House of Commons - Science and Technology

Select Committee on Science and Technology Fifth Report

CHAPTER FIVE: DEPARTMENTAL EXPENDITURE ON R&D

78. We were anxious to establish how the machinery for co-ordination and decision-making on R&D priorities operated at a departmental level and how far some of the criticisms levelled by witnesses were borne out by the example of individual departments.

79. We decided to take MAFF as a first case study, for two main reasons: it operates in areas of policy with a particularly high scientific profile and its R&D budget, though still large compared to many other departments, suffered significant cuts in the recent CSR.

80. In addition, we commissioned memoranda from three other departments with sizeable R&D commitments: the DETR, the MOD, and the DTI (apart from the OST).

81. The DETR funds some £180 million annually of research and monitoring in support of its policy and operational responsibilities.[79] DTI (excluding the OST) spends about £350 million on supporting science and technology under four main budget headings: innovation, aeronautics, space, and energy. The MOD does not have an R&D budget as such: it has a budget for research, on which some £572 million is projected to be spent in 1999-2000[80], and another for equipment procurement. Within that category, some expenditure may be regarded as relating to development (£1.92 billion in 1999-2000)[81] and the rest to production, although this distinction is not used for financial control or programme management purposes. MOD's research programme is largely managed by the Defence Evaluation Research Agency (DERA), which also carries out the bulk of the R&D work. Further details on the pattern of expenditure on R&D of all three departments are set out in their respective memoranda.[82]

82. Having considered these memoranda, we decided to take the DETR as our second case study. This was principally because it appeared to offer the most interesting, and potentially most instructive, comparison with MAFF in that it has a contrasting decision-making structure (decentralised versus centralised) and its R&D funding, despite departmental reorganisations, has remained broadly constant both during the current Parliament and the previous decade, whereas MAFF's has suffered a progressive reduction.

83. Although we make no specific comment at this stage on the memoranda submitted by the DTI (excluding the OST) or the MOD, they have both informed our conclusions. We would, however, draw attention to the concern expressed by the CSA about the decline in the MOD's research expenditure (down by 40% in real terms since the early 1990s) and the potential effect of this reduction on future defence capability.[83] The Defence Committee has recently published a Report on defence research expenditure.[84]

Background to the Departmental Case Studies

84. Within the context of a secular decline overall, civil departments' spending on SET (and within it, R&D), has fluctuated significantly over the past 15 years—both in terms of the total and of the commitment of individual departments. Thus, in real terms, total R&D expenditure by civil departments has at various points since 1986-87 been as high as £1.68 billion and as low as £1.06 billion. Similarly, some departments (for example DTI, excluding the OST) have seen a fall of almost 30% up to 1997-98 and a further drop of 16% since then. Others, such as the DfID (and its predecessor) have enjoyed a large rise (158 % up to the start of this Parliament). A third group, including the DETR, have experienced virtually level funding for R&D.[85]

The Purpose of Departmental Expenditure on R&D

85. There was no disagreement amongst witnesses (including Ministers and officials) that a key purpose of departmental R&D expenditure is to underpin policy-making by ensuring that decisions are based on relevant scientific evidence. A related objective, also accepted by witnesses, is the monitoring and evaluation of the effectiveness of existing policies and past decisions.

86. More disputed is the question of how far it should be the aim of departments, in setting their priorities for R&D, to seek to nurture the science base and, in particular, to try to maintain a core research capability in areas of relevance to their policy-making functions. Witnesses representing the science community were in doubt that such a commitment to the future health of the science base should, indeed, be at the heart of departmental decision-making. In this context, reference was made in evidence to two separate but related recent developments which have combined to create increased uncertainty amongst research institutions about their immediate prospects and even, in some cases, about their continued existence.

87. The first of these harmful developments is the sudden, and apparently arbitrary termination of a programme for purely budgetary reasons (such as the case, to which we referred earlier, of the abandonment of the Postgraduate Agricultural and Food Studentship Scheme). The second is the growing use of short-term contracts in the procurement of research by publicly funded bodies. The Institute for Animal Health (IAH) told us, for example, that in consequence they were increasingly obliged to offer their own scientists correspondingly short contracts—typically for three years. Currently some two thirds of the IAH's scientific staff are employed on short-term contracts. The problem is exacerbated, according to the IAH, by delays in the approval of projects and final reports. In consequence, "the prospects of substantially improving career prospects are poor unless there is a significant change in the policy of funding research institutes such as the IAH.".[86]

88. In his oral evidence, the Minister endorsed the need for departments, in weighing up their R&D priorities, to have regard both to their immediate requirements and to the research capability they might need to draw on in the longer term. So far as the length of contracts was concerned, Lord Sainsbury also referred to the necessity of striking the appropriate balance. On the one hand, the use of short-term funding, coupled with peer review, kept research establishments "in tune with what is happening, and sharp and efficient".[87] On the other hand, departments also had to adopt a more far-sighted perspective and, in particular, "where it is a question of maintaining a capability or a resource then the funding should be done on a much more long-term basis.".[88]

The Case Studies

(A) THE MINISTRY OF AGRICULTURE, FISHERIES AND FOOD

89. MAFF's overall departmental aim is "to ensure that consumers benefit from competitively priced food, produced to high standards of safety, environmental care and animal welfare and from a sustainable, efficient food chain, and to contribute to the well-being of rural and coastal communities.".[89] The purpose of the Ministry's R&D programme is "directly to inform and underpin [its] policy aims and objectives and their implementation and evaluation.".[90] The investment is mainly in applied strategic and applied specific research, although around £13 million of basic research at the Royal Botanical Gardens, Kew is supported by grant-in-aid from MAFF each year.

90. The principal priority areas for MAFF's research expenditure are —

public health (covering food safety, transmissible spongiform encephalopathies (TSEs) and zoonoses); [91] and

protection of the environment (emphasising improved sustainability in production methods and the potential benefits for the environment and industrial efficiency).

91. Other key areas of MAFF's R&D identified in Forward Look are —

genetically modified organisms (GMOs);

flood and coastal defence;

fisheries management and conservation;

animal health and welfare; and

industry competitiveness.

92. MAFF suffered a progressive cut in its R&D budget over the three years of the CSR, amounting to some 7.5% by 2001-02 (from £136.4 million to £126 million). The fall is even greater if the base-line for comparison is 1997-98, when the figure was £140.5million. The long-term decline in MAFF's R&D budget is even more marked. Taking 1986-87 as the starting point, expenditure is projected to fall by 32% in real terms, by 2001-02. (Some of the fall in the latter half of this Parliament is accounted for by the transfer of certain MAFF functions, and their funding, to the new Food Standards Agency.)[92]

93. In a supplementary memorandum, MAFF explained that in applying these cuts in their R&D programme, Ministers had decided to protect or, in some cases, enhance priority areas of research, namely BSE and scrapie, zoonoses and organic farming.[93] In addition, all the food research programmes due to transfer to the Food Standards Agency had been broadly maintained at their existing level, as had flood and coastal defence programmes. The overall cut in MAFF's R&D budget had accordingly been achieved for 1999-2000 by spreading reductions "equally across all the unprotected research programmes". For 2000-01 the position was similar, with the exception that elements of the zoonoses programme had joined the unprotected category. Among the areas of research which have been subjected to these equalised cut-backs, using MAFF's functional titles, are —

"thriving markets" (including arable crop research, plant health and animal disease control);

economic and social (including the rural economy);

conservation of fish stocks;

farm animal welfare;

genetic resources; and

supporting programmes (including science policy).

94. At the same time as overall R&D expenditure has been cut, MAFF's traditional R&D programmes have also been squeezed as a result of the shift in priority towards BSE-related research (up from 0.5 million in 1988 to some £15 million currently).[94]

95. Several witnesses expressed serious concern about cuts in MAFF's R& D budget, both in terms of the most recent CSR settlement and as a manifestation of the long-term decline in civil departmental SET expenditure. SBS put the position as follows:

"A whole series of farming and food related problems have been followed by continued and sustained cuts in the Ministry of Agriculture's research budget. Despite problems with, and serious questions about, BSE, salmonella, listeria, tuberculosis in cattle and wildlife, antibiotic resistance through agricultural use, and management of fisheries stocks, the budget has been reduced.".[95]

96. From the point of view of a research body on the receiving end of funding reductions, the BBSRC—which sponsors eight research institutes working in agriculture-related subject areas—told us that the decline in MAFF's research expenditure had "placed serious pressures on [their] science budget income over the past decade and a half".[96] This in turn had led to the scaling back of activity in important areas of research, including endemic disease and cattle and avian welfare.

97. Within MAFF, the final outcome as regards the balance between competing R&D priorities (and as regards the priority accorded to research, taken as a whole, within the total MAFF budget) is the product of a relatively centralised system of decision-making. It was described to us in these terms by the Ministry's Chief Scientist, Dr David Shannon:

"I would sit down annually with policy customers, talk to them about what their research needs were, go round all the policy groups within MAFF and pull together a bid for MAFF research—noting what research was coming to an end, what new requirements they identified, any other indications which had come from committees such as SEAC or the Food Advisory Committee, or whatever. I then pull those bids together into a paper which will be put to the MAFF R&D committee, which is chaired by the Permanent Secretary and which then takes a view on the overall balance of the programme. Having taken a view the paper would then be put to the Minister for his agreement to the actual balance of expenditure for the next year.".[97]

In other words, as Dr Shannon confirmed, the centrally determined total R&D requirement competes with the other components of MAFF's overall budget for priority within the Ministry's bid to the Treasury for funds.

98. We explored in more detail with Dr Shannon the respective rôles played in MAFF's decision-making process on R&D by the CSA and the Ministry's Permanent Secretary. Dr Shannon explained that the CSA had commented on a number of aspects of the research programme and that there were "several specific points where he has had an impact".[98] And he added that he expected the CSA to review the results of the forthcoming CSR and that no doubt he would "comment to the Prime Minister on what he thinks of the outcomes as far as science is concerned.".[99] Dr Shannon challenged the notion that the voice of science within MAFF was muffled as a result of the fact that the Chief Scientist reported to Ministers through the Permanent Secretary, who inevitably had many other matters on his mind. Dr Shannon pointed to the many occasions on which the Permanent Secretary discussed R&D-related matters with the CSA, whom he (the Permanent Secretary) saw as "someone to be consulted on a range of issues.".[100] He added that the Permanent Secretary was fully attuned to the importance of science through his chairmanship of the Ministry's R&D Committee and that as Chief Scientist he himself had regular contact with the CSA via the medium of the CSAC, which met four times a year.

99. We were so disturbed by what seemed to us to be the complacent tone of the oral evidence from MAFF that we decided to write to the Minister outlining five main areas of concern. Our intention in doing so was to give the Minister an opportunity to respond before we proceeded to consider our Report.

100. The points emerging from MAFF's evidence on which we sought the Minister's reassurance were the following —

the apparent reluctance to acknowledge the scale of the R&D investment needed to support MAFF's current policy objectives, both as regards long-term research designed to identify and give early warning of possible future BSE-type crises and in the development of innovative programmes to assist in the process of conversion away from conventional farming;

the impression that MAFF's bid for R&D expenditure in the last CSR had been framed not so much in the light of the tasks facing the Department but against expectations of what the Treasury would wear;

uncertainty as to whether MAFF's commitment to implementing its departmental science strategy (and the influence exercised through it by the OST and the CSA) would be strong enough to redress the apparent deficiencies described above;

the fact that, for reporting and line management purposes, the Permanent Under Secretary at MAFF is interposed between the Department's Chief Scientist and the CSA, and the implications of this arrangement for the emphasis given to science policy within MAFF; and

the apparent failure to acknowledge a wider strategic purpose for departmental R&D expenditure in terms, for example, of seeking to maintain core research capabilities in key policy areas.

101. In his reply, the Minister stressed his commitment to MAFF's rôle as a funder of research, not only in support of policy but also "in order to maintain and enhance the UK science base.".[101] He accepted that in the 1998 CSR his department had been "subject to a particularly tough settlement" which had left it "some way short of our needs.".[102] But he claimed that research in all the key policy areas (BSE, salmonella and listeria, bovine TB, antibiotic resistance, organic farming, and GMOs) had been either fully protected or increased. The cut in total R&D spending had occurred despite a recommendation from a group set up to consider the state of MAFF's research programme that the budget should be increased by up to £8 million annually in order to focus on key areas (food safety, zoonoses and other animal diseases; and biotechnology).

102. In addition to affirming his determination to press for increased funding for R&D in the forthcoming CSR, the Minister listed a number of steps recently taken by his department to enhance the rôle of research in its policy-making. These included —

the creation of a new Science Committee to "open up and modernise" the way research is prioritised and commissioned;

expanding programmes funded through the LINK process; and
the establishment of a programme of evaluations, conducted by independent consultants, to report on the success and value for money achieved by the research programme.

103. Finally, the Minister rejected the idea that the Chief Scientist's subordinate status vis a vis the Permanent Secretary had a detrimental effect on the Ministry's conduct of science policy: it merely reflected the normal reporting arrangements in government departments. There was "an active and healthy debate at all appropriate levels between MAFF and OST", Ministers met regularly to discuss science policy matters—both bilaterally and through the MSG—and the Chief Scientist had frequent contact with the CSA through the Chief Scientist's Advisory Committee. Mr Brown added that, as far as he was concerned, "these arrangements are working well and very productively".[103]

(B) THE DEPARTMENT OF THE ENVIRONMENT, TRANSPORT AND THE REGIONS (DETR)

104. In common with other departments, DETR's science strategy is "policy-driven". Specifically it aims to —

monitor and evaluate the effects of existing policies and earlier decisions;

ensure that all policy-decisions are evidence-based;

encourage innovation in the private sector where it is necessary in order to meet policy objectives;

assist sponsored industries to make best use of new technology;

develop the research programme in an open and consultative manner; and

deliver a coherent vision of future challenges within the DETR's policy responsibilities.

105. Expenditure on R&D by the DETR (and by its two predecessor departments, Transport and Environment) has been remarkably constant over the last 15 years. The figure for 1986-87 (£134.9 million) is almost exactly matched by the projection of £134 million for 2001-02. A decline of 1.6% in real terms up to 1997-98 is offset by an increase of 0.9% over the current Parliament. This broadly flat picture masks some important switches in R&D spending designed to reflect new policy priorities. Chief amongst these are: transport technology to help meet the objectives of the integrated transport policy; climate change (in particular relating to the UK's Kyoto commitments); energy efficiency; better targeting of resources in housing and regeneration; and regional planning.

106. By contrast with the position in MAFF, the DETR's decision-making process in relation to R&D priorities is largely decentralised. Since 1981, when the then Department of the Environment underwent a major reorganisation, research has been commissioned and managed by individual DETR policy directorates from within their own programme budgets. Under this system R&D demands compete individually with other claims on the relevant programme budget, rather than collectively with unconnected transdepartmental priorities. The advantages claimed for these arrangements by Dr David Fisk, the DETR's Chief Scientist, were twofold: the reduction in bureaucracy from no longer running a single research vote and the ability to respond much more flexibly to sudden demands for new (or increased) areas of research.[104]

107. This decision-making process is overseen by the Chief Scientist, who is supported in that function by the department's Science and Technology Policy Division (STP). STP is located within the DETR's Central Strategy Directorate and has 17 staff, 8 of whom are qualified scientists or engineers. The Division maintains "close day to day working links" with the Department's research managers. In assisting the Chief Scientist to carry out his supervisory rôle, STP provides, as the head of the Division put it, "a quality assurance rôle as far as the research procurement in the Department is concerned.".[105] The Division "does not try to tell people what research they should do".[106] Rather, it seeks to equip policy directorates with people who are expert in their area and "to provide those people with the systems and the methods of checking... and programme evaluation to enable them to deliver their job in a way that is justifiable by the Department.".[107]

108. The Chief Scientist has an opportunity to influence programme budget allocations (from which the individual R&D projects are funded) both through his reports to the DETR board at regular points in the bidding cycle and through his right to comment on annual programme submissions to Ministers.

109. As regards the proper rôle for the OST in monitoring and co-ordinating departmental R&D expenditure, Dr Fisk referred to the need for the Office to ensure "that best practice is maintained in Government.".[108] He also drew attention to the OST's development of mechanisms for drawing together cross-cutting R&D programmes (such as that relating to global environmental change), as well as to their work in linking Government research programmes into equivalent European Community projects. Dr Fisk added the hope that, as part of the commitment to evidence-based policy-making, the OST would create its own policy research programme in order to "better inform transdepartmental debate on science policy issues.".[109]

110. But when asked whether he could give examples of the DETR's R&D programmes where an intervention by the CSA had resulted in any adjustment of priorities or switch in funding, Dr Fisk replied: "No, but we would have treated such an event as signalling a breakdown in our working methods.".[110] He justified this remark by pointing to the fact that important programmes would already have been discussed with the CSA at a formative stage "particularly if the outcome could have significance for Cabinet business.".[111]

79 Including expenditure on R&D by the Health and Safety Executive. Back

80 Forward Look, p. 66. Back

81 Ibid. Back

82 Ev. pp. 41-4; 79-80; 88-90. Back

83 Q. 160. Back

84 HC (1998-9) 616. Back

85 Forward Look, p. 66. Back

86 Ev. p. 57. Back

87 Q. 165. Back

88 Q. 165. Back

89 Ev. pp. 83-4. Back

90 Forward Look, p. 5. Back