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But having these individual ingredients is not enough. They have to be brought together in order to be marshalled effectively. We have institutions such as the Technology Strategy Board to do that, as well as the knowledge transfer networks that bring a new and

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different focus on innovation. We also have to bring different cultures together. Science, technology and engineering need the social sciences to help us to solve our problems. How can we persuade people to change their ways so that we are able to cope with climate change?

Like Martin Luther King, I have a dream. My dream is that all these elements and centres of excellence will come together. The result will be a balanced economy. Let us take a closer look at each of these elements and see whether I have reason to be confident. Mine is an overview, because other noble Lords know an awful lot more about each of the individual elements. However, science, technology and engineering are changing our society whether we like it or not. You only have to use the phrase “Digital Britain” to demonstrate how accepting of new technologies we now are. Technology has changed our lives in ways that we find useful and acceptable, but that has not happened purely by accident. We used to think that, in order to persuade people to accept science, all that we had to do was explain it—the noble Lord, Lord Jenkin, chaired a committee that produced an important paper on this. But that view was too simple and too condescending. We now know that science must understand the concerns of society. Indeed, many institutions in this country are dedicated to doing this: universities, charities, museums, science learning centres and media centres. Also, National Science and Engineering Week engages thousands of people from the bottom up.

All this is dedicated to building mutual trust. In fact, mutual trust helps scientists and the public to make more informed choices. Trust also enriches the culture of science, which is especially valuable when the public have to choose between opposing views on issues such as MMR. Instead of making decisions based on prejudice, people make judgments based on the values of those making the case. As long as we do not underestimate the public, we will progress towards making science, technology and engineering socially acceptable. Much of this has been brought about by the great institutions that have become part of our culture, such as the Royal Society, the Royal Institution, the Royal Academy of Engineering and the medical colleges. All are proudly dedicated to continuing education and knowledge and to raising standards among people working in their specialties.

Central to the role of science, technology and engineering in our culture, society and a balanced economy are our universities and colleges. Others can elaborate better than I can, but our universities and colleges perform pretty well in terms of papers and citations. Writing in Science magazine, Tony Blair said that,

So it is disappointing that, in the recent Budget, the science research budget is to be cut by £106 million, even though this money is to be reinvested in key areas of economic potential. I hope that the Minister can put our minds at rest on this.

Science education does not start at university. It starts at school. In my time, science and technology were for the dumber students like me. Fortunately, this

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has changed, partly thanks to the popularisation of science. The current obsession for forensic science, stimulated by television and news programmes, teaches students a lot about science without them realising it. Thanks to organisations such as STEM, with over 18,000 ambassadors—yes, 18,000 and rising—to schools and colleges, young people are having their feel for science, technology and engineering turned into something more real. Science, technology and engineering are not second class any more. The ambassadors also do valuable work with young people’s concerns about the environment. We have to persuade them that science, technology and engineering need not be dirty and polluting. These ambassadors do valuable work in that area.

The last few years have seen science, technology and engineering become embedded in our political life and in the Civil Service. The Office of Science and Technology was created in 1993 by a Conservative Government carrying out a promise made in a Labour Party manifesto. Is science transcending politics? I hope so. We have a Chief Scientific Adviser who reports directly to the Prime Minister and a scientist in most government departments. Scientists are central to the green agenda, and even the security services have recently appointed a scientific adviser. However, we are still waiting for the Treasury to appoint one. We are well served by our own Parliamentary Office of Science and Technology, and we must not forget the work of the parliamentary Select Committees. No other nation in the world has a structure like that. The new American Administration are moving towards it; when appointing several scientists to senior posts, President Obama said that “promoting science” is,

I say amen to that. It seems to me that socially, culturally, academically and politically we have the ingredients to fulfil my dream of a balanced economy.

What about business and industry? Do we have sufficient commercial strength? Over the past 25 years, we have relied on consumer spending and financial services to expand our economy. As a result, industry has declined from about 30 per cent of our GDP to 17 per cent. It is this that we have to reverse at a time when private spending will be far more restrained.

There is some good news. Our ability to attract inward investment demonstrates that Britain is a good place to do business. Things are changing. We are breaking down the artificial difference between manufacturing and services. We are breaking down the barriers between pure and applied science. Moreover, the financial sector will also have to reform its priorities. Balance means thinking in industrial terms as much as financial. This means moderating demands for the short-term results looked for by many financial institutions, which conflict with the longer-term needs of scientific and technological development. Surely this is a prime example of the need to moderate sectional interests in line with the national interest.

But our industrial base is small. We cannot do everything; we need to choose. There is a great deal of talk about the future being in low carbon. The recent Budget earmarked nearly half the strategic fund for

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this purpose. But this is a risky business, because low-carbon energy is likely to remain more expensive than the traditional sources.

There are many other economic opportunities, however. An illustration is the 11 potential sites for nuclear power stations that have been identified: 40 per cent of the cost is in their building but 60 per cent is in the equipment that goes into them. John Rose of Rolls-Royce recently listed this work: high value-added manufacturing, robotics, electro-mechanical engineering, materials science, complex software and control systems, and, the Minister will be pleased to hear, all this on the back of a privately financed project.

Is this not a good focus for the strategic fund announced in the Budget? Is this not an opportunity to bring our businesses up to date in these new technologies so that we can compete internationally? Is this not an opportunity for businesses large and small to commercialise new techniques? I hope that the Minister will say something about this fund.

A key ingredient of a balanced economy, of course, is innovation. Not only does innovation find new and better ways of doing and making things, but it is also required to deal with society’s problems. How do we design hospital fabrics and furniture so that they look good, perform well and help to get rid of MRSA? These interfaces are where a lot of innovation happens nowadays and make it less risky.

There used to be a wide range of organisations aiming to improve the technology and innovation capability of British business. The task of joining them up and marshalling them was given to the Technology Strategy Board. To this has been added the task of responding to the challenges that society makes on business and industry for things such as low-carbon vehicles, intelligent transport systems, low-impact buildings and assisted living. We seem to be achieving some focus thanks to the various innovation platforms that have been prepared by the TSB.

Some of this work takes place through the knowledge transfer networks. I declare an interest as honorary president of perhaps the largest one, Materials UK. Again, these networks help to make innovation happen rather than just leaving it to chance. This work is important because business will not automatically do these things on its own. This kind of joined-up working is better developed here than in most other countries. Even so, it can be and must be done better because the TSB and its networks are an important part of our balanced economy.

In the short term, we all know that the urgent problem is to ensure that business and industry have the credit available to survive the current crisis and to hold on to their staff and to their skills. But I think that later there is a good chance of my dream becoming a reality. Recessions stimulate and accelerate change; new and different business models and markets emerge. Yes, we have all the ingredients to achieve a balanced economy. All we need in this changing landscape is the skill, the imagination and the will to make it all work in the way that we want. I hope that the Minister agrees. I look forward to hearing the remarks of other noble Lords. I beg to move.

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2.24 pm

Lord Freeman: My Lords, it is a real pleasure to follow the noble Lord, Lord Haskel. I congratulate him not only on selecting this topic for debate but on his excellent and wide-ranging speech. I do not always agree with what he argues in your Lordships’ Chamber but on this occasion I agree 100 per cent with what he said.

I declare some interests in the subject. I am the honorary chairman of Cambridge University’s technology transfer office, Cambridge Enterprise Ltd, and I have a financial interest in about a dozen high-technology companies either as a director or an investor. I should therefore like to concentrate on one specific aspect of the challenge facing the United Kingdom in developing and encouraging science, technology and engineering activity, at the start-up end. It involves pre-revenue high-technology companies which rely largely on seed funding not only from the Government but from universities. This is the seed corn for the future in terms of developing the quality of science, technology and engineering in this country.

I agree with the noble Lord, Lord Haskel, that the great resources in this country, for which we are world famous, will solve our practical problems. The previous debate might lift the spirit but this debate deals with the urgent practical problems and challenges facing this country.

It is a pleasure to see the Minister, the noble Lord, Lord Drayson, in his place. He was a great loss to the Ministry of Defence but I am delighted that he is back in government as Minister for Science and Innovation. This debate and his concluding remarks will be followed with great interest by the royal academies and by many universities interested in this subject.

The United Kingdom, if not pre-eminent, leads the world in innovation in this field. Perhaps I may compare our great universities with those in the United States. We develop and register more innovations but perhaps exploit fewer of them commercially and financially. However, we have a proud record to defend and nurture. The problem which I am identifying occurs at a very early stage in the development of technology: financing the development and proving of the technology before it is exploited commercially.

Many initiatives and programmes are available in this country. Perhaps I may single out, within the public sector, Partnerships UK. I pay tribute to what it has done, but it is very small in comparison with the resources needed; its total capitalisation, I think, is of the order of £45 million. There are also great foundations—in part led largely by the noble Lord, Lord Sainsbury, and a very generous benefaction to many universities in the development of science and technology—individual business angels; some venture capital companies; Capital for Enterprise, sponsored by the Department for Business, Enterprise and Regulatory Reform; and corporate venture capital funds. The great problem is that this traditional source of financing is beginning to dry up, presenting a real crisis in the development of technology in this country. Once the tap has been turned off, we will pay, five or 10 years down the road, in the lack of innovation that has been commercially exploited.

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Before I follow the noble Lord, Lord Haskel, in turning to the Government’s latest proposals I ought to acknowledge some present sources of alleviation. So far as the European Union is concerned, the Commission has just announced a doubling of the funding for future and emerging technologies, from about £88 million this year to double that by 2015. That is warmly welcomed, although sometimes bidding for these funds presents a serious challenge in terms of both energy and the detail required. However, it is certainly welcome.

The public procurement pull-through, which the noble Lord, Lord Drayson, has talked about in the past—in other words, the public sector providing financial resources in order to pull technologies through before they are either developed further in the public sector or commercialised in the private sector—has an important role to play. Again, I pay tribute to the All-Party Group on Small Business , which is specifically focusing on how to improve public sector procurement at the moment. One must also congratulate the British Library’s Business and IP Centre; it is spending a relatively small sum but it is an excellent resource for young technologists and small business men seeking information about patents, intellectual property and comparable technologies around the world. I congratulate the British Library on what it has already achieved.

The Department for Business, Enterprise and Regulatory Reform has shown focus in producing an excellent pamphlet called Solutions for Business. It is the first occasion when all the various sources of financial advice have been drawn together.

In terms of what is currently available, I single out Scottish Enterprise as quite a sensible model for the regional development agencies or whatever succeeds them. Scottish Enterprise takes the lead in providing matching funds for small high-technology start-ups, particularly those being spun out of the Scottish universities. It has been bold and brave in backing a number of companies, and it has already had its successes.

I turn to the kernel of my argument: all this activity, expenditure and support is not enough. In the Budget, the Chancellor talked about a £750 million strategic investment fund to take over from and provide much the same services as the old Industrial and Commercial Finance Corporation and 3i, until 3i decided to pull out of its traditional role of nurturing new technology. Then, on 20 April, the Prime Minister made a promise at Loughborough University; the idea was to set up a state-backed bank to address the funding gap for start-up ventures, so this was a specific proposal derived from the bigger innovation, the strategic investment fund. Now we read today in the newspapers of the appointment of Mr Christopher Rowlands, formerly of 3i, who is going to lead an official review of how a state-backed bank should be set up, reporting to the noble Lord, Lord Mandelson. It would be helpful if the Minister could confirm that that is indeed the case, along with the terms of reference and a timescale for the review.

We should be grateful to the National Endowment for Science, Technology and the Arts—NESTA—and the British Venture Capital Association for supporting

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the idea of a state-provided but privately run or privately managed fund for high-tech start-up businesses. Richard Lambert, the director-general of the CBI, deserves specific credit for helping to derive that suggestion.

In conclusion, the three principles that should govern this new initiative on spending public money to support high-technology, early start-up enterprises are: first, that we need an allocation of funds, and the £250 million that has been talked about by the Government in your Lordships’ House is of the right order of magnitude; secondly, that we must embrace the private sector to help to manage and exploit the assets available, because I do not think it should be run entirely by the public sector; and, lastly, that we ought to be picking winners, backing technology that has already had proof of concept in our universities or research institutes and technology that is either proven or capable of being proven. We do not want to spread the available money too thinly across many projects all over the country.

The time to act is now, and the Minister’s support is vital to the success of the project.

2.34 pm

Baroness Greenfield: My Lords, I congratulate the noble Lord, Lord Haskel, on drawing attention to this timely topic. As a research neuroscientist at Oxford University and director of the Royal Institution of Great Britain, I endorse, and shall try to amplify, some of the noble Lord’s comments. A good first step could be to identify some of the bottlenecks in scientific culture that are preventing UK plc from making the most of the current opportunities.

First, there is the relationship of science with the media. By definition, it is the print and broadcast media that outreach with greatest impact to all aspects of our society. While the recent coverage of swine flu was comprehensive and, for the most part, accurate, many scientists would feel that there is still a long way to go before we can with complete confidence consign to the past the all too familiar demonisation of science and scientists, the sensationalist, oversimplified reportage of facts and the wariness and aversion many scientists have of talking to the press.

At a basic level, I see the difficulty lying in a conflict of different cultures between scientists, journalists and, indeed, politicians. The ensuing clash is one of very different agendas and timescales. In order to be an effective politician, one has to have some kind of platform and power, and the normal timescale of operations is, say, a couple of years. High on the agenda is sensitivity to public opinion. Meanwhile, a scientist has not traditionally needed to communicate directly with the general public, but top of their list is the need for large amounts of money to fund experiments that are increasingly dependent on expensive high-tech equipment and escalating running costs. Without significant grant money, scientists cannot even begin to ply their trade, and even then they have to do so in a zig-zag progress that can constitute a whole career, spanning decades.

Compare the mindset that will most likely subsequently result with that of the journalist, with deadlines of hours at most, and the defining goal—enabling them to do their job—of attracting and retaining large

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numbers of readers, listeners or viewers. It is easy to see how there may be some bafflement and lack of understanding on all respective sides, as a long-term, and always provisional, discovery of a truth seems to be sacrificed in favour of a dramatic and usually scary conclusion which, above all, makes for an immediate soundbite. Alternatively, it is easy to imagine how a genuine inquiry by a journalist for covering a scientific news item might be met with, at best, an incomprehensible, circumlocutory response or, at worst, prevarication and frank hostility from the scientist.

Ways forward for building bridges between such otherwise disparate sectors are starting to make their mark. For example, Sense About Science, an initiative started by the noble Lord, Lord Taverne, and the Science Media Centre at the Royal Institution have done much over the past few decades to create a common forum where different agendas and timescales can be reconciled. Yet such initiatives are still not supported by all scientists as part of their mainstream activity, and some journalists can still be prone to exaggerate, oversimplify and scaremonger.

We will see a truly effective outcome of this culture clash when we have not only laudable initiatives but a buy-in from all sectors; when every rank and file scientist sees it as part of their job to help—yes, actively help—the media; and when every news journalist taking a scientific angle sees their job as really helping to empower their readers and viewers with knowledge, rather than giving them a quick frisson of second-hand horror. Prizes and acclaim should be given to journalists who can turn this culture around, while more weight should be given in the scientific research assessment exercise and in giving research grants to scientists conspicuously working hard to democratise science.

A second bottleneck also arises from another culture clash, this time between scientists and the private sector. Although the landscape has been transformed over the past few decades in the collaboration of universities with industry, there is still a residual mindset endemic within the technology transfer units of some universities, and indeed in the attitudes of the scientists themselves, that prevents realisation of the opportunities for commercialising on basic research. The respect of the business community for apparently highly paid management, the need to submit patent applications before publication and seemingly rigid milestones are as unpalatable for scientists as a high burn rate, jargon-ridden incomprehensible technology and a lack of obvious exit strategies are to disenchanted potential investors in biotechnology.

Moreover, basic research should not be unattractive just because relatively little money is required, and hence little return possible, for seemingly blue-sky research. The Weizmann Institute in Israel, for example, a research centre dedicated to basic non-applied research, none the less has one of the highest numbers of patents and one of the most stellar commercialisation track records in the world. Surely there are lessons for us to learn here.

A third bottleneck is the frequent disempowerment of up to 50 per cent of the potential scientific workforce. When I headed up a report for the Government in

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2002 on recruitment and retention of women in science, we found that much needed to be done. Today, still only 7.5 per cent science, engineering and technology professors in UK universities are female.

Aside from the need to persuade schoolgirls to look beyond sexist stereotypes, and the importance of giving women of professorial level the confidence and support to apply for glass-ceiling positions, another problem between these two stages became apparent that can be solved, not by a slippery cultural shift, but by simple resources. Money could be ring-fenced for those, including men, who had taken significant time off at a formative stage in their career, to look after a baby. Indeed, the retention rate of female science, engineering and technology graduates is merely 25 per cent compared with the male retention rate of 40 per cent. In a study conducted by the Royal Society of Chemistry in conjunction with the UK Resource Centre for Women in Science, Engineering and Technology, this so-called “leaky pipeline” was attributed to the uncertainty of the short-term contracts available and the inconsistency with raising a family.

Building on the aforementioned study, here is a solution that, while not being easy to implement in the current economic climate, is at least simple to conceptualise. It is to put aside a realistic level of funds so that those not in established posts and returning from childcare—probably mainly women—could compete for fellowships for re-establishing their research, not with the same probability, or lack of it, of winning the lottery, but with a chance that ensured the scheme worked to bring back effective and significant numbers of talented young scientists into the research workforce. With the advent of an estimated 2.9 million new science jobs in the UK by 2017, it is vital to ensure that both sexes receive an equal opportunity in benefiting from this growth.

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