UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 618-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Science and Technology Committee

Spending Review 2010

Wednesday 24 November 2010

Rt Hon David Willetts MP and Professor Adrian Smith

Evidence heard in Public Questions 1 - 69

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Science and Technology Committee

on Wednesday 24 November 2010

Members present:

Andrew Miller (Chair)

Gavin Barwell

Gregg McClymont

Stephen Metcalfe

David Morris

Stephen Mosley

Pamela Nash

Graham Stringer

Roger Williams

________________

Examination of Witnesses

Witnesses: Rt Hon David Willetts MP, Minister of State for Universities and Science, and Professor Adrian Smith, Director General, Science and Research, Department for Business, Innovation and Skills, gave evidence.

Q1 Chair: Good morning, gentlemen. Thank you for coming before us this morning. Of course, quite a lot has happened since we last met. I don’t know if you have managed to read the transcript of the exchange between myself and the Prime Minister at the Liaison Committee but it rather sets the scene for this discussion because most of the issues I touched on in my opening question to him will be covered in some depth here. His response seemed to me to be something out of The Beano: "Crikey, if two-brains Willetts can’t answer that question, I don’t know what hope there is for me here." The ball is very firmly in your court, Mr Willetts.

I want to start with the controversy that blew up a few days past over the new post of Director General of Knowledge and Innovation. I want to ask you a very simple question . Is it now established that that post will always be held by a senior scientist?

Mr Willetts: We have certainly got a very satisfactory outcome and it is excellent that we are going to have the benefit of Professor Smith’s role. There are, however, lessons to be learnt. One issue we will need to address, which you are right to raise, is that, on the one hand, there is the statement in the original William Waldegrave Science White Paper of the key role of the scientist in these decisions, and I see great merit in that. On the other hand, we have the Civil Service Commission making the specific appointment. Of course, Ministers are not involved in the specific appointment. So one area that we will need to investigate in future is looking at how exactly the Civil Service Commission procedures and that statement of principle in the 1993 White Paper are to be reconciled. We realise that there is an untidiness here that needs to be resolved.

Q2 Chair: It’s a bit more than "needs to be resolved". It would seem to me to be an untenable position to have somebody without any scientific experience in that role.

Mr Willetts: That was a very strong view of the scientific community that was communicated to me and to others. I fully understand that. As I say, we have reached a very satisfactory outcome this time and we now have a lot of time to work out a proper procedure for the future.

Q3 Chair: Finally on that point, why was the Government’s CSO not consulted about these changes?

Mr Willetts: Both in his evidence to the House of Lords Select Committee and then in his subsequent clarification, the Chief Scientist was consulted on the overall structural changes, and I recognise his words. He spoke very forcefully to the Select Committee about his unhappiness at not being involved more closely in some of the individual decisions.

Q4 Graham Stringer: The quote, actually, is the opposite of that, Minister, isn’t it, "…I was surprised that I was not consulted"-"not"-"and I believe it was extremely regrettable that I was not because I would have been able to put that advice in earlier rather than later"? That is slightly at odds with what you are saying, if you don’t mind me commenting.

Mr Willetts: In Sir John’s subsequent letter to Lord Krebs of 22 November, when he wishes to clarify a point from the transcript, he said: "I was consulted during the summer on options for streamlining the senior level structure in BIS and responded that I saw merit in an option which brought together responsibility for research, HE and innovation into a single post at Director General level. This remains my view as I made clear in response to Q100. What I was not consulted on was the nature of the individual being sought to fill the post, nor on the recruitment process (including panel membership and whether the competition should be public or within the Civil Service)." I think that is a very useful identification of some of the issues that will have to be sorted out before we go through this again.

Q5 Chair: I also want to make sure that we are all speaking the same language here. On another subject that is going to come up later in some more detail, namely the reform of the changes affecting quangos in the future, quite a few of them have significant scientific input. In quite a few cases on the Government website it uses the phrase "will be replaced by a committee of experts". What’s the difference between a committee of experts and a quango?

Mr Willetts: The committee of experts will not be a Non-Departmental Public Body. The committees will be working within the framework of a Whitehall Department. However, because we now have the principles of scientific advice reflected in the Ministerial Code, which began under the previous Government, I think we can feel confident that the new committees of scientific advisers will be able to ensure that there is properly independent scientific advice still going to Ministers.

Q6 Chair: So they will be external to the relevant Department?

Mr Willetts: They will not be Non-Departmental Public Bodies. They will have the power to give genuinely independent advice to Ministers, which I think is the crucial thing.

Q7 Chair: But the experts could be external experts?

Mr Willetts: Yes. They don’t need to be on the Departmental payroll. That is correct.

Chair: Right. I just wanted to clarify that.

Q8 Stephen Metcalfe: Good morning, Mr Willetts. Turning to the outcome of the Spending Review, the settlement appears to have maintained, in cash terms, the science budget. Yet I believe the budget for next year is £4.6 billion, which, on the face of it, appears to be a considerable increase from the £4 billion that it is in the year 2010-11. Can you explain why that figure is so significantly different, particularly as it does not include capital expenditure?

Mr Willetts: Yes, I am slightly confused here. We have got a figure for the current budget of £4.6 billion. In fact, to be absolutely precise, it is £4.576 billion. That is what we are taking as the cash figure. Very roughly, this year-perhaps there are one or two elements in it that are not included in your total-it has four elements. The biggest is the Research Councils, which is about £2.75 billion. Next there is QR funding for universities of about £1.6 billion. Then there are two smaller items: HEIF-Higher Education Investment Framework-which is £0.15 billion, £150 million, and then the learned societies and the academies getting £100 million. That adds up to about £4.6 billion. That is the total we have inherited. That is how the total of £4.6 billion is made up and that is what we are committed to for each of the next four years.

Q9 Stephen Metcalfe: The figure that we have for previous years is, I think, £3.97 billion. I don’t know where that figure perhaps came from. Maybe that is worthy of further exploration.

Mr Willetts: Do you recognise that figure?

Professor Smith: I don’t recognise that. When we look at the totality of the science and research budget, as the Minister has said, you have to pile in the stuff that goes to the Research Councils, the QR to the English universities, the stuff that goes to the academies, HEIF and the Science in Society Programme in the Department. It may be that it has just picked out some headline Research Council figure or whatever, but £4.6 billion is roughly the current spend within the totality of that budget.

Q10 Stephen Metcalfe: You mentioned the Research Councils. Are you nearing agreement with them on their budget allocation for the forthcoming year?

Mr Willetts: Yes, we are and I think this is the right moment to share our thinking with the Committee. We have had a further but more limited consultation exercise with the scientific community, which Professor Smith led, inviting them to give any views about the breakdown and the priorities. It is a fair summary that most of them have come back with the message that they would like, broadly, to keep the balance that we’ve got at the moment-both the balance between those four main components that I listed to the Committee a moment ago and also, within that, there is a broad sense that the allocation between Research Councils is broadly right. We are still working through the detail and we hope to be releasing the detail to the House before Christmas. Our thinking at the moment is to work, roughly, within the broad balance that we currently have.

Q11 Stephen Metcalfe: Bearing that in mind then, if, I believe, the Medical Research Council is likely to receive increases in its funding, does that mean that money must come from some of the other Research Councils and how will that be decided on? Is that going to be decided amongst the scientific community or will you have to make that decision?

Mr Willetts: You are right that there is a specific commitment to maintain the total real spend of the Medical Research Council, but their spending comes partly from the public expenditure element of their Research Council Grant. They also get revenues from IP, where, fortunately, because of the success of British medical research, they have a healthy and, we believe, growing revenue from IP. That is not quite going to plug the gap, but it does mean they have a buoyant source of income. That means that the re-balancing of the public expenditure on Research Councils necessary to generate a constant real spend by the MRC is less than you might imagine.

Q12 David Morris: Quality-related funding is included in the overall ring-fenced science budget. What do you envisage will be the balance between the Research Councils’ element and the HEFCE-the Higher Education Funding Council for England-quality-related funding? Will it remain broadly the same as it did in 2010-11?

Mr Willetts: That is our general thinking, yes. As I say, we have not yet got down to the detail but we will be releasing to the Committee, if we have not already done so, as part of our commitment to openness, the correspondence where Professor Smith did invite views from the learned societies. They have written back in the last few weeks and most of them have said, broadly, keep the balance as it is.

Q13 David Morris: The BIS Business Plan states that quality-related funding will be reformed to "further focus on research excellence taking account of benefits of critical mass and multidisciplinary capacity". Does this mean a higher proportion of QR money will go to fewer institutions? Again, what steer will you bring to the funding councils will respect to the distribution of QR?

Mr Willetts: We do understand the case for concentrating funding on excellence. It has to be said that it is already very much focused on research that really does score very high star ratings. This is a very delicate issue that you have rightly raised. Where there are strong departments as a whole, even in universities that may not be research-strong as a whole, I hope we will be able to continue financing those departments. The fact that we have this very satisfactory settlement does mean that some of the really tough options-some of the most draconian-that we were having to plan for on a contingency basis through the summer which would have meant a significant reduction in the number of universities getting QR funding will not now be necessary because we have the framework. It is worth just emphasising that in tough times like this, when we inherited a fiscal crisis, to be able to protect and secure the cash budget for science and research is something that the science community has appreciated is a really good settlement. It does mean that we can continue to sustain our science base.

Q14 David Morris: Thank you for that answer. Given that the Higher Education Funding Council for England may change its role to become a regulator following the proposals in the Browne Review, should its funding functions, such as QR, be transferred elsewhere to avoid any conflict between regulation, funding and policy?

Mr Willetts: That is something we are going to have to look at in the White Paper, because, you are quite right, the Browne Review does envisage big changes in the institutional environment and potential changes in the role of HEFCE as it shifts more to being a regulator. But I have already stated that we are committed to the Haldane Principle and having these two separate flows of money-one for university research via the RAE, the REF, and a separate one via the Research Councils-is something we are committed to. Although we have to look at the role of HEFCE in this new world and Lord Browne proposes merging it with several other bodies, I think the separation of the traditional HEFCE QR function and a separate budget for Research Councils is something I very much expect to remain.

Q15 Chair: With the changes envisaged, and it is still quite a complicated picture, you touched on something I agree with, which is that we need to look at departments and research programmes rather than at a university in its entirety. How are the various bodies involved, including your own Department, going to identify where those quality programmes of work are going to be undertaken?

Mr Willetts: The most important single mechanism is the RAE as was, the REF as will be, and that, I think again, commands widespread respect in the academic community. It is where ministerial involvement ends and peer review begins. The REF is going to operate in a rather different way than the RAE. There will be an impact assessment as part of it. The exact weighting is to be decided and the exact way it works is to be decided but it will be informed by the pilots that are currently going on. I think that that mechanism for identifying excellence is the best way to do it.

Q16 Chair: So you still see open, transparent peer review as mission critical to this?

Mr Willetts: Absolutely, absolutely.

Q17 Stephen Mosley: A number of our major competitors, including the US, France, Germany and China, are planning quite major increases in their science budgets over the next few years, and they are doing this because they see it as core to their long-term economic competitiveness. What will be the impact on us of maintaining our science budget in cash terms when it comes to international competitiveness?

Mr Willetts: One of the arguments that was put most eloquently through the summer by people like Lord Rees was, absolutely, that for us to have gone in for big cuts in science and research spending when some other countries were increasing theirs would have put us at a competitive disadvantage. I think that was one of the considerations that led to the decision to protect the budget in cash terms. Of course, ultimately it is the output that matters, not the input. We have an incredibly productive science and research base, which is second only to the US in the number of citations it gets. The week after next at the Nobel Prize Ceremony we will have four Nobel Prize winners in three different disciplines who are based in the UK. So it is very productive. Of course some of these other countries haven’t got a four-year plan, but I am confident that, with a ring-fenced secure four-year budget, the fact that people know exactly where they are for the next four years with a ring-fenced protected cash budget is a very good solid base.

Q18 Stephen Mosley: You talk about the next four years and of course that is the Comprehensive Spending Review period. Do you have any longer term strategy when it comes to science and research and development? Do you have any idea where we are heading to in 10, 15 or 20 years’ time?

Mr Willetts: That will partly depend on who wins the next election. One way in which the environment has changed in the past 20 years-and key figures have been previous Science Ministers; there is a great canon of Science Ministers and I think both David Sainsbury and William Waldegrave in their different ways were part of this-is that there has been a recognition that university research is no longer just a good thing in itself, though it is a good thing in itself, but, as the evidence comes in, it is clearly crucial for economic performance and economic growth in the 21st century. Earlier this week I was talking to representatives from the Japanese pharmaceutical industry who were in Britain and they were talking about how they wanted to locate their corporate R&D work in Britain because we had such excellent science. I was in India last week and they were very keen to work with us. Indian companies were speaking very highly of British science and wanting to have increased collaboration. It is a crucial factor in internationally mobile companies deciding where they want to put not just their R&D but other activities as well. I think that is widely understood across political parties, so I would feel very optimistic for the long term of science and research in this country.

Q19 Chair: Will the efficiency savings that you envisage make up the potential 10% loss over the spending round?

Mr Willetts: That is the challenge that we have been set, and I think it is a reasonable challenge. Over the next four years, strictly speaking, on the inflation forecast, you are talking of just under 9% inflation. If nothing changes, if there is no reform, on a pessimistic view, there is a 9% real resource cut. The challenge for all of us now is to deliver the efficiency savings, which means that this is a stable budget in real terms.

Professor Wakeham’s Report on how you could improve efficiency on the Research Councils’ side is a very useful guide to action. We are hoping that we can hold down pay costs. If you can do all that, we can deliver the constant real science and research budget that we would like. Of course, because of the ring-fence, the incentives are absolutely right. Because of the ring-fence, people will know that every pound they save on waste, inefficiency and overheads is not a pound that goes out of the system but an extra pound for real research output.

Q20 Gregg McClymont: We know that BIS’s total capital budget is to be reduced by 44% in cash terms over the next four years. Do we now know what the capital element of the science budget is likely to be?

Mr Willetts: We are in the process of finalising the exact figures and the profile, but I think the basis on which we should work is that this will be allocated pro rata between the different parts of the Department. So we are expecting overall, once you also include the UKCMRI, that the science and research capital budget will also have a 44% cut.

Q21 Gregg McClymont: Is that not an enormous reduction?

Mr Willetts: It is a significant cut, and we realise that. On the other hand, we have been able to identify some of the most important projects. We have got UKCMRI going ahead, we have got Diamond Phase III going ahead and, therefore, we will still be able to see really significant new investments in science, even in very tough times when we have got to reduce the budget deficit.

Q22 Gregg McClymont: Would you not agree that this somewhat changes the picture of the settlement that science has received in the Comprehensive Spending Review? You say "significant", but 44% seems to me at the very least significant, if not, as I say, enormous.

Mr Willetts: I think the scientific community understands that when you have got to go through this very tough process of bringing down the budget deficit and when you look across Whitehall at all the decisions that are being taken, including decisions on overall capital budgets, to be able to keep this protected cash budget for current spending and to be able to ensure that the highest priority projects go ahead is, overall, a very satisfactory budget for science. But I do accept in very tough times that the science community is not going to be able to do some of the extra capital investment projects that it would have liked.

Q23 Gregg McClymont : Are we not in danger, Minister, of repeating the historic mistake of protecting current expenditure at the expense of investment in future capital?

Mr Willetts: What is investment in the future? You could equally argue that research fellowships, DPhil students, bringing on young people and giving them the opportunity to study is also investment in the future. I attach as much importance to that-the flow of talent -as to the specific capital projects. The fact that we have already got the two big capital projects that the science community attaches the most importance to going ahead does, I hope, help ease what I know is going to be a very tough capital settlement.

Q24 Gavin Barwell: Can I explore this a little bit more, Minister? What is the logic behind, on the revenue side, giving the science budget some relative protection, which was rightly trumpeted during the CSR statement, but, when it comes to capital, applying across all the different bits of the Department a uniform cut, a salami slice, to each budget? Why that different approach in revenue and capital?

Mr Willetts: There is quite a significant overlap between the different capital activities of the Department. For example, higher education and university capital is another item, but there is quite a strong connection between capital investment in universities and the science and research capital fund. Given the circumstances we were in when, of course, the plan was for a 50% overall capital cut that was inherited, the fact that the BIS reduction is 44%, within that allocating it on this basis between universities, colleges and science and research is an equitable way forward.

Q25 Stephen Mosley: There is an issue that probably comes from this side of the table because we are all northern MPs along here. We do notice that the four big capital projects that are going ahead are all based in the south-east. Do you recognise that there is a concern that there needs to be more expenditure in the north, in Scotland and in Wales, and why?

Mr Willetts: That is an understandable point which you raise with me on every possible occasion, and quite rightly, and I pay tribute to you.

There are a set of decisions which still have to be made by the Technology Strategy Board. Again, we are in this process whereby the overall totals are being broken down into their components. I know there are excellent facilities outside London and the south-east. I think of Daresbury, but I think also of the Advanced Manufacturing Research Centre outside Sheffield. I very much hope, as we carry forward our proposals on the technology and innovation centres, which were recommended both in the Hauser Report and the Dyson Report, it is clear that those will be spread across the country as a whole.

Q26 Graham Stringer: I don’t believe that. I don’t think you really believe it, do you? It is not a party political issue. We have had exactly the same debate with Labour Ministers over the years. When you look at fundamental research that is taking place outside of universities, we were told when we went to Daresbury that about 92% of it takes place in the south-east. The real question is, is this Government, unlike both the last Labour Government and the last Conservative Government, going to do anything to reverse that process?

Mr Willetts: In fact I was asked about this by the equivalent Committee in the other place, and I did some research on it. It did show, and I accept, that because there is a concentration of research institutes and higher education institutions in the south-east that does tend to pull resources to the south-east. On the other hand, once you adjust for that, the funding that goes to institutions, per institution, is on a geographically equitable basis, if you see what I mean. So the University of Manchester gets a fair-

Q27 Graham Stringer: That’s why I excluded universities. I accept the equitable basis on universities. It is the fundamental research outside universities. It is essentially all here. Daresbury is losing a lot with the Diamond Light Source moving out. It has lost a lot of its fundamental researchers moving into a high-quality science park. Are you going to do anything about the centripetal force to the south-east?

Mr Willetts: I have made a commitment to come up and I will certainly go there and go elsewhere and get a briefing on this. There comes a point, of course-and I don’t want to hide behind the Haldane Principle-when it comes to these specific decisions about where best the capital budget should go, just as where funding should go, that it is the community of scientists whose advice matters.

Q28 Graham Stringer: Can I leave you with this thought? Can you look at some of the transcripts of this previous Committee that dealt with that issue when you are doing work on the Haldane Principle and re-stating it? I think it would be worth you looking at that.

Mr Willetts: I will undertake to do that.

Q29 Graham Stringer: Can I come to what I was really going to ask you about, which is the continuing emphasis on asking researchers what impact their research is going to have? Do you think that that is going to lead to more investment and more research in medical science and the life sciences rather than with theoretical physics, because it is easy to demonstrate impact in those areas?

Mr Willetts: I had a very useful meeting the other week with some of the academics who had been piloting research impact work in the REF. They came in to see me. Of course, it is a challenge for the community and there is a lot of scepticism about it, but what was striking was that, although it was tough, I don’t think that the physicists or the English literary critics thought that the exercise was impossible. I feel very strongly that it is absolutely wrong to ask researchers to pretend to know exactly what the economic return is from their research. We can’t invite them to do so and they hate being invited to make things up. They should not be writing fake accounts when nobody can know. But just inviting them to think through what the consequences of their research might be and how it ties in with the wider community, given that it is ultimately taxpayers’ money, I think is reasonable. We still have to work on it, we still have to improve it and we have to learn lessons from the pilots, but I think it is possible.

Q30 Graham Stringer: Two questions follow on from that. One is the original question I asked. Will it change the shape of the investment in science? Will particle physics and astronomy lose out because it is much easier to demonstrate impact in medicine? Secondly, it is a bit of a beard, isn’t it? It is a bit of camouflage to say that they have to think about it.

Professor Cox said to this Committee that he didn’t know how to do it. In a debate in Westmin ster Hall when I asked the new M ember for Cambridge , who himself is a distinguished scientist, how he responded to Professor Cox’s response, he said, "Oh no, we can do it. We all have a pro forma that we fill in and that satisfies everybody." So there is no thought going into that . T hey have learnt how to tick the boxes, essentially. It is a bit of camouflage, isn’t it?

Mr Willetts: I am a great admirer of Brian Cox. I have to say that he, as a scientist, is a case study in impact. He is a very good example of how impact takes many different forms. I think it is fantastic what he does for science. He makes a connection between theoretical physics and gets young people excited about science. He shows young people why it matters. We and the scientific community are working on this. I know there is a lot of anxiety about it, and I am very aware of it and we have to improve the methodology. It all has to be done properly. Provided scientists understand it, it is essentially inviting them to think of themselves as members of a wider community. "How does what you do relate to the wider community?" I think that is a reasonable question to ask and I am confident that, when we explain it properly and improve it, it is a challenge that the scientific community can rise to.

Q31 Chair: Have you had any discussions with your colleagues in education about this? I agree with you that Brian Cox is a great role model, an inspiring figure and so on, but have your colleagues in education fully understood how important programmes like his work are and what impact it has on the education system? Do they understand how, for example, the National Schools’ Observatory impacts upon education, and what value do they put on it?

Mr Willetts: I have had these conversations with Ministers in the Department for Education. The kind of examples I gave them was the arrival of the Space Shuttle crew in Britain in July, earlier this year. I saw them when they arrived at Portsmouth, and there were hundreds, if not thousands, of local school children who turned up. That was partly because they got to see a great film about being weightless, but the crew were also able to explain exactly what the G forces were and how the propulsion system for the rockets worked.

We know from research in America that there was the so-called "Apollo effect"-the Apollo programme encouraged young people to get involved in science. That sort of communication is very important. I do discuss it with colleagues in the Department for Education. I think it is one example of impact.

Q32 Graham Stringer: Coming back to the point about the future shape of science investment, do you think particle physics and astronomy will lose out?

Mr Willetts: I am going to turn to Professor Smith on this in a minute. The crucial test, remember, is excellence. Excellence is the absolute first hurdle and unless things are of the highest standard then neither the Research Councils nor the REF will recognise them. Impact will then be something that they are invited to consider. The peer groups, the scientific community, will decide the balance between these different disciplines that you are pressing them on, but I don’t see why, inherently, the exercise should be biased more than any other. I don’t know if you want to add anything.

Professor Smith: No. There are two aspects of the impact. One is the pathways in the Research Council which, as the Minister has said, is really asking people just to think about possibilities and to make sure that we’ve got apparatus in place to capture the potential for exploitation.

The plan in the REF is retrospective. Everybody recognises that there are very different timescales in which things have impact. I think there is a great deal of sensitivity to that and the way that we are doing pilots, methodology and learning from them is precisely there to try and assuage some of those anxieties.

Q33 Chair: Does the measure of excellence include the ability of a group of researchers to communicate their research to the wider population, including to school children, or is that ignored?

Professor Smith: If I may answer that, we must not confuse different headings. At the heart we are making research investment to get excellent world competitive research. Then, of course, we want to exploit that fully in many ways, in terms of social impact, economic impact and educational impact. But the threshold effect, before you get to those second order issues, is excellence-pure research, excellence and hitting power. Full stop.

Q34 Graham Stringer: I have two questions but I will put them into one. It is about whether you will carry on the commitments from the previous Government towards the STFC. The previous Government said they would separate out the STFC’s commitment to large facilities from its international subscriptions. They also said that they would look at stabilising its financing in respect of currency fluctuations. Will you carry those two commitments on?

Mr Willetts: I think there is an intention, as the budgets are fixed, to take out and afford exchange rate cover. I don’t know if you want to comment specifically on the STFC.

Professor Smith: Yes. We’ve had conversations with the Treasury and the Bank of England. Once the allocations are there, there will be forward purchase to give that hedging effect. Yes, we will do that.

Q35 Graham Stringer: And will the separation out of support for the large facilities in this country against international subscriptions in the STFC be done?

Professor Smith: The thing has to be done holistically. One of the things we are doing-and I don’t know if it has come to the attention of the Committee-is re-visiting each of those international subscriptions. For example, the CERN Council in September agreed to a 4.5% reduction, which for us will mean 10% over the period, which is about £50 million a year. We are trying to pull all the levers to maximise the effective use of that resource.

Q36 Pamela Nash: I would like to ask both of you about other Departments’ research and development budgets. So far only the Department of Health and the Ministry of Defence have indicated that they are going to protect those budgets. What effect do you think the CSR will have on other Departments’ budgets?

Mr Willetts: This is an understandable concern. Indeed, earlier on, Sir John Beddington and I wrote jointly to Ministers saying that we hoped there would be a proper process of consultation if there was any big change envisaged in their R&D budgets, and I know Sir John Beddington has been following that up with Permanent Secretaries. Again, we are in the process still of getting the detail out from the overall totals which were only set a few weeks ago. The position is that we have got the Department of Health research spend increasing in real terms and we have the MOD maintaining their essential science and technology investment. If anything, we expect that budget to rise slightly in cash terms. We have, of course, DFID with a very substantial budget. So we are doing quite well. There are, indeed, some other Departments that have yet to finalise their R&D, but so far-and I was checking again with Sir John this morning-there hasn’t been a great alarm bell flashing of some terrible R&D problem. In fact, by the time you have covered the Department of Health, Defence and DFID, you have covered quite a large part of the R&D budget across Whitehall.

Q37 Pamela Nash: Do you agree that some of those budgets may be left vulnerable as they don’t directly provide front-line services?

Mr Willetts: There are some Departments that are, essentially, going for a pro rata reduction in R&D. I think we will see some of that in some of the smaller Departments. As I said, when you have got those three big Departments all offering high levels of protection for Departmental R&D-and I undertake to come back to the Committee when we have all the detailed figures and we can do a proper departmental R&D assessment, which will take some time as it is a bit complicated-so far, we feel that that angle is being properly covered.

Q38 Pamela Nash: Professor Smith, I believe that on Monday you had a meeting with the Research Councils’ Chief Executives and the Chief Scientific Advisers of the Whitehall Departments. Would you like to share with us the outcome of that meeting?

Professor Smith: It was not a meeting which was geared to formal decision making. What myself and Sir John Beddington have done over recent years is regularly get together the Chief Executives of the Research Councils and the Chief Scientific Advisers for the individual Government Departments to share agendas and concerns and to try and get more coherence and working together. A lot of that has manifested itself in some of the cross-council programmes-Living with Environmental Change, Ageing and Global Security- where we have partnered inputs from the Government Departments with the Research Councils. So it is really a forum for making sure that we have understanding of where the policy drivers are coming from, where the research priorities are in the Research Council and where we can more effectively work together. It is not a meeting that leads to a decision but it is a networking and sharing of information and intelligence.

Q39 Pamela Nash: In those meetings, has there been any discussion of there being a transfer of responsibility for research from individual Departments to the Research Councils?

Professor Smith: No.

Q40 Pamela Nash: Finally, there has recently been a study by Imperial College London’s Business School and they suggested that the Government’s current R&D spending has little impact on national productivity. As you said earlier, it is output that matters, not input. Do you think there is any way to maximise the impact of the spending that we currently have on departmental research and development to affect the economy?

Mr Willetts: I am not sure I am aware of that particular piece of research. We certainly know the alternative. We know that there has been some very good research by Professor Haskel showing that Research Council spend has a very good knock-on effect. Are you familiar with that other research?

Professor Smith: I am not familiar with anything that has looked systematically in the same way and with a similar methodology at other Government Departments.

Q41 Chair: I think this is the same piece of work.

Mr Willetts: Are you taking the Haskel paper that shows high returns to Research Councils but you think it shows lower returns elsewhere? Is this the argument?

Chair: That is the implication.

Mr Willetts: Right. Whenever I spoke to the Treasury about the document I emphasised the high returns to the Research Council. I did not do the other part of the paper. Shush! Can we keep it quiet? This is the Haskel paper that you are talking about-Haskel and Wallace or something?

Professor Smith: Yes.

Mr Willetts: Well, we better check that point.

Q42 Chair: I think the implication is that some Departments are not as effective as others in delivering value for money in terms of the research programmes. You might argue, I guess, that therefore all research ought to come under your bailiwick, but others may have a different view.

Mr Willetts: This is a fair point. We will look into it. I understand there are these issues about R&D across Government. I have to say that the Research Council Grant structure and the REF-RAE-are both very well designed to drive high performance and efficiencies.

Chair: That leads us neatly on to Haldane.

Q43 Stephen Mosley: Yes. The Haldane Principle has been mentioned a number of times today. I know in your statement in October you said that there is some uncertainty over the interpretation of it and you will be clarifying the situation with a new statement before the end of the year. Are you able to indicate to the Committee what sort of changes you are proposing?

Mr Willetts: I think that the Haldane Principle means above all that Ministers do not get involved in the detailed allocation of resource between particular disciplines. Our strategic judgments are on the total size of the budget-the Research Council QR split, the balance broadly between Research Councils-but, after that, exactly what each Research Council does or exactly which Departments are judged excellent is not the responsibility of politicians, and a good thing too. I think one of the reasons for the productivity of our research base is that there is a high level of autonomy in Britain, and some of the other countries that you were referring to earlier which spend more on science don’t have that autonomy, which is why their spend is less effective.

The kind of dilemma though-and Graham Stringer’s questioning is a good example-and the fuzziness is, "Would we be able to say we are worried about the regional balance of your spending decisions? Is that something that would be a breach of the Haldane Principle or is that a legitimate public policy?" I think there are some areas like that that we just need to think about a bit further.

Q44 Stephen Mosley: There is also a view that it is good for Government and it is good for Ministers because it allows you to say, "Hey, look, we are increasing spending on this particular area", life sciences, for instance, and then it leaves the Research Councils almost to do the dirty work and actually provide that funding from funds elsewhere. How do you respond to that sort of argument?

Mr Willetts: The fact that I don’t have to take personal responsibility for these invidious decisions is, indeed, another attractiveness of the Principle. It is absolutely right-quite rightly so. I do get people who approach me about the case for their particular department, how it has research excellence or a particular research project, and I think it is good that we politicians don’t get into that. After all, we are lay people; I am not a scientist. That is where Professor Smith comes in.

Q45 Stephen Mosley: Professor Smith, do you see any re-interpretation of the Haldane Principle leading to Government, academics and the scientific community coming together in order to deliver a more long-term strategic approach to science funding?

Professor Smith: Those seem to be two different questions. As to a long-term strategic approach, the Minister said earlier that we have a national consensus about the importance of investing in science and research and going forward.

Do I personally think we are going to get any major re-interpretation of the Haldane Principle? No. I think it is a matter of a slight fuzziness in the middle. When locating a major piece of kit geographically, is the driver excellence and the ability and the linkage with other things that exist, or should there be a regional bias? I think that that sort of fuzziness is what we are talking about, not some major re-interpretation.

Q46 Chair: So, broadly speaking, you don’t envisage, from the evidence thus far, moving substantially from the last formal statement. I think it was John Denham’s interpretation.

Mr Willetts: Yes, exactly. I remember that speech and the work that, I am sure, he put into it. Yes, the Haldane Principle is treated with close to reverence in the scientific community and I have no desire to overturn it.

Q47 Pamela Nash: We touched earlier on the abolition of quangos. You seemed not to have any concerns about the quality of scientific advice available and suggested that it would not be affected. Can I just ask you to expand on how exactly the impartial advice will still be available with the change of responsibility to the new committees of experts?

Mr Willetts: What will happen is that we will have these expert Scientific Advisory Committees. Apparently, about 75 Scientific Advisory Committees have grown up over the years. Some of them are not NDPBs but others have been and they are being transferred into Departments, as I said earlier, as these expert scientific committees. As I said earlier, the key issue is that we continue to have independent scientific advice to Government and it has to follow the principles of scientific advice and the Code of Practice for Scientific Advisory Committees that we have formulated. There has been a strengthening that began before we came into office, but I have tried to carry the process forward of the regime for guaranteeing independence for scientific advice. Even though these committees are now going within Departments, we think that we now have sufficient protections in place.

Q48 Pamela Nash: You mentioned earlier that, although the Scientific Advisory Committees will be based within a Department, those on it will not be on the payroll of that individual Department. Does that mean that these advisers will be unpaid academics?

Mr Willetts: I am going to turn to Professor Smith. I don’t know about the academics who serve on these committees.

Professor Smith: In many of the existing ones they are unpaid.

Q49 Pamela Nash: If it is a voluntary role, how will the Government ensure that there is independent scientific advice available at short notice if there is any sort of an emergency?

Professor Smith: I think there are two things. Standing Scientific Advisory Committees that give long-term advice and help to feed in advice are one thing, but when you have got a national emergency, we go into another mode. With things like the volcanic ash, Sir John Beddington would lead on that as Government Chief Scientific Adviser, but he would liaise with me and we would bring in the Natural Environmental Research Council and its aeroplanes and so on. So there is a different modality but we are able to tap into the whole of the university and the Research Council expertise at short notice.

Q50 Chair: Can I just push you a little further on this? I am looking at the list in the Department of Health. A number of the key bodies that are being abolished or absorbed into other things, expert committees created and so on and so forth, have quite significant ethical challenges in front of them: the Gene Therapy Advisory Committee, the Genetics and Insurance Committee, the Human Fertilisation and Embryology Authority and the Human Genetics Commission. How are those ethical issues going to be dealt with in a way that is seen by the public to be independent of political interference?

Mr Willetts: I hope the fact that the Code of Practice is now in the Ministerial Code will give people that confidence. I don’t claim that people stand on street corners studying these documents with great attention, but I think the message overall is that politicians have to be sufficiently confident to be able to accept that these are independent people and are entitled to their views. I think that is something that all of us in the coalition Government understand.

This is very much for the Secretary of State for Health. The impression I pick up is that there are quite a few people who are rather pleased because they think there were rather too many of these bodies with lots of specific remits and that some consolidation was no bad thing.

Q51 Graham Stringer: I rather approved of getting rid of lots of quangos, but, as ever, there are exceptions. I was amazed, really, that the Human Fertilisation and Embryology Authority was down to be abolished because, in practice, it has provided both expert decisions and expert advice to Government, at arm’s length from Government, in some of the most difficult areas of ethics and religious belief. Don’t you think there is a case for re-looking at that particular body?

Mr Willetts: Of course the function carries on, but the function carries on as part of a larger Department.

Q52 Graham Stringer: Yes, but it will be in the Department of Health, won’t it, as opposed to an independent body set up by statute? It is a statutory body. It is not just a non-departmental body. I would have thought it was worth a re-look at it.

Mr Willetts: All I can say is that the scientific advice that we get remains independent. It is not an attempt to reduce the independence of the scientific community’s advice. We are absolutely committed to that and that is why it is so important that we have the code in place.

Q53 Graham Stringer: I don’t want to labour this but I do want to look at it. It does give advice but it actually takes decisions, doesn’t it, on authoritative stem cell research and other issues? Surely, that is better away from Government rather than in the bowels of the Department of Health.

Mr Willetts: This is advice to Government, but this is not going to be advice from mainstream career civil servants. This will still be advice from independent scientists.

Q54 Chair: It has the danger of running counter to what you have earlier said about Haldane?

Mr Willetts: I will be rigorous in making sure that that principle continues to be understood and appreciated because I think it is fundamental to the success of science in this country.

Q55 Gregg McClymont: Minister, in your oral statement on 3 November, you emphasised your belief that it was a good idea to move increasingly to a system of higher education driven by student choice. Can you tell me what you mean by "student choice" in this context?

Mr Willetts: What I mean is that the bulk of the money that comes currently to universities via teaching grant would instead come via students and the charges that universities levy but, of course, the student will not have to pay upfront, out of his or her own pocket. It is a graduate contribution. They will be lent the money to pay the charge and then there will be a graduate contribution depending on their earnings afterwards, but it is a shift away from allocation by HEFCE to money following the student.

Q56 Gregg McClymont: "Money following the student". It sounds to me from what you are saying that the student will be increasingly sovereign as a consumer-would that be a fair way to put it-having a direct relationship with the university?

Mr Willetts: I don’t know if you think you are laying a trap for me but I am happy to fall into it. Yes, I do think that. In taking a step back, we have very sharp incentives for research in this country. It is one of the reasons why we have scientific excellence. I do think it is quite an issue that we do not have sufficiently sharp incentives for teaching in universities and I would like universities to be focusing just as much on the teaching experience. Something that strikes me is the contrast between the general belief that we have a really strong research base and the fact that quite a lot of students and their parents say, "How many essays do you write this term? How crowded are the seminars? How frequently do you get to see the big-name academics whose faces are all over the prospectus?" I think there are some issues there and I think we do need to empower students and get them addressed.

Q57 Gregg McClymont: There are a number of things there. I will pick up specifically on the implications of the student as a consumer for STEM subjects. It seems to me from what is left of the teaching grant being focused on STEM subjects that you recognise that a market in terms of supply won’t work in those subjects. But can I raise the issue of demand in terms of a market?

The historical position of British students has been to avoid doing science and engineering courses . So are you not laying a slow- burning fuse under the future of British science and engineering?

Mr Willetts: This is completely equitable between the different disciplines. The way we see it is that the standard teaching cost, which is at the moment approximately 50/50 between the fees introduced by the previous Government and the teaching grant-you can think of it very roughly that each of them are just over £3,000-all, essentially, goes to the student, ultimately met through the graduate contribution. However, the extra costs of delivering certain subjects, where you can identify them empirically-you need an expensive lab and you need equipment-should still be met. That is what we will be doing. So I think it is a fair system.

Q58 Gregg McClymont: That is about supply, but what if students have to be coaxed int o doing science and engineering? It has always been the British disease. If you move to a system where the student makes the choice, how are you going to get enough people into science and engineering?

Mr Willetts: I attach a lot of importance to transforming information, advice and guidance, and people from all political parties are recognising that that is the challenge. One of the things I am keen on is for people to be able to see how they can end up doing the jobs they want to do, what jobs are well paid-that is not the whole story but it is a crucial consideration for some people-and what routes you need.

My view is that there are lots of young people, for example, who want to be scientists or engineers. They ended up wishing they could do science or engineering but nobody tells them that they needed to have an A-Level in maths to get through to most of these subjects. I met the Young Engineer of the Year last year and this is true of her. It is a scandal that there are schools that will rack up the A-Level points with a mishmash of courses that are not a coherent way into a particular discipline, a particular career or a way into a university course. Okay, you have done your religious studies, your social studies and drama, and you have got 3 As or 2 As and a B, but then you suddenly discover that the career options for you and university course options for you with that mix of A-Levels are not that good. I think we do need to do far better at getting that information out to young people. That is a challenge for improving careers advice and improving information so they can see if they do engineering or physics that they have got a good chance of moving on into the kind of careers they dream of and that perhaps some other courses at some other universities are not such a good bet.

Q59 Gregg McClymont: Can I ask a final question, Chair? This Committee also covers social science, which is within your remit. By cutting the teaching grant by 80%, roughly speaking, are we not moving towards the privatisation of the British university?

Mr Willetts: British universities are, legally speaking, independent entities. They are not part of the public sector. They are independent bodies that receive grants. Over the years, a mentality has spread in which they are seen as if they are parts of the public sector but I don’t want that mentality. I want them to be proud, independent institutions that have their own independent legal status; their spending isn’t public spending; their borrowing isn’t public borrowing. They are, of course, publicly supported through research funding and continuing teaching grant and the funding for the Graduate Contribution Scheme. I think that is one of the historic strengths of British universities and I want to reinforce them.

Q60 Chair: We will have to move on now. There is a lot more we could ask about that area. Can I just ask for a simple clarification? None of the newspapers managed to fully understand yesterday’s statement in so far as it impacts upon STEM researchers and highly skilled PhD students. How is the cap going to work?

Mr Willetts: As you know, there are several tiers. For Tier 1, which is for skilled people without a job offer, there is a proposal that within that there should be specifically identified people who are excellent in science, which I think is very welcome. There is then a Tier 2 for skilled workers with a job offer, and that can also, of course, include many scientists. Then there are, thirdly, the inter-company transfers, which will be outside the cap. That, again, could well be research scientists moving from a company’s lab in one part of the world to moving here.

Q61 Chair: And you are confident that the way it has been outlined is not going to impact upon our ability to attract world-class scientists?

Mr Willetts: Throughout the discussions that we have had, it has been emphasised by all of us, and particularly by the Prime Minister himself, that Britain has to remain a place to which the brightest and best in the world want and are able to come to carry out scientific research or, indeed, to take a leading role in business and enterprise.

Q62 Chair: So any employer or university vice-chancellor who is worried that he is not able to attract the best should personally come to see David Willetts?

Mr Willetts: My door is always open. I have actually had some very useful meetings with the university community and I, of course, have transmitted those then in discussions with the Home Secretary and others. I increasingly think that part of the issue is implementation. There is some genuine confusion about exactly how the rules work and we can make a lot of progress just by clarifying the rules.

Cambridge University told me at one of their meetings that they were advised that a Nobel Prize winner who was invited to come from America to give a guest lecture with an honorarium of £100 needed to get a work permit. Now, the UK Border Agency did not seem to think that a work permit was necessary. There are many issues like that which cause understandable unhappiness to our academic community and, I think, as we improve the implementation of these policies, a lot of them can be tackled.

Q63 Chair: So, in future, scientists and engineers are not going to be treated less favourably than Drogba?

Mr Willetts: Correct; exactly.

Chair: We’ll watch this space.

Q64 Gavin Barwell: Can I just pick up on that, Chairman, before I come on to the last question? It seems to me that that is not quite the case, because with footballers there is an exemption, as I understand it, and what the Home Secretary announced yesterday was not an exemption. If I understood her aright, she was saying that the Tier 1 channel is now going to be restricted solely to eminent scientists or people with the potential to become eminent scientists and that there will be a limit of 1,000 a year. I don’t think it is quite equivalent to the footballer situation, although I believe that that clarification is welcome.

How is the figure of 1,000 arrived at and how will it be divided up between different i nstitutions?

Mr Willetts: On the footballer, on your comparison, there are actually very strict criteria for who these excellent footballers are. There are not 1,000 Drogbas out there who are going to be able to come into the country. If you look at the conditions, they ensure that this is a pretty modest number. I think 1,000 was reached on the basis of discussions that we are all having about the best way forward. Of course, the Home Secretary has made it clear that this will be reviewed annually. We are going to look at how it works and check that it is working the way we intend and not deterring the brightest and best.

Q65 Chair: Reviewing it annually is all very well, but turning back a potential Nobel Prize winner seems pretty daft.

Mr Willetts: These are people coming to this country without a job offer. Remember, there are other routes as well. I am trying to clarify for the benefit of the academic community issues about whether you need a work permit to come and deliver a visiting lecture, which I don’t think was how it was ever intended to operate.

Q66 Gavin Barwell: I will move on to the next issue as we are tight on time. Are you in a position to clarify at all the budget for the Technology Strategy Board for next year?

Mr Willetts: This is something that we are still working on. We haven’t yet got the full departmental breakdown of our overall totals. We, like other Departments, are working through this and I hope in the next few weeks I will be able, with the Secretary of State, to issue the grant letter to HEFCE and be able to give a full breakdown. Given that the departmental budget as a whole is being cut, we have to expect that there will be reductions in the TSB’s budget as part of that, but then we have separately identified that there is £200 million for Technology and Innovation Centres to which we attach a lot of importance.

Q67 Gavin Barwell: That neatly moves on to the next question I was going to ask, which is, will the £200 million, in terms of the Technology and Innovation Centres, be part of the core TSB budget or will it sit as a separate budget line?

Mr Willetts: We will be identifying that as a separate line in the budget of course. This Committee and perhaps the departmental Select Committee will be entitled to a breakdown of all the different components of departmental spend and it will be possible to see the £200 million Technology and Innovation Centre budget alongside the rest of the TSB budget, and it will be separately identified.

Q68 Gavin Barwell: My final question, Chairman. What proportion of the costs of the establishment and the running of these TICs do you envisage being borne by the private sector?

Mr Willetts: The German model is quite interesting. We have to be very careful. We are not simply picking up Fraunhofers and applying them in Britain. Again, there is a separate set of questions about all this which we are still working on. About a third of the German funding figure is public expenditure, about a third of the money comes from the business community and about a third of the money is specifically project-related, which itself is a bit of a mix. That is an interesting guide. It is not the perfect formula but I would certainly very much hope that we will get a significant contribution from the business community to these, which will mean that our public expenditure commitment is geared up and leverages up some significant private investment as well.

Q69 Chair: Finally, you will have gathered from questions I have asked you and other Ministers, and I asked the Prime Minister the other day, that we believe there is a potential interaction between all of these complex subjects-Browne, the immigration cap, the CSR, departmental spending, the rundown of the RDAs and so on. If you find there is an unforeseen outcome of the impact of one of those upon the other, what are you going to do about it?

Mr Willetts: I am tempted to say that you have put this question to the Prime Minister already and now you are expecting the mere Minister for Universities and Science to be able to answer it.

Chair: He passed the buck to you.

Mr Willetts: I do realise that there is this interaction. You are quite correct that there are a set of interactions. But our view is that, if you put it all together, we have had a very good science settlement and we have now got a set of decisions on immigration caps which expressly recognise the importance of scientists and which are also explicitly going to protect students coming to universities. Remember that the term "student" as used in most of the public debate covers many more people than people coming to university. So university students coming to trusted institutions are going to be all right. If we put all this together, I hope that the science, research and business community, which attaches so much importance to it, will feel that we are absolutely on their side and realise how fundamental they are to raising the growth rate of the British economy.

Chair: May I thank you very much for your attendance, and particularly, Professor Smith, we wish you well in your new rather challenging role.