Examination of Witnesses (Questions 180
- 199)
MONDAY 1 NOVEMBER 2004
RT HON
PAUL BOATENG
MP, DR KIM
HOWELLS MP AND
LORD SAINSBURY
OF TURVILLE
Q180 Mr McWalter: Of course if you
have a nano-fabrication company that is still pre-revenue, it
will be much more difficult for them to reach that stage.
Lord Sainsbury of Turville: The
whole point of the scheme is that you can get it even if you are
not making profits. Can I deal with your point about nano-fabrication,
because that has not slipped away at all.
Q181 Mr McWalter: It has gone quiet!
Lord Sainsbury of Turville: Actually,
we are already making the first investment. What has changed is
that as we have looked at this in more detail, and looked at the
proposals, two things have become clear. First, nano-technology
manufacturing is a series of technologies, not just one, so having
one or two is not sufficient; you need a range of them. Second,
because we have been slower in this country in getting into the
micro level and we need to go into that level first, because unless
you do that you cannot get into a nano-technology level.
Q182 Mr McWalter: I am aware of micro
technology investment; I was referring to the nano-technology
level.
Lord Sainsbury of Turville: No,
but if you go straight—
Q183 Mr McWalter: I am short of time,
so I would like to ask one more question.
Lord Sainsbury of Turville: If
you do not do that, you can have a big nano-fabrication facility,
and it will be a white elephant, as we are finding in various
parts of the world, unless you go through the micro level first.
Q184 Mr McWalter: I know some companies
that would not think that. Dr Howells, you mentioned Pasteur.
I am asking questions about research and development and, in a
way, research is often the bit that is the pure bit, and then
development is often regarded as the application. Would you not
agree that there are clearly some research projects that have
a greater probability of improving the gross national product
than other research projects, and in a sense is it not part of
your job in the DTI sometimes to make sure you make that judgment
of probability and make relative levels of investment to, as it
were, back what looks more likely to be the winner? You are very,
very reluctant to do this and have a very hands-off approach;
but does that mean that you in your turn are failing to take the
decisions which would lead to the health of our economy in 25
or 30 years' time?
Dr Howells: No, I am in the Department
of Education and Skills, of course; Lord Sainsbury is in the DTI.
Q185 Mr McWalter: I beg your pardon.
Dr Howells: I do not agree. We
have very many initiatives and schemes—a bewildering number
I think—all designed to encourage research to move in certain
directions, to encourage scientific research and engineering research
about which we have not talked very much so far. There are sets
of initiatives there. In a way, you are asking me to rattle the
cage of vice chancellors, which are very reluctant to do it.
Q186 Mr McWalter: Why?
Dr Howells: Within universities
there is academic freedom, and it is something we have to protect.
They will decide what it is that they want to research. I would
hope that that would be done with the encouragement of Government,
to co-operate and work in partnership with the private sector.
You have mentioned, Mr McWalter, the pharmaceutical industry,
and there is some very important work going on there. We probably
have as many sectors in this country per capita as any
advanced country, in terms of that kind of research going on.
I certainly believe that there is sufficient encouragement there,
but I return to my earlier point: the bit that worries me is that
we are not making science and engineering attractive enough to
enough young people to go into universities in the first place,
and that is the big job.
Q187 Dr Turner: If you strip out
R&D in biotech and the pharmaceutical industry, you do not
have much left because British engineering has traditionally invested
very little of its turnover in R&D. Are you seeing any changes
in behaviour as a result of the tax credit system being available?
Mr Boateng: I think we are. David
will give you his take across the piece, but I just want to share
with the Committee, since you ask the question, about a visit
I made to Aberdeen at the beginning of this year where I met the
founder and managing director of a company in the forefront of
the supply of sub-sea tools and sensors for remotely operated
and autonomous underwater vehicles. This is top-notch engineering,
and they are world leaders. The company is winner of the Queen's
Award for Innovation; it has the Royal Society of Edinburgh's
Millennium Award, and Queen's Award for Export achievement: it
is a remarkable company. As a result of that visit, the very clear
impression that I got was that the single most important development
in terms of Government policy for that firm was the R&D tax
credit, undoubtedly. That is what that particular hi-tech engineering
company was telling me. My sense is—David will have the
bigger picture—that they are by no means alone in that respect.
Q188 Dr Turner: With increased research
council funding, how much of that additional funding will be needed
do you think if research councils are going to meet the full economic
costs of publicly-funded research? Is it possible that we could
have a situation where we are actually funding projects fully,
but not increasing the number of projects?
Lord Sainsbury of Turville: The
figures are likely to be that we are funding somewhere between
60 to 70% of the full economic costs. This is with the increased
money for sustainability. If we were going to fully support them
100%, then you have to add on 50% almost to that figure. Of course,
the situation is not that you have to rely on research council
funding for the full economic cost of a project. That is what
QR money is for, to provide the other side of this in terms of
the overhead costs.
Dr Howells: We would have to find
about £500 million a year more—
Lord Sainsbury of Turville: It
is about 50% more on top of what the research councils will be
given.
Q189 Dr Turner: You have put an extra
£90 million in to support charitable research funding. Will
that be enough to cover full economic costs of charitable research
funded projects in universities?
Lord Sainsbury of Turville: No,
it will not again, but this is to help bring them up to a situation
where they are not at a disadvantage compared to projects which
they are getting from research councils.
Q190 Dr Turner: There is evidence
to suggest that people no longer apply for EU Framework Programmes,
never mind if they can fight their way through the bureaucracy
of them, because they cannot pay economic costs. Is there any
realistic chance of getting the EU to increase its funding towards
full costs?
Lord Sainsbury of Turville: I
think there is something of a misunderstanding here, which is
to say that you can only take on projects where you get full economic
costs. That is not the case. We are saying that it is important
that when people are applying for research grants they know what
the full economic cost is. They will not get full economic costs
from the research councils. We are saying that you should know
what the full economic costs are, and in going for projects you
should have available to you ways of making up the difference
through QR money or other money. There is nothing to stop people
going for European grants, even though they do not get full economic
costs. In regard to whether it is realistic to think we will change
this, we are doing a lot to try and move it in that direction
and get funding on full economic costs. However, the reality is
that because other countries tend to fund their universities on
a different basis, in which a lot of the infrastructure cost is
given in the form of grants to cover that, it is unlikely that
we will move easily in that direction.
Q191 Dr Iddon: I want to look at
regionality, starting with the regional development agencies.
With one or two exceptions, this Committee feels that quite a
number of regional development agencies are not up to passporting
the money for science and innovation through their individual
regions. I am fortunate in that I come from the north-west, as
you know, Lord Sainsbury, and we have an excellent set-up there,
in my opinion; but that is not the same in all regions. Would
you like to comment on that? How will you improve the other regions?
Lord Sainsbury of Turville: The
north-west led the way on this and were the first to have a science
and industry council, which Tom McKillop of AstraZeneca was the
chairman of. They set the standard for this and have done an amazingly
good job on that. The north-east has also been one of the leaders
in this. I am hugely encouraged now that all the other RDAs are
setting up science and industry councils, and by the end of this
year they will have science and industry councils, with on the
whole good people on them representing both academics and industry.
I hope that will help them make these kinds of decisions.
Q192 Dr Iddon: Who is going to audit
that huge flow of money and see that it is spent to best effect?
Lord Sainsbury of Turville: This
money is coming out of the single pot. In most cases it is part
of that, and is subject to the same kind of review as all their
other funding. We will obviously be looking at that. With those
science and industry councils, that is a very good way to make
certain that there is an overview as to whether the money is being
well spent.
Mr Boateng: It is worth remembering
that RDAs agreed targets with central government in return for
their funding, and they have agreed that their targets and tasking
framework will include measures of business university collaboration
so I would certainly expect that to feature in the monitoring
process, and we will all be very much on their case.
Q193 Dr Iddon: This Committee has
also been rather critical of the way that money has been siloed
in the past, for example the seven research councils, but interdisciplinary
work is emerging slowly. The same is true in other areas of science
expenditure. As you know, I am involved in a project that crosses
between industry and education, and it is very difficult to keep
some of those projects going; so what is the Government doing
to channel money into real innovation that crosses state departments
and crosses disciplines?
Lord Sainsbury of Turville: With
the setting up of RCUK and now the further changes we have made
that are bringing it even closer, we are now seeing a great deal
more multi-disciplinary projects. That is beginning to go rather
well. I am not quite certain what your second category was, where
you have a split between—
Q194 Dr Iddon: Industry and education.
I am talking about the technical innovation centre which you are
well aware of; it falls between two state departments in a way.
You tend to get passed from pillar to post if you are not careful.
This is for the revenue expenditure, not capital expenditure.
Lord Sainsbury of Turville: Of
these innovation centres. I think you have to see what the basis
for them is, and it usually is that they are funded by HEIF money
in some cases and partially by RDA money. That is a perfectly
sensible way to do it, and it is a question of both the university
and the RDA making a long-term commitment to those projects. As
a whole they are doing that rather successfully.
Q195 Dr Iddon: Turning to universities,
this Committee has been rather critical of the research assessment
exercise, but with changes the next one is obviously going to
go ahead. That has looked at R&D excellence and channelled
the money into a shrinking number of SET departments as a result.
Now—and I do approve of this late move—it seems that
the Government are now going to keep SET departments open in the
regions, which might otherwise close because they are not in the
top excellence brackets. What has caused that change of policy
of the Government?
Dr Howells: If universities decided
to close certain departments, there simply will not be the capacity
there for the study of subjects like chemistry, physics or engineering.
We want to be certain in our own minds that that capacity is there,
should it be required. It is a very difficult call because universities
have to decide where they are going to spend their own money.
We have to talk to them about a decision as serious as closing
a chemistry department. These are not easy decisions for universities
to make, nor indeed for the department to make, but we are very
serious about ensuring that capacity is out there, and we are
doing what we can, in discussion with the universities and the
RDAs, to protect that capacity wherever we can. We are in the
early days of talks on that subject. As you know, there has also
been some discussion about asking universities to hold off for
a year if they decide they would like to close a particular department
like a chemistry department, so that we can concentrate on how
it might be possible to keep that department open.
Q196 Paul Farrelly: One of my concerns
when we did the research assessment exercise report, which discussed
this very subject, was the extent to which the policy on variable
tuition fees would compound and exaggerate those effects on science
departments. How does that change also square with the policy
on variable tuition fees and introducing the market more explicitly
into universities?
Dr Howells: It goes back to an
answer I gave earlier, which is about how we inspire young people
to want to do science and engineering, and how it might be possible
to raise the application levels for those kinds of subjects in
universities, including those universities which receive the most
science research money. That is the main issue there. The variable
tuition fee of course has not come simply as an increase in that
fee; it has come together with a very, very good funding package.
When I took this job on five weeks ago and started to look at
it—we have a very distinguished member of the Treasury here,
and I thought that this must have been a difficult thing to get
past the Treasury because there are no up-front tuition fees;
you can borrow—
Q197 Chairman: Let us not get back
into it. It saddens me, of course!
Dr Howells: Mr Chairman, this
is a very important answer to this question because there is an
assumption—
Q198 Chairman: Go on then. Be quick!
Dr Howells: No, it needs answering.
There is an assumption that somehow variable tuition fees will
put people off studying science. I do not follow that at all.
In fact, I think the new funding arrangement will encourage people
to study subjects because they will have much more confidence
that they can handle that loan and those repayment terms, than
they have with the present one, which I have to say I was the
Minister who brought it in.
Lord Sainsbury of Turville: You
will have noticed in the Financial Times this morning the
survey of universities, responding much more to trying to have
vocational courses because of the pressures coming on them from
students, who are now looking more seriously at the jobs which
will follow on. This has always seemed to me one of the likelihoods
which would come from that. I think that will act towards science
and technology because it will be seen that these are useful skills
to have in the world outside.
Q199 Dr Iddon: I would have thought
you would get plenty of support on this Committee, Kim, for trying
to keep important departments open throughout the regions in the
country, which is what we are largely discussing. How can you
square that with the research assessment exercise, which is pulling
in the opposite direction; and with the independence of vice chancellors
and academic freedom in general across universities? Take Swansea,
for example, where we are having great difficulty persuading any
vice chancellor in Wales to keep a department of chemistry with
two qualities of excellence open.
Dr Howells: Yes, we certainly
need to be very assiduous in making sure that we are aware of
those trends and what universities want to do in terms of departments
like chemistry, physics and engineering, absolutely. When I started
reading for this and read what I think is the tremendous report
that has come out of this Committee, the Research Assessment Exercise,
re-assessment, it struck me that we have still got a very considerable
spread of research in this country. It looks sometimes as if it
is skewed towards the south and the east, but if one looks at
the collaborative research that is going on, and very much the
applications of that research, then it has a much more equitable
spread across the country. You may know, Dr Iddon, better than
I, but I do not think there is a region in the country that has
not got a first-class research—or a university that is up
there in the top 16 or 17 in terms of the amount of research money
it receives. I think that is very encouraging. What it does mean—and
you have put your finger on a very important point—is that
all of our higher education institutions have to think very much
about collaborating with each other and co-operating in order
to maintain that degree of high-quality research in all the regions
of this country.
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