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10 Nov 2010 : Column 117WH—continued

As well as our history, however, there is also the issue of our future. What is our economic future? What will this country be doing in 2050? If we actually mean it when we say that we want to rebalance our economy, science and high technology will surely be how we do that and where we go. I have been working on this issue with various people, and I draw hon. Members' attention to an article that I have written with another new Member of Parliament, the hon. Member for Mid Norfolk (George Freeman), about the appliance of science. We discuss some of the issues and some of the blocks, and the article is available in selected newspapers,
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possibly near you, depending on where in the country you are. We look at how we can advance in biotech, cleantech, agritech and digital technologies, in which we really have the capacity to be world leading and to change what happens over the next 40 years.

I do not, however, want to talk about all those issues. Instead, I want to pick up three key issues that feed into our scientific research, and I apologise in advance if I give them a slightly more academic than industrial slant. Those three issues are people, money and freedom.

We cannot do scientific research without good people or the right people. As we have heard, we have problems right at the beginning, at school. We have problems in teaching STEM subjects, and the shortage of physics teachers has been mentioned. Work is being done to alleviate that; in fact, there are possibly too many different initiatives. I am delighted to be shadowed today by James Glover, from Mott MacDonald, who is an ambassador for the Science, Technology, Engineering and Mathematics Network. It is sheer coincidence that he is here today, but STEMNET does a lot of work linking industry with schools to make sure that they are aware of what can be done, so that practicals become exciting, relevant and interesting, unlike some of the staid practicals that many of us had to experience.

We have problems at school with people falling out of STEM subjects. We possibly make people make decisions about A-levels too early, and we lose them that way. We then have problems at universities with the perceived ease of STEM subjects and their relative attractiveness. Increasingly, many courses are for four years, which automatically makes them less attractive than three-year courses, and Browne, if I can mention it-it has suddenly gone quiet outside-will make the problem worse. If fees go up to between £6,000 and £9,000, people will think about what they should do. Will they do that fourth year, which is so necessary to have a full grounding in a subject? I worry about that. For the record, I do not support increasing the fees, and I have campaigned against it for many years, since Labour first brought fees in.

Mr Lammy: Will the hon. Gentleman give way?

Dr Huppert: I was wondering whether I could tempt the right hon. Gentleman.

Mr Lammy: I want to add something on that specific point, although I think that the hon. Gentleman will welcome what I have to say. The House will continue to have a big debate about the level of fees, and we are aware of what is going on outside. However, we have not discussed what student debt at the end of the undergraduate experience will do to domestic students who want to go on to postgraduate study. Is the hon. Gentleman as concerned as I am that UK students will be put off going into postgraduate study and engaging in the innovation that we really need?

Dr Huppert: I thank the right hon. Gentleman for that comment. Indeed, that was my next point, so it was very helpful. We do have a problem. I used to teach students, and they were concerned about debt. We can discuss to what extent it is a debt and so forth, but they were concerned. The issue of whether to go on to relatively low-paid PhD positions is a real concern.
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Furthermore, I welcome the fact that PhDs are changing from being typically three years long-or at least paid for for three years, although they normally overrun-to four years long. Although that gives a more rounded experience by the end, however, it also means that people are delaying serious earning potential for a lot longer, and I worry about how that fits with the increase in debt.

There are issues about the quality of PhD programmes. I was recently told that one university has given out one PhD in the past seven years. Although I have not verified that figure, I would be concerned if we had institutions that gave so few PhDs, because there would be questions about the quality of such qualifications. There is also a problem with availability in some subjects, and some very good students struggle to get positions or funding. We therefore have problems attracting people to do science-based PhDs.

If those who go on through PhDs, having sacrificed many years of earning potential, want to stay in academia, they will look for a post-doctoral position, but we have a big bottleneck in terms of the availability of such positions. Even if someone gets one, such positions tend to involve very short contracts-two or three years are typical. That causes problems getting money for the next position. It takes such a long time to find money for the next job-I will come back to this later-that a lot of postdocs do not have the freedom to focus on their work. The fellowship schemes that exist are fantastic, partly just because they allow postdocs to focus on their work.

That uncertainty-that hopping from one short-term contract to another-has real issues for gender balance. We talked about the gender balance at earlier stages, but there is an issue at the post-doc level as well. Women in general do not like this process, and it is a real disincentive for them.

Once people finally make it through the post-doctoral position, they may be fortunate enough to get one of the few academic positions available. That will finally complete the process, but the steps at every stage make it harder to attract and keep people.

So far I have talked only about domestic students. Of course we do not get all our scientists from Britain. We get a huge number from overseas, and that is essential. Science is a global activity. It does not make sense to say that Britain should supply all the skills it needs for science. We cannot draw up barriers. I have been very concerned about the Government's proposed immigration cap, and many hon. Members will know about concerns that have been expressed. The cap causes problems; it makes it hard to get good quality people from outside. There are many stories of people not coming, and others of people who have made it clear that they would not have come under such a system. Venki Ramakrishnan is one example. We have heard some instances already, and I have heard of students not being given visas to come to Cambridge for a four-day conference, because the UK Border Agency was not satisfied that there was sufficient evidence that they would not require benefits while they were here. Given that they had already paid the fees for a four-day conference I think that it would be safe to assume that they would have come to the conference and then gone again. There is increasing concern from the university of Cambridge that we cannot get PhD viva examiners from outside the EU,
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because that is classified as work. We do not want to stop that activity. I find it bizarre that the cap includes exemptions for elite sports people and ministers of religion, but not for doctors, scientists or engineers, who contribute much more to our economy.

Another issue is people-just as people. When I talk to representatives of high-tech companies around Cambridge, I find that many of their concerns are not just about the things we have discussed already. The No. 1 concern that people talk about in Cambridge is housing-the cost of affordable housing there, by which I mean affordable for science researchers, and not in the sense that was used in the rather ill-informed debate that we had in the House yesterday. People also talk about transport problems and how to get where they want to go. They talk about the problems of finding good education for their children, and the issues of the environment that they live in. Those issues affect scientists and their choice to continue working in this country rather than moving elsewhere.

Money, of course, is another factor, and scientists, like all people, are motivated by money. We had a freeze on the total science budget, as has already been discussed-the £4.6 billion. That is good news. It is not as good as it could be. Other countries, such as Germany, invest more in their science funding. However, it is helpful, and I thank the Deputy Prime Minister in particular for getting the last £200 million that came into the science budget on the Sunday night just before the comprehensive spending review. I share hon. Members' concerns about lack of knowledge about the capital budget. A comment was also made about long-term security, and I have in the past asked the Minister for Universities and Science whether we can have at least a 10-year funding horizon, because science projects often take that long.

There are also problems with the cycle of allocation of money by research councils. I am well aware of the Haldane principle and would not dream of telling research councils how they should operate. They did not give me the grants I deserved and I am sure that they will continue not to give people the grants that they deserve in future, but the real problem is the slow pace. An application goes in, and it takes six to nine months, typically, to get a response. If people are on contracts of one to two years, that is a huge amount of time for them not to know the result. Success rates are phenomenally low. Academics apply for grant after grant, driving up the number of applications that must be studied, and filling up the system. There must be a way to run the system faster and more efficiently.

We need financial support from industry, and good relations with it. Cambridge is fortunate because we have an excellent cluster. One of the features of that is to do, again, with people. People can work in industry or academia and can move between them. Scientists are often married to other scientists, so both partners can have jobs in the same area, with the same level of security. We have a number of successful spin-outs. Research and development tax credits were also mentioned. They play a critical role in supporting industry systems. Companies have highlighted that time and again as essential.

I support the moves for greater procurement by small and medium-sized enterprises. A detailed analysis by entrepreneurs in Cambridge shows that if there is a client when someone sets up a company, it works. It is
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much better to have a client. The success of silicon valley has been largely due to Government procurement with small start-up companies, really giving them the initiative to go. However, the issue is not only public. I think that Max Perutz was responsible for the excellent comment:

[Hon. Members: "It was Rutherford."] I am grateful that so many hon. Members can correct me on that: my thanks to them. The sentiment stands, none the less. It is the freedom to think that makes a difference. We cannot predict which research will be world-shattering. We cannot say that lasers or the internet will be the thing that matters. DNA was first discovered in pus, and was a curiosity. It was believed to be the way in which phosphate was stored by the body. It was completely uninteresting; and now it leads to all the advances in genetics, health and biotechnology. We cannot predict such things, so we must allow academics the freedom to explore. There is a false split between pure and applied research, which I am very concerned about. Pure research often leaps into applications and I am very concerned about the increasing drive to impact. It does not make sense to ask people to estimate the economic impact of a piece of research.

Graham Stringer (Blackley and Broughton) (Lab): The hon. Gentleman is making an interesting speech. Does he agree with Professor Cox who said when he came to the previous Select Committee on Science and Technology that he found it impossible to know what to put when assessing impact? It is not do-able.

Annette Brooke (in the Chair): Order. If I may intervene; there are 25 minutes left, and at least three speakers before the winding-up speeches.

Dr Huppert: I am about to finish, Mrs Brooke. I think that Professor Cox is to some extent right, and to some extent wrong, because universities have begun to provide the text to put in those boxes. I think that a form-filling exercise is developing.

I join in the support for the technology and innovation centres, whether they are Fraunhofer or Hauser models. That will make a big difference in enabling us to do true translation that works.

We know what we need. We must make sure that we provide it, whether it is money, freedom or support for the people involved. I take the point that we should look more broadly than just to the sciences. Humanities, classics and other subjects have a lot to provide. I have one last request to the Minister. I have asked before whether the Treasury could have a chief scientific adviser so that its staff could understand science. They say they cannot see why they need one: that is exactly why they do.

3.27 pm

Mr Andrew Smith (Oxford East) (Lab): I congratulate my neighbour, the hon. Member for Oxford West and Abingdon (Nicola Blackwood), on securing the debate, and on her speech. Her timing is exquisite, whether by accident or design, as she has picked the day when more
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than 50,000 students are protesting outside at the damage to be inflicted on higher education by the 80% cuts in teaching grant and huge increases in student fees. I particularly welcome and support the students from the university of Oxford and Oxford Brookes university, both of which have most of their students, and key science facilities, in my constituency. Those include the Oxford science area and the Oxford science park, although of course the Begbroke science park is in the constituency of the hon. Member for Oxford West and Abingdon, the Diamond synchrotron is in the Minister's constituency of Wantage, and the Culham science centre is in the constituency of the hon. Member for Henley (John Howell). There is a huge Oxfordshire-wide and cross-party interest in the health of scientific research. The work of scientists in our area is of global as well as national importance, and makes a huge contribution to the economy, which is crucial to the competitiveness and future prosperity of our country.

It is to the credit of the Labour Government that they were responsible for record investment in science. [Interruption.] I am pleased to hear the Minister applauding that. The Government's investment was amplified by the invaluable contribution of the Wellcome Trust, the medical research charities and others. However, as the hon. Member for Oxford West and Abingdon pointed out, when we consider publicly funded science as a share of GDP it is not as though no more needs to be done. I echo the call made by my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) for us to pull together to do more.

Given the context of massive and ill-judged public expenditure cuts, it is also right to recognise that the Government have afforded science and research a measure of protection in the recent spending review. I know that that the higher education Minister fought for that, and I thank him. I am sure that the Minister who is present today fought for it too, and if so I thank him too. I am not going to let them off the hook, however, given the real cuts, the big outstanding uncertainties still affecting science funding and the challenging context in which scientists will be working in the years ahead.

I should like the Minister to answer a number of questions. First, as we have heard, the cash freeze over the next four years represents a 10% real cut. Although welcome protection for medical research is provided, there are worries that that could involve bigger real cuts in other areas of science, such as physics and engineering. What is the position on that?

Secondly, the Science and Technology Facilities Council has already, as we have heard, had a tough three years and is not facing further cuts from a position of enormous strength. It is not clear whether the commitments to improve STFC's situation, made by Lord Drayson last January-to cover exchange rate fluctuations in the costs of international subscriptions-will be honoured by the coalition Government. It would help if the Minister confirmed that that undertaking still stands.

Thirdly, the severe cuts to the Minister's capital budget could, as we have heard, have a serious impact if they feed through directly to research council funding. Capital is not just about new projects, which can of course be delayed, albeit at some cost to our international research competitiveness. A significant proportion of the running costs of facilities, for example, the routine replacement and upgrade of equipment, are classified as capital.
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Almost a quarter of the running costs of the ISIS centre at Rutherford Appleton, which does cutting edge atomic work advancing a range of physical, biological and material sciences, are classed as capital costs. Cuts would reduce the amount of time that that vital facility could operate each year. Can the Minister assure us that such factors will be given sympathetic attention when his Department makes its capital allocation?

Fourthly, what is the position on the overall budget of the Technology Strategy Board over the spending period and how much redirection of current funds will be required to support the operation of the new technology innovation centres that were recommended by the Hauser report? Obviously, if that amounted to a big sum-tens of millions of pounds a year, or whatever, from a static TSB budget-it would represent a significant cut in other important areas of its work, such as collaboration with business on knowledge transfer. Can the Minister clarify that position?

As the hon. Member for Cambridge (Dr Huppert) said, success for science research depends on more than the science budget, critical though that is. I should like to mention a couple of other areas. Keeping up the high quality of our science depends in no small part on the quality of science teaching in our schools, as the hon. Member for Oxford West and Abingdon said. In a written parliamentary answer on 26 July, to my question on incentives for physics graduates to enter teaching, the Minister of State said:

Where has that consideration got to? It is clearly all the more relevant, given the huge increases in fees that the Government are now imposing.

My hon. Friend the Member for Ellesmere Port and Neston and the hon. Member for Cambridge mentioned the immigration cap. I would like to press the Minister on what representations he is making across Government on the real threat to our scientific excellence and standing posed by the coalition Government's proposed annual limit on economic migration and changes to the visa regime. Nearly a third of Oxford university's academic teaching and research staff, and 46% of its research-only staff, are from overseas. Although some of those people are of European economic area origin, a lot of academic staff hold tier 1 highly skilled migrant programme visas, and more than 700 are work permit/tier 2 visa holders and sponsored researcher/tier 5 visa holders. As the vice-chancellor of Oxford university said in his evidence to the Migration Advisory Committee:

I hope that the Minister is concerned about this as well. Can he assure me that, in view of the contribution that their teaching and research make to knowledge, the economy and society in general, top internationally mobile academics and researchers will be exempt from the immigration limit or, at the very least, that the visa and work permit regulations will be operated in such a
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way that Oxford and other universities and research institutes will be able to recruit all the people they need to sustain their international standing?

Science and successful business spin-offs do not just need funding, research facilities and the best researchers; their staff-managerial and technical as well as scientists-need somewhere to live, a good environment, transport infrastructure and room for businesses to grow. However, these things are all too likely to be a casualty of the coalition Government's decision to abandon all the evidence and careful consideration that went into the south-east and other regional plans and leave planning up to district councils. An example of the disastrous effect that this is having is that a significant housing development to the immediate south of Oxford, in the planning jurisdiction of South Oxfordshire district council, is now most unlikely to go ahead, given that nimbyism seems to be that council's principal planning policy. [Interruption.] The Minister may laugh, but if I recall correctly, he once famously told the Conservative party conference that he was greatly in favour of additional housing in Oxfordshire, as long as it all went into my constituency, although it is not quite big enough to take it all. I welcome the expansion of my constituency to make room for the growth south of Grenoble road.

Part of the development that I have mentioned was an expansion of the Oxford science park, providing exactly the sort of facilities that are needed to harness our scientific excellence to business success, jobs and prosperity. Will the Minister consider that, bearing in mind his comments to the Conservative party conference, and chat about it with his colleagues in Department for Communities and Local Government?

Stephen Mosley (City of Chester) (Con): The right hon. Gentleman has asked the Minister a number of questions-I agree pretty much with all of them-and I should like him to ask one on my behalf. For every leading research scientist there are dozens, if not hundreds and thousands, of lower-level lab technicians, who are just as important a part of our national science research base as those guys at the top. Perhaps the right hon. Gentleman will ask the Minister what he is doing to ensure that we get 17 and 18-year-olds into science research, through apprenticeships, further education and workplace training, because these guys are just as important as the people at the top.

Mr Smith: The hon. Gentleman makes a good point, which I shall add to my list of questions. We will all be looking carefully at the announcement of the Government's skills strategy next week to see what specific component it contains to address those important issues.

We can have higher, sustainable economic growth if we really want it. But if we are to achieve it we need more housing and better transport in places such as Oxfordshire, across the south-east and in other regions where science is so important, so that business can do still more to make the most of the scientific excellence that we are investing in.

Those are a few questions for the Minister to consider. If he does not have time to answer them all this afternoon, I should be grateful if he wrote to me. It is important, as other hon. and right hon. Members said, that we keep up the pressure in the cause of science, which it is no
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exaggeration to say is vital to the quality of life, living standards and our whole civilisation, now and for generations to come.

Annette Brooke (in the Chair): There are 12 minutes remaining. I wish to call two speakers-Gavin Barwell and David Mowat-and I call Gavin Barwell first.

3.39 pm

Gavin Barwell (Croydon Central) (Con): Thank you for those clear instructions, Mrs Brooke. I will watch the clock carefully. I congratulate my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood) on her excellent opening speech, and all hon. and right hon. Members who have spoken in this high-quality debate.

I start by declaring a personal interest: I am a science graduate. I studied theoretical physics at Cambridge, although I am ashamed to say that I have not used a great deal of that study since I graduated. However, I now have the opportunity to do so because I was recently elected to the Science and Technology Committee. I am also taking part in the Royal Society pairing scheme, and I echo the comments made by several hon. Members about its importance. I am paired with Dr Emily Nurse from the high energy physics group at University college London. I represent a London constituency, and while we have heard a great deal about Oxford and Cambridge universities throughout the debate, London has Imperial college, UCL, and other leading institutions.

I have been asked to stick to time but, luckily, those hon. Members who have spoken have covered many of the points that I wished to make, so I can be relatively brief. There is political consensus about the need to diversify our economy, and one of the lessons we must learn from what has happened over the past few years is the need for a broader economy. One of the strengths of UK plc is our scientific base.

My hon. Friend the Member for Oxford West and Abingdon cited figures from "The Scientific Century", which is an excellent report by the Royal Society. Let me set out the full figures for the world: we have 1% of the population; 7.9% of scientific papers; 11.8% of world citations; and just under 15% of the most highly-cited papers. This is an area of excellence, and we also have the second strongest higher education sector in the world, after the USA, so we must build on that strength.

Like other hon. Members, I am grateful for the work carried out by my right hon. Friend the Minister for Universities and Science and the relative protection of the science budget. I echo the points raised about the Science and Technology Facilities Council, and the issue of capital funding, which accounts for just more than a third of its budget.

Neil Carmichael (Stroud) (Con): It is good to see science supported and to ensure that science works with business. Many business men have asked me how we can protect our patents and our value in an international sphere, so the Department for Business, Innovation and Skills needs to think about that.

Gavin Barwell: My hon. Friend makes an important point to which I am sure that the Minister will respond. My point is that the Science and Technology Facilities
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Council has a high dependency on capital funding. If we do not have clarity on that matter, there is the danger that we will see significant cuts in the general grant spend. Its dependence on capital is higher than that of other councils.

Although it is important that the Government look at the benefits of science-economically and to wider society-there is also a benefit to society from knowledge in its own right and from pure research that is designed to extend the sphere of human knowledge. It is sometimes difficult to quantify that, and I appreciate that the Government have to cost such matters. However, it is important to put on record the significance of knowledge in its own right, which is often the primary motivation of scientists, rather than some putative economic return.

Let me echo the points that have been made about the immigration cap. I am a strong supporter of the cap, and although my constituents feel strongly about immigration, they are not worried about leading scientists coming into the country to drive our economy forward. Their concern is about the numbers of people who have been brought into the country and take jobs that should have gone to economically inactive British people who could have gone back to work during the last boom but failed to do so. Their concern is not with people who come in to create businesses, opportunities and jobs for other people, and I hope that the Government will be sufficiently flexible on that issue.

My hon. Friend the Member for Oxford West and Abingdon pointed out that these matters are not only ones for the Department for Business, Innovation and Skills, and I echo that sentiment. A number of members of the Science and Technology Committee have spoken about whether the Government office that deals with science would be better located in the Cabinet Office because of the overarching role that science plays across Government activity.

I shall conclude with a point about education which, again, several hon. Members have touched on. I have read a piece by Simon Schama about the teaching of history in our schools. It contrasted children's great fascination with detailed works such as "The Lord of the Rings" with our failure to make the story of our history sufficiently interesting to children. The same is true of science education. I have an eight-year-old son. Any conversation with him quickly becomes a succession of "Why?" questions. He has complete fascination with the world around him and why it is as it is. As children get older, however, we somehow fail to maintain their enthusiasm to find out about the natural world. Developing that passion for science in the critical phase of secondary education is a key area that the Government must look at.

I am conscious of the time and I know that my hon. Friend the Member for Warrington South (David Mowat) wishes to speak. I end by congratulating my hon. Friend the Member for Oxford West and Abingdon on securing the debate and thanking other hon. Members who have taken part.

3.44 pm

David Mowat (Warrington South) (Con): I thank my hon. Friend the Member for Croydon Central (Gavin Barwell) for giving me the chance to speak. I am one of three hon. Members in the Chamber from Imperial
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college-I think that there are only three of us-so we should get our retaliation in first-[Interruption.] My hon. Friend the Member for Windsor (Adam Afriyie) is one of them.

I wish to talk about the application of science. We have heard a lot about pure research and so on, but when we think about the economy over the next 20 or 30 years, and the fact that we can no longer rely on the City and North sea oil to the extent that we have over the past two decades, we must ask where the innovation will come from. With respect to the right hon. Member for Tottenham (Mr Lammy) and the large contribution made by arts graduates, that innovation will, to a great extent, come from science.

My constituency, like many in the north-west, will lose around 2,000 public sector jobs over the lifetime of this Parliament. The Office for Budget Responsibility has forecast that it will gain 5,000 private sector jobs. All north-west Members, and those more widely, must think about where those jobs will come from and what we can do to help their creation.

Hon. Members have mentioned silicon valley, and it is interesting to note that companies such as Microsoft, Google, Yahoo!, Dell, Apple and eBay, and their supply chains, have probably generated in excess of 1 million jobs over the past two decades. For the most part, those companies did not exist 30 years ago. In 20 or 30 years' time, there will be another list that people will talk about. I do not know what companies will be on it-if I did, I would probably not be in the Chamber-but they will come from innovation and science. We must do what we can towards achieving that.

On the border of my constituency is a place called Daresbury. We have heard something of the golden triangle, which makes me feel a bit outnumbered, but Daresbury is a fantastic place that, together with Harwell, is one of two SFTC locations in the UK. Daresbury is a little different from Harwell because it focuses strongly on innovation as well as on pure science. There is also pure science, however, and Daresbury has a fourth-generation accelerator-a lot of the design work on the Diamond synchrotron was carried out there. However, the distinctive thing about Daresbury-if the Minister has not seen it, he should come and visit-is that there are about 100 small companies that are growing, taking output from the universities and turning that into commercial exploitation. On average, those organisations have grown by 20% over each of the past two years. That has happened through the recession, so it is quite a thing. A 36,000 square feet extension is being built and is already nearly full. There is a significant chance that 10,000 jobs will be created by those 100 companies and the public-private partnership that is being put into place.

Andrew Miller: Does the hon. Gentleman agree that those 100 or so tiny companies are in Daresbury as a result of the magnet provided by the research facility? They would not have come there on their own; this is part of the integration between very small and very large companies that I was speaking about.

David Mowat: I agree with the hon. Gentleman. The key term is multidisciplinary. Those companies interact with each other, and the pure science laboratory, which was there in the first place, has been the driver.

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I want to contrast the multidisciplinary model of the Daresbury campus with some of the ideas that have come out of the Hauser review. That is more about excellence, with the Government picking areas in which they want to invest and going for it. I am not against that, but there are two models to determine how we invest in science and applied science. One is what could be called, "Let's pick a winner and go for it," and the other is, "Let 1,000 flowers bloom. Let's try lots of things. Some of them will be brilliant and some of them won't."

My hon. Friend the Member for Cambridge (Dr Huppert) pointed out that silicon valley was created by Government procurement, but I do not think that that is true. I think that it was created by innovation, entrepreneurship, encouragement and the linkage of money to brilliant technologists.

I do not wish to overrun my time, but I have two minutes left and a couple of concerns to raise, to which I shall be interested to hear my hon. Friend the Minister's response. I welcome the local enterprise partnerships as a way forward. There is a risk, however, that they will be quite fragmented in a way that the regional development agencies were not and other things are not. I recently had a ridiculous conversation with a colleague who said to me, "Which LEP is Daresbury going to be in?" That is not the right way for us to think about how we do all this, and if we let that mindset grow, it will be quite dangerous.

I mentioned the Hauser review and technology and innovation centres. It is not clear to me how they will interact with what we call regional growth hubs-or at least there is a lot of language in this area that seems to be quite loose-so I would welcome input on that.

With regard to the success of Daresbury, I have a bit of concern about the way in which the Science and Technology Facilities Council funding goes between Daresbury and Harwell. I am not an expert in how that works, but I think that nearly all the members of the board of the STFC are Harwell-based, not Daresbury-based. We must be careful that we do not have a south-centric civil service and a south-centric triangle driving science in a way that we do not want.

You will be pleased to hear that I shall stop speaking shortly, Mrs Brooke. I just want to reiterate that this has been a good and positive debate, principally because it has not been party political. We have much more in common with one another-especially those of us who went to Imperial college-than party politics allows, and it is extremely important to us all and to our children that we get this right.

3.51 pm

Chi Onwurah (Newcastle upon Tyne Central) (Lab): I congratulate the hon. Member for Oxford West and Abingdon (Nicola Blackwood) on securing a debate on such an important subject and on the excellence of her speech. As one of those STEM-qualified women who are no longer working directly in STEM, I was very impressed by the breadth and depth of her analysis, even if I do not agree with every one of her conclusions. Her constituency certainly has an excellent advocate.

Oxford West and Abingdon is home to excellent science research, as are many of our great university towns: London, Manchester, Cambridge, Liverpool,
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Bristol, Southampton, Edinburgh and, of course, my own constituency of Newcastle, to name but a few. However, it is clear from the speeches and interventions made today that hon. Members on both sides of the Chamber have concerns that go wider than the science research carried out in their constituencies.

I am sure that even if his colleagues in BIS had not been in China or otherwise engaged, the Culture Minister would still have been eager to come to this debate and set out the Government's policies on science research. That is recognition of the hugely important role that science plays in our society. From the sharpened stone to the mobile phone, scientific developments have changed society and brought new opportunities. Indeed, I am sure that if decent research grants had been available in prehistory, it would not have taken 2 million years to go from sharpened stones to the stone axe. Equally, the Egyptian pyramids would not have required quite so much slave labour-the wheel could have taken a bit more of the strain.

To take an example closer to our own day and age, the mobile phone-we all have one-is a result of decades of public sector defence research into wireless transmissions; billions of private sector investment in R and D, infrastructure and commercialisation; academic research into cutting-edge modulation techniques; and Government-led access to spectrum and global protocol standardisation. The result is a technology that enables a farmer in Kenya to know the market price of corn on the Chicago stock exchange, and ensures that information about voting irregularities in Burma or Iran can be tweeted across the world before the voting is over.

Science changes society, and generates wealth. The Campaign for Science and Engineering has estimated that investment in science research gives a return of 30% a year in perpetuity. Right now, we need that return more than ever, so we are right to treat this debate as hugely important. To be fair, the Chancellor of the Exchequer, in the comprehensive spending review statement, claimed that he was protecting the science budget, as many hon. Members have gratefully commented. In his final flourish, under the sub-heading "growth and promoting a private sector recovery", he said:

Now let us consider what the Chancellor did not say. As has been pointed out, a cash freeze means a 10% cut-assuming current rates of inflation-in real terms, or £460 million, at a time when the rest of the world, including the US, China, France and Germany are increasing their science spend. Also, what the Chancellor calls the "science budget" is only 50% of Government science investment in the UK. The rest, including departmental R and D, capital expenditure, R and D tax credits and RDA spending, has not been frozen or ring-fenced and therefore is vulnerable to cuts. In the case of the RDAs, we know that their science funding of £440 million a year has been lost. If other expenditure is cut at the same rate as departmental expenditure-let us remember that this is science funding that has deliberately not been ring-fenced-we are looking at a cut of 10% in cash terms.

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In July, the Royal Society said that

Although the upgrade of the Diamond Light Source synchrotron in the Minister's constituency has been secured, the rest of the capital budget, as has been pointed out, has not been safeguarded. Nature reports that the research councils have been warned to expect at least a 30% cut in their capital funding. Hon. Members have pointed out that as a result of those capital cuts, the Science and Technology Facilities Council, which funds the Rutherford Appleton laboratory in the constituency of the hon. Member for Oxford West and Abingdon-

Mr Vaizey: It's in mine.

Chi Onwurah: I apologise. The STFC, which funds that laboratory in the Minister's constituency, is likely to be hit as the bulk of its budget is capital. High-tech European partnership projects such as JET-the Joint European Torus at the Culham centre for fusion energy in neighbouring Henley-are funded through the capital budget. They will need to find extra money to cover inflation. That might result in UK researchers having to cut usage while still paying high fixed costs, or to cut other areas. As the Royal Society says, that would dramatically reduce the efficiency of our investment.

Overall, there could be far-reaching consequences in the UK economy. Research Councils UK has calculated that a cut of £l billion in science spending results in a drop of £10 billion in gross domestic product. Therefore, the protection offered by the Chancellor seems rather flimsy, especially in the competitive world of global science. China is stoking its engine of innovation with 2.5% of its GDP and an 8% rise this year. I hope the Secretary of State for Business, Innovation and Skills will be listening to his hosts in China in that regard at least.

The situation is somewhat worse than it first appears. We have agreed that we need to rebalance our economy, but we do not want to do that by reducing the financial sector-absolutely not. We want to do it by growing other sectors, such as advanced manufacturing.

In addition to the cuts to science funding, we have further cuts disabling the vital economic levers that translate scientific understanding into commercial ideas. For example, programmes funded by the RDAs, which supported the commercialisation of scientific discoveries, which we have discussed, have already been cut-such as the Innovation Machine in Newcastle.

It was mentioned that the Prime Minister announced funding for the technology and innovation centres to the tune of £200 million. However, in Germany, where the model they are based on is located, six times more is spent each year on running costs.

Given that our situation and the funding for science are under such threat, I ask the Minister to confirm a number of points. Will Government spending on science that is not in the £4.6 billion be safeguarded? Are the Government intending to increase science spend as a proportion of GDP, in line with European targets? Do
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they acknowledge the vital role they must play in helping to commercialise new technologies? Finally, will R and D tax credits be safeguarded?

We need the jobs that come from the timely exploitation of scientific discoveries. The Government's plans for science and research endanger all our futures.

4.1 pm

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Vaizey): I am grateful for the chance to speak under your chairmanship, Mrs Brooke. The last times I spoke in a debate, I had the full might of the Welsh Labour party ranged against me, so 50,000 students making noises off is slightly easier to deal with.

I congratulate my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood) on securing this important debate. One of the great advantages of having new Members of Parliament is that those of us who have been in Parliament for merely five years get the chance to patronise them, so let me say what a pleasure it was to be at her parliamentary birth, at the Abingdon leisure centre on that momentous night when she became the Member of Parliament for Oxford West and Abingdon.

I put on record what a hugely successful job my hon. Friend is doing-slightly too successful, as my Conservative association in Wantage keeps asking whether we can have her to speak instead of me. Also, almost all the companies in my constituency seem to want her to come and visit them. In fact, she mentioned one that I, too, visited on Friday-she had got there before me-Nexeon, in Milton park in Didcot.

If my hon. Friend the Member for Warrington South (David Mowat) wants to know what the future is, he should resign his seat and go and work for Nexeon. It is making extraordinary lithium ion batteries, which are another example of British scientific expertise. The discovery was about the use of silicon, which stores more energy, and Nexeon's way of putting silicon into batteries promises the future-houses powered by batteries, apparently.

One of the great pleasures of representing my constituency is that I wish I had won the lottery and could invest in almost every company that I go and see there. One is literally "The Man in the White Suit" company-coat a shoe or shirt with its material and water literally drips off without leaving any damp patch at all. However, I digress, and we do not have much time.

We have had a fantastic number of excellent contributions to the debate, such as those from the Chair of the Science and Technology Committee, the hon. Member for Ellesmere Port and Neston (Andrew Miller), and from the hon. Member for Cambridge (Dr Huppert), who reminded us why it is so important to have scientists in the House, because of his chalk-face experience, if I may put it that way, and his ability to talk us through what happens with scientists on the ground.

Another such contribution came from the right hon. Member for Oxford East (Mr Smith) who, as I have said many times before, is only in the House because I was the press officer of the Oxford university Conservative association when he was fighting Steve Norris in 1987. However, what is absolutely true is that he, I, my hon.
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Friend the Member for Oxford West and Abingdon, my hon. Friend the Member for Henley (John Howell), the Prime Minister and my hon. Friend the Member for Banbury (Tony Baldry) all work well together on Oxfordshire interests, even if we might clash on national policies.

My hon. Friend the Member for Croydon Central (Gavin Barwell) made a valuable contribution to the debate, and I have renewed respect for him now that I know he is a theoretical physicist, while my hon. Friend the Member for Warrington South has a distinguished degree in engineering, although he left it for accountancy. I propose a twinning arrangement with my hon. Friend the Member for Warrington South: I would certainly like to see his facilities in Daresbury, if he will come and see my facilities in Harwell.

The debate covered a huge range of subjects. We even got on to housing shortages, nimbyism and transport networks. However, what it boils down to-stating what I regard as the highlights-is essentially: the myth and reality, as it were, of the science budget; the need to engage young people in science, even those in primary schools; concerns about whether the coalition Government's immigration policy will impact on scientific research in the future; and some specific Government policies, notably on technology and innovation centres.

Adam Afriyie (Windsor) (Con): May I bring the Minister's attention to another point that was raised? In my time as the shadow Minister for Science and Innovation, I was keen to have a chief scientific adviser in the Treasury. Can he shed any light on that matter or on any progress that might be taking place in that regard?

Mr Vaizey: If I can make a career-ending response to that, in my short experience as a Minister I have discovered that the Treasury thinks it knows absolutely everything, so the idea that it needs to be advised on science or, indeed, any other subject would clearly be anathema to it. That, I am sure, is why it is resisting the appointment of a chief scientific adviser-I shall turn to the role of the Government's chief scientific adviser in a minute. I also congratulate my hon. Friend, because he was a distinguished shadow science spokesman for us. I have no doubt that, behind the scenes, he influenced the Government's approach to the science budget.

To give credit where it is due, however, the Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts), who cannot be here because he is flying the flag for UK plc in India, I think, ought to be hugely credited with securing the important settlement that we have had for science.

I would like to say that I played a role in that settlement. There was a moment when I was in the Secretary of State's office and I noticed a paper on the Diamond synchrotron, so I said to his private secretary, "You really want to sort out the Diamond synchrotron because they have a really effective MP and you don't want to cross him." He looked at me and said, "Who's that?" So, I am not sure how much influence I had, although as a politician I would like to take the credit.

Other issues raised were the allocation between specific research councils-the charity research fund referred to by my hon. Friend the Member for Oxford West and
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Abingdon-and the capital funding. The debate was not partisan and has been conducted on a good cross-party basis.

One of the things that I note about science, which we should all treasure, is that people from different places work together. [Interruption.] That is probably my right hon. Friend the Minister for Universities and Science ringing-

Mr Andrew Smith: Or the Chancellor.

Mr Vaizey: Yes, that is the Treasury on the phone.

Going to such large scientific facilities-I was struck in particular going to the large hadron collider-one sees Iranian scientists working next to Israeli scientists. That for me, if we are talking about bringing science alive, brings alive the global, co-operative nature of science.

I can tell hon. and right hon. Members that I cannot tell them anything about some of the questions they asked, because the negotiations are still ongoing. I can tell them that we hope to conclude them by Christmas.

Mr Andrew Smith: The Minister is doing very well in the limited time, but can he write to us on the specific questions that he does not have time to answer now?

Mr Vaizey: I thought about standing up and simply saying that I would write to the right hon. and hon. Members, given that approximately 35 questions were asked in the course of the debate. However, I will certainly ensure that we give a comprehensive response to all the questions of right hon. and hon. Members who attended the debate.

We talked about research budgets from other Departments. Yesterday the Department of Health signed an agreement for a UK Centre for Medical Research and Innovation, with £220 million for the construction
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of this new centre, which will bring together the Medical Research Council, University college London and medical charities.

Reference has been made to the £69 million secured by the Diamond synchrotron, as well as other important innovations such as the European Space Agency, which is also in my constituency. I was delighted to see the report this week, pointing out that space success has rocketed in this country; the industry is now worth £7.5 billion, and it employs 25,000 people, which is an increase in a year of 11%. When the right hon. Member for Oxford East said that our scientists have a global reach, I would correct him and simply point out that they now have an intergalactic reach, which we should praise.

The important question of immigration was raised. It is absolutely part of our strength as a scientific nation that we attract the best scientists to live and work here. As I said earlier, scientists working together from different countries that may be politically hostile to each other is very important. It is an extraordinary experience to visit leading scientific institutions and see the range of people from across the world who have been attracted to them. We must secure that sort of international work force working together.

Last week, my right hon. Friend the Minister for Universities and Science met representatives of further and higher education and of the UK Border Agency, and had the opportunity to hear their concerns directly. My Department is working closely with the Home Office to develop a system that, while delivering the Government's objective-as my hon. Friend the Member for Croydon Central pointed out, it is strongly supportive of reducing the overall level of immigration-allows those who can make a positive contribution to the UK, such as researchers and academics, to continue to come here.

The hon. Member for Cambridge spoke about people being denied a visa to attend a legitimate high-profile conference. I understand his frustration. We need to establish a system under which reputable institutions should be trusted to vouch for those who attend conferences.

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Exeter to Plymouth Railway

4.11 pm

Anne Marie Morris (Newton Abbot) (Con): During the next 10 to 15 minutes, I shall speak about the south Devon railway line. It is close to my constituents' hearts, and I am clearly looking to the Minister to support continued investment in it.

The line goes from Exeter to Plymouth, and part of it goes through my constituency. It goes through Starcross and down the coast through Dawlish and Teignmouth. From there it divides, and goes on either to Torbay or Plymouth. It is one of the most picturesque stretches of railway in Europe; indeed, it is a tourist attraction in its own right.

The line is hugely important to the Devon economy for two reasons: because of the role it plays in supporting tourism, and for its role in helping my constituents to commute to work and back. In my part of the world, public transport is important, as it is a very rural community. The Minister will be delighted to hear that the more rail travel we have, the smaller will be our carbon footprint, so I hope to achieve some support in that regard.

I shall dwell first on the economic value of the line and explain how important it is for Devon. Tourism accounts for 7% of the Devon economy, a substantial part. We have 5.3 million visitors a year, which is no mean feat. Teignbridge, the part of my constituency through which the railway runs, is the second most important destination for tourists. As a result, it is no surprise that 30% of the local work force are engaged in tourism or related industries. While tourists are in Devon, they spend in excess of £2 billion a year. That is a significant sum.

I turn to the commuting element, and the economic and environmental benefits of the line. The Minister may be surprised to learn that 2 million people used that line during the last 12 months. Indeed, Network Rail's estimate is that we will see 19% growth over this year and next. It has been identified as one of the fastest growing lines.

Sarah Newton (Truro and Falmouth) (Con): I thank my hon. Friend for giving way, and I congratulate her on securing this debate. I give her my support and the support of all Members of Parliament who represent Cornwall.

All trains from Paddington to Cornwall use this line, but we in Cornwall are even more remote and peripheral to the UK than Devon. The line is vital to us, and it should be protected and upgraded, especially given the environmental problems that I hope my hon. Friend will mention. The line is important not only for Devon, but will play an important role in the future economy of Cornwall.

Anne Marie Morris: I thank my hon. Friend for that valuable contribution and for the support she offers.

As I said at the outset, I am seeking the Minister's support for continued investment, and I shall explain why. During the last Parliament there was a House of Commons inquiry into an alternative inland route, which resulted from concerns about the viability of continuing investment, given the coastal path that the route takes.
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The inquiry findings were made public in February this year; its view was that, at a cost of £100 million, it simply was not viable. We now have a new Administration, and I therefore seek an assurance that the Government see the coastal line as a priority. That is particularly important as it will allow Network Rail and the Environment Agency to plan for the future, and it is clearly important that such planning be put in place now.

Why is it important that we plan now? It is important because, as many will be aware, this line has its own challenges, which are not new. They have been well rehearsed; indeed, the matter was last debated in 2006. The main challenge is this: as a coastal line, it is inevitably affected by erosion and a rise in sea level. The line follows 13 miles of tidal water, four of which are aligned with or cross open sea. The Met Office prediction is that sea levels will rise by 0.32 metres over the next 100 years. That may seem a lot, and we need to plan now because of the consequences.

Another factor needs to be taken into account. The Minister may know that the UK is on a tilt: the south-west is tipping into the sea, and the north-east is going the other way and rising out of the sea. As a consequence, the south-west is sinking by between 5 mm and 10 mm a decade. We need to consider what has to be done sooner rather than later.

I have discussed the problem with Network Rail, the body responsible for maintaining the line. It is more than happy-it believes that it is viable-to continue investing £500,000 a year to ensure that the sea wall remains rugged and fit for purpose. However, when looking forward to 2025, it believes that more investment will be required. If we are to make that further investment, we need to consider its quantum and what sort of disruption would be caused to local businesses, tourists and commuters, as we need to manage the process in a sensible way.

In my discussions, I have discovered two problem areas. One is in Dawlish Warren, where there has been consistent erosion; the sand has moved, to the benefit of Exminster and the detriment of Dawlish Warren. The Environment Agency's position is that we can hold the line, but come 2025 it believes that managed realignment will be needed. What will happen then, and what will the cost be? The second difficult area is Powderham bank. As the sea level rises there, the wetland will begin to disappear. We need to ensure that we still have the wetland, with its birds and wildlife, which means we will have to create a causeway for the railway line. The appropriate spot for that is Powderham bank, but significant engineering problems and costs will need to be evaluated.

We need a shoreline management plan, and the Environment Agency is responsible for ensuring that it is in place. As expected, it has developed an overarching coastline strategy. It has been diligent in renewing groynes and gabion defences. Recently the Environment Agency spent £100,000 on emergency repairs and, as we speak, is considering putting sand deposits on to Dawlish Warren to deal with the erosion problem. However, there is a challenge in getting agreement between all the interested stakeholders in Shoreline Management Plan 2, as it is called. That plan was discussed before the election, and was put on hold as we moved towards the election. Post-election, it is to be re-visited. There is a meeting in two weeks' time of the western structure
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team, at which Teignbridge district council, the Environment Agency, English Heritage, the Countryside Council-indeed, all parties-will be present. My concern is that at that meeting there needs to be a real focus on what the priorities should be. That is why I would like the Minister's assurance that the priority is to ensure that line continues to run.

Therefore, I am looking for three things: a statement on the Government's behalf that it is their priority to keep the line running; confirmation that there is no plan to resurrect a debate about the alternative inland route at a cost of £100 million; and for the Minister and the Government to direct Network Rail and the Environment Agency to work together to find a way forward, putting this route and its long-term viability and infrastructure at the heart of the plan going forward. I might be so bold as to suggest to the Minister a time line, because I am conscious that with a plan and a time line, we will have a result. I suggest that in the rail regulatory period 5, running 2009-14, the Minister propose that the group look at putting in place a proper plan and implementing proper consultation, because the changes required in 2025 will have significant local implications. I then suggest that during rail regulatory periods 6 and 7, which run from 2015-24, we look at the design and the building of the work that needs to be put through. The Minister will already be well aware that the Government are committed to a high-speed train between London and Torbay; indeed, that starts next month. I hope that, given that commitment, I and others can expect support for this line. Otherwise, it will be a wasted investment.

In conclusion, I want to make clear on behalf of my constituents and those of adjoining constituencies how important this line is to the local economy of Devon and Cornwall and to the south-west in general. I make my case to the Minister on our constituents' behalf that this line needs to be protected and to have continued investment. We need confirmation that this is a priority line that will receive direction from the Government and, where relevant, funding.

4.23 pm

The Parliamentary Under-Secretary of State for Transport (Norman Baker): I congratulate my hon. Friend the Member for Newton Abbot (Anne Marie Morris) on securing the debate. She set out with great clarity the importance of the Exeter-Plymouth railway line to her constituency and the south-west in general. I welcome the opportunity to reassure her that the issues she raised about the route's long-term resilience are being taken seriously by the rail industry and the Government.

The Exeter-Plymouth railway line is of great importance to the economy of south Devon, Torbay, Plymouth and whole of Cornwall. It makes a significant contribution to tourism in the area. I am sure that there are many people whose first glimpse of the Devon seaside came from the window of an express train as it hugged the coast on the line between Exeter and Newton Abbot.

The line is also important for people getting to work and college, and also for the businesses that rely on it to maintain efficient contacts with the rest of the country. However, as my hon. Friend notes, its proximity to the coast is the line's Achilles heel, and it has been subject
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to temporary closures from time to time. Network Rail is responsible for the operation, maintenance and renewal of the rail network and it takes very seriously the long-term resilience of the network in the face of climate change.

It falls to Network Rail to continue to monitor the likelihood of risks to the safety and operational integrity of the railway in the Dawlish area and to propose further appropriate measures of protection from flooding and coastal erosion. Network Rail is fully aware of the importance of the section of coastal main line between Teignmouth and Dawlish Warren. I understand that around £9 million has been invested in recent years to maintain the integrity of the sea wall and the stability of the cliff face. Network Rail does not believe that the railway sea defences in the Dawlish area are likely to fail in the foreseeable future, thanks to the works carried out and ongoing maintenance and monitoring.

Network Rail advises that it spends around £500,000 each year, as my hon. Friend notes, on maintaining the sea walls and estuaries. A dedicated contractor work force is based at Dawlish. The sea walls are subject to an enhanced structural maintenance inspection regime, with an additional post-storm element, to ensure railway safety and performance, and to target resources at where the risk is greatest. Weather forecasts and tidal predictions are monitored, and when the combination of events reaches a pre-determined level, additional inspections are undertaken.

The implications of climate change will stretch into the long term, however. On 16 September, my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs responded to a report published by the adaptation sub-committee, which was set up as a result of the Climate Change Act 2008. She said:

This is a challenge that Government must rise to, but they cannot do it alone. Transport infrastructure providers need to recognise both the economic and social necessity of taking steps to protect the areas for which they are responsible.

Network Rail has been taking action for some time. It is working with the Met Office by using its data to help to stress test thousands of miles of rail tracks, embankments and bridges to determine whether they can stand up to the patterns of extreme weather predicted over the coming decades. The process is not cheap. The investigation itself will cost around £750,000, but when Network Rail points to such early action leading to savings of around £1 billion over 30 years, the work starts to look incredibly good value for money.

This new piece of work builds on an earlier technical study undertaken by Network Rail and the Rail Safety and Standards Board in 2008. The railway lines adjoining the Teign and Exe estuaries and the south Devon coast were used as case studies, and the conclusions suggested, not surprisingly, that the frequency of disruptions along the main line was likely to increase over the next 70 years as sea levels rise.

Network Rail has therefore identified that there is a problem-not just in south Devon but on other parts of the network-that needs to be addressed. The Department
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for Transport is funding a major research project with Network Rail to understand the impact of climate change on the railway. The project has already identified wave over-topping and flooding at defended coastal and estuarine railways at Dawlish as a priority. The next phase of the project will provide the quantified evidence needed to decide where and when investment may be needed to maintain the resilience of the railway to increasingly extreme weather.

No conclusion has yet been reached on what mitigation measures might be required to minimise the risk to the rail network from rising sea levels at locations along the coast and river estuaries. Nevertheless, along with the key objective of protecting the railway, its users and properties adjacent to it, it must be a priority to maintain access by rail to the areas of south Devon and Torbay.

My hon. Friend asked whether keeping the line running was a priority, and I hope I have answered that question-it is. Do we see it as the main line to Cornwall-this point was also referred to by my hon. Friend the Member for Truro and Falmouth (Sarah Newton)-in the indefinite future? Yes, we do. I will turn briefly to the question of whether we intend to resurrect the debate about an alternative route. A number of suggestions have been made about building alternative routes away from the coast or reopening former railway lines such as the Exeter-Okehampton-Tavistock-Plymouth line. As I have pointed out, any solution cannot ignore the needs of south Devon and Torbay, so reopening that line alone would not meet one of our key objectives. That is not to say, however, that if the line were to open, it would not be welcome. It would be welcome but, in our view, it would not be a substitute in any shape or form for the main line along the coast.

My hon. Friend the Member for Newton Abbot also mentioned CP5 and the considerations for 2025, which she identified as a key date. I undertake to pass on her comments to the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), so that she has them in mind as she discusses the contents of CP5 with Network Rail.

I am encouraged that Network Rail is engaging with other organisations to tackle the issue and taking it very seriously. My hon. Friend the Member for Newton Abbot referred to the Environment Agency, which has a key role to play. To meet her suggestion that we direct Network Rail and the Environment Agency to find a solution, I will be happy to write to them following the debate to stress the importance of maintaining the line to the economy of south Devon.

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Housing Revenue Account Subsidy (Wales)

4.30 pm

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): May I begin, Mrs Brooke, by saying that it is a pleasure and an honour to serve under your chairmanship this afternoon?

The topic of my debate is the housing revenue account subsidy scheme, and it aims to highlight one of the great injustices of public housing policy in Wales during the last 20 years. That policy has led to a reported £2 billion in cash terms-not taking into account inflation-of the rents of some of the poorest people in Wales being returned to the Treasury. It has also led to chronic under-investment in the Welsh public housing stock, which is among the poorest and of the worst standard in Europe, with the associated social and health implications. It has deprived our communities of a significant cash investment. Furthermore, it has driven the stock transfer agenda.

With the UK Department for Communities and Local Government scrapping the housing revenue account subsidy scheme for England in September-a decision that we in Plaid Cymru welcome wholeheartedly-there can be no justification for Welsh local authorities having to continue paying around £100 million per annum to the Treasury.

As far as Wales is concerned, the story of the housing revenue account subsidy scheme is one of great incompetence by both Labour and Tory politicians, who have miserably failed some of the poorest people in Wales. Perhaps that is not surprising, as I am reliably informed that only a very few individuals understand the full complexity of the scheme.

As part of the then Conservative Government's relentless attack on public housing, the Local Government and Housing Act of 1989 led to the confiscation by the Treasury of a large part of the rents paid by tenants. The complication of the new arrangements was hardly helped by those arrangements being labelled as a "subsidy". My understanding of the word is that "subsidy" should mean some sort of financial benefit, but that was certainly not the case in this instance.

The effect of the 1989 Act was to undermine the attractiveness of public housing by running down its quality, as investment was redirected from local communities. Rents in Wales were lower than those in England-they still remain lower now-and that led to less revenue in general. The quality of housing in Wales is also generally poorer. However, under the terms of the Act, local authorities were forced to return any surplus from expected rent, after operational and maintenance costs were met, to the Treasury, rather than investing those moneys in the housing stock. That had the bizarre effect of promoting the stock transfer of public housing, which is a theme I will return to later.

Perhaps the use of the word "subsidy" comes from the effect of the new arrangements, which meant that those council tenants who were able to pay their rents were, via the new funding mechanism, paying for the housing benefit entitlements of others. Of course, that did not apply to private rented sector tenants or to tenants of registered social landlords.

With HRA payments being used to fund housing benefit, the greater the money that the Treasury could accumulate via the scheme, the less it needed to pay out
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directly in benefits. Indeed, the 1989 Act allowed UK Government Ministers to set the expected level of rent income from each local authority, as well as the expected level of expenditure on maintenance and management of their homes.

Guto Bebb (Aberconwy) (Con): First, I congratulate the hon. Gentleman on securing this debate. On that specific point, it is also worth pointing out that the decision in 1989 to introduce those changes also meant that there was a more equal distribution of rents among the local authorities in Wales. Indeed, there was a cap on the increase in rents for local authority housing at that time.

Jonathan Edwards: The hon. Gentleman makes an honourable point, but I am trying to point out the perverse effects of the 1989 Act and I am sure that he will give me some time to do so.

As I was saying, the 1989 Act allowed UK Government Ministers to set the expected level of rent income and the expected levels of expenditure on maintenance and management of the local authority homes. The policy motive of the UK Government was to drive up council rents while decreasing expenditure on housing, in order to increase the differential and gain maximum financial advantage from the new arrangements. As a result, the quality of publicly owned housing stock in Wales significantly worsened.

The then Secretary of State for Wales, Peter Walker, was guilty of a dereliction of duty of the greatest scale, as Wales was included under the terms of the new arrangements while the Secretary of State for Scotland, Michael Forsyth, refused to sign the Scottish clause, meaning that Scotland was exempted from the 1989 Act. Considering that housing benefit is a UK function, there was no reason at all why Scotland should have been excluded and Wales included, apart from the ineptitude of the Wales Office and its Conservative occupants-if the hon. Member for Aberconwy (Guto Bebb) will forgive me for saying so.

New Labour being new Labour, it continued the policies of the previous Tory Government on public housing for the first three years after the 1997 election. In 2000, however, following a backlash among local authorities, the UK Government introduced proposals to amend the scheme without legislation. To end the deduction of rents from local authorities, the Treasury introduced in each housing revenue account an amount for spending on the renovation of properties. That new budget line was called the major repairs allowance and it was set at a level to ensure that local authority expenditure exceeded rental income, with the immediate effect of halting the Treasury's rent grab.

The increase in funding brought about by the MRA for England was from UK Government sources and the UK taxpayer, and hence a Welsh equivalent should have been introduced by increasing the block grant by the Barnett formula. However, and critically, those new changes were only applied to England. In what has been described as "the year of the great mistake" by Paul Griffiths, a former Labour Welsh Government special adviser, in an excellent Bevan Foundation article, for some reason the Treasury again decided to make Wales
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a special case and Labour, which was in control of the Welsh Government, totally missed the significance of the changes applied to the HRA in England. As a result, since devolution, Wales has lost a further £1 billion, with an average of around £100 million per annum being siphoned off from council rents in Wales.

It is true that the Welsh Government could have made a unilateral decision and left that money with the councils, but as devolution guidance notes insist that any policy decision must be neutral in its impact upon the Treasury that would have meant that the Welsh Assembly Government had to find a further £100 million from its already underfunded Budget to give to the Treasury. Therefore, that is a change that can be made only with Treasury consent.

We in Plaid Cymru continuously make the case that Wales is ill-served by the UK Government. The Barnett formula continues to underfund Wales to the tune of £300 million per annum. We welcome the announcement of a review of the formula, which will take place shortly, although for the life of me I cannot see why that review has to take place after the referendum. However, given its attitude on Barnett and other issues, it is no surprise to us that the Treasury would consider Wales as an afterthought in relation to the introduction of the MRA in England in 2000.

The gross incompetence of the Welsh Government of the time is less easy to understand. Quite how successive Welsh Ministers and Welsh civil servants have failed to challenge the inequity of the situation is beyond me. With a Labour-controlled Welsh Government more concerned with placating their London masters, it is hardly surprising that the people of Wales are being let down so badly. Indeed, it has taken a Plaid Cymru Housing Minister to put this issue on the agenda at all. In short, the Treasury, under Labour control, threw a hospital pass to the Welsh Government in 2000, with a tragic £1 billion consequence for some of the poorest communities in my country.

In 2004, the Welsh Assembly Government created its own MRA out of its own funds, which further confused the issue. It meant that around £100 million was diverted from other areas of devolved responsibility each year, when the right course of action was to demand what was rightfully Wales's from the Treasury. Therefore, despite the introduction of the Welsh Government-sponsored MRA, the Treasury continued to rake in their £100 million per annum from the HRA scheme in Wales.

As I mentioned earlier, one of the direct consequences of the HRA scheme has been to make the sale of publicly owned housing far more attractive, either under the terms of the right to buy or by the wholesale selling off of stock to registered social landlords, because housing associations are not covered by the scheme and are free to spend this money as they see fit on improving housing stock.

To date, the local authorities of Bridgend, Ceredigion, Merthyr, Newport, Monmouthshire, Rhondda Cynon Taff, Gwynedd, Torfaen and Conwy-the local authority of the hon. Member for Aberconwy-have all transferred their stock to housing associations, with many more local authorities seeking to follow the same path, due to their inability to access funds to help them to meet the Welsh housing quality standards set for 2012.

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Guto Bebb: On that specific point, it is interesting to note that some local authorities in Wales have identified the issue and embarked upon stock transfer as a means by which they can invest in repairing the properties that they hold. Indeed, it is very interesting that Gwynedd council, which is actually controlled by Plaid Cymru, has also followed that procedure. However, I am sure that the hon. Gentleman will concur that it is interesting how often local opposition to such a move has been led by Labour politicians. In view of how the Labour Government in Wales failed completely in 2000 to address that issue, is it not surprising that local Labour politicians have been so opposed to those stock transfers?

Jonathan Edwards: The hon. Gentleman makes an excellent point. It is a shame there are no Labour Members here to debate that issue with us. Of course, he and I have divergent views on stock transfer. I will return to the situation in my home county of Carmarthenshire later.

Guto Bebb: My understanding is that Plaid Cymru party members are extremely supportive of the stock transfer undertaken in Gwynedd. In the county of Conwy, which I have the pleasure of representing, it has been deemed a great success, even though Labour party members opposed the decision.

Jonathan Edwards: The hon. Gentleman makes a point. To be honest, there is a debate within the party about the merits of stock transfer. I, for one, am not as persuaded as some of my colleagues in the north of our great country may be.

The stock transfer agenda has been driven by the denial of funds to Welsh local authorities that would not necessarily have wanted to go down that path, because of the housing revenue account subsidy scheme. The HRA scheme has therefore had the undoubted effect of driving greater change in Wales than was ever envisaged, and, in my view, not necessarily a change for the better.

My local authority, Carmarthenshire county council, which is keen on keeping its housing stock, was recently forced to borrow money in order to introduce its housing plan to keep its stock in public ownership. If the money from the council's own rents had been available to it, it would not have needed to borrow money; it could have used the revenue generated by its stock's rents. As a ring-fenced account, money collected in this way can only be used on housing. Why is that option simply not available for local authorities in Wales?

Due to the scale of the situation, it is perhaps surprising that the Treasury was unable to provide details of the HRA contribution made by Welsh local authorities when I asked a parliamentary question on the subject in July. Thankfully, it seems the Welsh Government are better at keeping records of that sort of financial transaction. Their response to my freedom of information request made clear the scale of the great rent robbery.

As the Treasury has been unable to provide the figures, it will be useful for the record and indeed for the Treasury's records if I outline each Welsh local authority's contribution in cash terms since 1999. If I may try the patience of the House, Mrs Brooke, the figures are, to the nearest million: Blaenau Gwent, £12 million; Bridgend, £16 million; Caerphilly, £70 million; Cardiff, £139 million; my home county of Carmarthenshire, £51 million; Ceredigion, £15 million; Conwy, £14 million; Denbighshire,
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£32 million; Flintshire, £62 million; Gwynedd, £53 million; Ynys Môn, £23 million; Monmouthshire, £33 million; Neath Port Talbot, £52 million; Newport, £75 million; Pembrokeshire, £63 million; Powys, £60 million; Rhondda Cynon Taff, £2 million; Swansea, £56 million; Torfaen, £71 million; Vale of Glamorgan, £56 million; Wrexham, £110 million. Merthyr was the only Welsh council in surplus of £5 million. If the Minister wants, I can provide an annual breakdown for each year since 1999, but I might try his patience a bit too much.

Guto Bebb: Do the figures quoted date from 2000 onwards, or from the 1989 decision?

Jonathan Edwards: From 1999, because the Welsh Government can provide figures only since devolution, but 2000 would have been the benchmark.

Considering the pressure on housing waiting lists, it is sobering to think that if those moneys had been retained over the past decade, 10,000 brand-new family houses could have been built in Wales, all eco-friendly and built to modern specifications. That could have helped address major social justice issues such as fuel poverty. Some 30% of households in Wales, not just those living in public stock, are in fuel poverty. We could have addressed Wales's terrible legacy of poor housing and associated poor health. The money could also have provided enormous benefits for the local construction economy, which is part of the backbone of Welsh employment, and improved the circulation of money inside some of the poorest communities in Wales.

I am informed that by now the Treasury will have received a letter on the issue from the Welsh Minister for Business and Budget and Deputy Minister for Housing and Regeneration. The letter encloses a report by Professor Wilcox, an expert on housing finance. I have not been privy to that report, but I believe that it argues that Wales should have parity with Scotland. I agree, as I hope will all parties in Wales.

Furthermore, the new UK Government's decision to scrap the housing revenue account for England this September means that there is no justification whatever for the Treasury's insistence that the scheme should continue to apply to Wales alone. Such is the inequity and injustice at the heart of the whole affair that I believe, as I said in a recent early-day motion, that the Treasury should make reparations based on the real-terms amounts of money accumulated over the past two decades. At the very least, the Treasury must make a clear statement that the provisions of the HRA and the great pillage of Welsh rents are to cease with immediate effect.

In terms of the UK Budget, this ever-decreasing figure, which lessens every time a local authority transfers its housing stock, is small, but to the tenants who must make do with poorer-quality housing than they deserve and the local authorities that want to provide new and better-quality housing for their residents, it is a significant amount. This is not just the right thing to do; it is the best thing to do and the fair thing to do. Diolch yn fawr.

4.45 pm

The Exchequer Secretary to the Treasury (Mr David Gauke): It is a great pleasure to serve under your chairmanship, Mrs Brooke. I congratulate the hon.
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Member for Carmarthen East and Dinefwr (Jonathan Edwards) on securing this debate and presenting his case with such eloquence and detail, although I am grateful to him for not providing the breakdown of every local authority for every year since 1999.

I am pleased to have this opportunity to discuss the Government's policy on the housing revenue account subsidy system and its financial consequences in Wales. Housing policy, as we heard from the hon. Gentleman, is governed by the same primary legislation in England and Wales, and the public spending framework is also similar. However, it is important to remember that housing policy itself is a devolved matter.

The HRAS system in Wales is based on notional income and expenditure on council housing, which is derived from information provided by local authorities. If the overall HRAS system is in surplus once all local authority expenditure has been totalled, the surplus is collected by the Welsh Assembly Government and given directly to Her Majesty's Treasury as annual managed expenditure.

I recognise that the existing centralised system is seen as complex and opaque and is therefore unpopular with local authorities across Wales, a point made by the hon. Gentleman. That is why the Welsh Assembly Government launched a review of the HRAS system last December. My colleagues in Government and I look forward to the outcome of the review. As he said, there is certainly potential to improve the current system, and any recommendations will be duly considered as part of our wider reform agenda.

It might be helpful for me to touch briefly on the example of England, about which we have heard a little bit. As part of the spending review, we announced that we will be ending the current HRAS system in England and introducing a new self-financing model for council housing that will abolish the annual centralised subsidy and replace it with a more transparent system that gives greater power to local councils and authorities.

As in many areas of public service provision, we seek to devolve responsibility away from the centre so that communities have more of a say in what goes on in their local area. The measure will enable councils to keep their rental income and use it to maintain homes for current and future tenants, providing new opportunities and incentives for authorities to plan for the longer term. That approach will allow councils better to meet the housing needs of their specific areas. Decisions will be made based on local knowledge and priorities, not a central Government formula. Details of the new system will be introduced this autumn as part of the localism Bill.

In principle, it would be feasible to construct a similar solution for Welsh authorities, if that is what they wish to propose. However, there are some differences between the HRAS systems in England and Wales that will need to be bottomed out. As I said, it is a devolved matter.
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Any decision on the future of the Welsh HRAS system will be made by the Assembly Government, subject to agreement by HM Treasury. I note some of the hon. Gentleman's criticisms of the Welsh Assembly Government-not all coalitions work as harmoniously as others do. His points are very much on the record.

It might be helpful for the hon. Gentleman to know that, earlier this week, my right hon. Friend the Chief Secretary to the Treasury wrote to Jane Hutt, the Welsh Finance Minister. He offered officials to work with Welsh colleagues on developing a similar reform to the Welsh HRA subsidy system, with the same protections provided for the position of the Exchequer.

Guto Bebb: I am obviously delighted to hear that because this is an important subject. Although I have made the point that stock transfer has been a way of dealing with the matter and providing a more local approach, it is fair to say that there is a cross-party feeling in Wales that the issue should be dealt with. It is part of the localism agenda and the Minister's comments are very welcome.

Mr Gauke: I am grateful to my hon. Friend for his comments. Indeed, I have a lot of sympathy with what he has said about stock transfer. If there is a consensus within Wales, from the position of the UK Government, the Treasury is keen to engage. As I said, Treasury officials are available to work with their Welsh counterparts to find a way in which we can move forward in this area. Yes, there are differences between the English and the Welsh system, but we are keen to consider the matter and engage in a positive way.

I thank the hon. Member for Carmarthen East and Dinefwr for securing today's debate. He has raised some important points and I am grateful to him and my hon. Friend the Member for Aberconwy (Guto Bebb) for their contributions. It is incredibly important to address the issue of housing needs across Wales-and the UK more generally-and the Government are keen to do so. I look forward to seeing the proposals for reform of the HRAS system that the Welsh Assembly Government are currently putting together and, as I mentioned earlier, the Treasury is keen to engage in that process. I hope that, through working in partnership with the Welsh Assembly Government, we can find a solution that meets the needs of local authorities in Wales set out by the hon. Gentleman. I also hope that we can deliver similar protection to the Exchequer as that achieved by the reforms we have undertaken in England, which have been assessed by the Office for Budget Responsibility as being fiscally neutral. In that context, I would like to say that this has been a useful debate. I am grateful to the hon. Gentleman for securing it and I hope he feels that it has enabled us to make some progress in this area.

Question put and agreed to.

4.52 pm

Sitting adjourned.

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