The Minister for Science and Innovation (Malcolm Wicks): I beg to move,

The Chairman: With this it will be convenient to consider the draft Technology Strategy Board Order 2007.

Malcolm Wicks: It is a pleasure, Mr. O’Hara, to serve under your chairmanship.

In a competitive global economy, innovation and the successful exploitation of creative ideas is increasingly necessary to ensure business success, productivity and long-term economic growth. United Kingdom business is often criticised for its failure to develop and to exploit technology and new ideas to the full, although I believe that that criticism is increasingly outdated. The Technology Strategy Board Order will help to address that problem; and the Science and Technology Facilities Council Order will create a research council equipped to manage the provision of research facilities in the emerging international environment for more large, long-term projects and to ensure the successful transfer of knowledge from those facilities.

The orders establish new research councils under the Science and Technology Act 1965. The Act requires a draft of the Orders in Council, declaring the Technology Strategy Board and the Science and Technology Facilities Council to be research councils and specifying the new bodies’ objectives, to be laid before Parliament and approved by resolution of each House. The draft royal charters under which each new body will be incorporated have been placed in the Library to provide a background to our debate.

The Technology Strategy Board Order will establish the Technology Strategy Board. Its operational approach, however, will be very different from the research councils already created under that Act, in that it will have a strong business focus. The present Technology Strategy Board has made an impressive start as an advisory body. Since October 2004, it has advised the Secretary of State for Trade and Industry on business research, technology and innovation priorities for the UK, the allocation of funding for those priorities, and the most appropriate ways to support them. The board has been instrumental in the success of the Government’s technology programme. Indeed, more than 600 projects have been supported, mobilising more than £900 million, which has been devoted to research and development in many areas of the economy.

The Secretary of State announced to Parliament on 1 November that the best way to build on the success of the current board and to ensure that the programme of technology support continues to be delivered efficiently and effectively was to create a new Technology Strategy Board as an executive arm’s length body. Its primary location will be in Swindon. The new body will work closely with Ministers in achieving its objectives. It will promote and support research into and the development and exploitation of science and technology and new ideas for the benefit of business, in order to increase economic growth and to improve the quality of life in the UK through the delivery of key products and services, as agreed with the Secretary of State.

The new body will have executive responsibility for delivering Government financial support for programmes to encourage business investment and the use of technology across all sectors of the economy. That will include continuing support for collaborative research and development for business investment and the use of technology in manufacturing and the service industries. The aim will be to increase innovation in sectors in which the UK economy is strong, the development of new sectors through the creation and growth of research and development in intensive small and medium-sized enterprises, and support for the use of technology in areas important to the future of existing and emerging sectors in the UK.

The Technology Strategy Board will also support knowledge transfer networks—national overarching networks that aim to improve the UK’s innovative performance by increasing the breadth and depth of knowledge of transfer technology into UK-based businesses. The establishment of the new body will provide improved strategic focus, better operational flexibility and greater consistency and coherence in the delivery of the Government’s programme of technology support. The new body will be business focused, with a business-led board. It will work closely with Departments, agencies, the devolved Administrations, the regional development agencies and the research councils. It will collaborate with those bodies and business on technological developments and innovation of importance to the UK and to Government procurement.

A key role of the new body will be to support close working between Government and business in developing and exploiting new technologies through its programmes. In its advisory role, the new body will alert Government to areas in which barriers exist to the exploitation of new technologies, and may be asked to make recommendations on how those barriers can be removed, but responsibility for the overall direction of innovation policy will remain with Ministers.

These proposals were subject to an informal consultation in the middle of this year and received wide support from key stakeholders, including the devolved Administrations, the regional development agencies and the CBI. There was general support for delivery of the board’s remit at arm’s length from central Government. It was felt that an arm’s length relationship would provide a stronger focus and greater effectiveness in delivery, and clearer accountabilities for performance. Stakeholders also believed that such a relationship would enhance the influence of the Technology Strategy Board across Government.

Graham Spittle, the present chair of the Technology Strategy Board, has agreed to chair the new body. That will help to ensure that the successful work of the board is carried forward through the transition period. Mr. Spittle has a tremendous record of driving innovation in business, and I greatly appreciate the leadership that he has provided to the board in his current role.

All contracts, assets and liabilities to be transferred from the Department of Trade and Industry to the new Technology Strategy Board will be transferred under a further order made under the Science and Technology Act 1965 under the negative resolution procedure. I expect the new body to be formally inaugurated in the first half of the 2007-08 financial year.

The purpose of the Science and Technology Facilities Council Order is to establish a new research council under the 1965 Act. The aim of the new council will be to create a more integrated approach to large scientific research facilities, including in international negotiations for long-term projects involving several countries acting together; to obtain more value from the knowledge and technologies developed as a result of the new council’s programmes; and to deliver both those goals using the two science and innovation campuses at Harwell and Daresbury as identifiable knowledge transfer centres that host UK-based large-scale international facilities.

The new council will be created by a merger of the activities of the Council for the Central Laboratory of the Research Councils and the Particle Physics and Astronomy Research Council, and by the transfer to it of the nuclear physics research activities of the Engineering and Physical Sciences Research Council. The proposed objects will give the council the scope to carry out those activities. The proposals to create such a council were subject to a public consultation following the 2006 Budget.

Professor Keith Mason, the present chief executive of the PPARC, has been appointed chief executive designate of the proposed new council and is leading the necessary transition work at the council. I am grateful for the leadership that he is providing. All the staff, assets and liabilities would be transferred from the existing councils to the Science and Technology Facilities Council under a further order made under the 1965 Act, using the negative resolution procedure. It is planned that the council will start its work on 1 April 2007. I commend both these orders to the Committee.

Charles Hendry (Wealden) (Con): I welcome you to the Chair, Mr. O’Hara, and the Minister to his new role and responsibilities. There was a sense at DTI questions last week that not a huge amount had moved on and he was still covering all of his previous energy brief as well as his new ones, but we wish him well in his new role. If he brings to his science role the same diligence and commitment as he brought to his energy brief, it will be a very good contribution indeed.

We welcome both orders. We certainly welcome the new Technology Strategy Board. As we have heard, that will be responsible for allocating hundreds of millions of pounds of public money. It is essential that that money is allocated wisely and with minimum waste. We acknowledge the importance of innovation across all sectors. The new board will specifically include the service sectors as well as the manufacturing sector. That is particularly welcome, because it is imperative that we meet the challenges of globalisation by building a strong knowledge economy.

However, last week it was reported that the board of 10 people for the Commission for Equality and Human Rights appointed by the Secretary of State for Communities and Local Government will contain four Labour party supporters. We also learnt that five of the 10 members of the Big Lottery Fund board, appointed by the Secretary of State for Culture, Media and Sport, are also Labour party members.

Mr. Kevan Jones (North Durham) (Lab): Quite right.

Charles Hendry: The hon. Gentleman says, “Quite right”, but there are many awkward people who seek political neutrality and impartiality in such important appointments, even if that view is not shared by members of the governing party. Will the Minister assure us that when new members are appointed to the Technology Strategy Board that will be based on their technological and business expertise rather than their party allegiance?

Will the Minister go further and clarify for us how members will be appointed to the new board and who will be responsible for making those decisions? Will he tell us how the new body will work with the European Institute of Technology and how their work will be combined to best effect? How much emphasis, if any, will the new body place on the big challenges that we face, such as climate change and new cleaner energy sources? Will the way in which the new body allocates research grants change in any way? If so, will the Minister explain how that will happen and what the effects of the change will be?

To turn to the Science and Technology Facilities Council Order, we generally welcome an integrated approach to research councils, and we can see the potential benefits of bringing together the work of the Particle Physics and Astronomy Research Council, the Council for the Central Laboratory of the Research Councils and the nuclear physics work of the Engineering and Physical Sciences Research Council. Merging those bodies will hopefully make it easier for research to be shared and not to be duplicated and it will also improve the ability to take advantage of some international opportunities, as the Minister has mentioned. Will he advise the Committee of the reactions of the three councils involved to the proposed merger and on whether they have all been absolutely in favour of the change?

I am aware that the Government’s record of merging organisations sometimes leaves quite a lot to be desired—in the case of Natural England, for example. The new council will have a budget of some £530 million a year and is expected to employ more than 2,000 staff. It is important that the money is spent in the most cost-effective way and that none is wasted by an increase in bureaucracy. The regulatory impact assessment states that the transitional costs of the changes will be from within the existing budgets, but then states

What assessment have the Government made of the exact costs of merging those bodies and what does the word “modest” mean in this case?

I am sure that the Minister is aware that when the Equality Bill was being debated last year, there were a lot of discussions about the cost of setting up the Commission for Equality and Human Rights, which merged only three bodies—the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission. At the time, the total cost of merging those three bodies was estimated at £24 million. The Science and Technology Facilities Council will merge four bodies. Does the Minister expect the transitional costs to be more than the£24 million involved in setting up the Commission for Equality and Human Rights?

What assessment have the Government carried out of the effect that the cost will have on the research work being carried out by the existing councils? The regulatory impact assessment claims that there will be savings made in administration, but will those savings be used to increase the funding for research grants, or will the money be returned to the Treasury? Finally, the appointments panel for the Science and Technology Facilities Council was looking for six part-time members of the council. Applications closed on 8 December. Will the new appointments increase the council’s total running costs and, if so, will their salaries be funded by the Treasury or the councils’ existing budgets? Apart from those few questions, we support both orders.

Dr. Evan Harris (Oxford, West and Abingdon) (LD): I share the welcome given by the Minister and the hon. Member for Wealden, who speaks for the Conservatives, to you as Chairman, Mr. O’Hara. I assume that you chose to chair this Committee—or were chosen—because of your ability to deal with issues to do with nuclear physics. I want, too, to welcome the Minister for Science and Innovation, as this is the first opportunity that I have had to welcome him to his new role. It is a great pleasure to have a Minister for Science and Innovation in the House of Commons. His predecessor was well regarded and rightly so, but one of the few drawbacks was that he was stuck in the other place. I welcome the opportunity to hold such Committees with a Minister whose portfolio covers the policy exactly.

I am pleased to see my hon. Friend the Member for Harrogate and Knaresborough, who chairs the Select Committee on Science and Technology. He asked me to pass on to you before his arrival, Mr. O’Hara, the fact that he was held up by engineering failures in the railway system, and he may say a little more about that if he catches your eye. He might also have something specific to say about the proposals, because the Science and Technology Committee, on which I serve under his chairmanship, is conducting an inquiry into space. Space is obviously an issue for PPARC, which is one of the research councils involved in the merger, and which has recently conducted an inquiry into knowledge transfer. The job of the Technology Strategy Board, in its former existence, was to perform part of that scrutiny role, so my hon. Friend may wish to say a word or two about those matters.

I have a couple of questions about the Technology Strategy Board Order. My party and I do not oppose the move. We understand the motives for it and see where it is coming from, as the Minister set out in his opening remarks. However, I should like to ask a few questions for clarification. Will the new research council’s funds come from the DTI in the normal way, or is there any likelihood of money that had been allocated to other research councils through the Office of Science and Innovation and Research Councils UK being transferred to the new body, if the Government felt that the other research councils were not doing enough to meet the Government priority of knowledge transfer and innovation? A great deal of work is being done in the research councils to ensure that they foster innovation and technology transfer. It would be better if that work were done in that way. There is a keen desire—albeit for understandable reasons—to ensure that more of what is called business-friendly investment of Government funds is taken from funds that might otherwise be headed towards the other research councils. I hope that the Minister can reassure me about that.

I should also be interested to know in what way the Minister feels the change to an executive agency at arm’s length meets the objectives that he has set out, as the policy background, in the regulatory impact assessment. For example, he talks about the need to increase innovation and to create new sectors, but it would be interesting to know what he feels is likely to happen within the new structure that currently does not happen as much as it might. He talked about the new arrangements allowing the Technology Strategy Board to have a stronger focus, and greater accountability and influence across Government, but it would be helpful if he could explain why he thinks that is the case, because that could enable us to suggest where the same thing might apply elsewhere in the DTI, or indeed in other Departments.

The Minister talked about the success of the Technology Strategy Board. I shall not argue with that judgment, but when Ministers assert that a body or a policy has been successful, particularly where science is involved, they should set out on what basis they view it as a success, in either its current form or the new form. I accept that the Technology Strategy Board is well regarded, but that is a qualitative view rather than a quantitative one. Perhaps the Minister could clarify whether there are any performance measures or targets that he will expect the agency to meet, and how they will be subjected to monitoring. For example—this is relatively quantitative—he talked about the fact that the Technology Strategy Board had been able to mobilise, from a smaller budget, around £900 million of resource for research. The supporting documents for the measure refer to around £750 million. I do not know why those two figures differ by £150 million, but if that is the sort of performance measure that will be looked at, it would be useful if the Minister could confirm whether the criteria are set out clearly somewhere, so that there is accountability within the mechanism for setting measures for performance.

The Minister talked about the board being business focused and led. Can he clarify exactly what he means by that? I understand the difference between business focused and purely research focused, but I am trying to establish what he specifically means by that term? Is he saying that the board has or will have a majority of people with business experience, or will business experience be a requisite for everyone serving on the board? If there are, as I imagine there will be, people with plenty of business experience on the board and people who are, indeed, still active in business, can the Minister clarify what arrangements exist to avoid conflicts of interests? A board such as this will dole out significant amounts of money to a sector where there may be fears of competition. The potential conflicts of interests are obvious and I am sure that there will be robust mechanisms to deal with them, but I would be grateful if the Minister mentioned that issue.

I had the pleasure of visiting the Office of Science and Innovation with my hon. Friend the Member for Harrogate and Knaresborough and other hon. Members, including the hon. Member for Brighton, Kemptown who I see is in his seat. It is certainly true that the Government ‘s chief scientific adviser spoke highly of the work of the Technology Strategy Board and was excited about this move. During those meetings, it was impressed upon us that creating an executive body that is at arm’s length has potential for doing more. I hope that those expectations are realised as we see the board develop.

On the question of accountability, will the Minister clarify how he will ensure that the most appropriate allocations of funding are made from the money that the body has access to? What are the mechanisms, in general terms, for peer review and how will he ensure that we do not end up with an arm’s length body giving the appearance of arm’s length decisions when specific allocations are being made according to what the Government want to see happen? I entirely understand and support what he said about the thrust of Government policy on innovation remaining the responsibility of the Office of Science and Innovation. However, there is a risk for any Government—I am not just picking out this Government—of favouritism and that grants will be awarded on a regional basis or to specific sectors based on favouritism. That would result in a different allocation from one that would come from a purely dispassionate, peer- reviewed analysis of the grant system.

Can the Minister also mention an issue that the DTI has recognised is a concern: the plethora of schemes and systems for allocating money to business support, including in the field of innovation? Part of what the Government are seeking to do is to streamline that system—and not before time. Can he say whether what the board is aiming to do is relevant to ensuring a simple yet effective structure for handing out grants?

In the context of this portfolio, the issues regarding the Science and Technology Facilities Council could not be any more different from those discussed in relation to technology transfer, because much of the work of the council will be long term and, if not literally blue skies research, it will certainly look to the skies. The technology transfer, or the application in business of that research will sometimes not be clear. The Minister will know that there is great concern, generally speaking, as there always has been, about whether there will still be space for true blue skies research without an obvious business application, or whether there will be lower hurdles for grant applications that have a claimed, if not actual, application to industry. I make that comment by way of background. I know that he is aware of that concern, and that he has been keen to reassure people about it—his predecessor certainly was.

My party and I are pleased to welcome the emergence of the Science and Technology Facilities Council. The proposal is rational. Clearly, the Government have listened to the outcome of the consultation and the objections of the science community about the transfer of grant-giving powers from the Particle Physics and Astronomy Research Council to the Engineering and Physical Sciences Research Council, and the resultant separation of grant-giving powers from the facilities. It is important that those who hand out awards understand how facilities can be used to their maximum potential. However, the corollary is a concern that smaller facilities and smaller grant applications will be overlooked by a grant-giving body that is dominated by people used to running big kit and big facilities, and that any application that does not fit in with their mindset might not be viewed as positively as it would have been under PPARC.

PPARC had a university focus that the Council for the Central Laboratory of the Research Councils did not have. It dealt with applications from university departments in a way that CCLRC did not. I am not blaming CCLRC for that, but there is a concern that the new body will not be as understanding as PPARC was of the requirements of universities that apply for grants. Can the Minister not only give reassurance but explain how we will be able to check at a later date how that concern has been met?

There is again a concern about conflict of interest. It will be difficult always to avoid conflicts of interest, or at least the appearance of them, because the people who award the grants will also be running the facilities, and they will have an understandable interest in using those facilities efficiently so that the books balance. Because part of the grant award involves payment for use of facilities, there is a danger that grants that will not involve use of the facilities managed by the new council will be at a disadvantage compared with those under which funding will be recycled through use of the council’s facilities. I hope that the Minister understands that that is not a criticism. It is a concern, and it would be useful if he could put on the record that he is aware of it. I do not require him to say that such a conflict would never arise, but he needs to give some reassurance that people will be on the lookout for a trend in that direction so that it can be identified and dealt with.

Generally speaking, the Government’s reasons—I shall not repeat them—for maximising the potential in this important area of science are most welcome. They have done the right thing by bringing the two bodies together and creating the council, particularly if they can ensure that there are no perverse effects such as I have mentioned. The Minister is aware that, now that we have the facilities and the funding—the funding by this Government has certainly been generous compared with what went before—we must ensure that we have the personnel. I hope that in his new portfolio he is aware of the real concern about a vicious circle: fewer qualified people come out of universities and go into teaching, resulting in a shortage of people who will be able to work in this area in the future. That will affect the long-term viability of UK science. I know that he is engaged on that issue, and I welcome his response to my questions.

Mr. Tobias Ellwood (Bournemouth, East) (Con): It is an honour and a privilege to serve under your chairmanship, Mr. O’Hara. In our statutory instrument Committees, we often learn a little bit about the various Chairmen. I did not realise that you were such an expert in nuclear physics; you will obviously add much value to our debate.