Engineering Biology (Science and Technology Committee Report)

Baroness Northover Excerpts

Monday 28th April 2025 Grand Committee

[Baroness Northover (LD)]

My Lords, I, too, thank the noble Baroness, Lady Brown, for steering our Select Committee so thoughtfully through this inquiry and for her introduction to this debate. I wonder whether the power outage in Spain and Portugal has extended to the Moses Room, but I can at least just about see what I have written in front me.

I, too, pay tribute to our excellent staff. Our brilliant policy analyst, Thomas Hornigold, who is present here today, seems to relish each new challenge that we give him. He not only becomes an expert on the subject; he is able to simplify it for those of us who are not experts and spot the key elements that we need to consider. Like the noble Viscount, Lord Stansgate, I, too, thank our impressive witnesses.

This is a case study of one area where the UK has been at the forefront in the past but where we seem to be missing the opportunity to scale up. This inquiry has led to our current, wider inquiry on what the UK must do if it is to scale up from innovation—particularly in our universities—to SMEs and, crucially, to large-scale businesses here in the UK. As the noble Lord, Lord Mair, said, we know that this has long been a concern, but it is always worth looking at how, in current circumstances, this can best be addressed. We have had some successes in the past: we fostered the pharmaceutical industry and we kept the automotive industry in earlier years. We have also faced different economic and global challenges, which means we must always analyse how best to steer through whatever our current challenges or opportunities might be.

The global position we now find ourselves in—suddenly needing to be far more resilient than we were before, as our major ally veers off course—means that this is even more important. It also presents a vital opportunity. Right now, US academia—which has, in the past, been so strong, so well-funded, so closely linked to venture capital and so well able to get ideas scaled up—is under bizarre threat from the new President. It is extraordinary to see Harvard needing to fight back against government overreach, and chilling to see the threats from the US Government that its research funding will be cut if it does not fall into line.

We must be at the forefront of attracting talent here. Can the noble Lord tell me if there is a cogent plan for this? I do not simply want to hear a list of what we already have. We know that this is totally inadequate for this, with our visa rules, health charges, salary requirements and so on. This is a time to welcome young scientists and technicians who see the US Government as a block in their path for at least the next few years—possibly a decade or more. The US in the past has benefited hugely from the inflow of such talent; we need to do the same.

Will we see the Home Office, even under such a sentient Minister as Yvette Cooper, pushing back now, simply to keep immigration numbers down? This would be the act of national self-harm to which the noble Baroness, Lady Brown, and the noble Lord, Lord Berkeley, referred. I hope that the Minister is engaging persuasively with the Home Office over the upcoming immigration White Paper.

We have here a leading-edge new technology with potentially wide application, one that the Government said that they prioritised, saying that it has huge growth potential for the UK. The noble Baronesses, Lady Willis and Lady Neuberger, the noble Lords, Lord Tarassenko, Lord Freyberg and Lord Lucas, and others all made this very clear. To semi-quote the noble Lord, Lord Borwick, maybe this one is an “obtainium”. The UK has historically had strengths in this area.

However, we also heard that the rest of the world is catching up and indeed overtaking us. As the noble Baroness, Lady Brown, noted, even the Minister identified to us that the window of opportunity is small and closing. It needs investment. We received a report today from Perspective Economics that underlines what we found. It identifies that the UK is

“at risk of losing out to better-resourced international markets”.

It finds that there is already a trend of innovative British firms moving their manufacturing operations to countries such as the Netherlands, Sweden and Portugal, where scale-up infrastructure and support are, it reports, more accessible.

The response the Government gave to our report has many instances of “wait and see”—in particular, wait for the industrial strategy. It is very welcome that the Government are about to publish an industrial strategy. It is astonishing to me that the previous Government so often prided themselves on not having such a strategy. We had one in the coalition, out of which the catapults came, for example, and investment in the Crick Institute and in areas where the UK had an advantage, even though the then Chancellor defined this as a period of austerity after the 2008 financial crash.

Some subsequent Conservative Business Secretaries, such as Greg Clark, did develop an industrial strategy—but most of his colleagues refused to do this. However, it is not so much about picking winners but trying to work out where the strengths and weaknesses of our economy are today, where we potentially have advantages, and how to move those areas forward, making plans and working out where we should best focus resources. It is also of course about addressing risks and benefits, as the noble Baronesses, Lady Bennett, Lady Neuberger, Lady Young and Lady Freeman, have mentioned.

When will this new industrial strategy be launched? We must hope that it is not all things to everyone. I heard one Minister last week apparently describing certain aspects of it—which I must say made my heart sink—like an election manifesto, with something for everybody. Yet in that same speech, there was absolutely no mention of visas for talented people to come here. Above all, where does the critical scale-up funding come from? Innovate UK can provide some early-stage, small-scale funding, as we saw, but this does not address the need for substantial long-term funding, which has been a feature of the United States, for example.

We noted that the decline in the UK’s capital markets does not help. We concluded that financial reforms, to which noble Lords have referred, including those announced in the Chancellor’s Mansion House speech, which aim to address the limited availability of scale-up funding in the UK, should be rapidly progressed, lest we see even more of an exodus of capital. The noble Lord, Lord Mair, pointed to the limits, though, even here. Clearly, there might be slightly less of that exodus, as Trump takes a scythe to the global economy. As the noble Lord, Lord Drayson, pointed out, this could also be a key opportunity.

I recall that we established the Green Investment Bank in the coalition days, only for it to be sold off later. What kind of strategic thinking was that? Then the wheel is reinvented. We concluded in our report that the National Wealth Fund and the British Business Bank ought to be helpful here, but that their mandates would need to be expanded, they would need specialist investors and they would need to move at speed and to take risks.

There are, of course, immediate political attacks when something seems not to be working. What should we collectively make of this? Just as reform in the health service is so often resisted, risks need to be taken here, and projects given time to develop—and some will not succeed.

We also felt that much more could be done through public procurement, a point clearly made by Angela McLean, which has been referred to this afternoon. We hope the Government will seriously address this.

Regulation was another area that came up in our study. I welcome the appointment of the noble Lord, Lord Willetts, in terms of speeding up regulation and what he has laid out today. However, I am, in turn, shocked by what my noble friend Lady Bowles said about IP. Perhaps the noble Lord, Lord Willetts, and the Minister, can take that away and act on it.

In conclusion, bioengineering has such potential. We need to move fast and effectively if the UK is to benefit from it, but there are clearly huge challenges. I therefore look forward to the Minister’s response to both our report and this debate.