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24 Jan 2007 : Column 487WH—continued

Dr. Gibson: My hon. Friend has also had a mouthful of acid in his time, or alkaline. I welcome the fact that many of us, in our professional lives, have been through
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the process of doing things in different ways and saying, “Gosh, why didn’t we do that?”, “How did that idea come about?” and “Why didn’t we develop that?” The world is like that, and we should welcome and encourage such activity. No one mouths pipettes any more; there are now good instruments to suck things up accurately without the need for that. People may wonder why that was not possible before, and there is a real issue about how we get innovation into our world.

New challenges arise. My right hon. Friend the Prime Minister has said in relation to information technology and computers that we need new ways of doing things, so that there is interaction between Departments—so that the press of a button suddenly acknowledges the fact that people have similar problems and they can interact and make things happen that did not happen before. We are encouraging new technology in that respect and making that happen. My hon. Friend the Minister and the rest of us will acknowledge how very difficult it is to make it happen. We want to ensure that the environment and the circumstances are right, so that we can interchange such information.

The health service provides an example. I have had reports and I am very grateful to the many people who have put ideas to me about health services and whether we are innovating to the extent that we should be. An organisation representing the pharmaceutical industry has said, “We’re not really up to what they do in America.” There are criticisms, under the surface, of doing things better. I think that, in relation to innovation, we always have to admit that there might be another way of doing it and we ought to encourage people or individuals to think about that. I shall talk about the processes involved in how it might happen.

I am also very grateful to the Design Society, which says, “It’s great to have new products, but why do we not think of design at the same time?” It says, “It’s great having a wine glass that’s a certain shape, but how do we design that shape?” It is not just a question of functionality or of having something that we can put something in—things have to look good too. The process is a matter not just of designing the product, but of designing it well, and I shall talk later about countries such as Finland, which have taken up that major issue. I am grateful to the Design Society for saying what it has.

I am also grateful to the Royal Society of Chemistry for saying that innovation is important in its world. Indeed, it has produced documents to show the interaction that takes place not only in Britain—I shall talk in a second about who interacts in this country—but across Europe and the world. The excitement of chemistry—or whatever the science involved—and of developing new products in the light of what people do or do not know is important. That is all part of the innovatory process.

I have combed the DTI website, and it really is hard work to get through the initiatives that the Department employs to handle some of the problems. Before I come to that, however, let me say that, underlying all this innovation, is the post-neoclassical endogenous growth theory. Hon. Members may not instinctively understand the connection, so let me explain it briefly—besides talking about the Norwich football team, the Economic Secretary to the Treasury and I
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spend hours discussing post-neoclassical endogenous growth theory at Carrow Road football ground.

Speaking of the theory, Michael Heseltine, who was a right hon. Member of this House at one time, said:

Hon. Members will remember that clever quote. The theory, which took over from neoclassical theory, was an attempt to engage with the origin of growth and ideas and to see how we could make the economy grow. It required that policies had a long-run growth rate in the economy and did not engage aggregate savings. It saw subsidies for research and development and for education increasing the growth rate in an endogenous way by—this is the main point for our debate—increasing the incentive to innovate. That amazing idea, which linked those areas with the economy, is now pervasive in the Treasury.

Of course, there are many critics of that theory. One of its failings is that it does not explain non-convergence and why some countries are much richer than others. Exogenous growth theory explains the income divergence between the developing and developed worlds, but post-neoclassical endogenous growth theory has still not come to terms with that divergence. However, that is a bit beyond the scope of this debate, although it is fine for Oxford, Cambridge and other places to debate it. I simply make the point that innovation is all part of the theory, and we should remember that when serious politicians talk about innovation.

I am very interested in the DTI’s point of view because it has published much serious work on this issue. I have been reading its work—letter by letter, page by page—since its 2003 report. I pay credit to those who produced that report, and some of them are probably surreptitiously in the room. They have seen that innovation is very much part of developing business and markets and that it provides the products. They have also seen that we need to invest in research and to have a knowledge-based economy. All those phrases fit together around the word “innovation”. I agree with the DTI that Britain is much more innovative than it is has ever been. The report shows how many graduates there are in different parts of the country and it makes it clear that university education plays into and encourages innovation, with university degrees promoting innovative, active enterprises.

Of course, universities are supposed to interact with business, but there is a problem there. I have looked at the report, and elements of that interaction are beginning to take place. However, the academic people to whom I talk despise business; they believe that working with it amounts to getting their hands dirty and that they should not get involved with it. I am old enough to remember a culture in which Nobel prizes were the thing—indeed, they still are in many places—but there has been a sudden change in that culture. People are saying to themselves, “Maybe this thing we are doing in the laboratory is marketable.” That idea has suddenly taken hold among some people, but it is not pervasive enough. Many of us in the room have worked in laboratories, and we must have done something innovative every day of our lives when carrying out experimentation, collecting data and
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managing things. We did not write those things up in academic papers, but they were always clever little things. I remember people saying, “That’s a clever way to do it. Why did you think of that?” and someone else saying, “It just seemed natural.” However, people did not think that such things were marketable and patentable or that what was going on would improve the process.

Things are better now, however, and there are more patents; indeed, that is one way of measuring innovation, but it is not the only way. On this small island of ours, there are thousands of people doing smart things all the time in their jobs. I am talking not just about the academic elite, but about the financial quarter and the health service. People are not doing anything formal, but they are making a difference to how things are measured. However, they do not even know or care that they are being innovative, and that is the problem. The DTI is talking about innovation and is trying to measure it, but the problem is how we get to the reality to see what is happening out there and what people are doing.

Mr. Phil Willis (Harrogate and Knaresborough) (LD): Perhaps I could bring the hon. Gentleman back to his post-neoclassical endogenous growth theory and his point about universities.

Dr. Gibson: I wish that the hon. Gentleman would not.

Mr. Willis: Well, I think that the hon. Gentleman is making an incredibly important point. Will he comment on the disincentives to universities becoming involved in knowledge transfer and translational research, because the underpinning grant system goes in the opposite direction from encouraging such involvement? Universities see citations and publications as a way to assess the quality of their research work and get the next set of grants, but translational research and knowledge transfer do not attract the academic kudos that impresses the research councils and gets the money. Post-neoclassical endogenous growth theory suggests that we have to put in resources to innovate, but that does not seem to be happening, or have I made a false assessment?

Dr. Gibson: No, I absolutely agree and I thank the hon. Gentleman for that contribution. In general, that is what happens. Of course, we can all point to areas in which people have discovered things and made things happen. The previous Minister of Science staked his money on us putting all our energies into ensuring that universities developed small spin-out companies, and that happened in places such as Manchester, Oxford and Cambridge. However, I can mention other places where that was not the priority for the university department. Instead, the priority was the research assessment exercise and getting money in to do anything at all. That culture is still pervasive in our country, and there is still a research exercise.

I mentioned all the little things that people do to measure and understand things, and they do some crazy things to take measurements or get things designed, such as going to the workshop and so on. However, that was not really encouraged, and those people did not get any awards as a result of research
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assessment exercise. As I shall say in a minute, research councils are now trying to interact to develop a different culture. However, they are blowing in the wind, because many of the young people I meet have been brought up in a different culture and would never work for industry. Now I think it is good that they do not all work for industry and that there is blue-skies research, of course, in which brains ask silly questions and do silly things—which come off. However, at the same time we need to foster a culture in our universities and institutions in which people consider whether what they do might be valuable for other people.

Mr. Willis rose—

Mr. Peter Atkinson (in the Chair): Order. Before the hon. Gentleman intervenes, I ask that interventions be short. The clock is ticking and if hon. Members want to contribute they will have to keep an eye on it.

Mr. Willis: I recognised, Mr. Atkinson, that I will not get to speak, so I wanted to make a couple of interventions on the hon. Gentleman, in the hope of contributing to the debate.

Does the hon. Gentleman accept that to have true innovation we must maintain a level of basic science—certainly at the present level, although I would argue that we must enhance it significantly really to take advantage of the opportunity for translational work and innovation? As to the hon. Gentleman’s last comments, how does he feel about the research councils putting so-called business experts on their panels, to judge some of the applications for research grants on their innovative aspects? Does that worry him?

Dr. Gibson: Yes, that has worried me. It has always happened, actually, that research councils have included business people on those panels. It worries me in relation to the interaction between those people and the more pure academics and their research. I am describing a world in which opinion diverges on what is important. If that is also reflected in the relevant committee it does UK plc and the development of innovation no good. I shall say something about the training of young people, and the science plan, in a moment.

The DTI report, with all the pie charts, does not just deal with science and technology, but goes into the creative industries as well. There is a report by the National Endowment for Science, Technology and the Arts showing clearly that on this small island we underestimate the true innovation that happens in hospitals and health, in design and in the creative industries. Those creative industries are advertising, architecture, the art and antiques markets, leisure software, publishing software, computer games, films and video—and I could go on. There is more innovation than we know about in those industries, and I challenge the DTI on whether it knows about it, and on what it is doing about it. I may have revolutionary things to say about how we can change the DTI to bring out some of the ideas. As in the case of the Home Office, there may be too many functions in one big building down the road. We may need to take that on.

We can consider why some businesses, as the report states, do not innovate. I know people who do not know their regional development agency and do not care. They do not think that they have to innovate,
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because “we are doing all right”: the profits are up, and so on. That is how they measure success. That is not success. In this competitive world businesses must keep moving, or things will crowd in on them.

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): I congratulate my hon. Friend on securing the debate. He talks about business success, but does he agree that courses on innovation are one avenue we could pursue, which the Minister should perhaps consider? We should be looking to universities to train people or enable them to educate themselves on that topic. That happens in other countries, but not necessarily here. That might train the scientists, engineers and other people about whom my hon. Friend talks, to stretch out further and take opportunities to innovate and make things happen.

Dr. Gibson: As someone who has spent a lot of time trying to teach people ideas, I should say that the best ideas have in many ways always come spontaneously. What is necessary is to set up an environment, not just in universities and institutions, but in schools, so that young people can say, “Let me do this; let me try to find out about this,” and suddenly there is the explosion of an idea. I am not sure that it is possible to structure that in the same way as is relevant to other kinds of success.

This island has produced so many good people. I was at a Scottish night—and shall be at another one tonight—where the Scots always talk about Simpson, who invented chloroform, and about Kirkpatrick Macmillan and the bicycle, and so on. How did all those inventions and ideas come about? The environment might have been dominated by poverty and might have been excited by a grant from a research council—although there were no research councils in those days; but we can never know how we get bright ideas to emerge. We need to create the environment and encourage them. My major criticism of school teaching is that young people are not allowed, in the sciences, technology and engineering, to do experimentation. There is a point where someone knows how to find out about things and test them, and how, when a bad result is produced, to try again and learn from it, perhaps getting a good result. We all have experience of seeing people trying and trying again, to explain what happens.

I take my hat off to such people as David Attenborough for his series “Blue Planet” and other work. We hear the simplistic view that it is only about the natural world, and is not real science. However, he has excited a generation to ask questions such as “Why do wildebeest charge into a river full of crocodiles? What a mad thing to do; haven’t they learned through evolution?” We can think up explanations, but such things excite people and stimulate their imagination. If that does not happen we do not have civilisation. That is what is lacking in much of our training in schools.

Cambridge university can run entrepreneurship courses, but in the end does it stultify real creativity? I am not sure. I am very aware of the Massachusetts Institute of Technology-Cambridge course that would involve people from MIT working with people in Cambridge; it was going to be wonderful, with great ideas and innovation. I do not know how that works, really. There has been a rough passage for the
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administration, but nothing has really emerged from it. That is the point. Innovation does not just happen tomorrow. It is an environment that is created, so that results emerge over a period of time. I remember the discovery of DNA, published in a simple little paper. Gosh, what a discovery that model was—published in a paper that I should probably have thrown out if I had reviewed it, because there were not enough data; it was an idea. Nevertheless, it really excited people to do other experiments.

The DTI, and the way in which it accepts science and technology, is important. We have a very important plan. I was so excited about the 10-year plan, for the years 2004 to 2014. It was a real move forward. We have all studied it and we all welcome it, but we want to make it happen, because if it does not, we shall fail. We must take the science and technology part of the innovation process seriously. I have said something about what we can do about education. It is appalling that many of our brightest young brains will not go into science and technology because of terrible contracts and because there is no future or encouragement for them. We would say that that is not true, and that they will get more money as PhDs. However, that is not how they feel. They do not see that world as a welcoming place in which to use their creativity and brains. The scientific world is not about Isaac Newton any more, or people with money; it is about young people who get married and want mortgages. We must engage with that to make sure that they are excited. They are excited by science, and are enthusiastic, but we must make things happen.

We need a strong supply of scientists, engineers and technologists; that is explicit in the plan. How do we make it happen? If we do not make it happen soon, we shall lose out. It is not just a question of the current generation. We are brilliant at science. We do very well, winning our Nobel prizes and all that. However, we must keep the next generation, who are coming up fast, in the game. It does not help when we close chemistry and physics departments, because—the Royal Society of Chemistry has been very active in this respect—it is necessary to understand how to make chemistry and physics part of the innovatory process. Chemistry is valuable not just for its own sake; it is part of developing a culture, society and civilisation, and an industry that can compete with the best of the world. I am never sure whether we are really in the shadow of the United States—perhaps the figures show that we are—but some of the Americans’ ideas have come out of collaboration with people in Britain. We need much more of that kind of interaction.

We have talked about research and development, in relation to the DTI document, how we have increased it, our ambitions for it in terms of gross domestic product percentage and how we are making that happen. We must continue to do that, but we have to think about which industries we are talking about. Is it only science-based industry or any industry? How do we make that kind of thing really happen? Do industries talk together?

We have talked about universities and business. There is a huge culture gap between university and businesses. We still have a culture, although not 100 per
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cent., of failing to make that interaction happen. People will say that there have been spin-off companies in Oxford and Cambridge and so on. There are thousands of chemistry and other students out there who have great ideas that could be taken up in the right environment and developed into some new product, if that is how we measure these things, or some new way of doing things.

The NESTA document, which is quite revolutionary in some ways, has clearly shown that we measure innovation in funny ways. We measure it in a pipeline way about research and development and pharmaceutical companies. Other companies innovate all the time—indeed, we all do. If the US ambassador thinks he innovates, I am sure that people here innovate in the way in which they handle their finances. The financial sector innovates all the time. We can argue about whether it is advantageous for people like us, but they are always changing things and looking for new ways of doing things.

There are interesting ideas in design and architecture. Our way of measuring innovation varies from one industry to another. I have a whole list of ways in which it is measured. The success of science in Britain used to be measured by the number of spin-off companies we had, and we sat back and said, “Wow, aren’t we doing well?” That is just one way of measuring innovation. Another issue to consider is whether those spin-off companies carry on. Do they become big companies or do they just fall? Is it a couple of guys at Cambridge who met in a pub and had a good idea about injecting someone in a certain way with a new drug and then that is the end of it—they make a million and retire to the south of France? That is innovation, but not continuous innovation. It does not stimulate other things.

There are other ways in which people can measure innovation, such as through the market share, brand value and customer satisfaction. It varies between sectors. It is no use saying that something has grown by 15 per cent. if the world market on which it competes has grown by 60 per cent., because that means that we are still behind in the game.

Many people are still researching this field. I know a lot of them and it can go on for ever. Somewhere it has to stop. They talk about knowledge spilling over from one organisation to another, and do I know it in Norwich. We have several networks there that are trying to shape the Norfolk future—and, wow, does it excite me when I go to their meetings! There is not much innovation there; it is all about playing administrative games. There is a Norfolk network of young people that is much more imaginative, but that cannot make things happen because local regional development agency money is not there for them.

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