Catapults (Science and Technology Committee Report)

Baroness Blake of Leeds Excerpts

Thursday 19th May 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

My Lords, I thank the Science and Technology Committee for its thorough investigation and the report we have before us. In particular, I thank the noble Lords, Lord Mair, Lord Patel and Lord Kakkar, and the noble Baroness, Lady Walmsley, for their considered contributions today. I am sure the Minister agrees that the scale of the issues raised today warrants a further debate and an in-depth look at the issues raised. As we have heard, the 2010 Hauser report, commissioned by Gordon Brown’s Government all those years ago, recommended the establishment and funding of a network of technology and innovation centres in areas where the UK has the potential to gain substantial economic benefit, and that became the Catapult Network. We need to focus on that regional element.

These Benches take science seriously and fully support the Catapult Network’s role in driving innovation. I am afraid I believe this is contrary to a Government who have had five Science Ministers in less than three years and have offered a multitude of strategies, road maps, plans, reviews—as we have heard—and various broken promises, but who are short on purpose, power, resources and, indeed, leadership. Those things are needed to drive a high-skills, high-wage, high-productivity economy benefiting the whole country, not just talk and hesitation. This is evident in the findings of the Science and Technology Committee, which examined the contribution of catapults to the R&D framework, particularly their role in stimulating long-term investment from the private sector and the support they offer to new innovation collaborations between organisations rather than the centres themselves. It was, of course, welcome that the report found that the innovation system had all the components to be successful, but that is about where the good news ends. I shall address some of the barriers preventing the Catapult Network delivering the economic benefits it promised, and the recommendations in the report that would be particularly beneficial in realising this.

The only place to start is funding. We have heard something about this today. At the highest level, the Government have already stated that the 2.4% of GDP target found in the 2017 industrial strategy and the R&D road map could be achieved by 2027 or earlier if enough private investment could be leveraged. I have no doubt that this is something the Minister will already be doing, but can he update us on progress towards it and on what steps are being taken to ensure that sufficient investment can be leveraged? Having examined the technology and innovation centre networks operating in the UK’s international competitor countries, Dr Hauser’s 2010 report clearly set out the importance of a strategic, predictable and sustained approach to public funding that can be complemented with programme and contract funding from the public and private sectors. This approach allows the networks to capitalise on local and national strengths, helps integrate the network into the wider innovation system and technology-focused activity across government and enables long-term planning to maximise their contribution.

A third model was adopted in accordance with best international practice, and Dr Hauser’s 2014 review supported its continuation, with one-third of funding coming from a core grant from the Government via Innovate UK, one-third from industry partners and one-third from collaborative R&D funds bid for by consortia involving catapults. However, the report in front of us found that, while this is an appropriate intention in theory, in 2019-20 total funding from core grants was 90% higher than funding received from collaborative R&D funds. In Germany, by contrast—where, by the way, total funding is more than three times higher—the split was close to exact. Younger projects in particular struggle to meet the funding split and subsequently rely more heavily on their core grant. Perhaps the Minister can look into this and see whether more flexibility with the model may be beneficial for helping new innovative projects get off the ground.

The report also found that Innovate UK’s cap on the amount of CRD funding that can be allocated to public sector partners in a consortium, which is currently set at 30%, can limit the extent to which catapults are able to engage with these organisations. They are also found to be at a disadvantage to universities by not being able to apply for UK Research and Innovation research council funding. I am pleased to understand that the Government are in agreement on these two issues and have asked UKRI and Innovate UK to review them. Can the Minister update us here?

While I briefly welcome the Government’s actions, I shall take a moment to reassert that one positive aspect of the levelling-up White Paper was the Government’s commitment to invest at least 55% of R&D funding outside the greater south-east by 2024-25. More R&D spend across the country is of course to be welcomed, but what are the Government doing to ensure that much of it does not just end up in the regional hubs of companies based in London and the greater south-east that end up reaping the rewards of investment elsewhere? Let us be clear: the greater south-east dominates research and development funding. The east of England receives £1,106 per head, nearly twice as much as the UK average and four times as much as Wales.

As well as public sector funding, the committee found that private investment and the involvement of academia could be better harnessed by more strategic decisions being made to

“optimise the performance of the organisations and maximise innovation and commercialisation.”

Will the Minister update us on what steps are being taken in this space?

I will finish on a few broader points. It is very disappointing that the Government have rolled back on their promise to double science spend as part of reaching their 2.4% GDP target and seem to have abandoned their manifesto commitment to finding a cure for dementia through this means. Do noble Lords remember the dementia moonshot? Will the Government reconsider delivering on this promise?

Lastly, many excellent UK science start-ups are being bought up or are moving abroad because of a lack of UK investment options, with private sector funding for research and development lagging behind comparable countries. This is particularly disappointing with regard to the impact it has on levelling up, as science investment remains so heavily focused on the golden triangle. For example, I have been speaking to colleagues in offshore renewable energy off the north coast, and this sector highlights the issues perfectly. Brilliant research means that they are ready to upscale capabilities immediately. The huge risk with delay is loss of competitive advantage with markets overseas, especially, as we have heard, in Europe, where companies are ready to proceed. This has to be one of the main focuses of our considerations today.

I heard the Chancellor’s comments, as read out to us today, at the CBI dinner last night. In the media coverage today I recognise some of the despair that greeted them from so many. I emphasise that the essential ingredient for success in business is ebbing away, and that is confidence. We need a clear, long-term funding plan for science and innovation, and we need it now. Government action in response to the report before us is urgent and overdue. The UK deserves and needs so much better.