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Mr. Jim Cunningham : Like my hon. Friend, I   welcome the Chancellor's increases for science and technology. I am sure he agrees that that is important for research and development in universities and industry, and for so many aspects of our economy.

Dr. Gibson: I agree and I shall deal with that point in more detail to show how we can plug some of the gaps in those developments.

I want particularly to talk about the £2.5 billion that is being put into biotechnology. One aspect of biotechnology was highlighted in the Budget speech—stem cell research. Many Labour Members, including my right hon. Friend the Secretary of State, will remember that we argued about that subject profusely, but we came up with legislation that has stood the test of time and has put Britain at the forefront of research in that field. Christopher Reeve was extremely confident about this country. Just before he died, he expressed
 
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support for our arguments and congratulated us on being well ahead of America. We do not often hear that in the fields of science, technology and engineering these days.

There are many benefits just around the corner. The organisation that the Chancellor is setting up, to be headed by Sir John Pattison, includes the Stem Cell Foundation. In terms of stardom, the list of its members reads more like a Chelsea football team than a Norwich football team. I exempt myself from those remarks as I   confess that I, too, am a member of that body. Everybody else is a knight or a dame, including Sir   Richard Branson, Sir Christopher Evans and Dame   Mary Archer. It is a glittering group. I shall probably be asked to take the minutes, which I shall   gladly do.

Some of the work going on in this country is within a year of reaching clinical trial. In London, in Newcastle, at Roslin in Edinburgh—Dolly the sheep emanated from work there—and in Durham, people are carrying out research on brain infarctions and using stem cells to sort out some of the problems. In the long term, there will be work on Parkinson's and Alzheimer's. Diabetes is being investigated and that work is very close to clinical trial. Corneal and bone repair research is going on, as well as work on graft structures for heart valves and blood vessels. Within a year all that work will have reached phase 1 or phase 2 of clinical trials with patients. We can bet our bottom dollar that there will be some successes in that field and the UK is ahead of the game.

As well as the stem cell foundation, the Medical Research Council will be receiving more money. The Wellcome Trust will be putting more money into such research and the Department of Trade and Industry will also be involved. All that forms a nucleus that will keep this country ahead in one aspect of biotechnology, although of course other work is going on in the private sector.

Much money has gone into economic research and knowledge transfer—for example, the Richard Lambert business initiative to enable businesses and universities to work together better. The fault does not always lie with the universities; sometimes businesses do not relate to the people who are developing that bright new technology. I am not referring merely to stem cell research.

Mr. Willis : Does the hon. Gentleman agree that a big problem faced by many of our universities that lead bioscience technology research is that they cannot get technicians to support the scientists? There is a mismatch between what schools are doing, especially at level 3, and what the universities actually need in terms of technical support. Does the hon. Gentleman have a solution for that problem?

Dr. Gibson: I thank the hon. Gentleman for that intervention. Yes, I will address the training of our young people in universities in the latter part of my speech, but we must consider more than just the universities: university students and graduates come from schools, so the science, engineering and technology taught in schools, as well as the technicians themselves, are extremely important. We are missing a trick or two in that respect, and I shall make some suggestions about that.
 
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We are putting much more money into clinical research, and not just in relation to stem cells. We are putting money into engineering under the Budget. We are bringing researchers over from other countries. Indeed, Roger Pedersen—a friend of mine who is a professor in stem cell research on the Addenbrooke's site at Cambridge—has come from California and will not go back because we are ahead of the game. In the next week, there will be another sensational recruit and transfer from across the great pond into this country. So we are well up front.

The Chancellor announced that we will put money into sustainable energy and other energy developments in relation to climate change and global warming. He also announced science cities. Now there is a concept. I   asked various eminent people about the term "science cities", and the only answer that I got was, "Well, that'll be another sign outside a place. Does it mean anything?" If we read the script properly—we have more to do on it—the relationship between the science and business communities will be extended and will grow because of the feeling of being a science city. They exist across the world. For example, Sir Richard Sykes of Imperial college tells me that Novosibirsk—I have been there—in Siberia is an amazing science city, where it is minus 20°   centigrade outside, so the scientists and teachers do not get out very much, as hon. Members can imagine. Perhaps that is not a bad idea, so let us have a bit of global cooling as well.

Bristol, Birmingham and Nottingham are all areas where we will have science cities, and they are being developed under the aegis of the regional development agencies. Not all the regional development agencies are   up to speed at encouraging interaction between universities and businesses to develop a part of their region into a science city. The other night, the Home Secretary and I entertained many glamorous people in Norwich in a business tent to collect huge sums of money for the Labour party—who in their right mind would vote for anyone else these days?—and we asked them what they would do about making Norwich a science city. There was a long silence, and we said that, as soon as we get back and get on with business, Norwich would become a science city and we would knock some heads together. The concept is intended to drive people together in order to promote the whole science arena, in the areas that the Government have identified, to the level of world excellence.

Peter Bottomley (Worthing, West) (Con): Just in case someone reads this speech after today, can the hon. Gentleman name a serious scientist who either believes that the present number of Labour MPs is good for the Labour party, democracy or science, or wants to see the   present Government returned to power?

Dr. Gibson: I can assure the hon. Gentleman that that   was in the first motion passed at the Stem Cell Foundation, and the House would miss several eminent   Labour Members' contributions to science and technology and, indeed, to higher education— top-up fees and so on—if we were not returned to government. Many constituents will believe that, and
 
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many members of the Royal Society believe the same thing, too, but there may be one or two people in other places that I have missed.

Peter Bottomley: Just for clarity, will the hon. Gentleman, who is well recognised in scientific circles, say whether he is suggesting that the Royal Society or the Stem Cell Foundation had a vote on whether they preferred to see the Labour Government return for another term of office?

Dr. Gibson: I have not seen the minutes, but I seem to recollect that there was such a vote following a discussion of the issue at the first meeting. There was no opposition, and Lord May and Lord Winston, as one may expect, go along with me. Those people are forming in that foundation a paradigm for many other areas as well, but we shall return to that, no doubt.

There are one or two storm clouds. I do not pretend that everything is wonderful. There are many more things to do, and the Budget has opened the way for that. There are certainly questions about research and development, as the hon. Member for Worthing, West (Peter Bottomley) will remember in relation to health care. We lag behind in terms of initiatives and developments in comparison with India and China, but we should not hold up our hands and wallow in defeat; we should say that we can do as well, if not better, and that is the spirit that the Budget has delivered to many scientists in this country. For the first time, we have doubled that budget and people are smiling and beginning to work, but there is more to do in that arena.

The problem is not just competition, but trying to persuade small businesses to develop that sort of work and to increase research and development in science-intensive small businesses. A private Member's Bill that   my hon. Friend the Member for Cambridge (Mrs.   Campbell) intends to present has been picked up in the Budget, which requires Departments to provide money for research. It will be mandatory for 2.5 per cent. of the research and development budget to come from Departments.

There are problems accessing venture capital. Venture capitalists are strange people—I met some in Cambridge on Friday night—and talk in billions not millions of pounds. They work in the short term and want results within one or two years, but results take longer than that in many enterprising and innovative research arenas. We must marry those two different views and, at last, we are starting to talk to venture capitalists. The aim is to encourage small businesses—not just bright people from universities but inventors and the James Watts's of this country because they have bright ideas and need support.

Another problem is VAT, as hon. Members know, for organisations involved in biomedical research and so on. I have taken two cases to the Inland Revenue to ask its officials to remove VAT because of the nature of the research. A charity in my constituency is trying to develop a cancer information centre, but has been told that because it is connected with a private finance initiative hospital it must pay the full rate of VAT. The money comes from charity and there is a lot of reaction
 
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against that decision. The Minister will recognise that problem, which arises time and again. I never want to meet another official in my life, although when one puts the arguments one sometimes wins £1 million for a   university or £2 million for a charity. I hope that something will be done about the VAT problem. The process is clumsy and we must do something about it.

There is something fundamentally at odds with the problem of developing small industries. The antipathy of many young people to taking their research and discoveries to the marketplace must be seen to be believed. The culture in this country is that people dirty their hands if they go into business after doing magic work on this, that or the other, whether chemistry, physics or mathematics, and so on. The sort of people that I have talked about—Paul Grayson, Chris Evans and Richard Branson—have had such experience but they are true entrepreneurs in a sense that is sometimes hard to define. Many people think of themselves as entrepreneurs, but are not because someone else takes on the marketing and development problems, proof of concept stages and so on. Making a discovery does not suddenly result in a glorious product that the world awaits. It must be marketed and it is difficult to tell someone to leave it to another professional or expert in the area to develop the product. Partnership and teamwork are necessary and we are beginning to accept that.

I once thought I had the answer to prostate cancer. I   discovered a gene and went to my bosses at the university to ask them for advice on how to start a company. The answer—I kid you not—was, "You need headed notepaper." That was depressing. To get a kick-start and an introduction to someone who has been through the process is a big step. One gets depressed, but then one gets on with winning the research assessment exercise and glorious kudos as a scientist, but one forgets the other aspects of the work. We need to do much more to encourage that side of matters.

If there is one factor that distinguishes the US from this country it is that people in the US take risks. In the US, people can fail once, twice and even three times, but they are still not failures. It is recognised that it may take four attempts to achieve something, but every time something does not quite make it, lessons can be learned. That is how Americans are encouraged to think, but that does not happen in this country. People are deflated and put down if something does not work. The knives go in and people are put off. We have to change that culture, and we should start in schools by encouraging people to experiment and think. If they do not succeed the first time, they should be patted on the back and told to try, try and try again. We have a long   way to go in introducing that attitude into our teaching culture.

The Government have also talked about other aids for small businesses, including tax credits, involving the Inland Revenue, ways to give people the confidence to get on and do it, and setting up Lambert-type interactions. However, we still have a serious problem with physics and chemistry departments in universities closing. That is not a new phenomenon, but when universities lose key departments, it is demoralising for those who work in them and it creates a threatening environment for everybody else. I am pleased that the Government have started to consider how we can prevent such closures.
 
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We know that we need bright young people, not only for policy-making but for research, development and   innovation. However, the number of people taking the subjects I have mentioned has been declining for   several years, and that contributes to the closure of departments. If they are closed, we will not be able to take on the extra students coming through the system who want to be chemists or physicists, or to develop new subject matter. We have intervened to try to increase the number of university places, but we have to be smarter. We have to look at the root cause of the decline in   student numbers that has led to the closure of departments. We need to inspire students and young people in schools to study science. We want teachers who can be creative and enthusiastic. We need to change the curriculum, because it is dull and boring. When I   visited a school in Norwich, I found that stem cell research was not taught to scientists but to those studying religion. That is fine, but scientists should be talking about the big idea in science in this country at the moment. I invite colleagues to ask whether stem cell research is being discussed in the schools they visit.

Another reason for the falling numbers of science students is the funding arrangements for research and teaching in this country. Departments often nick money out of their research budgets to pay for teaching. Strange ratios have developed for different subjects, but nobody seems to know why one subject gets more for teaching than another. I am sure that there is an explanation, but it is not convincing in terms of the overall visionary economic plan that we have to increase the number of students in some areas. Nor can anybody tell me how many physicians, mathematicians or biotechnologists we will need. There is no overall plan, but we need one.

We must also be honest and admit that not all universities can do everything. That is a brave thing to say, but every region can provide the surety that, whatever subject someone wants to study, they can find a course that they can follow within easy travelling distance of home—I shall not go into all the reasons why someone might want to stay at home or why they should not do so. We need to take hold of the regional development agencies and take something from them—not just money but some of their people, who could interact with others on a regional affairs committee or some such body to solve our infrastructure problems in order to ensure that the subjects are taught. We will never have enough money to teach every subject that we want to teach in universities. That is a hard thing to say and believe. Yes, we will get more students; we want more graduates and we want more of them to go out into the business world and into pure blue skies research. We must allow for that on a regional basis, although I do not see it happening in some RDAs.

Policies must not dictate that research is the only thing that is important. A vice-chancellor once told me, "Forget teaching. Give the students 20 minutes and then walk out and get on with your research. That is much   more important." We must not have that. We must create structures in which very good teachers just teach and do not do research, and vice versa. We must work out such interaction on an original basis.

A vice-chancellor who does not live far from me once said, "If you were starting the university system in this country over again, you would not have Essex and
 
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Norwich universities down the road from each other." Both Essex and the university of East Anglia have had to close physics and other subjects because neither is big enough separately. Together, they would be dynamite. We have a long way to go to get such things going. All   the restructuring in universities at the minute is demoralising without a bigger, visionary picture.

The Budget opens up all these questions. For the first time in my life we are beginning to hear serious discussion about science, technology and engineering. There is a serious belief in our Government about using knowledge to create the businesses and wealth that will not only provide jobs, excitement and enthusiasm throughout people's lifetimes, but enable us to compete in the world markets, which are becoming tremendously serious. We can do it, and this Budget is the first line in the sand.

4.52 pm

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