Select Committee on Innovation, Universities, Science and Skills Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)



  Q220  Dr Gibson: Can I come in briefly just to try and get some excitement into the proceedings; this is a bit boring! What has the STFC done in terms of initiatives and new things? What ideas has it got? Something that is challenging and helpful to the nation; what is it doing? It is getting attacked a little but what is it doing really?

  Ian Pearson: There are lots of very positive things but I think the hugely exciting thing will be the Large Hadron Collider coming on-stream in in July. That is a huge bit of kit.

  Professor Sir Keith O'Nions: £700 million UK investment.

  Q221  Dr Gibson: So when will we see the result? Will you be around?

  Ian Pearson: It will be starting its full operation in July this year, is my understanding.

  Professor Sir Keith O'Nions: For a bit of excitement, it is the biggest international physics experiment ever; and the questions that are addressed, if you are interested in fundamental particle physics and cosmology, are amongst the profound questions in field theory that exist, so boy is that exciting!

  Chairman: Right, we have had our bit of excitement, we cannot cope with any more.

  Dr Turner: The answer is 42!

  Q222  Dr Blackman-Woods: Sorry to bring you back to the mundane but I think this issue of consultation is quite important. How do you account for the fact that so many people in the physics community feel that they were not consulted at all about these cuts or the priorities, if you are saying that the process was fine and was the same as every other research council?

  Professor Sir Keith O'Nions: From where we sit—and that is having personally sat through all the meetings on delivery plans and PowerPoint presentations and we have people attending councils of STFC—although we do not participate in this—we understand that the Science Advisory Council at each stage has been involved, and the normal process with councils and the preparation of their strategic plans is to be feeding information into this. Whether or not we decide to have a closer look at that as we learn the lessons from this, I think is a separate issue, but answering your point, as we were going along, were there massive alarm bells that this council was completely out of order and out of line? I do not think there were, but that does not mean to say we are not obviously going to think quite carefully and see what lessons can be learned from this. I think the rest of that question will have to be addressed to STFC, frankly.

  Q223  Dr Blackman-Woods: Do you intend to look at all at the structure of the STFC Board? It is constructed in a slightly different way from some of the other research councils. It has got ten members, three of them are executive members of the STFC, so there is quite a small representation from the wider academic community compared to some of the other research councils. Is that the sort of thing that you might consider looking at?

  Professor Sir Keith O'Nions: Obviously we looked at the Board quite closely and discussed it at length with Keith Mason when he set it up. The structure that he set up was a rational structure. The sub-board committees and the Independent Advisory Board seemed absolutely right. I believe an announcement was made on Monday and Keith Mason is making very significant structural changes in his management of the STFC. Of course we will take a close interest in that and, as I say, there are lessons to be learned here in slower time. I think when you talk to Keith Mason you will discover that he really is responding and getting a grip on some of these issues.

  Chairman: You will be delighted to know that we are going to move off STFC for a short time and I am going to bring in Gordon Marsden.

  Q224  Mr Marsden: Thank you Chairman. Whether the delight will been unmeasured remains to be seen! Can I ask specifically about the situation with the funding award to the Arts and Humanities Research Council resulting from the overall settlement. Our information tells us that out of the seven research councils, AHRC received the smallest increase, and that was a 12.4% increase, and its share of the science budget fell from 2.8% in 2007-08 to 2.6% in 2010-11. The implications of that, at least initially, are quite severe: they are cutting the post-grad awards from 1,500 to 1,000 in 2008 and over the whole period the fall in awards amounts to a reduction of 19%. I just wonder what sort of message you think that is sending out to the arts and humanities in terms of the overall budget and particularly in terms of inter-disciplinary co-operation?

  Ian Pearson: I will start on this and then Keith may want to say a few words. You are right to say that the Arts and Humanities Research Council received an increase in funding, in actual fact £26.3 million more over the CSR period. I would also point out that the Arts and Humanities Research Council did well in the last Spending Review where its budget increased by 20.5% over the previous three years of SR04. The situation, as Keith outlined earlier, is that AHRC will have received its full economic costing increase and then its budget is probably minus 1%, so it is somewhat of a surprise to me to learn that it is planning to see such a major reduction in the first year in terms of its number of research grants. I will want to enquire why that is the case. When you look at the numbers with the budget going up maybe not as much as it would have liked of course, as with the other research councils, but still a rising budget, you would not necessarily expect to see such a significant reduction.

  Q225  Chairman: What will you do about it if in fact that is confirmed?

  Professor Sir Keith O'Nions: I am similarly perplexed as is the Minister, and we do not know the detail between us. However, when you look at the figures there is an increase in the budget, FEC paid for, otherwise a pretty much flat cash with perhaps a 1% reduction, you would say that overall there will be a small reduction in volume but you would not—

  Q226  Chairman: 500 less PhDs?

  Professor Sir Keith O'Nions: I am looking at the cash. Overall you would expect some small reduction in volume in as much as inflation is not paid for. Would you expect swingeing cuts? No, frankly and I think we do need to understand more. I just hope that this and other research councils are not being so conservative that they are going to underspend, because the biggest single risk that all research councils carry is not overspending, it is underspending. We do not know the details but reductions from 1,500 to 1,000 are not the sort of numbers that we would expect. That is as much explanation as we can offer you; we will take a close interest in it.

  Q227  Mr Marsden: Can I pursue this point, and in fairness to the overall figures, as I say, in the overall figures the reduction is about 20%, but I would agree with you that it does seem rather curious. It would be useful for the Committee to know what the implications of the cuts in these post-graduate awards are going to be particularly for collaborative and inter-disciplinary work across the piece because that is surely something that we ought to be promoting.

  Professor Sir Keith O'Nions: Or even if those are included.

  Q228  Mr Marsden: Or indeed if those are included.

  Ian Pearson: Yes and it may well be the case that because the AHRC is participating in a number of collaborative cross-council programmes and that it is not factoring the awards that are going to be made in those areas into its calculations, so the reduction in volume might not be as much as it seems to be saying in its report to you. I do think that one of the things that we will need to do is to talk to the Arts and Humanities Research Council to understand better their assessment of their priorities and why they are making these decisions.

  Mr Marsden: Through you Chairman, could I therefore ask that when you have been able to do that you might be able to write further to the Committee on this matter. I know my colleague Tim wants to come in on something.

  Q229  Mr Boswell: I have really got two points. I would group the first under flexibility and the second under autonomy, if I may. As I understand it, some of these cuts go back to the reduction in end-of-year flexibility resulting from the science budget cut-back that happened a year ago, the £68 million. Can we have an assurance from the Minister that the CSR07 budget will be honoured so that the councils can plan their budgets properly and they are not going to find themselves caught short by further cutbacks?

  Ian Pearson: I do not feel the need particularly to go back over the old ground of the £68 million. The Committee is very well aware of the situation and the Government's view on this. I can confirm that the AHRC's share of this was £5.3 million and, like other research councils, the AHRC had to make some adjustments to its budget for 2007-08 to reflect that. There still is the situation however where its overall budget has gone up, not as much as I accept it would have liked, but it has seen an increase in budget allocation for the next three years. As far as a guarantee on the ring-fence of the science budget, I cannot bind the hands of people who might make decisions in the future, but the Government has always remained committed to a ring-fenced science budget and it is certainly the Government's intention that we will keep committed to that.

  Q230  Mr Boswell: That is helpful. My second is perhaps smaller in that context but it is about flexibility for research councils in their recurrent activities and particularly CSR overlaps, and the more they have a degree of flexibility, particular in relation to their larger programmes even if those are not typically so large in the humanities, it is going to be easier for them to manage these difficult interfaces. How do you feel about that? Would you be inclined to give them as much flexibility as you can?

  Ian Pearson: We certainly look to use all the flexibilities that exist within the system to make sure that we get maximum benefit, so for instance if there are underspends in particular areas often they can be balanced by overspends in others, and that is part of what you would expect of good financial management of a department. Keith will have operational responsibility for this.

  Professor Sir Keith O'Nions: Good financial management of these budgets is very important. If you actually look at the figures, you can see that you often do not get a smooth increase over a three-year spending period. It maybe very flat in one year and typically they often have quite large rises towards the end of the Spending Review. In order to manage the sort of profile of a research council spend over that period, which is a much smoother curve, you are obviously going to have to accumulate some underspends and EYF and spend it somewhere else. Our job is to try and manage that. Good financial management will involve end year flexibility and cross-CSR transfers, but we have to persuade councils not to be so conservative that they carry enormous amounts of EYF which ultimately there is no prospect of spending, and that is part of my job.

  Q231  Mr Boswell: My final question is simply about the management side. It slightly concerned me, and my eyebrow metaphorically lifted, given that the announced impact on AHRC has been known for some little time, that it is only now that you appear to be, as it were, undertaking to call them in to talk about it. Everybody, from whatever previous experience they have, understands that there are Haldane principles and you should not be digging up research councils by the root every few minutes. It does slightly concern me that apparently the information links are not, as it were, immediate and readily operating in both directions so it appears almost to have caught you by surprise.

  Ian Pearson: Can I say that it does slightly concern me as well because when I read the AHRC's delivery plan it did not come screaming out at me that there was going to be a major reduction in research grants. I expected some small decrease in volume over the CSR period as with some of the other research councils, but I did not expect to see that, which is why I said I was surprised. That is one of the reasons why I would want to take this away.

  Q232  Dr Harris: Some straightforward questions just on this point, is it fair to say that for the EPSRC that significant funds that would have been allocated to it were instead directed to the new Technology Strategy Board and the Energy Technologies Institute, around 3% of its annual budget?

  Ian Pearson: It is fair to say that the Government believes that the Energy Technologies Institute is a strategic priority and it is fair to say as well that the Government agreed with the research councils as part of our response to the Sainsbury Review recommendations that the research councils combined would commit a total of £120 million over the CSR period to collaborative work with the Technology Strategy Board. Overall, when you add both of those, that is a relatively small and modest proportion of EPSRC's budget.

  Q233  Dr Evans: It is not the volume. You will not be aware that myself and the Chairman were at an SI committee that set up the Technology Strategy Board and I asked: "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 RCUK being transferred to the new body". And Malcolm Wicks said that funds would be allocated to the board in the normal way depending on the Comprehensive Spending Review. "We hope that adequate funding will be provided, given the priority that we give to the matter." And I confirmed to the Liberal Democrat spokesman "that money will not be taken from other research councils to fund the new board; the money will be allocated in the normal way by the DTI." Is what you have just described not a contradiction?

  Professor Sir Keith O'Nions: That is a wonderful gizmo you have there, I must say, it is a very impressive piece of high technology.

  Q234  Dr Harris: That is all to the purpose of asking these questions.

  Professor Sir Keith O'Nions: The undertaking that was given has been adhered to. There is no transfer of money from research councils to the Technology Strategy Board. The arrangement is actually quite welcome by the research councils. It is an alignment of spend. The strength of the proposal is that there is a clear line between where the TSB spends its money in collaborative arrangements with business according to state aid rules and where the research councils spend their money is on aligned programmes, funding what is appropriate for their priorities in their councils in universities. They are not transferring money to industry and to the TSB. We have discussed this before. It is not a subtle point, but actually the undertaking has not been reversed at all. Just remember that EPSRC has a very large proportion of its budget behind missions that logically underpin some of the challenges that face the TSB.

  Q235  Dr Harris: Time prevents me from exploring the subtleties.

  Professor Sir Keith O'Nions: It is not subtle.

  Q236  Dr Harris: Would you agree with what Mr Watmore told us when he and John Denham came to see us that the financial side of the settlement was previewed before we turned up, so the science budget had been announced in the Budget of 2007?

  Ian Pearson: Yes it was and it is a matter of record, is it not?

  Professor Sir Keith O'Nions: The broad structure was determined in the Budget. There was a commitment in the Budget settlement to the national challenges issue, to the implementation of Cooksey, to support of the Energy Technologies Institute and, most importantly, to full economic costing, so the broad structure was there.

  Q237  Dr Harris: I will come to my point. The Treasury claw-back from the MRC of £92 million was decided, I think, in the summer of 2007 by the Treasury. Is that correct?

  Professor Sir Keith O'Nions: We can give you the precise date but it might have been a bit earlier.

  Q238  Dr Harris: A bit earlier? May?

  Professor Sir Keith O'Nions: Can we send you the precise date. It was June apparently.

  Q239  Dr Harris: So that was after the science budget had been announced in the Budget. I do not understand how it could be said that that clawback was known about before the science budget was set and was compensated for in an enhancement in the science budget. If you get the timings correct it does look as if the science budget was set, then the Treasury intervened—that is not your fault and I am not blaming either of you—and took away £92 million from the commercial fund of the MRC. The figure £92 million is not unadjacent to the £80 million that the STFC is down on and so it is fair to say that there was no compensation in the science budget for that clawback.

  Ian Pearson: Again you are wrong to quote the figure of £80 million when it comes to the STFC. The simple fact is that there has been an increase in the STFC's budget, but not as much as it would have liked. In fact, all research councils would have liked more money.

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