Examination of Witnesses (Questions 1-19)|
Wednesday 19 December 2001
1. Can I welcome our guests here today, the
Secretary of State for Trade and Industry, the Minister for Science
and Innovation and the Director General of Research Councils?
Can I say how pleased we are to get you so early in the process?
We are deliberating about the issues we feel are so important
for the development of the British economy. We know that science
and technology are a major feature and we know that you agree
with us on that, so we are trying to help in the process of moving
it all forward. We look forward to this session very much. We
are in abundance here today, which shows how very determined we
are to move things forward. Thank you very much. I think if the
Minister wants to deflect a question to one of her colleagues
that is fine, we are very happy to do that. We want to get the
best out of everyone here today. Can I start off by saying that
we are very pleased we had the memorandum from you and the implications
for the OST of the DTI Review? In a written Parliamentary question
on 9 July you said, Minister, "there is no separate Review
being carried out at the Office of Science and Technology".
Does this mean there is no separate review or does this mean that
it took place and you concluded that everything was hunky dory
in that division? Did you, in that Review, consider at all the
OST being a freestanding partner or sending it back to its home
in the Cabinet Office, where it once was?
(Ms Hewitt) Thank you very much indeed,
Chairman. What we looked at in the Review was really the organisation
of the DTI. We, therefore, looked at the relationship between
the DTI's work specifically and the work of the Office of Science
and Technology, which, of course, is cross departmental. It was
very clear to me as we went through that Review, and indeed to
all of us, that the Office of Science and Technology is doing
very important and actually rather successful work right across
government. We have Dr Taylor's work as Director General of Research
Councils and, of course, there has just been a quinquennial review
of the Research Councils, we might want to come back to that,
we certainly did not want to repeat that review. We also have
the Chief Scientific Adviser reporting directly to the Prime Minister,
to him and indeed to the Cabinet as a whole. I certainly did not
think it was within the scope of the review of DTI and how we
work to start going down the track of whether those arrangements
might need changing, they certainly seemed to us to be working
well. What I was primarily concerned about was how we match the
work we have been doing to support Britain's outstanding science
base with increased work to ensure that we are commercialising
out of that science base, that we are transferring knowledge and
technology into business and industry across the economy and,
perhaps, most important of all, we are building an understanding
of science and technology and a demand for the products of the
science base within British business and industry. That, of course,
is why we have concluded, as part of the reorganisation of the
DTI, we need this new Science, Technology and Innovation Group.
What I think we will have coming out of the review, I hope that
was conveyed in the memorandum, is a much stronger and effective
relationship between the Office of Science and Technology and
the DTI's core work. We will not disruptindeed for other
reasons we will be strengtheningthe work that is being
done in relation to the pure science base and, of course, the
work of the Chief Scientific Adviser generally.
2. Does that mean that the knowledge transfer
schemes that are now with OST are going to transfer to the new
unit or will they still stay where they are?
(Ms Hewitt) We are looking at that at the moment.
Dr John Taylor is acting as the Head at the moment of the new
Science, Technology and Innovation Group, as well as continuing
with his Research Councils' job, with a remit of designing and
building a new group, which we want to have up and running along
with the rest of Department's reorganisation in April of next
year. We will go out in January for a public recruitment for the
new permanent head of that new group.
(Dr Taylor) I think the design of this new organisation
is actually going quite well. The model I think that everyone
is comfortable with is that the activities currently in the Science
Budget to do with knowledge transfer basically should stay there
but that the activities in the new STI Group will pull together
at Director General level for the first time a whole set of activities
in DTI to do with science, technology and innovation. We are going
to set up a new tight management group which will co-manage the
interface between what goes on in the science base on push and
what should be going on in the industry side in pull. What you
will see as this new group gets together is much more effective
co-management of the way those two sets of things work together.
I think it has been very interesting, not to say exciting, to
see the results coming back from the studies we have done lately
on the rate of innovation going on in the universities and out
of the universities, dramatic increases over the last three or
four years in the rate of start-ups, and so on. It is really shown
very clearly that in research intensive universities, both the
generation of new knowledge and the training of very skilled researchers,
and the knowledge transfer activities are all going on in a very
closely interlinked kind of way. To try and dissect part of that
out from that would be a reversal of what everybody has been trying
to do very hard. We are going to provide much clearer interface
through the new RC-UK organisation into the activities that go
3. You do not think there is a danger you are
creating another chief scientist in the DTI, do you? You will
have chief scientists coming out of your ears soon! You already
mentioned Professor King, we have the Minister with us here, is
this going to be another chief scientist?
(Lord Sainsbury of Turville) Professor King is, of
course, the Chief Scientific Adviser for the Government as a whole.
The new head of the Science Technology and Innovation Group will
be, amongst other things, the Chief Scientist for the Department,
just as, for instance, a new chief scientist has been appointed
at DEFRA. There are chief scientists in various other parts of
government. I think it is an important part of Professor King's
role that he is the head, if you like, of that scientific expertise
and profession right across government. It is not David King's
role to be particularly the DTI's Chief Scientist any more than
he is the Chief Scientist for any other department, he is the
scientific adviser for the whole of the Government.
4. Members of this Committee, Secretary of State,
have been rather worried in the past about the lack research in
some major departments of state. I cite just as an example, it
is not the only example, the old MAFF where the scientists were
not available at a critical moment in MAFF's history. Will the
creation of this new post in your department and the creation
of similar posts in the other departments strengthen the science
base across all major departments of state, do you think?
(Ms Hewitt) Yes, I believe that they will and I think
it is essential that they do. I think your concern was widely
shared, not least by Margaret Beckett, who has made the appointment
of a new chief scientist within the new department within DEFRA.
David King was involved as Chief Scientific Adviser in that appointment
and I believe I am right in saying for the first time the R&D
budget of DEFRA is now increasing in real terms. I think one of
the roles that I can play as the Cabinet Minister responsible
for science is particularly through the new Cabinet Sub Committee
on Science to ensure that right across government colleagues are
aware of what does need to be done to strengthen not just scientific
expertise within government but the use of that expertise and
its communication to the public at large.
(Lord Sainsbury of Turville) I think there is a real
need to have the Chief Scientific Adviser of government keeping
what in industry we call a functional responsibility across government
to make certain that science in all government departments is
of the calibre that it should be and making certain that where
necessary we bring people into those posts, so that we have people
who have been doing scientific research in recent years rather
than doing administrative tasks and, therefore, fully in contact
with top scientists in that particular field. I think the appointment
at DEFRA is a first example of this, which is very important in
maintaining the standards of science across government.
5. You are also Minister for Women as well,
I just wondered if we might see a woman scientist in this position,
a woman businessman or a woman civil servant, how open is your
thinking in all this?
(Ms Hewitt) When appointing a woman you do not have
to be very open in your thinking to want to ensure that you are
recruiting from the whole of the talent pool, not only half of
it. If you are talking about the appointment of the new head of
the Science Technology and Innovation Group that will be an open
recruitment, in other words we will invite applications from within
the Civil Service but also from the entire community. The specification
for the job and the individual who we are looking for is being
drawn up at the moment but obviously we want somebody who has
got a strong expertise in science and technology but who also
has some real expertise in the transfer of knowledge and technology
between the science base and industry itself. It will be surprising
if this person had not worked pretty closely in or with industry.
Yes, it would be wonderful to get a woman in that post, we will
have to see what we can do.
6. Keep your fingers crossed.
(Dr Taylor) Can I just add to that? In the last twelve
months we have appointed the first woman chief executive of a
Research Council and the first woman chairman of a Research Council.
In both cases they were entirely on merit.
Chairman: Radical changes all round, great.
7. Secretary of State, that collegiate approach
sounds fine, but where is the mechanism that ensures complementarity
of disciplines you have in different departments? How do you make
sure you have a reasonable spread of expertise across the Government
which can advise government in the most effective way?
(Lord Sainsbury of Turville) I know this is an issue
and one of the issues we are addressing at the cross-cutting science
reviewthe part of that which is dealing with other government
departments, which David King is leading, as part of the Spending
Review, looking at the science and innovation strategies of each
government department. We now require each government department
to have a science and innovation strategy. The Spending Review
is a good opportunity to review those to make certain they are
focused on what is necessary to help decision making in that department,
and equally to ensure that there are not overlaps or gaps across
government. For example in areas like energy research or drug
abuse, a number of departments have an interest in these and we
want to make certain in planning that research does not duplicate
things and equally we do not have gaps. The only way to do that
is part of a planning process.
8. I think it is the gaps I am more worried
about. Epidemiologists come to mind as not being always available
when you want them.
(Lord Sainsbury of Turville) I think this is an issue.
If there are areas like that then this is the sort of point we
want to follow up at this stage.
9. If I can follow on, the Biotechnology Directorate:
how is that going to be organised? You have four pillars in your
structure that cross all of them; how is that going to be dealt
with under the new structures for science and technology? Will
it cross the pillars?
(Lord Sainsbury of Turville) As you will know in the
Review there are the people who are dealing with business relationships
and obviously they will deal with the relationships with the biotechnology
industry. Where it is a question of designing new schemes or looking
at how we diffuse new technology then clearly the Director General
of the Science, Technology and Innovation Group will have a large
part to play in that.
10. I wonder if I can just lob the usual question
to you about R&D in this country. We have just seen the figures
and we are way behind, apart from the pharmaceutical industry.
What plans have you got to stimulate percentages to creep up?
What is the investment in the different sectors of industry?
(Lord Sainsbury of Turville) I am sure you will also
note that the food industry is also ahead of the game in national
and international statistics. I think this is a big issue and
that is why we are looking, as you know, in the Pre Budget Report
at the whole question of an R&D tax credit for large companies
as well as with small companies. We are looking at how we design
that to give a real stimulus to R&D in big companies. There
has been an encouraging trend upwards on the R&D figures and
the important task now is to make certain that does not fall back
during the period of low growth we are going into.
11. We could argue how it compares with different
countries, and so on, in percentages; in general there is a lot
to do, would you agree?
(Ms Hewitt) If I can come in on that. We are all quite
clear that we need to see both public and private sector R&D
increase significantly. Of course, as this Committee knows well,
we have been very substantially increasing the investment in the
science base over the last four years and that will continue to
be the case. We are looking at the cross-cutting review of science
going on at the moment as part of the 2002 Spending Review. The
incentives to the private sector to increase its R&D are even
more important than what we can contribute in the public sector.
The outcome of the Chancellor's and my consultation on the design
of R&D tax credit is very important.
12. Secretary of State, one might hope, it may
be a highest hope, that the Government puts its money where its
mouth is and increases government spending on research and development
and that industry will follow their example. Do you see any evidence
of this really happening because it is not immediately apparent
at the moment?
(Lord Sainsbury of Turville) It is frustrating and
as your Chairman rightly said there are only a few sectors where
private sector R&D spend is at or above world class levels,
so we need to increase it. One of the things that I observed is
that one of the main reasons why the United Kingdom has remained
the number one location for foreign direct investment into Europe
is the strength of our science base. We are getting more and more
foreign companies investing in the United Kingdom in part because
they want a partner with one or more university departments, they
want to use the outstanding science and technology and engineering
graduates that we are producing, they want to do leading edge
research here. A recent example of that is the Boeing partnership
with the metals department at Sheffield University and with the
Welding Institute. What I think we need to do is not only to continue
to attract inward investment and market our science base to those
potential inward investors, we need to be much more active in
building partnerships with British-based businesses, businesses
who are already here, who have not thought about what the science
and technology base could actually do for their business. We have
made a start on that in a number of different sectors but there
is much, much more we can do. That is going to be one of the chief
missions of the new Science, Technology and Innovation Group.
13. In the 2000 settlement from the previous
Comprehensive Spending Review the science budget did quite well,
with a 7 per cent year-on-year increase. Were that to be maintained
it would be very good news for the future of British science.
Is this your aspiration, to be able to maintain at least this
level of growth?
(Ms Hewitt) I am not going to pre-empt the outcome
of the Spending Review, indeed I have not yet got my bids to the
Spending Review, so I am not going commit to those bids either.
We do have a cross-cutting review of science, which Lord Sainsbury
is leading. We are very clear that the investment we have made
so far in the science base and in the commercialisation of that
science base is proving enormously successful. We are also clear,
I think, despite the fact we have gone a considerable distance
to make up the under-funding of the previous 10 years or so there
is still an awful lot more to do, so I anticipate making a fairly
ambitious bid to the Chancellor as a result of the cross-cutting
(Lord Sainsbury of Turville) We will put in an ambitious
bid. Obviously the circumstances are more difficult now than they
were at the last Spending Review. I think there has been a very
considerable period of under-spending, we have turned that round
and we are now going in the right direction. There is still some
way to go. It is a rather uncomfortable fact that if you look
at the Forward Look statistics, in spite of a very substantial,
real increase which will take place as part of this Spending Review,
in total terms, real terms, we will be spending less across the
whole of government than we were in 1988. I think there is a long
way to go but we are heading now in the right direction and we
will try and push that forward.
14. You are confident of making a good case
for science and technology in this cross-cutting review. Does
the fact that it is a Treasury-led exercise give you any cause
(Ms Hewitt) Not at all. I think the Chancellor and
Treasury colleagues have demonstrated in the last four years their
commitment to the United Kingdom science base. There has been
a very, very substantial increase in funding and indeed the science
budget in the current year is £1.7 billion. There is a very
substantial investment being made there. We hold that budget,
which is ring-fenced, in a sense, on behalf of government as a
whole. As I say, its value is very well understood in the Treasury.
The issue, of course, will simply be that there is already very
substantial increases in public spending plans in the current
Spending Review period and there are enormous demands within the
public services, as all of us are aware, and so we will be competing
for resources against a number of other very important priorities.
(Lord Sainsbury of Turville) One of the encouraging
things is that we can now point to the extraordinary change that
is taking place in universities with spin-off companies, where
we have gone from an average of about 70 a year to nearly 200
a year. We can point to the rate of patents going up very strongly,
the proportion of university research which is funded by industry,
and I think these are very clear indications which will be putting
to the Treasury of how valuable this money now is in terms of
our economic performance.
(Ms Hewitt) There is a very nice figure which came
out from the review we have just done of this commercialisation
and knowledge transfer which will commend itself to the Treasury
that our universities have managed to identify one spin-off firm
for every £8.6 million of research expenditure, in Canada
they get one spin-off firm for every £13.9 million of research
expenditure and in America they need to invest £53 million
to get one spin-off firm. We are getting very high value for money
in our investment in the science-based fields.
15. Do we know what the relative turnover of
spin-off firms are?
(Ms Hewitt) Not yet.
16. When will our bid be going in?
(Ms Hewitt) It will all be going in in the early part
of new year. We would expect to get the results of the Spending
Review by the summer of next year
17. Do you think a concerted back up campaign
will help or do you feel that confident you do not need any?
(Ms Hewitt) I am sure that this Committee and others
who understand the importance of the science base will be helping
us make that case.
18. So, it is Newsnight with Jeremy,
(Ms Hewitt) There will be discussions amongst colleagues
as well. We do not have to do all of these things on television.
19. Could I ask a question to Dr Taylor? You
are moonlighting at the moment, doing two jobs? Can you assure
us that you will be able to keep your eye on the preparation for
the Spending Review because it is so crucial?
(Dr Taylor) Absolutely. As all of us do moonlighting
several times over, we have-cross-cutting reviews, spending reviews,
quinquennial reviews, and so on, and the preparation for the Spending
Review is a pretty well organised process that we have been running
right across the Research Councils since the beginning of this
year. I think we have done a fairly thorough, systematic first
cycle of the RC-UK approach to life in getting that going. I am
very confident that my colleagues and my staff are well ahead
on that. I am certainly keeping a very close eye on it, and on
the relationships between the Spending Review proposals and the
cross-cutting review, which raises a whole lot of wider issues
about funding in universities, and so on.