Examination of Witnesses (Questions 40-59)
MR ROBIN
YOUNG, DR
JOHN TAYLOR
OBE, PROFESSOR SIR
GEORGE RADDA
CBE, PROFESSOR JULIA
GOODFELLOW CBE, AND
PROFESSOR JOHN
LAWTON CBE
MONDAY 11 MARCH 2002
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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