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I am afraid, though, that all is not well. Our country has been driven to the brink of bankruptcy by a Government who encouraged an over-reliance on financial services and on debt. We should not be surprised that the edifice has collapsed, but, as the noble Lord, Lord Rees of Ludlow, has said, through both private and public investment in research, technology and engineering, we have an opportunity to rebalance our lopsided economy. The noble Lord, Lord Haskel, also emphasised the need for this rebalancing, as did the noble Baroness, Lady Sharp.

Our universities, science parks and hi-tech and creative businesses provide solid foundations on which we can rebuild. Indeed, our creative industries, to which the noble Lord, Lord Bhattacharyya, referred and which, as the noble Lord, Lord Howie, said, have already had an outing in this Chamber today, are now worth over 7 per cent of GDP. Britain really has got talent, particularly in areas such as design and digital media, which offer great potential for growth.

We must acknowledge, though, as several noble Lords have, that there are always limits to the funds, especially the public funds, that are available. The noble Lord, Lord Bhattacharyya, and the noble Baroness,

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Lady Sharp, among others, rightly spoke of the importance of private sector investment. Taxpayers’ money must be allocated and controlled effectively. Future funding plans must be credible. We must clearly identify—the noble Lord, Lord Crisp, among others, touched on this—where the money is to come from so that research continues while the economy is stabilised.

We must also look seriously at the burden of regulation that can depress productivity. There is a strong danger that cries to increase regulation, aimed in reality at our financial sector, will drown those for a reduction in red tape in our honest-to-goodness engineering and manufacturing sectors, the sectors of which the noble Baroness, Lady Wall of New Barnet, spoke.

As a nation, we must be clear about our research spending priorities. We must maintain a robust science base, with a stable funding system. It is imperative that we look back on this dire period in our economy not as another lurching step on our downward path but as a new beginning. It is axiomatic that science and engineering are now more important than ever to our future national prosperity.

4.18 pm

The Minister of State, Department for Innovation, Universities and Skills (Lord Drayson): My Lords, I thank my noble friend Lord Haskel, for securing this important and timely debate. In fact, as the noble Lord, Lord Crisp, said, this is an urgent debate. I thank all noble Lords who have spoken today; their contributions reflect the true expertise in this House on these matters and reflect well on its expert role.

Science, technology and engineering represent a public good, in the best and strictest sense, growing in value as they are used and shared and yielding tangible benefits for our society, our democracy and our economy. Indeed, our only hope in dealing with the major challenges facing the United Kingdom and the rest of the world—clean energy, disease, sufficient food and water—is to address them through science, technology and engineering. For our economy to achieve sustainable growth, it requires a constant stream of top-quality research to generate new ideas, products and processes so that we can compete in the next-generation industries in the modern world. However, as my noble friend Lord Howie said, it also requires us to ensure proper recognition of our scientists, our engineers and our science entrepreneurs. This Government, I believe, have done that and are doing it. This Government have treated science as one of their highest priorities for public investment and they will continue to do so.

As my noble friend Lord Haskel argued, post-credit crunch, there is an urgent need to rebalance our economy. We need to ensure that those areas where the United Kingdom has the potential to generate future growth are ones in which we continue to invest. Science is key to building Britain’s future. We see approximately 2.7 million new jobs over the next 10 years based around science and engineering. I could not put it more clearly than my noble friend Lady Wall did when she spoke about science being key to getting out of this recession.

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When I speak here of science, I mean not only the physical or medical sciences but the social sciences. I trust that noble Lords will allow me to employ the word “science” in its broadest sense. Let me be clear: I believe that we should fund science even if it produces no measurable economic benefits. Building a greater understanding of our universe is worthy of investment in itself. But I believe that in practice there is no such dichotomy in terms of science spending. There are no hard and fast lines between pure and applied science but, rather, a range of potential benefits when scientists tackle interesting questions.

History has shown us repeatedly that, when world-class scientists are given the resources to ask new questions and introduce fresh perspectives to older ones, they generate insights that ultimately drive the economy, improve the quality of our lives and achieve more besides. After a lifetime in science, I am optimistic about the capacity of this country’s research base to rise to the challenges of the 21stcentury. In the past six months, in my role as Minister for Science Innovation, everything that I have seen has increased that optimism. I have seen the talent at work in this country.

It is no accident, as we have heard from a number of noble Lords, that the UK is ranked No. 1 or 2 in the world in almost every area of science, or that our researchers are more productive per pound spent than those of any other major nation. They are twice as productive, for instance, as their counterparts in the United States. There is something very special in the water, so to speak, in the United Kingdom when it comes to what we do in science.

This world-class performance is also as a result of a dramatic and sustained increase in public investment over the past 12 years. More than £1 billion has been spent on developing our research infrastructure, reversing years of crippling underinvestment under the previous Government. It is the result of, for example, ring-fencing science funding, which has created stability and enabled long-term planning, and of the freedom provided through quality-related research funding for our universities. It is also the result of preserving the independence of the research councils, which make decisions that are in the best interests of their own specialist areas.

The impact of this investment and the effectiveness of the systems through which it is channelled are clear. We can see from the results that it is working. Universities’ external income rose to £2.6 billion in 2006-07—a 50 per cent increase in real terms since 2001. Early indications show another real-terms increase in 2007-08. Even in this very difficult global economic environment, university spin-outs raised more than £1 billion of outside investment last year. UKTI reports that the strength of our research base attracted 251 R&D investments to the UK during 2007-08 alone.

As the noble Viscount, Lord Montgomery, recognised, we have always known that we have been brilliant at invention, but there has been a transformation over the past 10 or so years. We are also now brilliant at commercialisation. I saw for myself the changes that took place in Oxford University through the late 1990s into the early years of the 21st century. From the perspective of scientific breakthroughs, our research base has really delivered.

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However, despite all this success, I agree with the noble Lord, Lord Rees, that we still need to raise our game. Competitors are becoming more numerous and many more countries are focusing on these areas of science. Recent investment made under the new Administration in the United States has shown the way to go.

What is the role of modern government? It is certainly not to tell scientists how to do their jobs, what experiments to do and which hypotheses to explore. We rightly separate ourselves from those decisions in accordance with the well established Haldane principle, but the Government can, and must, look at the big picture and towards the long term, so that this country is in a position to address the inevitable challenges of the future such as coping with climate change or the effects of an ageing population. It is entirely appropriate for government to direct the attention of scientists and engineers to these issues, not telling them how to tackle them, but asking them to find solutions none the less. That is precisely what we have done by creating cross-council programmes in areas such as global security. The research councils are already exploring how to tackle this and other issues in a co-ordinated way. I am very keen for this culture to become more firmly embedded across the science community.

The noble Lord, Lord Freeman, rightly highlighted the fact that, despite our significant investment in our science base over the past 12 years, there is as a result of the global credit crunch a dire shortage of venture capital to enable the spin-off businesses from our universities to grow. I am happy to confirm that the Government are working on programmes to identify actions that they can take. I am happy to clarify that the discussions relating to a state-backed bank recognise that two separate problems need to be addressed: first, the lack of venture capital for those companies that are typically pre-profit and how capital can be generated during this market failure to ensure that the money is available to take them through to profitability; and, secondly, the provision of development capital, as the noble Lord said, post the transition of 3i into larger, more highly geared private equity deals. There is also a lack of development capital for companies that are already profitable to take them to future growth. We are looking at both those areas.

My department, DIUS, working with other government departments such as BERR, is at the forefront of making sure that science and innovation can fulfil their potential, identify problems and come up with solutions. I note the points made by the noble Baroness, Lady Sharp, based on her extensive experience in this area. While we need to need to learn the lessons of the past and from the failures of this type of industrial policy, we still need to recognise that intelligent choices need to be made.

We have had successes. For example, we recently secured agreement on the European Space Agency’s first investment in a facility in the United Kingdom, at Harwell. That is excellent news, which raises the profile of another thriving UK industry, the domestic space industry, and will increase the involvement of our scientists in international programmes.

I am delighted to have the opportunity in response to the noble Lord, Lord Crisp, to highlight the work

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of the Office for Life Sciences, which has been set up to drive change across government departments in support of what is now, post the credit crunch, our single most important industrial sector. I am happy to confirm the themes that he highlighted: the promulgation of best practice across the NHS and the recognition that in the NHS we enjoy a competitive advantage that no other country has. We need to exploit that advantage properly, particularly the patient database going back to 1948.

Many noble Lords have mentioned the importance in all this of science communication and the engagement of science with the wider community, which is why the Prime Minister and I earlier this year launched the “Science: So What? So Everything” campaign, not to target the science community but to address the sense, as mentioned by several noble Lords, that science is seen too much as the preserve of the elite and not as something affecting everyone’s lives. The campaign has been very successful and we will maintain it, using the media and celebrity ambassadors to convey the relevance of science in every part of our lives.

As the noble Baroness, Lady Greenfield, highlighted, we need to recognise the cultural clashes that exist between the timescales in different parts of our society. I pay tribute to the work of the Science Media Centre, which noble Lords have mentioned, but we need to take this further if we are to make the UK a continued leader in science.

Our ability to exploit our science base to deliver economic growth is in part to do with making better use of the Government’s massive procurement budget to support and drive innovation. That is why we are putting effort into our small business research initiative, which supports the high-technology SMEs at a critical stage of their development. In particular, we are developing the Technology Strategy Board, which I am grateful to a number of noble Lords for highlighting, particularly my noble friend Lord Bhattacharyya. It has been a success, which is why we have put more investment into it—an additional £50 million, allocated to the board through the strategic investment fund. The noble Lord opposite described it as a slush fund, but it is anything but that; it is a strategic investment fund, going into those areas of growth where the United Kingdom has real competitive advantage, such as life sciences, clean tech, new energy and renewables, digital and IT. It reflects the continuing importance of investing in technology and innovation for the sake of our long-term competitiveness.

At the same time, we must continue to extract maximum value from the public investment in science. Maintaining our investment under the 10-year science framework gives a clear sense of our commitment to do that. Of course, the global recession makes increased efficiency a universal virtue and increases demands for accountability. The Government must make efficiency savings in all areas, science included, but I reassure my noble friend Lord Haskel that there has been absolutely no cut in the science and research budget. The ring-fence remains intact despite the spending pressures. The science community is in the unusual position of having a commitment that all efficiency savings that can be generated—through the lower rate of inflation, for

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example—can be invested directly back into scientific research. The research councils have announced that projects related to such areas as life sciences and the green economy would benefit from this. However, I stress that it is the science community that decides what the areas are and where the research investment should go.

Whether we are experiencing a downturn or enjoying economic growth, people have every right to know that their taxes are going to best use. They have every right to expect that scientists with support from the Government are looking at every opportunity to derive benefits from the excellent research that they undertake. That requires the science community to look hard at the knowledge that it generates; irrespective of whether that knowledge emerged from a project that is pure or applied, it should consider the potential impact. The research councils now ask all grant applicants to do this, and I believe that that is right.

Also, it is the fundamental responsibility of scientists funded by the taxpayer to engage with the public and to explain the value of the work that they do. We need scientists to talk not just to one another but to people in business, public services and the Government through the media. The best way in which to encourage them to do this is through the way in which the research is assessed. As the noble Lord, Lord Jenkin, highlighted, they should have the opportunity to stress what is known as well as what is not known. Therefore, the Government have asked the Higher Education Funding Council to make sure that the new research excellence framework reflects the quality of researchers’ contribution to policymaking and public engagement and makes it easier for researchers to move between academia and the private sector.

Let me say a few words about focus. The recession poses a far greater challenge for us than just the need for efficiency. We need to reshape our economy to be competitive in the industries of the future. As the noble Baroness, Lady Sharp, said, I offered three criteria that I asked the research community to consider, so that it, business leaders and the Government could decide together where science investment may be best focused to help to rebalance the economy. I stressed areas where the growth opportunities over the next two decades will be significant, where the UK has a realistic prospect of being No. 1 or 2 in the world and where we have a clear competitive advantage.

The research councils have reported back to me on how the science community can best support this, and the Government will say more about this through sector-specific policies in the months ahead. This is how, for example, we will be employing the £750 million strategic investment fund. It is an example of why a full £250 million of the fund will be targeted at low-carbon projects.

For all my emphasis on efficiency and focus, I want to conclude by reiterating the quality of UK science and by stressing the Government’s continued commitment to science. That has to be right for our long-term success, which depends on our having faith in the ability of our researchers to make the profound discoveries that have defined this country’s scientific legacy to date and which will meet the challenges of the future. I

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again thank my noble friend Lord Haskel and other noble Lords for this fascinating and informed debate. A number of points have been made that have given me constructive ideas, particularly those made by the noble Baroness, Lady Greenfield, which I will take forward. Any points that I have not answered I will write to noble Lords on.

4.37 pm

Lord Haskel: My Lords, I thank all noble Lords for speaking in the debate and for their kind words. Sadly, there is not enough time for me to reply to every noble Lord. I have learnt an awful lot. There has been a lot of agreement about the value of science, technology and engineering, and the urgent need for communication and engagement. Over the years, many people have asked me what the value and purpose are of the debates that we have in your Lordships’ House. Surely, I am told, our job is just to legislate, to hold the Government to account, to hear from the Government and to hear from the Opposition. It is not. The response is that, in debating these issues, we provide a valuable opportunity for those with no organised voice to be heard and to hear the voices that need to be heard. Today we have heard those voices. I hope that the Government and society are listening. I beg leave to withdraw the Motion.

Motion withdrawn.

Public Service Broadcasting (Communications Committee Report)

Copy of the Report

Motion to Take Note

4.38 pm

Moved By Lord Fowler

Lord Fowler: My Lords, first, I thank my committee for its exceptional, hard work on the report and, indeed, for its work on all the other inquiries that we have conducted. Secondly, I acknowledge receipt of the Government’s response delivered this lunchtime, which shows Whitehall catching up with the transport concept of “just in time delivery”. It responds, in several respects, very constructively to the points that the committee made. It is an extremely well written response, which I put down entirely to the new broadcasting Minister, the noble Lord, Lord Carter.

Perhaps the first question is, “What exactly is public service broadcasting?”. We could so easily spend the next two hours debating its scope and how it is expressed. For the purposes of the debate, however, I suggest that the working definition we give at paragraph 13 of the report—

roughly describes the area that we are in.

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In the provision of these kinds of programmes, there is no doubt that the BBC is, and has been for three-quarters of a century, the pre-eminent provider. It is something of a national pastime to hurl bricks at the BBC. Sometimes they are justified. For example, personally, I am on the side of the Public Accounts Committee, which was reported this morning to have said that the BBC should give information about the salaries and fees that are paid to its very expensive presenters. It should make that a term of the contracts that it provides.

However, it should also be recognised how important a national asset the BBC is. One of the lessons that the Communications Committee has learnt in its short career is just how valued the BBC is at home and how much admired it is overseas. No other broadcaster is able to provide the promenade concerts or range of drama, for example, that are provided on Radio 4 and, indeed, on Radio 3. No other media organisation in this country is able to provide the range of home and overseas news that is broadcast by the BBC.

I am not one of those who believe that the future somehow belongs to citizen journalists. By their very nature they are part-time and issue-driven. They undoubtedly have a part to play, but the real need in an increasingly complex world is for professional journalists with the ability to dig beyond the press releases. Here, again, the BBC sets a standard of professionalism and objectivity that is difficult to match.

Having said that, it is always important to remember that the BBC is not the only public service broadcaster in this country. In the committee’s view, it would be entirely unsatisfactory if it was ever to become so in Britain. The Government’s response also makes that point clear. ITV, Channel 4 and Five make important contributions. With regional news, for example, ITV attracts four to five million viewers every evening and the research shows that audiences value the choice that this gives them.

Of course, however, as the committee points out, the commercial public service broadcasters currently share a common feature: they are all having to deal with the severest financial weather to hit broadcasters for over half a century. The transfer of analogue to digital has deprived them of the implied but very real subsidy that was being provided. The internet provides increasing competition for advertising revenue, and the world recession has meant company after company cutting back on spending. The impact is severe and undoubted.

My speech will concentrate on news provision, not least because, earlier in the day, the noble Lord, Lord Bragg, dealt with many of the issues surrounding the arts. We face the prospect that, unless action is taken, much broadcast news will simply disappear. ITV has already made it entirely clear that, under present arrangements, its regional news programmes—much valued but expensive to produce—will go. Equally, the much admired “Channel 4 News” programme has always relied on cross-subsidy from Channel 4 itself. In the present cold economic climate, the subsidy cannot continue indefinitely.

So the questions are those of what could be done and, of course, whether anything should be done. One argument is that it should all be left to the market. We

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rejected that argument, partly because some of the alternative programmes—good as they might be—could not be accessed free by the public but depend on subscription, but crucially because, if you take the area of news, going the market way would end up with a virtual BBC monopoly, which I think would be totally undesirable in a democracy.

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