EU Report: Effectiveness of EU Research and Innovation Proposals

Lord Hunt of Chesterton Excerpts

Thursday 21st November 2013 Lords Chamber

[Lord Jenkin of Roding (Con)]

My Lords, I am the first speaker in this debate who was not a member of the committee. Indeed, I have never served on any of the European committees, but I was persuaded to take part by the chair of the committee, my noble friend Lady O’Cathain. I very much share the regret of the noble Lord, Lord Kakkar, that she is unable to be here today.

To pick up a point made by the noble Lord, Lord Haskel, figures that I have seen recently about what is called, in the jargon of the business department, BERD—business enterprise research and development—show that it is a smaller proportion of the total because research and development in other fields has grown very rapidly, but BERD has continued to grow in recent years. This should not be ignored. Indeed, in 2011 it increased in real terms by 6%. As that normally happens only during periods of economic growth, this is quite encouraging and we should not be too pessimistic about it.

When I put my name down to speak, I was a bit apprehensive that I would very quickly find myself out of my depth and perhaps addressing issues that were outwith the main thrust of the report. I need not have worried. The noble Lords, Lord Kakkar and Lord Haskel, have both raised issues to which I will wish to return.

I am doing this because, when I read the committee’s report and the Government’s response, they threw some fresh light on how institutions within the European Union deal with this hugely important area of research and innovation. It led me to compare the way in which this is done in the Community with what happens in this country, always remembering, of course—as the noble Lord, Lord Haskel, reminded us—that much of the money spent in this country that counts as UK research and development or research and innovation is funded through the Community programme.

First, there is obviously common ground. The procedures for assessing the impact of any proposal for research have developed in recent years often in different ways and at different paces, but the purpose of impact assessments has become increasingly clear both to EU institutions and UK bodies such as universities and the research councils. Simply stated, it is this: they are to help those whose task it is to decide how to spend research and innovation money to make choices that will give the best value for money.

But immediately one comes to a question: what is meant by value? At this point, I should perhaps state my interest. I attended a recent seminar held by the Foundation for Science and Technology, of which I was chairman for nine years and am now the president. The subject of the seminar was:

“Maximising the value of the UK strengths in research, innovation and higher education”.

I thought that this might throw some light on the comparison between this country and the EU. Indeed, the words might have been paraphrased as “the effectiveness of research and innovation proposals”, which appears in the title of this report, but that case relates to the European activities.

Whether it is value that you are talking about or effectiveness, I am inclined to believe that they aim at the same thing. Here, the noble Lord, Lord Kakkar, gave us an interesting point on what he thought might be part of value or effectiveness. That was echoed by one of the speakers in our seminar, who asked the question, “What is the value?”. He answered it by asking more questions: “Is it employment, or productivity, or human capital and skills, or human contentment and health—or is it all these things?”. Some of the participants in the discussion started at the other end and suggested that the purpose of research is the advancement of knowledge and understanding, and that this should in turn lead to the innovation which we all seek.

One feature of our discussion on that occasion was that, although the UK stands very high in the world rankings for research or universities or whatever it is—I shall cite in a moment some figures on that which we were given—when it comes to innovation, we are not so successful, as the noble Lord, Lord Haskel, indicated. I shall come to one or two of the reasons.

However, I turn first to universities. Three or four of our top universities regularly figure in the top 10 of virtually every world ranking of universities. When one looks at a longer list of, let us say, the top 50 universities, one sees that there are very few, if any, in other parts of the European Union. In Europe, we absolutely dominate the university field. It has been suggested to me that this may be because far less research is done in EU universities than is done in universities this country and, therefore, they do not rank as high. I can understand that but it is interesting to note that almost none of them is in the top 50. That may to some extent colour the attitude of some of our partners in the European Union.

Turning to research, the UK has 1% of the world population and produces nearly 8% of research papers, almost 12% of world citations and 14.5% of the world’s most highly cited papers. This is a remarkable record of which this country can be very proud. However, as I said a few moments ago, we are not as good at innovating—not nearly as good as this volume and quality of research would suggest that we ought to be. We discussed the trends that may be giving rise to this. The noble Lords, Lord Haskel and Lord Kakkar, have already mentioned one or two of them, but it comes down to knowledge transfer—that is the key phrase—and the difficulty of transferring knowledge from the research field to the industrial field. The noble Lord, Lord Haskel, was absolutely right to put his finger—as does the report—on the fact that this is even more difficult as regards SMEs. Why should this be? Several reasons have been given. One is the inherent institutional, cultural and financial barriers between universities and business. Another is the great reluctance of businesses in this country, but perhaps also in Europe, to take risks and to realise that introducing the products of new research does involve taking risks. There is a reluctance to do that. I was told that if a firm announces that it is going to undertake a major research programme, its shares immediately fall on the market, whereas one might think that this would be a plus. However, in the eyes of the market it is not; it is a minus. The other tendency, of which we are all very well aware, is that of thinking short term rather than long term. However, some of the results of research and innovation may be a long time coming.

I come to my main point. Many of the speakers at the seminar emphasised the huge importance of impact assessments. These have grown over the years in many different ways. In this country it is virtually universal practice to require researchers to make the best assessment they can of the impact which they believe their research could have. The Pro-Vice-Chancellor for Research at Brunel University said that in the experience of that university the very process of having to support a research application for funding with a carefully composed impact assessment was making applicants look at how their research might be transferred to other fields. He went on:

“If the ‘impact agenda’ was to be effective in ensuring that researchers embedded knowledge transfer at the start of projects, they must understand how business might be able to use their research”.

Those seem to me wise words which should apply universally. However, when I turned to the report—here I pick up the points made by the noble Lord, Lord Kakkar—I noted that paragraph 133 states:

“We … urge the Commission to ensure that analysis of R&I policy and proposals is based on scientific evidence, rather than political considerations”.

I find it quite astonishing that that has to be said. Then we had the Government’s response:

“Funding based on excellence is fundamental to the Government’s national research strategy and we also encourage this approach at EU level, as it is the most cost-effective use of public money”.

Can my noble friend on the Front Bench say what the Government are doing within the institutions of the EU to make that happen, if this still has to be said? After all, this is the second report that the committee has produced; there was a 2010 report where it made these selfsame points. Yet here they are three years later, having to repeat them yet again.

[Lord Hunt of Chesterton (Lab)]

This is now the second or third time that this point has been made about peer review. Nature has shown that the whole process of peer review and so-called excellence of research tends to be highly biased towards the English language and the American literature. Some of the most important discoveries were hardly referenced at all in the English language. The EU takes a very broad view of science across Europe, while the rather mechanical view of some of our British colleagues about the nature of choosing by excellence is too narrow. The EC, quite rightly, takes a political and social view of the breadth of science across Europe.

[Lord Jenkin of Roding]

I do not know enough about that aspect of the European attitude on this but I totally support what the committee and the Government have said about the huge importance of basing their decisions on, as they put it in their response, “scientific evidence”. It went on:

“Moreover, it is important to stress that this evidence must be robust, peer-reviewed and replicated. Policy decisions should not be made on the basis of a single report which happens to support a political objective”.

I have no doubt that we will hear from the noble Lord, Lord Hunt, a little later, but I would be interested to know whether my noble friend on the Front Bench supports completely what was said in the Government’s response to this report.

I will not go on quoting; I have taken enough time. Again, I come back to my reaction to this. I found it surprising and depressing that these things still have to be said and are not accepted as part of the overall process of assessing research and development projects. We have been brought up against the background of the Haldane principle. Why do we not have something like the Haldane principle operating within the European Union? We may have our problems in this country—I have outlined the problems of knowledge transfer—but I shall finish on this note. I am left with an uncomfortable feeling that the EU’s approach to the effective use of impact assessments in helping decision makers to secure the best value for money appears to leave a great deal to be desired.

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[Lord Hunt of Chesterton]

My Lords, I welcome this constructive debate, introduced by the noble Lord, Lord Kakkar, on the vital issues of research and innovation for the future prosperity of the UK. This is in the case of the UK working inside and with the EU. I regret, as do many commentators, from the Economist to the CBI, and the noble Lord, Lord Brooke, and as insiders have commented in the EEC, that the debate about the UK’s future membership of the EU reduces significantly the UK’s influence on improving the effectiveness of EU programmes for promotion of research and innovation.

Despite the constructive tone of the report, I am sure that UK SMEs will be pleased that Minister Willetts in the Government’s response highlighted the importance to the UK of the Horizon 2020 future programme, and the public-private dimension of that programme. However, it is surprising that I have now heard one or two speeches by Minister Willetts, and he has never mentioned Europe. There was a big meeting of the Royal Society on the future of science and technology in universities, but Europe was not mentioned. There was mention of the Conservative Party programme on science and technology, but Europe was not mentioned. So I am very pleased at the constructive tone of the Government’s reply in this correspondence.

Everyone, including EC officials whom I have contacted—there may not have been an official response, but I e-mailed some EC officials this week and asked them what they thought about this—agree that the delivery of these programmes could be more efficient and easier for SMEs. I declare an interest as a scientist, working on EC programmes for the last 20 or 30 years, and as a director of a small high-tech company that has received funds from the EC as well as from the UK Government.

The European Commission and European institutions have, of course, transformed many aspects of European science and technology, particularly through their practical and commercial applications. Europe leads the world in practical meteorology. You go to the United States now and turn on a weather channel and they say, “The European weather forecast is the following and the American forecast is this”. You can listen the next day and find out which is correct; for example, the Europeans get the hurricanes right. Europe is remarkably advanced in environmental science. In Beijing, the pollution forecasting for the Olympics was done by a public-private team from Europe. Similarly, in aviation, we know which aeroplanes are the best, and it is the same with advances in nuclear fusion.

I hope that the Minister will take the message from this debate to the Prime Minister that, when he goes to China in two weeks’ time, he should travel on a European aeroplane, Airbus, and make sure that he chooses an airline that has an Airbus with Rolls-Royce engines. That may take a bit of trickery but I can assure noble Lords that there are airlines that do have them. I hope that when he goes to Beijing he will talk about the European prowess in innovation and research and not just leave it to Monsieur Hollande. Time and time again we hear no mention at all by British Ministers of European projects in which the UK is involved, whereas when Monsieur Hollande goes there, one might think that all these European projects were French—but they are not; they are British. We build the wings of Airbus. Enough said, but I hope that the Minister and our colleagues in the Box will take this message away.

This report emphasises how the European Commission has been particularly effective—much more so than the United States in many ways—in identifying new areas of technical research and setting up networks across the EU. One of Boeing’s top aerodynamicists came to a conference this summer in Lyon and was amazed by the new concepts and applications for turbulence over wings developed by European programmes. No academic in the United States has any idea about Boeing’s future plans, but in Europe hundreds of research groups are participating in the Airbus programme. It is a remarkable general programme. However, I received a very mealy-mouthed response to a PQ in which I asked what the effect on our Airbus programme would be of Britain leaving Europe. To my astonishment, the reply was that there would be no difference except, perhaps, to one or two tiny research projects. Leaving Europe would have an enormous impact, and this is something that we should be clear about.

The regional networks are rightly emphasised in this report, despite the Government’s destruction of some of the regional economic programmes which existed before they came to power. The networks that I helped to set up with colleagues across Europe to bring researchers together with industry have been going successfully since 1988. One of the points made in the report is that programmes are funded by the European Commission and then stop. What happens to the people involved? If the various industries and researchers have their own networks then although the EC projects may come and go, the bottom-up network will continue. Some EC officials were reluctant about having these independent networks but now realise that they are actually a good way to fit the pieces together.

The other feature of the EC system is that it is inevitably bureaucratic because it is trying to do things that have not been done before. It is trying to bring people from all across Europe together and introduce interdisciplinary projects. I accept that there will not be much correspondence if you have one project in Swindon that is working on one topic in one lab. But if you are trying to do something across Europe and break new ground, you will have a lot of meetings and letters—because it is worth it and you will get the most remarkable results. There was an effective project on system dynamics in policymaking involving all sorts of disciplines which, noble Lords will be pleased to hear, ended up considering even the fashionable question of defining happiness. We also had interesting discussions about what is wrong with economics, and we had meetings here in Parliament. That is outreach and broadness and it takes a lot of organisation. However, through the extraordinary European office of University College London, all this was handled smoothly and no one complained about bureaucracy. None of these kinds of projects occurs in the United States or any other advanced country.

I asked the CEO of a high-tech SME who was previously a director of a university science park about this issue in order to get an objective view. He agreed about the benefits of EC support for networks but said that there were definitely problems for many individual SMEs. The difficulties included understanding what the grants were and how to apply for them. He said that there were certainly problems about payment and it was important to understand the rules on payments when applying for a grant.

The tenor of this report implies that the big companies can move through it all smoothly and it is just the SMEs which are having difficulties. One of the reasons the SMEs find it difficult is that the big companies delay delivering their share of the contribution. No one gets paid if the big boys do not do their job in time. It is not quite as simple as has been implied, and I have seen that problem for myself.

There is a major gap in this report. While listening to speaker after speaker, I thought that surely someone would mention it, but astonishingly no one mentioned the really surprising thing. The Government and the European Commission have to promote the technology of Europe. They do a pretty bad job of it. If you go to Beijing, as I do quite often—and I came back from Kuala Lumpur last night—you will have 25 trade missions, including the European trade mission, all giving little bits of this and that. Then you have the American trade mission with extraordinarily specialised offices from all the federal agencies. Who will you buy your product from when you have it all explained to you by the United States? The co-ordination behind pushing out European projects is absolutely hopeless, and this needs to be discussed.

We have the UKTI and I am pleased to see that the present Government are promoting exports and supporting UKTI’s budget. However, the department should be working with other European countries. The noble Lord, Lord Oxburgh, and I went to a trade fair in Singapore. If I may say so, there was a pathetic little sideshow by the Brits. It should have been much broader and more European in order to compete with Japan and the rest of them. I hope that that might be something that could be considered. Where we do have European projects, of which the Airbus is a brilliant example, they are promoted because they need to be. Monsieur Hollande does a good job, and let us hope that our Prime Minister will take that point on board.

Another feature of this debate is that our Government should themselves be able to promote these European projects. The United States Department of Commerce has an office not only for promoting US products, but for looking at products for promotion from all around the rest of the world. I do not believe that our Government in Whitehall are even looking at the European projects we are funding, some of which are Brit in origin and some in other countries, to see how we can use them. That is a really important point. Our money is being used to fund technological projects in other countries in Europe, but are we making use of them for our industry? Probably not. This is a broader aspect of the process that needs to be considered.

An interesting aspect of the report is the recommendation to support the Chief Scientific Adviser. I interrupted the noble Lord, Lord Jenkin, earlier in the debate on the question of objective science. I get slightly complicated about objective science because I have been to France, Japan and China where you can see that the nature of peer review is terribly Anglo-US dominated. There is a lot of very important science that is never referenced or seen by these things. The IPCC is perhaps another example. That is particularly true of the humanities where you have all sorts of literature in many different languages. It should be part of the Chief Scientific Adviser’s remit to take a broad view of what the standard of science is across Europe, and the office should also be involved in identifying flagship projects.

Finally, what Europe needs to do is build on the brilliance and originality of its design innovation. The great thing about the UK is that we have a rather anarchic form of originality that does not fit easily into the more Napoleonic systems of administration in the European Commission. It is good that we have a Chief Scientific Adviser from Scotland who understands anarchy, so hopefully she will understand how the Brits can make better use of the EC.

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[Lord Ahmad of Wimbledon]

I assure the noble Baroness that that is already happening: officials are talking on the exact point that she has raised. I do not think that it is happening in real time but I assure her that an ongoing conversation is taking place.

The noble Lord, Lord Hunt, raised various issues concerning China and the representations made there. My right honourable friend the Prime Minister is visiting China. Through UKTI, we have an established presence in China—in both Beijing and Shanghai—and we continue to promote not only UK interests but European interests as well.

The noble Lord, Lord Hunt, also suggested that I could perhaps use my influences in relation to the Prime Minister’s travel plans. I can only share my experience as someone whose in-laws are in Australia. When I go there, I try to book the A380 simply because it is an easier way to travel, and I shall certainly seek to share my experiences on that front.

Both the noble Lords, Lord Brooke and Lord Hunt, asked whether the Government are committed to research and innovation and whether we believe in it. I can do no better than pay tribute to my right honourable friend David Willetts, the Minister for Universities and Science. The noble Lord, Lord Hunt, said that he has not been mentioning the EU much, but perhaps I may give a direct quotation. He said:

“Driving research and innovation in the EU is central to putting our economies back on the road to a sustainable and competitive future … This is one of the areas where we can benefit the most from constructive engagement with our European counterparts. Some of the most exciting and innovative research projects have been the fruits of greater cross-boundary cooperation and mobility”.

[Lord Hunt of Chesterton]

Where did he say that? Was it in the letter?

[Lord Ahmad of Wimbledon]

He said it in the letter.

[Lord Hunt of Chesterton]

Exactly, but not in a public speech.

[Lord Ahmad of Wimbledon]

I can assure the noble Lord of one thing. My right honourable friend is well known to him. I represent his interests and his department, and that is a view that he shares quite publicly. I shall certainly review his speeches and get back to the noble Lord, but perhaps I may also say that that particular sentiment is confirmed within the committee’s report.

It is vital that this opportunity is seized across the board both by the well established participants in the EU’s recent programmes and by newcomers. The UK has been a major player to date in EU research funding programmes, and the Government are totally committed to ensuring that participation is further strengthened in the years ahead.