote, in my experience going round the different institutes and meeting different kinds of people I think a carefully managed amount of this kind of activity in the public research institute speaks to two important frustrations, one is the route to market for the things they are doing, they would like to see that the discovery, the invention, the innovation they have made can find its way to the public a little better than it would if we did not do this kind thing. They also get tremendous feedback from the people they interact with in that process, which informs the research they do and the new kind of research proposals they make. I think if carefully managed it is extremely positive.

Mr Jenkins

  48. I am glad you came up that statement "carefully managed" because there is an ethos amongst some research scientists, they do want to work on science, they did not pick to go into a commercial environment and if you get too commercial they may as well go along and join one of the commercial associations. Forgive me if this is an easy question, but it is important for me to get it into my head, money kept by councils, Mr Young. If you allocate public monies—at one time I used to on a much smaller scale, of course, I had to allocate it to different departments and if the department found they had a surplus I would not allow that department to keep that money, it had to come back to the centre, and the centre would allocate where its priorities were—I see we are going down the road of allowing councils to keep seed funds to select which particular projects they want to go with and that might not be the priority you want to go with. You have established a precedent now, what scale would you let it grow to before you start saying, enough is enough?
  (Mr Young) It is not that straightforward a question, as I expect you probably realised. The Baker Report gave us some very specific recommendations that in order to try and maximise these commercialisation opportunities we have been talking about we needed to give research establishments, I am reading page 16, Figure 6, more control both of intellectual property and financial freedom. It was argued that if we just took back income which they got from commercialisation and did not allow them to spend it, just as if we did not allow any individual scientists at all to benefit from their inventions, we would not incentivise the sort of behaviour we wanted to encourage. We got the recommendation from Baker that, (a) we had to allow carefully managed incentivisation procedure for scientists and, (b) we should lift what you describe as the normal old-fashioned Treasury rule of annualised expenditure controls so that they could not spend any more, even though they earned more. What we have done now is, and it is described on page 34, 4.6, "The Government allows Research Councils and their Research Establishments to retain the receipts from commercialisation, to be shared between them as they see fit. The Treasury has changed its rules on budgeting annuality..." It then goes on to say, we are applying that flexibility and spending between years to the Research Councils. The justification for that is we want to incentivise them to get income in and we want them to feel that they benefit from that. If we just swiped it at the end of the year, in the way you remember, there would be no incentive for them to get it. That is justification. We have kept controls. I think we are a long way, away from that danger, but there is a power for us to stop it if gets beyond a certain percentage or becomes a risk.

  49. That is the question? What is the percentage? What do you feel is the cutoff point, if you like?
  (Mr Young) That would be in Treasury's hands.
  (Dr Taylor) Of the order of five per cent is when we start paying serious attention to whether we need to take this further with Treasury, in the zero to five per cent bracket.[2]

  50. The commercial returns to be utilised by the research council is excellent, up to five per cent, and then the principle kicks in?
  (Dr Taylor) No, I said that is when we need to start consulting Treasury and others about particular cases.

  51. It is a flexible friend?
  (Mr Young) Yes. We have never had to restrict it yet, which is why I answered slightly—

  52. You have never got to five per cent?
  (Mr Young) That is right. That is why I say we are a long way away from this excessive spending danger which you are holding out to us.

  53. Hopefully they are growing and they will get to a point where they will go past five per cent. I have no problem with that as long as I have an understanding of it. Our core scientific role, page 2, versus commercial, I notice that there is a risk assessment undertaken to ensure that we do maintain a core scientific role, yes?
  (Mr Young) Yes.

  54. How is it done? I want to be clear in my own head, how do you undertake this risk assessment? Who does it?
  (Mr Young) The research councils do it. The risk assessment is roughly as in Figure 14 on page 35, that is the system roughly which people do and one of my colleagues will talk you through it.
  (Dr Taylor) Let me preface it by saying, the vehicle for overseeing this is each councils annual operating plan, its annual report and it chief executive's objectives and his ability to satisfy those objectives. It is in that annual oversight process from OST that each of the councils gets looked at in terms of, is it achieving its core mission? Is the balance for what it is doing making sense? Is its audit committee satisfied that it is following the priorities that have been set out by the council?

  55. You do it then?
  (Dr Taylor) We oversee at that level.
  (Professor Goodfellow) I cascade down to the institutes on rather an external review every four years in our institute, which is knowledge transfer, the quality of the science, strategic growth and interaction management and research programmes at the institute, which has outside reviews as well and which reports to my council. That is monitored yearly. Financially they are monitored every six months in terms of business plans.

  56. Mr Young, do you feel happy with this?
  (Mr Young) I most certainly do, because the whole point of this is to give the research councils maximum discretion and maximum freedom. If we centralise this that is where disaster lies, in my view. We appoint good people to the boards of research councils, we appoint excellent chief executives, of whom you have three very good examples here, and that is the best way to get the right decisions in this area. There is no way we can centralise this or lay one-size-fits-all rules.

  57. Taking you on to individual benefits, one thing I did not ask is, in private or commercial research laboratories do researchers normally have a contract which allows them to benefit from their research work? Do you have any knowledge of this?
  (Dr Taylor) Many companies have stock option schemes, which are usually awarded discretionary on how well the individuals perform. Very often stock option schemes on a discretionary basis are used to reward outstanding achievements by individuals. That, plus a much more flexible approach to salaries, is probably the way in which private sector researchers get compensated for individual success. There are also a set of things to do with team performance.

  58. If this is the world we work and live in we have to attract people from that commercial world, I think we should know the complete deal rather than one in isolation. If people benefit from their work in the commercial facilities why should they not benefit when they come into the public sector?
  (Dr Taylor) Did you say "should" or "should they not"?

  59. Why should they not? I am trying to get both sides of the coin, it is not a trick question.
  (Dr Taylor) The guidance that the OST put out last year about how these schemes might operate included the rather altruistic options for taking personal reward, it could come as increased research funding to the individual group, it is very flexible.

2   Note by Witness: Departments are allowed to retain receipts from activities under the Wider Markets Initiative up to a level equal to five per cent of their allocation. For receipts beyond this level they are required to consult with Treasury. Ref Ev 24, Appendix 1. Back

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