Science Research Funding in Universities (Science and Technology Committee Report)

Baroness Bowles of Berkhamsted Excerpts

Wednesday 9th September 2020 Grand Committee

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I will start by declaring not so much an interest as a prejudice, which is in favour of research in STEM subjects —given that I am a physicist and former university researcher myself.

In my subsequent career as a patent attorney, I came face to face with the inability of our universities to build on technical developments that came from their research. In a country that prides itself on financial services and capital markets—something that has occupied me for the last 15 years of my career—we are still broadly incapable of finding the domestic investment that means innovation can get much beyond start-up before it is sold on to foreign companies. That is not just my sentiment—it was said by the head of Cambridge Enterprise, and similarly just now by the noble Baroness, Lady Young.

No doubt such buyout counts as “foreign direct investment”, just as takeover of our companies does, but it does not retain control of profits or allow the scale-up in British industry that is so desired in numerous policy statements.

We rightly flatter ourselves on our university research but, until we transfer the 15% of most highly cited papers into 15% of the world’s most productive technology, we are failing. We can reap only what we sow, which means that until the industrial strategy White Paper target of 2.4% of GDP being spent on R&D happens, we waste potential economic benefit and end up paying to buy back our own innovation. It certainly flows in the wrong direction not to have quality-related funding that reliably keeps up so that the true economic costs of research are covered. The various impacts of Brexit will also need addressing.

Right now, our universities are under the threat of reduced income as the number of international students falls. As the committee’s report explains, it would be very damaging if the Augar review were cherry-picked for a headline of reducing the cap on student loans without correspondingly increasing the government teaching grant, the full package of which is not Treasury-friendly.

The Economic Affairs Committee, of which I am a member, had a jolly good stab at unravelling the intricacies of student loan financing in its 2018 report, Treating Students Fairly: The Economics of Post-School Education. Giving students value for money and not treating tuition fees as cash cows was a primary concern. A squeeze on university finances would push that in the wrong direction and away from the more expensive STEM subjects that the economy requires.

The committee also proposed removing the various fictions and anxieties surrounding student loans—my paraphrase—by lowering interest rates and removing the deferred recognition of loan losses used in the national accounts, which differs from international corporate norms—a correction which has now been made. So, if a headline student debt cut is needed, go for the interest rate: it causes alarm and is unfair, yet significantly adds to the amount that is not eventually repaid, serving little purpose now other than appearing as a loan loss in the national accounts.