Examination of Witnesses (Question Numbers
60-79)
The Rt Hon Vince Cable MP,
Secretary of State for Business, Innovation and Skills, and The
Rt Hon David Willetts MP, Minister of State for Universities
and Science, Department of Business, Innovation and Skills
26 October 2010
Q60 Nadhim Zahawi:
Just so I understand this correctly, Secretary of State, the £200
million that is allocated to helping manufacturing—
Vince Cable: It's
not just manufacturing, it's business support in general.
Q61 Nadhim Zahawi:
Right. It will be the Manufacturing Advisory Service, the growth
hubs that Mr Prisk is suggesting, and the Hauser Institute, which
is modelled on the Fraunhofer Institutes in Germany.
Vince Cable: Those
are the three main clusters of ideas, but we have not yet precisely
worked through the numbers of what our allocations will be.
Q62 Nadhim Zahawi:
That was going to be my question. How many of the Hauser style,
Fraunhofer Institute style centres are you going to create? That
£200 million seems to be stretching a long way to cover
all those areas.
Vince Cable: Again,
I think it is an area we're excited about, so I understand your
wanting to push us for specifics. It's the concept we wanted
to get established first of all. A lot of these institutions
exist already; there are very, very good centres, many of them
located in or near our universities, which already take spinoffs
from academics and turn them into commercial businesses and have
become a centre of excellence in that particular field. So in
a sense we're building on that rather than starting something
greenfield from scratch. We would certainly envisage that there
is scope for new proposals, even with modest amounts of money,
both in terms of current spending and capital.
David Willetts:
The technology innovation centres, proposed by Hermann Hauser,
do not have to be, and should not be, entirely publicly financed.
I think it's reasonable to expect businesses to make a contribution,
and we see this as a research development resource for businesses.
There is a Government role, but it is not exclusively us.
Q63 Nadhim Zahawi:
So you will be using that money to leverage bigger money from
elsewhere?
David Willetts:
Correct.
Q64 Nadhim Zahawi:
Can it stretch to helping existing SMEs or just new start-up ideas?
David Willetts:
The way we see these developing is that, as the Secretary of State
said, there will be some projects already under way in universities,
or perhaps developed by RDAs, that can be taken over and become
a crucial technology innovation centre. There will be some that
start completely afresh, that are new initiatives, but we very
much hope to get a mix of corporate sponsorship and backing alongside
public money in all of this.
Nadhim Zahawi: Thank you
very much.
Chair: Can I go on to
Brian Binley on digital infrastructure?
Q65 Mr Binley:
Thank you Mr Chairman, I am very grateful to you and I will turn
to the page in due time. What page are we on?
Chair: Ten.
Mr Binley: Thank you very
much. Right, digital infrastructure. I have given you a little
time to think, Secretary of State. Can you tell us how you will
fund the £530 million you intend to invest in the roll-out
of superfast broadband? And can you tell me if you think it is
wise to intervene with public funds at this time, before the market
has had a chance to fully develop? There is some serious concern
about this within the industry, as you know.
Vince Cable: Well,
our colleague Ed Vaizey is not here to deal directly with that.
He acts as a bridge between our Department and DCMS. The reason
why the Government are involved with this is that there is a market
failure in remote areas; the market simply will not deliver a
universal, digital, superbrand, superfast system, and that is
why the Government are intervening to expedite it. Of course,
most of the investment in the digital infrastructure is coming
from the private sector.
Mr Binley: Absolutely.
David Willetts: If
you look at, say, Cornwall, where there has recently been an announcement,
I think that is a good example of how there is some public money,
but there is equally European Union money and there is also spending
by BT. You can put together partners.
Q66 Mr Binley:
I am grateful for that. We do need some answers for our report,
as you will appreciate; perhaps you could get Ed to write to us
in order that we have those answers.
David Willetts:
Yes.
Q67 Chair:
Your responses have been vague. Can you give us an analysis—not
at this moment, but if you could let the Committee have one—of
where the balance of funding is going to come from, both in terms
of departmental support and private sector support, and if there
are any areas which appear to be not covered?
Vince Cable: Do
you mean on digital or generally?
Chair: In the rollout
of superfast broadband.
Vince Cable: Yes,
we will try to substantialise that.
Chair: Can we go on to
the Regional Growth Fund now? Obviously we have touched on it
before, but there are some specific questions that need to be
asked. I will start with Rachel Reeves.
Q68 Rachel Reeves:
Thank you. Can you tell us how the funding is organised for the
Regional Growth Fund, between BIS and the Department for Communities
and Local Government?
Vince Cable: There
is a common pot of funding. We are not controlling departmental
streams of spending. It is a pot, and there is additional money
being put in as a consequence of the spending round. It does
not operate on the basis of departmental silos.
Q69 Rachel Reeves:
Of the £1.4 billion, how much of that comes from your
Department?
Vince Cable: We
do not think of it in those terms. A pot of money has been allocated
under the spending review, in which different Departments have
an interest, but funding streams do not operate in the way you
have described. We are starting from scratch, trying to create
a new institution, with a specific mandate, with Government backing.
Q70 Rachel Reeves:
So the Regional Growth Fund, chaired by Lord Heseltine, will that
be under the auspices of the Department for Business, Innovation
and Skills, or Communities and Local Government?
Vince Cable: Quite
a lot of the technical work and the admin work will certainly
be done in my Department, but a lot of this is necessarily collaborative.
Q71 Rachel Reeves:
I just wanted to understand whether it is a BIS responsibility,
or who leads on it? Will it be you?
Vince Cable: My
understanding is that we will be doing a lot of the background
heavy lifting in terms of looking at the projects, and I guess
we will be reporting to you in Parliament, but clearly a Department
has to do so and we will do that. A lot of this is collaborative
and cross-Government.
Rachel Reeves: Okay.
Q72 Chair:
I am slightly puzzled, because I thought the whole purpose of
having Lord Heseltine and his team was to actually make those
assessments themselves, independent of the Government Departments?
Vince Cable: That
is quite right. But there will be an awful lot of technical work
looking at individual cases; the board, which they will sit on,
will have an oversight of it.
Q73 Chair:
They make the decisions, do they not?
Vince Cable: They
will make an evaluation of projects, and make recommendations;
we will be using the resources of the Industrial Development Board
as well.
Q74 Chair:
Where will they make the recommendations?
Vince Cable: There
will be a board that will oversee the Regional Growth Fund.
Chair: Yes, I know that.
Vince Cable: That
will make the final decisions on how the funding is allocated.
Q75 Chair:
That is the point I am trying to get at. Will that board make
the final decisions? Because you seemed to imply that BIS and
DCLG might have a role.
Vince Cable: I
am talking of different levels of operation. A body will, in
the final analysis, have to sign off on big investment decisions.
There is a lot of technical work in terms of looking at the projects
as they come in and preparing them and making sure they are properly
vetted, and a lot of that administrative, technical work will
be done in my Department. As I say, it will be collaborative.
The governance structure, which I think is what you are getting
at, the decisionmaking structure, is one of the issues that
will be covered in this White Paper on subregional growth,
which is emerging very shortly.
Q76 Chair:
As of this the moment, it appears to be a very confused process.
Vince Cable: No,
it is not confused. It is not yet been described publicly; we
are working on how this will operate, and in due course, when
we publish that paper, very soon, you will have answers to a lot
of those questions.
Q77 Chair:
I was going to say, with respect, if this is a public description,
then I can only say I am confused.
Vince Cable: Well,
I am not sure why you should be confused. We are making the point
that within short order, the Government have assembled a substantial
amount of money in order to deal with the very specific problem
of areas that are very badly hit by a rundown in public sector
employment, and other growth difficulties. We are committed to
putting in those resources; different Government Departments are
working collaboratively on it. We have access to Lord Heseltine,
and to Sir Ian Wrigglesworth, who has helped us in that process.
The precise mechanism by which decisions will be made, which
is the question you are asking me, we will describe in due course.
Clearly, before the fund starts operating, you will know how
that happens.
Q78 Chair:
The other issue is that this is Government money. Who is going
to be accountable for it?
Vince Cable: If
you are talking about direct response to Parliament, and parliamentary
accountability, I will be answering your questions in Parliament.
Q79 Chair:
So it will be BIS?
Vince Cable: That
is my understanding.
Chair: Okay. Can I bring
in Margot James?
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