Select Committee on Science and Technology Seventh Report

The Spending Review 2002

18. The outcome of the Spending Review 2002 in July 2002 was very positive for science. The Spending Review White Paper promises an increase of £1¼ billion a year in overall government spending on science by 2005-6 compared to 2002-03. This increase is to comprise £890 million on the Science Budget, "the major part of" £244 million for DfES recurrent spending on research (of which around 80% is expected to be on science),"at least" £100 million through DfES to implement the recommendations of the Roberts Review and £50 million through DfES for science research infrastructure.[29] We note that these figures use 2002-03 (the current year) as their baseline, instead of 2003-04. Thus, the reported increase includes the increase from 2002-03 to 2003-04 already agreed in the Spending Review 2000.


19. The additional £890 million in the Science Budget, as reported in the Spending Review White Paper, represents an increase of an average of 10% a year in real terms. The Spending Review White Paper presents the new Science Budget as follows.[30]

Table 7: Spending Review 2002: Science Budget

£ million
Science Budget
Resource Budget
Capital Budget
Total Departmental Expenditure Limit

The Spending Review White Paper states that the Science Budget will receive, by 2005-06, an additional £400 million for research project funding through the Research Councils for investment in new areas of scientific development (such as proteomics and brain science); £120 million in increased Research Council contribution to the indirect costs of university research; £30 million on knowledge transfer, including a new fund for knowledge transfer from public sector research establishments; £100 million a year for postdoctoral academic fellowships and PhDs (raising the minimum PhD stipend to £13,000); and around £100 million a year for large scientific facilities such as the Diamond Synchrotron. It states that there will be a dedicated capital funding stream for university research worth £500 million, of which £300 will be from the Science Budget.[31] On the basis that this will replace the SRIF (which is to end in 2003-04), this means increased expenditure of £50 million from the Science Budget and £50 million from DfES. Adding these figures together we reach an additional £800 million for the Science Budget by 2005-06. We are unclear how the figure of £890 million is arrived at.

20. The Government's Investing in Innovation document, published shortly after the White Paper, gives further details. Resources for the Research Councils' research programmes are to increase by £136 million in 2004-05 and £300 million in 2005-06.[32] A further £122 million from 2002-03 to 2005-06 is to be provided for the Diamond Synchrotron. (Annual figures are not given.) An additional £30 million a year by 2005-06 is to be provided for new investments in other large facilities and the renewal of infrastructure in Research Council institutes.[33]

21. OST's memorandum presents the new money for the Science Budget as follows.[34]

Table 8: Spending Review 2002: Science Budget Settlement

 New money £ million
New science
Large facilities
Knowledge Transfer
Roberts implementation
University research sustainability - RC indirect cost contribution
University research sustainability - dedicated capital line

OST's figures show an increase in the Science Budget of £660 million from 2003-04 to 2005-06. The difference between this and the figure of £890 million given in the Spending Review White Paper is accounted for by the difference in baseline, plus some difference in accounting for depreciation. The OST's figures take 2003-04 as the baseline, as is the standard methodology. The Spending Review White Paper, on the other hand, uses a 2002-03 base. Thus, it includes the increase from 2002-03 to 2003-04 already agreed under the Spending Review 2000, which amounts to some £244 million. The increase in the Science Budget brought about by the Spending Review 2002 is more accurately represented as £660 million, not as £890 million. The way in which the Spending Review White Paper presents the increases to science spending is misleading and leaves the Government open to accusations of double-counting.

22. OST's memorandum states that the funds for new science and large facilities and some of the funds for Roberts implementation will be allocated to Research Councils during the autumn. Knowledge transfer funds will be distributed in a separate exercise "over the next year", in which universities will bid for funds from the new HEIF. The new dedicated capital line for university research infrastructure will be allocated by formula from 2004-05.

23. The additional funds for Research Council programmes are very welcome, though the emphasis on funding of new science gives us some concern: valuable existing programmes must be maintained too. Investing in Innovation acknowledges that "a key issue for the Research Councils in the period ahead will be to consolidate their existing core programmes", but also identifies a number of new areas in which investment will be considered: brain science, regenerative medicine, proteomics, sustainable energy and rural economy and land use.[35] It will be important to ensure that focus on directed programmes does not lead the Research Councils to neglect speculative research and response mode funding.

24. Much will depend on the decisions on the Science Budget allocations which are still under negotiation. We intend to take evidence from the Science Minister in November 2002, when the Science Budget allocations have been published.


25. We welcome the additional funds for research infrastructure announced in the Spending Review and the fact that it will be provided through an ongoing capital funding stream, which should facilitate long-term planning. In evidence to us the DGRC recognised that there was "a serious level of underfunding" in research infrastructure, though he believed that the £1.75 billion invested through JIF and SRIF (the Government's Joint Infrastructure Fund and Science Research Investment Fund) had had a considerable impact.[36] However, a consultants' report commissioned by OST recently found that only 15% of research infrastructure would benefit from JIF and SRIF, and estimated that £3.2 billion was required to bring research infrastructure and laboratory equipment up to standard.[37] The additional funds will only partly meet this shortfall. We note that "an element of the new capital stream will be retained centrally to support strategic rationalisation and restructuring of the university science base".[38]

26. We also welcome the increase in resource funding for higher education research, which will go some way towards remedying the longstanding imbalance in the dual funding system. On the OST side, the Research Councils' contribution to universities' indirect costs will be increased by £120 million a year by 2005-06. On the DfES side, HEFCE recurrent spending on research will increase "starting in 2003-04 and rising to an additional £244 million in 2005-06".[39] We remain uncertain whether the Government will meet the recommendation, made in our recent report on the Research Assessment Exercise, that it fund in full the results of the RAE 2001.[40] Much depends on the outcome of the DfES's current review of higher education strategy which the sector awaits with trepidation.


27. While the Science Budget, and to some extent the Higher Education budget, has done well out of the Spending Review, its impact on the science and research budgets of other departments remains to be seen. The CSA acknowledged that departments' research funding had dropped for a period after 1986, though he maintained it was currently "fairly static". He told us that he was focusing on improving the quality of department research: "once quality and fitness for purpose are excellent, I believe funding will flow much more naturally into those areas".[41] The Spending Review White Paper states that the Government is introducing "new procedures for the external review of the quality of Government science".[42] Further detail is given in the Cross-Cutting Review.[43] Though understandably guarded about naming names, the CSA admitted that he was worried about the quality of research in some Departments.[44] The Department for Environment, Food and Rural Affairs (DEFRA) is widely regarded to be a problem area. The Environment, Food and Rural Affairs Committee has recently highlighted the erosion of Ministry of Agriculture, Fisheries and Food research spending over the past twenty years and recommended that DEFRA's review of the organisation of its science be extended to its funding.[45] It is to be hoped that the appointment of Professor Howard Dalton as its Chief Scientific Adviser will strengthen scientific research in DEFRA, but more money may also be required.[46] We welcome the steps being taken by Government to improve the quality and fitness for purpose of scientific research by departments. It must also ensure that this research is adequately funded.


28. The Spending Review 2002 was informed by seven cross-cutting reviews set up by the Treasury. Lord Sainsbury, the Science Minister, led a Cross-Cutting Review of Science and Research, whose terms of reference were to consider how to maximise the benefits provided by public spending on science and research to the UK's economy and quality of life. It began work in July 2001 and reported its findings to the Treasury at Easter 2002.[47] We were disappointed that only a digest of the Cross-Cutting Review was published with the Spending Review, and pressed the OST to publish the Review in full.[48] We are pleased that the Government has now published the Cross-Cutting Review of Science and Research in full. It is a very useful document and we find it hard to understand why it was not published at the time of the Spending Review. We recommend that the Government publish such important policy documents in future, without waiting for prompting by our Select Committee.


29. The Spending Review was also informed by two other science-related reviews: the Roberts Review into the supply of scientific skills and the Transparency Review on the costing of university activities. The Roberts Review was published in full in April 2002.[49] The Government's response is published as an Annex to the Investing in Innovation document.[50] We also pressed OST to publish the Transparency Review. OST's response states that "the review has never produced a final report as such" and that the work of the Transparency Review was subsumed within the Cross-Cutting Review and reflected in the outcome of that review.[51] OST states that the Transparency Review's steering group had accepted that the universities should adopt a costing tool called TRAC (Transparent Approach to Costing) and that this system is now in operation with figures aggregated and published by the Funding Councils. One of the conclusions of the Cross-Cutting Review was that more needed to be done to embed proper costing and pricing methodologies across the HE sector and work is underway to achieve this. Now that the Cross-Cutting Review has been published, we are able to confirm that it contains very useful information on the funding of university science research, including data obtained from the Transparency Review.[52] It is ironic that it has taken so long to bring transparency to the Transparency Review.

30. Shortly after the Spending Review announcement, the Government published a another document, entitled "Investing in Innovation - A Strategy for Science, Engineering and Technology".[53] The status of this document is unclear: it is not a Command Paper and was not laid before Parliament. Indeed, copies were not made available in Parliament at the time of publication. This document purports to "set out a long-term vision for science in the UK". It provides some useful information and is for the most part sensible enough in what it says. What is curious is that it seems to have been produced by the Treasury, not OST. We welcome the close interest being taken by the Treasury in science and engineering, particularly since this has led to additional funding, but responsibility for policy-making in this area must lie clearly with the OST.

European Union funding

31. In addition to providing funds through the UK Science Budget, the Government also funds scientific research in the UK through the European Union. The European Fifth Framework Programme for research, technological development and demonstration activities is now nearing completion.[54] Since 1998, it has dispensed a budget of some _14.960 billion. The DGRC was confident that the UK had received a good deal from this investment: "If you measure it crudely in terms of how much money came back from the programme as opposed to how much went into the programme, the balance is positive."[55] We recommend that the OST carry out a detailed analysis of the costs and benefits of the Framework 5 programme to UK science, and that this analysis be published.

32. Negotiations are nearing completion on the next funding period, Framework Programme 6, which will run from 2002-2006. The total budget is _17.5 billion. Of this, _11.285 billion is to fund research focused on seven priority areas: biotechnology for tackling major diseases; next generation information technologies; nanotechnology; aeronautics and space; food quality; sustainable development; and economic and social sciences.[56] _2.925 billion is to be spent under Framework Programme 6 to structure, and to strengthen the foundations of, the European Research Area, which is envisaged as the research and innovation equivalent to the common market for goods and services. OST's memorandum states that the aim is to network national research activities, share best practice on engaging science with society, and support the planning of research infrastructure. _1.23 billion is to be spent, under the Euratom Treaty, on nuclear research and training.[57]

33. OST's memorandum states that the main Framework 6 Programme was adopted on 3 June 2002, and that it is hoped that the Specific Programmes will be adopted by the end of September, subject only to agreement on the provisions applying to the funding of research on human embryos and human embryonic stem cells.[58] It states that the UK has secured a commitment to more efficient management of the programme by the Commission.[59] OST has also assured us that it is actively encouraging the UK scientific community to access Framework 6 funding.[60] The European Framework 6 programme is responsible for the outlay of considerable sums of public money: the UK Government must monitor it closely to ensure that the commitment to more efficient management is achieved in practice.

Restructuring of DTI

34. In June 2001 the Secretary of State for Trade and Industry launched reviews of the DTI's support for business and of its priorities and structure. In December 2001 the DTI provided us with a memorandum explaining the implication of these reviews for OST.[61] We were told that the position of OST was essentially unchanged, but that there would be a new group, the Science, Technology and Innovation Group, outside OST, one of whose objectives would be to maximise the Government's significant investment in science by providing a sharper focus within DTI on technology transfer. There was to be a new Knowledge Transfer Strategy Committee, bringing together the CSA, DGRC, the Head of the new Group and others, to ensure that the DTI made the most of its investment in the science base. The Science, Technology and Innovation Group was to be headed by the DGRC until a new externally recruited Director General was appointed. In evidence to us in December 2001, the Science Minister told us that the new Director General would be "amongst other things, the Chief Scientist for the Department".[62]

35. By the time the CSA and DGRC gave evidence to us in May 2002, the Science, Technology and Innovation Group had been renamed simply the Innovation Group. We were told that the Secretary of State had decided that one word was enough for each of the new groups.[63] While we agree that complex titles are best avoided, we fear that the name change may risk a loss of focus on science and technology. The post of Director General Innovation was filled on a temporary basis by a DTI official, Alistair Keddie. An external candidate, David Hughes, formerly of BAe Systems, was finally appointed in September 2002 and took up post on 3 October.[64] We intend to take evidence from the new Director of Innovation at DTI at an early opportunity. It will be essential for the new Innovation Group to work very closely with the OST, if it is to achieve what was intended.


Quinquennial Reviews of the Research Councils

36. The outcome of a Quinquennial Review of the six grant-awarding Research Councils was announced in December 2001. It found that the Research Councils system was broadly working well, but that a clearer strategic framework was required, that they needed to work more closely with their stakeholders in a more collegiate fashion, and that they should be more focused on public service delivery.[65] It made some 50 specific recommendations. An implementation plan was published in August 2002.

37. Among the Quinquennial Review's recommendations was that a Research Councils UK Strategy Group be formed, comprising the Chief Executives of the seven Research Councils and the DGRC, in order "to enhance the collective leadership and influence of the Research Councils and to secure greater strategic co-ordination in the funding of science". Research Councils UK - or RCUK, as we fear it is to be known - was launched on 1 May 2002, and is staffed by a small secretariat based, with most of the Research Councils, in Swindon. The DGRC identified three areas in which he expected Research Councils UK to add value: a more coherent approach to research funding; a focus for dialogue; and greater operational efficiency.[66]

38. The Council for the Central Laboratory of the Research Councils (CCLRC) has also been subject to a Quinquennial Review. The review, published on 30 April 2002, recommended that CCLRC should act as the national focus for large scale facilities for neutron scattering, synchrotron radiation and high power lasers, and that it should receive direct funding from OST for providing, operating, maintaining, developing and upgrading its large facilities and their instrumentation, rather than through annual service level agreements with the individual Research Councils. It set out a number of areas in which improved performance was required.[67] OST's memorandum states that the new arrangements will contribute to a more strategic approach to the investment, management and operation of large facilities, and that the direct funding arrangement will ensure that the Chief Executive of CCLRC is clearly accountable for the delivery of these facilities.[68]

Arts and Humanities Research Board

39. While the Research Councils are responsible for funding basic research in the sciences and social sciences, research in the arts and humanities is funded by the Arts and Humanities Research Board (AHRB), which is accountable to the DfES. The AHRB was established as an interim measure in 1998 following the recommendation of the Dearing Committee that there be an Arts and Humanities Research Council. In July 2002, the report of the DfES-led Review of Arts and Humanities Funding was published, recommending that the AHRB become a Research Council, operating UK wide, under the aegis of OST.[69] It also suggested that the British Academy (which partly funds the AHRB) might also be funded by OST - rather than by DfES as at present - in the same way as the Royal Society and Royal Academy of Engineering. The Government is consulting the Devolved Administrations on the future of the AHRB and is expected to announce its response to the Review later in the year. The indications are that the change will happen but it is unclear when. The creation of an Arts and Humanities Research Council will require primary legislation, and thus the change, as OST's memorandum states "would be bound to take some time to enact given the pressures on legislative time".[70]

40. The DGRC told us that he was very positive about the change: "There are many areas of overlap with the sciences, engineering and technology ... It can only be advantageous to have a single funding organisation, in other words to move AHRB from its position in DfES into the OST."[71] The Chief Executive of AHRB is already attending meetings of Research Councils UK as an observer.[72] The DGRC told us that the change might require OST's name to be changed: the CSA suggested OST might become "the Office of Research".[73] We welcome the proposal for an Arts and Humanities Research Council under the OST and will be following developments closely, as this change has considerable implications for the future of OST and its place within Government.

Associated Public Bodies

41. Our order of reference requires us to scrutinise the "associated public bodies" of the OST. Identifying these bodies is not entirely straightforward: there is no formal list showing which of the DTI's non-departmental public bodies (NDPBs) fall within the responsibility of OST. The Research Councils certainly fall into this category, as does the Council for Science and Technology and also, in part, the Agriculture and Environment Biotechnology Commission and the Human Genetics Commission.


42. The Council for Science and Technology (CST) is an advisory NDPB, first established in 1993, whose purpose is to advise the Prime Minister on the strategic policies and framework for science and technology in the UK. It is, in effect, a committee of "the great and the good" in science and technology, meeting quarterly, with a small secretariat provided by OST. Its chairman is nominally the Secretary of State for Trade and Industry, though its meetings are normally chaired by the Science Minister or the Chief Scientific Adviser.[74] Our predecessor Committee considered the work of the CST in two reports in 2001 and recommended that more effort should be made to disseminate its work more widely and to give more prominence to its activities.[75] The CST has published only one report since June 2001 (on the links between the arts and humanities, science and technology[76]) but has also provided input to the Quinquennial Review of the grant-awarding Research Councils, the Roberts Review and the review of Foresight. It is currently undertaking a study of the links between knowledge intensive business services and the science base.[77] We share the view of our predecessor Committee that the work of the Council for Science and Technology should be better publicised.

43. A Quinquennial Review of the CST was announced in August 2002.[78] The first stage of the review will examine the role and organisation of CST, concentrating on whether its function of providing independent strategic advice to Government on science and technology continues to be necessary, and if so whether CST as a Non­Departmental Public Body (NDPB) is the best way for the Government to obtain such advice. It is due for completion in October 2002. If it is decided that CST should continue, stage 2 will consider whether the way in which in which CST carries out its functions can be improved. The final report is due in December 2002.


44. The Agriculture and Environment Biotechnology Commission (AEBC) was established in June 2000 to advise the Government on developments in biotechnology and their implications for agriculture and the environment. It works closely with two other advisory commissions: the Human Genetics Commission and the Food Standards Agency. It is an advisory NDPB, originally established by the Cabinet Office and MAFF: responsibility passed to OST and DEFRA in June 2001. Its secretariat is provided by OST (with administration costs shared between OST, DEFRA and the devolved administrations).[79] It has to date published two major reports (Crops on Trial in September 2001 and Animals and Biotechnology in September 2002) and an annual report on its activities in 2000-01 (in October 2001). We note that the Environment, Food and Rural Affairs Committee draws extensively on the AEBC's Crops on Trial report in its recent report on Genetically Modified Organisms, and commends the AEBC for its transparency.[80]


45. The Human Genetics Commission, which advises Government on developments in human genetics and their impact on people and healthcare, is an advisory NDPB reporting jointly to the Department of Health (DoH) and OST. OST has co-responsibility for the HGC's secretariat, although it is based at DoH: surprisingly, no mention is made of this in the DTI's Annual Report. We examined the role of the Human Genetics Commission in our recent Report on Developments in Human Genetics and Embryology.[81]

Royal Society and Royal Academy of Engineering

46. The Royal Society and the Royal Academy of Engineering are not public bodies but they do receive recurrent public funding from the OST's Science Budget. This amounts to £28.783 million and £4.770 million respectively in 2002-3. A breakdown of this expenditure is provided in OST's memorandum.[82] The purpose and value of this expenditure is examined in detail in our recent Report, Government Funding of the Scientific Learned Societies.[83]

Cambridge/MIT Institute

47. Another somewhat surprising line in the OST's Science Budget and Estimates relates to the Cambridge/MIT Institute (CMI). In November 1999, it was announced that the Government would contribute £65 million over a five year period from July 2000 to a collaboration between the University of Cambridge and the Massachusetts Institute of Technology (MIT).[84] This money has been channelled through OST. Under the 2002 Science Budget allocations, £14 million a year has been allocated in 2001-02 to 2003-04 to fund CMI programmes in four areas: integrated research; undergraduate exchange; professional practice; and national competitiveness network. It was intended that CMI would work with the Science Enterprise Centres to disseminate best practice.[85] The Investing in Innovation strategy document states that "CMI is now starting to deliver tangible benefits to UK research and business", but gives no details.[86]

48. We asked OST how the expenditure on CMI was being evaluated. OST's response states that CMI is evaluating its own activities, with the assistance of external consultants and the DTI Performance and Evaluation Unit; and OST will be commissioning an independent evaluation.[87] We welcome OST's decision to commission an independent evaluation of the Cambridge/MIT Institute and recommend that it be published when complete. The decision to fund the CMI, made outside the usual Science Budget allocation process, is somewhat curious, and we intend to ensure that its effectiveness is monitored.

OST response to scrutiny

49. We are grateful to the OST, and to the DTI more widely, for its assistance and co-operation in our work of scrutiny. We acknowledge that parliamentary scrutiny places a burden of work on Departments, and especially on an Office so small, and tightly-staffed, as OST. We hope that the Department will recognise the value of effective scrutiny, and ensure that OST is resourced appropriately to meet the reasonable demands and expectations of Parliament.

29   2002 Spending Review - Opportunity and security for all: Investing in an enterprising, fairer Britain, Cm 5570, chapter 25; also paras 2.18-21 and 15.4ff. Back

30   Cm 5570, Table 25.1 Back

31   Cm 5570, para 15.5 Back

32   Investing in Innovation: A strategy for science, engineering and technology, July 2002, para 3.49 Back

33   Ibid, para 3.50 Back

34   Ev 13, para 1 Back

35   Investing in Innovation, paras 3.51-3.52 Back

36   Q29 Back

37   JM Consulting, 2002: available via . See also Investment in Innovation, para 3.37  Back

38   Investment in Innovation, para 3.40 Back

39   Ibid, para 3.41. The devolved administrations "will receive their share of the funding ... and will, if they so decide, be able to use if to fund recurrent research in the universities". Back

40   Second Report, Session 2001-02, HC 507, paras 78-79, 90 Back

41   Q49; also Q56 Back

42   Cm 5570, para 25.10; see also Q56 Back

43   Cross-Cutting Review of Science and Research: Final Report, March 2002, paras 281-285 Back

44   Q51 Back

45   Sixth Report of the Environment, Food and Rural Affairs Committee, Departmental Annual Report 2002, Session 2001-02, HC 969, paras 25-26 Back

46   See Q8-Q9 Back

47   Ev 13, para 1; see Q1 ff Back

48   Ev 14, para 2. See Back

49   SET for success: The Supply of People with Science, Technology, Engineering and Mathematics skills: The Report of Sir Gareth Roberts' Review, April 2002 Back

50   Investing in Innovation, p 95 Back

51   Ev 15, para 3 Back

52   Cross-Cutting Review, para 60 ff Back

53   Investing in Innovation: A strategy for science, engineering and technology, July 2002. Available via Back

54   For details, see Back

55   Q12 Back

56   Q19-Q20; Ev 15, para 4 and Ev 23, Annex C Back

57   Ev 15, para 4 (iv) and (v) and Ev 24, Annex C Back

58   Ev 15, para 4 (i) and (iii). Back

59   Ev 15, para 4 (i) Back

60   Q13; for details see Ev 16, para 4 (vi) to (x) Back

61   HC459-i, Ev 1-Ev 5. Back

62   HC459-i, Q3. Back

63   Q58. Back

64   DTI Press Notice P/2002/586, 23 September 2002. Back

65   Quinquennial Review of the Grant Awarding Research Councils Stage 2 Report by the Review Team, November 2001. Available via  Back

66   Q71 Back

67   Quinquennial review of the CCLRC Stage 2 "Improving Performance", April 2002. Available via  Back

68   Ev 18, para 15 Back

69   Available via  Back

70   Ev 18, para 14. Back

71   Q83 Back

72   Q82 Back

73   Q84 Back

74   For minutes of CST's meetings, reports etc see  Back

75   Fourth Report, Session 2000-1, The Scientific Advisory System, HC 257, para 14; Sixth Report, Session 2000-01, Are We Realising Our Potential?, HC200-I, paras 35-38. Back

76   Imagination and Understanding, July 2001 Back

77   See Cm 5416, paras 5.16-5.17, and CST Annual Report for 2001-02 Back

78   OST circular 19 August 2002. For details see  Back

79   Cm 5416, para 5.22 Back

80   Fifth Report of the Environment, Food and Rural Affairs Committee, Session 2001-02, Genetically Modified Organisms, HC 767, para 17 Back

81   Fourth Report of the Science and Technology Committee, Session 2001-02, HC 791  Back

82   Ev 21-Ev 23, Annexes A and B Back

83   Fifth Report of the Science and Technology Committee, Session 2001-02, HC 774-I. Back

84   Treasury Press Notice 186/99, 8 November 1999. See also Back

85   Science Budget 2001-02 to 2003-04, page 9 and Table 2. £1,145 was spent in 2000-01. Back

86   Investing in Innovation, para 5.31 Back

87   Ev 19, para 17 Back

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