Examination of Witnesses (Questions 60-79)
MR RICHARD
LAMBERT
30 JUNE 2009
Q60 Chairman: But if you do not have
a strong leader of the Department it may be necessary to move
the pieces again.
Mr Lambert: I think the better
thing is to have a strong leader. In politics what happens very
often is that institutions are designed to fit government ministers
rather than the other way round. That would be all right if government
ministers stayed around for a bit, but they rapidly move on. Therefore,
the institution that was structured for the individual might not
be appropriate any longer. You need a strong secretary of state
in a department of business, just as you need a strong personality
in the Treasury, for example. You would not break up the Treasury.
Q61 Lembit Öpik: From my business
background it seems to me absolutely insane to design government
around individuals because that is not strategic but tactical.
I resist the temptation to go further with that just now. Maybe
a political concern is that the expenditure will be directed towards
what is politically expedient. For example, if education becomes
scandalised through its under-funding money will be put in that
direction; if the recession deepens then money will flow from
education and into business. How do you stop that kind of expediency
influencing the long-term strategic planning that you as a business
person would prefer?
Mr Lambert: I think that problem
arises whatever structure you have for the machinery of government.
Under pressure tactical financial considerations take over. I
do not think it makes a huge amount of difference whether they
are all under one or different roofs. Certainly some of our constituents
would welcome a greater degree of certainty than they have now
about the financial pressures they will face in the next few years.
I was not here for the evidence given by the universities, but
I am aware that a lot of them have a strong sense that public
funding of higher education will be squeezed in the years ahead.
They are completely in the dark about what form that will take
and therefore they are making decisions now to cut their budgets
in a state of considerable uncertainty. That cannot be a sensible
way to go about things.
Q62 Lembit Öpik: Would you recommend
to Lord Mandelson a five or 10-year plan that would give each
part of the department, or at least the institutions that are
dependent on funding by that department, a greater degree of certainty
about where they are likely to end up?
Mr Lambert: I do not know about
five or 10-year plans, but a clearer approach to spending over
the cycle of the comprehensive spending review would be a very
welcome step.
Q63 Lembit Öpik: You would prefer
to have that comprehensive spending review now rather than wait
for the expediency of the general election?
Mr Lambert: Yes, I would. I think
that over the next year quite a lot of important decisions must
be made on our economy and social structures and it would be a
good idea to know the framework in which those decisions were
being taken.
Q64 Mr Binley: You heard my question
to the TUC about a strong leader and the fact that he is doing
two jobs. You touched on the fact that one of them is to direct
overall government presentation of attitude, policy and so forth.
I intimated that business felt that was a dangerous thing.
Mr Lambert: I was not here when
you asked that question.
Q65 Mr Binley: In that case let me
put the question to you. My concern about a strong leader who
also is running government presentational policy is that it appears
to have created suspicion in the business sector. Your remarks
appear to suggest that there is some element of that from your
perspective. Is that true, or am I looking for meaning that is
not in your words?
Mr Lambert: If I may say so, I
think that on this occasion you are. I did not mean to imply that.
It is more a question of the uncertainty about the broad direction
of public finances over the next few years than a particular reflection
on the Secretary of State, and it is not intended to be.
Q66 Miss Kirkbride: The inference
to draw from what you have said is that it would have been better
had there not been this rearrangement of the deckchairs. It is
about having a big personality and wanting a big department rather
than it being motivated by the need for change anyway. We all
know that there must be a general election by next May. We have
a department that has struggled to implement some of its policies
already with regard to assistance programmes tied to the automotive
and other sectors. We have the experience of DECC which is a newly-created
department that has taken months to begin to get its act together.
The question is: what can really be the justification for this
change? What possible added value can be provided in doing it?
Why not leave it as it is and get on with the more important task
of doing what you have already said you will do?
Mr Lambert: Because I am an optimist
I think we should be saying that here is a department that brings
together important parts of the economy and social infrastructure.
There is value in having innovation, business and science under
one roof. Science was under the same roof only a couple of years
ago. Let us make it work.
Q67 Miss Kirkbride: That illustrates
the "deckchairs" point, does it not?
Mr Lambert: My sense is that if
you are to move the furniture have a think about it before you
do so.
Q68 Mr Bailey: One issue that arises
time and time again when I talk to local businesses, particularly
SMEs in my constituency, is the gulf between academia and industrial
needs. I know that this is a big issue to which you are always
referring. We have introduced all sorts of government policies
designed to bridge that gap. My concern is that if we are to change
that the anti-manufacturing industry mindset that still exists
within the academic system needs to be changed by influencing
young people quite early on. Now business and higher education
are together. I instinctively feel that this will go some way
to address the issue, but it will not necessarily deal with the
fundamental problem of culture that by the time they get to higher
education they will already have a mindset that is not necessarily
constructive in terms of what manufacturing industry needs. Working
within your departmental structure how do you think one can influence
other departments to overcome that problem?
Mr Lambert: That is a very powerful
challenge. There has been a great deal of change in the relationship
between industry and universities over the past 10 or 15 years
and for that I give credit to government policy. Various initiatives
like the Higher Education Innovation Fund designed to build bridges
have worked. In the past few weeks I have visited the University
of Wales Institute and seen amazing stuff going on with SMEs.
In Sheffield there is a manufacturing centre and one is being
built in Nottingham. There is real traction going on and there
has been a big change. The universities are much more outward-looking.
Small and medium-size enterprises still need more help in finding
the front door and some of that is going on. Advantage West Midlands
has a voucher scheme which SMEs can pick up. They get £3,000
worth of free consultation. Clever things are going on in this
area and there is more to be done. You are right to say that the
challenge particularly in the manufacturing sector starts earlier
than that, maybe even in the primary school. There are various
schemes under way which intend to make businesses more engaged
with the primary and secondary school system and we strongly support
and endorse that. That must also be a two-way stream: teachers
must be willing to allow that to happen. But the biggest challenge
is the perception that somehow industry is oily rags and brown
coveralls. That is still a problem.
Q69 Mr Bailey: From your business
perspective do you think that the disproportionate size of the
budget for industry and academia means that the traditional priorities
of academia rather than the emerging priorities of business will
prevail?
Mr Lambert: If you look at the
total size of the budgets, the academic budgets are rightfully
vastly greater than those for the relevant business stuff. HE/FE
funding is well under £200 million a year whereas the research
budgets run into many billions. Business is an important stakeholder
of higher education but by no means the only one and it would
do a great disservice to the country if, for example, it was decided
that curiosity-driven research was for the birds and it should
all be focused on the applied end. The balance must be got right.
You can argue now whether you could tilt the balance a bit more
towards the applied end, but we have to go on doing great research
in every discipline, not least because nobody has a clue what
ideas over a long period will turn into commercial products. For
more reasons than that, it is worth doing it; it is a public good.
Q70 Mr Bailey: Within the budgets
just how much flexibility do you think there should be? From a
business perspective how comfortable would you be with a high
degree of flexibility?
Mr Lambert: Within the Business
and Enterprise Department budget?
Q71 Mr Bailey: Yes.
Mr Lambert: It is important that
research councils' budgets are pretty focused. It would be a bad
thing if somebody said there was a problem somewhere else and
a few hundred millions were taken out of the research councils'
budgets. Consistency and certainty to build the long-term scientific
strengths of the country are very important and should not be
messed around with. Again, to the credit of this government it
has not done that.
Q72 Mr Clapham: We know that the
universities do not seem to have an easy fit with the new Department
and yet with innovation they are so important to industry.
Mr Lambert: Yes.
Q73 Mr Clapham: Some academics suggest
that the attitudes of business date from the 1970s and to some
degree that is a hindrance to the engagement between industry
and higher education. Do you believe that the universities being
in the new department will be able to bridge that difference in
attitude to the benefit of the UK?
Mr Lambert: I hope so. If you
look back, they were in DIUS where they were floating around;
before that they were in the Department for Education and were
very much a poor relation. The budgets and politics were all in
primary and secondary education and universities were pretty much
an after thought. It is not as though there was a kind of golden
age. It is really important that they should keep their autonomy
but be within the structure. As an organisation we shall publish
at the beginning of September of this year the results of a project
we have done with a number of vice-chancellors and business people
over the past year. Rick Trainor who was here is on that group.
We hope that that will be a constructive part of the debate. It
must be a two-way stream; it is not enough for business to say
that universities should be doing this or that.
Q74 Mr Clapham: Presumably, when
it is published MPs or this Committee will be circulated.
Mr Lambert: We will make sure
you are.
Q75 Roger Berry: I am very conscious
of the fact that businesses are concerned not only about decisions
of this Department but those of the Bank of England in terms of
interest rate policy and those of the Treasury on fiscal policy
and so on. In terms of the importance attached to this Department
from a business point of view what is your experience? Over the
years I have read CBI briefs on interest rate policy and what
the Treasury and this Committee should do. From the point of view
of business where are the most important decisions made? How important
is the work of this Department to furthering the aspirations of
business in comparison with, say, the Treasury or Bank of England?
Mr Lambert: We think it is very
important that there should be a voice at the Cabinet table speaking
for the economy and for business. We are strong supporters of
that structure. Around that it seems sensible to have some of
the levers of government that make that work. For example, in
the discussion about industrial activism it is clear that the
Department will have to co-operate more than it has before and
so on. Business strongly feels that the independence of the Bank
of England has brought a degree of stability to monetary policy
that was not there before. If you think of previous recessions
and what happened to interest rates and inflation, they were in
double digits in the early 1990s. The Treasury makes decisions
about tax and spending that are critical for business output.
I would say that in terms of "crunchy" policy the Treasury
and to a slightly lesser degree the Bank of England are the key
decision-makers, but in terms of shaping the overall strategy
and thinking about what sort of economy we want and what its components
should be in 10 years' time a strong department of business is
also an important part of it.
Q76 Roger Berry: What do you believe
are the major difficulties for the Department given that the macro-economic
environment is determined essentially by the Treasury and Bank
of England? What kinds of problems does that create for the Department?
Its strategies, action plans and so on cannot be drawn up in the
abstract and never are. What are the major difficulties that you
see for the Department given that so much of the responsibility
for the economic environment clearly rests with both the Bank
of England and the Treasury?
Mr Lambert: The answer changes
with the economic cycle in a sense. A problem right now is the
continuing pressure on our manufacturing industry including large
swathes of manufacturers who in normal times are productive and
very competitive. The challenge for the Department with very limited
resources is to think what if anything it should be doing about
it. It is also the case that, for what I believe to be sensible
reasons, all the political parties are now thinking about a rather
more strategic approach to industrial policy than we have had
in past years. To get that right requires a depth of experience
and knowledge and the ability to make economically rational priorities
which are of a high order. That will be really challenging.
Q77 Chairman: Is it right that you
are broadly happy about the structure of the new Department and
there are no technical issues about the way it is fitting together?
Mr Lambert: Yes. It seems to have
rather a lot of ministers.
Q78 Chairman: That was to be my next
question. Is the ministerial team, not the individuals, appropriately
structured to deliver the outcomes you want from the Department?
Mr Lambert: I do not feel qualified
to answer that. There just seem to be an awful lot of them and
I do not know what they do.
Q79 Chairman: We are to lose one
quite soon: Stephen Carter is to go. In my view it is difficult
to see which ministerial responsibility you can shed without imposing
too heavy a burden on anyone.
Mr Lambert: To be honest, I have
not considered that.
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