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10. Mr. Edward O'Hara (Knowsley South) (Lab): What assessment he has made of the plans of the Administration in northern Cyprus to develop land in Morphou belonging to Greek Cypriots displaced in the 1974 invasion; and if he will make a statement. [49009]

The Minister for Europe (Mr. Douglas Alexander): We are aware of construction plans in the Morphou district. Although we maintain a dialogue with the Turkish Cypriots on all aspects of the Cyprus settlement, we cannot control property development in the north. The many difficult and complex property issues in Cyprus are likely to be resolved only as part of a comprehensive settlement.

Mr. O'Hara: If the land legally belongs to Greek Cypriot refugees, who were forcibly displaced by the Turkish army in 1974, in terms of international law and human rights, it is illegal and immoral for it to be disposed of in that way. What possible positive contribution can such action make towards finding a solution, which we all desire, to the Cyprus problem? Will my right hon. Friend use all his influence to dissuade the illegal Administration in occupied Cyprus from proceeding with those measures?

Mr. Alexander: I reiterate that we are not in a position to control property development in the north but I agree with my hon. Friend that the status quo is bad for Cyprus, the region and the European Union. That is why my right hon. Friend the Foreign Secretary travelled to the island in recent days to try to give impetus to finding a way forward.
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Procurement of Innovative Technologies and Research

3.32 pm

Kitty Ussher (Burnley) (Lab): I beg to move,

By being in the House this afternoon, I am missing the funeral of a Labour party colleague and friend, Alan Daiches. Although I am here in body, my thoughts and prayers are with him, his friends and family, in my constituency.

In his Budget statement last year, the Chancellor made the welcome announcement that all Departments would be mandated to spend 2.5 per cent. of their external research budgets with small and medium-sized companies. That is important because it enables high-tech, science-based start-up companies, which venture capitalists often perceive as too risky, to trial their new ideas in the security of a 100 per cent. funded Government contract. It is good for manufacturing because many of those companies become the manufacturing success stories of the future. As a member of Amicus, I welcome that. It is good for the taxpayer because it will help us to use the latest technologies in this country's universities and business parks to find smarter new methods of solving public policy problems. As a member of the Public Accounts Committee, I welcome that, too. Indeed, I hope that high-tech incubator units, such as the digital technology centre in my constituency, may benefit from the measure.

The Chancellor's announcement represented a victory for a group of business people, scientists, venture capitalists and academics, who were admirably led in the House by Anne Campbell, the then Member for Cambridge, and outside by the venture capitalist David Connell. I congratulate them both on their achievements.

The Bill would enshrine the Chancellor's commitment in law. It would make it not only mandatory for Departments to spend at least 2.5 per cent. of their external research budgets on smaller companies, but illegal for them not to do that.

It is my firm belief that, without a change in the law, the commitment given by my right hon. Friend the Chancellor is unlikely to be translated into reality. That belief is shared by the 13 distinguished academics, scientists and entrepreneurs who signed a letter to that effect in the Financial Times on 19 October last year, and by the 80 Members of this House who signed the associated early-day motion 799.

We need a change in the law because the co-ordination required by the Whitehall machine is simply too great. The Department of Trade and Industry's Small Business Service does not have sufficient clout over the big research Departments to push through change. Even if it did, there would be no way to ensure that Ministers in those research Departments regarded change as a priority.

My confidence in the current system has not been bolstered by the fact that it is coming up to a year since my right hon. Friend the Chancellor's announcement,
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and details of how the new scheme will work are still sketchy. In America, by way of contrast, a policy similar to the one that I propose was enshrined in legislation in 1982, and enhanced a decade later. The results have been astounding. Despite the target of 2.5 per cent., 13 per cent. of all federal Government research and development contracts—worth over $5 billion—now end up with small businesses. The average award is far greater than anything routinely on offer in this country.

The system in America is carefully designed to help small companies take the first step on the Government procurement ladder. They are encouraged to retain and, indeed, exploit their intellectual property, which means that they often go on to create larger companies. For example, large US firms, such as the biotech companies Amgen and Genzyme and the communications giant Qualcomm, employ 30,000 American people between them, but they began as recipients of small business innovation research awards from the American Government. In 1999, the US Congress concluded that the renewal of the programme would


My Bill aims to replicate the American experience in this country. Specifically, it will set up a process through which, by law, Government Departments will, at twice-yearly intervals and over the web, define their requirements for innovative new technologies. Small businesses would then be invited to bid for innovation contracts of up to £500,000 in value to develop and trial technologies capable of meeting those requirements. Unlike elsewhere in Government, the procurement process would be streamlined, standardised and rapid.

Without such measures, we are already losing talent and ideas, and therefore jobs and wealth. For example, the scientist Dr. Helen Lee developed in Britain a simple new diagnostic test for HIV and hepatitis, but decided to commercialise it in the US, specifically because of the availability of SBIR grants and awards. She took five people from Cambridge with her to America to help with the process. However, Teraview—widely recognised as the world's leading company in terahertz imaging—decided to stick to the existing system here. It took two years for the company to get a contract out of the UK Government, and that lost it time and money. In addition, all hon. Members have constituency stories of bright new start-up companies that fear that trading with the Government will cause them to lose their intellectual property.

In conclusion, I urge Ministers to be vigilant in the operation of our policy and to ensure, with legislation where necessary, that it is as successful in every respect as the American model. Our manufacturing companies, jobs and future prosperity will benefit from that success, and so will the taxpayer.

I thank the House for its courtesy in listening to my speech this afternoon.

Question put and agreed to.

Bill ordered to be brought in by Kitty Ussher, Danny Alexander, Janet Anderson, Mr. Michael Clapham, Rosie Cooper, Mary Creagh, Mrs. Claire Curtis-Thomas, Paul Flynn, Mr. Shahid Malik, Andrew Miller, Mr. Austin Mitchell and Mr. Edward Vaizey.
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Procurement of Innovative Technologies and Research

Kitty Ussher accordingly presented a Bill to make provision in relation to the awarding by Government Departments and agencies of research and development contracts for innovative technologies; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 3 March, and to be printed [Bill 125].

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Opposition Day

[13th Allotted Day]

Mental Health Services

Mr. Speaker: I wish to inform the House that I have selected the amendment in the name of the Prime Minister.

3.40 pm

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