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Westminster Hall

Wednesday 4 November 2015

[Albert Owen in the Chair]

Prefabricated Housing

9.30 am

Damian Collins (Folkestone and Hythe) (Con): I beg to move,

That this House has considered modern prefabricated housing.

It is a pleasure to serve under your chairmanship for the first time in a Westminster Hall debate, Mr Owen. I thank colleagues who are present this morning to consider this important subject. I chose to use the word “prefabricated” in the motion because I thought that would give Members the clearest steer on the subject matter, although the housing industry’s preferred terminology is “off-site manufacturing”.

For many of us, prefabrication conjures up images of the immediate post-war era, when it was one of the solutions to the country’s incredible housing need, but things have moved on a lot in the prefabricated market. Modern methods of off-site construction and manufacture and on-site assembly have transformed the use of the technology and its application in modern housing. People may have seen modern retail parks such as BOXPARK in Shoreditch, east London, which was assembled from box units and can be disassembled and moved away, and wondered whether such methods are possible in housing and an answer to the our dire housing needs. I believe that they could be. The purpose of today’s debate is to explore that and to ask the Government what opportunities exist to incentivise and encourage the development of the technology.

There is no doubt that housing need in this country is great. The record modern high for house building completions was set in 1988. It is now estimated that 230,000 new accommodation units a year are needed. In the past few years, the Government have introduced incentives and simplified the planning system and announced schemes such as Help to Buy to help more people on to the housing ladder, but despite the success of such programmes and the welcome increase in the number of housing starts and completions, the number of completions is still running at around 130,000 a year—considerably less than the target. In many ways, that is a moving target. It would be nice to have the luxury of believing that if we could just catch up with the lost years of house building during the recession, we would be in a much better place, but while that would be progress, the number of new households created each year is rising faster than we can build homes to accommodate them. That is what is creating the massive pinch in the housing market.

The problem is principally one of supply—the lack of homes to buy and of affordable homes to rent. In previous debates, we have discussed rogue landlords and problems in the private rented sector, and I was pleased to see the measures that the Government are introducing in the new Housing and Planning Bill to give councils more powers to combat rogue landlords.

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One of the reasons why rogue landlords exist is the lack of supply of good-quality properties in the private rented sector at affordable prices. Rogue landlords can get away with exploiting their tenants because the tenants often have few options of other places to live. More and much higher quality housing at the lower end of the market is essential.

I said that prefabrication often conjures up images of the post-war era. The building industry has evolved considerably since then, so we should not seek to copy that era’s techniques and methods, but we should certainly consider the ambition. When Winston Churchill famously gave Harold Macmillan the task of building 300,000 new homes, there were the added complexities of post-war austerity and a simple lack of timber with which to build homes. Rather than putting up their hands and saying, “We don’t have enough wood to build the homes we need,” they harnessed the ingenuity of British engineering and design to come up with different techniques and methods of building homes. Famously, they designed the timberless house, which required very little wood to support its construction. With those new ideas and methods, they were able to meet their targets. We should similarly be looking at the new ideas and methods in prefabricated housing to unleash a revolution in the design and delivery of new homes for Britain to meet the Government’s targets and the people’s need.

Julian Sturdy (York Outer) (Con): My hon. Friend is making a powerful argument. He is right that prefabrication has moved on tremendously over the years. Does he agree that we should consider prefabrication not only in housing, but in schools and hospitals? Portakabin in my constituency has just signed a deal to provide a huge school project worth £44 million and is moving the technology further on every year.

Damian Collins: My hon. Friend is absolutely right. When thinking of portakabins, some of us may think of the rather inadequate buildings that we inhabited at school in the 1980s, but things have moved on a lot. We are looking at modern, fully furbished, fully functioning units that can be designed for almost any need and assembled quickly in any place to do any type of job. As my hon. Friend said, be it for schools, offices or accommodation, the units have many uses and can be delivered to an exceptionally high quality and specification. It is that sort of technology and approach that we want in the housing market.

I recently met the architectural practice Rogers Stirk Harbour + Partners because I wanted to find out more about the Y:Cube project that it recently delivered in Morden, south London, which I know the Housing Minister has visited. The project involves specially designed pods that are manufactured off-site. The build cost for a one-bedroom studio flat in the development could be as little as £30,000 to £35,000, and they can be rented out from £150 a week. The units can be built in the factory in a week and assembled on-site in a further week. A whole project—not just a single unit—can be delivered in about a third of the time of a traditional development. The practice believes that it can deliver a block of 50 accommodation units in less than 11 months from the moment that a planning application is presented to the council to tenants actually living in the building, which is a radical change in the time it takes to deliver a project of such complexity.

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Referring back to my hon. Friend’s intervention, the modern technology used in the design of modern prefabricated units means that they are cheap to run. Energy bills can be as little as £10 a month—much cheaper than in many of the properties in the private rented sector. The construction price is also low—it could be a third less than that of even the most affordable housing units currently being built. Prefabrication totally changes the economy of the housing market for both developers and tenants. It provides an opportunity for much lower rents and prices, based not on subsidy but on the fact that the property itself is much cheaper to construct using modern methods.

The value of a property is based not only on the materials and labour used to construct it, but on the value of the land on which it sits. The Government could consider whether their land assets could be made available to support the use and development of modern off-site constructed housing. Smaller plots of land, which are often uneconomic to develop and not of interest to house builders, could be used. We have a crisis in housing supply, but not necessarily among house builders, which have many projects to work on. The economies of scale that they get from delivering a large housing estate of thousands of properties cannot be derived from a relatively small piece of land that might be owned by a local authority or a public body such as Transport for London, where perhaps only a few flats could be delivered. New methods of off-site construction make such developments much more viable. Units can be constructed off-site and assembled on-site quickly with little disturbance to local residents.

One of the biggest challenges for the construction industry is waste, but there is virtually no waste with off-site construction and on-site assembly. Furthermore, when land already owned by local authorities and public bodies or land with little commercial value because of its location and restricted size is used, methods of off-site construction come into their own. When local authorities compile a register of brownfield sites under the new Housing and Planning Bill, perhaps the Minister will ask them to include a schedule of sites suitable for off-site construction housing projects—suitable because of the land’s limited commercial potential and value, and restricted size.

Off-site construction homes also come into their own for companies that are as yet uncertain about what the best value use of their land holdings will be. Some land might be developed for commercial or residential purposes but is not being utilised at the moment, and some of us get frustrated at land being held in land banks as an asset, and not released to meet its full potential because of market circumstances. The great thing about off-site construction and on-site assembly is that homes can be removed and reused in a different location. For example, a major developer with a big project to be delivered over 10 years or more might look at short-term delivery of housing units on a site—low-cost units to rent that could be moved on later. The Government—particularly the Ministry of Defence—have land assets, but they might be reluctant to sell to a commercial developer, or not want to release too much land in one go, thereby devaluing their assets, so they might look at whether some of their sites could be used for the deployment of prefabricated housing as an interim measure.

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The technology is such that the units are advanced, well designed, well insulated and durable. Rogers Stirk Harbour + Partners told me that the units in the Y:Cube project they worked on met all modern building specifications and would have a life of 60 years or more, so they could be delivered not only for low-cost rented housing, but to purchase at low cost. The units are mortgageable, because of their 60-year life.

There is massive potential for such construction and I want local authorities and the Government to look at their available assets for sites that could support the development of the technology. They should also look at the roll-out of the factory units to construct the properties, because new factory jobs can be spread around the country so that the houses are built in factories close to where they will be deployed. That might be a useful tool for economic regeneration in areas where that is needed.

The project in Merton, south London, will followed by others in Lewisham and elsewhere in the city. The technology suits the London market in particular, where the gap between people’s average earnings and the average property price is so wide that property ownership is out of reach to many people. That has also pushed rents up. Those challenges are faced throughout the south-east and, in many ways, throughout the country. Prefabrication could be a solution to rebalance the market not through subsidy, but through the development of new technology to offer new choice and lower prices.

I look forward to what the Minister will say about such opportunities. The scheme that I outlined is by no means the only one—Urban Splash has a project in New Islington, in Manchester, in which people can in effect pre-order and pre-design their home before it has been constructed. It will be manufactured off-site and then assembled on-site to their exact specification. Again that can be done for less cost than might normally be the case in the construction sector, certainly where that level of purchaser design is part of the end product. Other companies are also looking at similar schemes. We could be on the verge of an exciting new technology, which could revolutionise the design and delivery of homes in this country. I will welcome the Minister’s views.

9.44 am

Alan Brown (Kilmarnock and Loudoun) (SNP): It is a pleasure, Mr Owen, to serve under your chairmanship for the first time in a Westminster Hall debate.

I thank the hon. Member for Folkestone and Hythe (Damian Collins) for securing the debate. I agreed with a lot of what he said, so there is a risk that he will think that I have cribbed his speech. The debate is timely given that earlier in the week we had Second Reading of the Housing and Planning Bill in the House. We discussed the right to buy in social housing, which I spoke against for various reasons. One thing that was agreed, however, given the right to buy, was the need for replacement housing to be put back into circulation. Obviously, as has been said, prefabricated housing or off-site construction is one way to speed up that process cost-effectively.

As the hon. Gentleman said, the term “prefabricated housing” takes us back to the image of post-war housing. Although those prefabricated houses are now somewhat maligned, I agree that we have to compliment the ingenuity of the time. The houses served a real need,

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providing housing on site quickly when there was a shortage of raw materials. Also, the people who stayed in those prefabricated homes in general loved living in them, and some remain today, which is a testament to how well the houses were built, although in energy efficiency they no longer serve modern purposes. When I was a councillor with responsibility for housing, adapting that older prefabricated housing to energy-efficient standards was a real challenge, if not impossible. It is therefore good to revisit the prefabricated home with modern technologies for the new house build.

Over the years in Scotland, especially in the private housing sector, there has been a switch to kit houses, with much of the frame built off site for quick assembly on site, speeding up the whole building process. It makes sense that off-site construction has evolved further to provide complete wall panels, which come with insulation or even services included, and modular units.

In off-site construction, “modular units” is a more popular term than “prefabricated houses”, because it does not have quite the same connotation in the imagination. Modular units are now used for schools and offices, and we have heard about a retail development. No one looks at those units and thinks, “Oh, they were prefabricated”, or, “That’s off-site construction; it will only have a 10-year lifespan.” They look and feel permanent and have similar lifespans to traditional builds. It makes sense for modular units to be extended into the housing sector.

Damian Collins: The delivery of the London Olympic games was a triumph for UK design and architecture in many ways, and a prefabricated or off-site constructed unit was used for the basketball arena. It was a temporary building that was constructed for the games, but could then be disassembled and relocated to other places around the country.

Alan Brown: The hon. Gentleman makes a fair point about the successful delivery of the 2012 Olympics and prefabrication helping to control budgets.

It might surprise the House to know that Scotland is ahead of the curve with off-site construction and prefabrication. In 2013 there was an estimated construction value of £125 million in Scotland, compared with only £46 million in the rest of the UK. That illustrates a stark difference. Also in 2013, it was estimated that 50% of new houses in Scotland had an off-site build element, which again is a much higher rate than in the rest of the UK. We also have a much higher new build rate in social housing and private housing, and the 50% rate clearly contributes to that. Scotland’s housing growth also means a potential increase in exports, creating new jobs and keeping traditional construction jobs on site. There has been a real fillip for the construction industry.

I agree that there is less waste on site when there is off-site construction, and vehicle movements to and from the site can be reduced by up to 40%. We should consider that housing developments often take place adjacent to existing houses, so that reduction in movements is great for reducing disruption to local residents. Of course, having fewer vehicles also brings a safety benefit.

Damian Collins: Does the hon. Gentleman agree—I would also welcome the Minister’s thoughts on this—that we could consider off-site construction and assembly as having an advantage in the planning system, because there is less disruption to residents during the construction phase than with a normal build?

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Alan Brown: I agree. When I was a councillor I was also chair of planning, and I know that the number of vehicle movements drives a lot of objections from local residents. I was in committees where we debated planning conditions to control and limit the times of movements. If we had a system that much reduced vehicle movements in the first place, that could certainly speed up planning and take some of the heat out of those considerations.

Off-site construction clearly speeds up the construction process. The trick is to have utilities on site ready for assembly. Utilities are the one risk to construction programmes, but that risk exists in traditional build as well. I am sure we have all heard about problems with getting utility companies to stick to their programme and engage with developers. As we increase the number of off-site constructions, we need to ensure that the utility companies are up to speed and do not cause delays, because delays inevitably mean that people do not get into their new-build homes quick enough.

I have outlined the advantages of this type of construction, which has seen real growth in Scotland. I want to highlight a couple of specialist companies—it is no surprise that we already have such companies operating in Scotland. Rural House, based in Skye, does more robust prefabricated designs for the more inclement highland weather. Its houses are also aesthetically pleasing; they are designed to look like traditional steadings.

In my neck of the woods, but in a neighbouring constituency, there is the Wee House Company, which was started up by an entrepreneurial 22-year-old. It can produce one or two-bedroom models in three weeks, with costs that start at £68,000. In a debate the other day there was much discussion about what was deemed affordable housing, but it is clear that units that start at £68,000 fall in that bracket.

Off-site construction has a real future in the house building industry. To steal a quote, “Let’s not call it prefabrication.”

9.53 am

Dr Roberta Blackman-Woods (City of Durham) (Lab): May I say what a pleasure it is to serve under your chairmanship, Mr Owen? I congratulate the hon. Member for Folkestone and Hythe (Damian Collins) on introducing an interesting element to our housing debate.

This week we have rehearsed the point well that we are in the middle of a housing crisis. Last year’s output was only 117,000 homes, and we need about 245,000 a year, so anything that can help us to plug that huge gap in supply has to be looked at carefully, especially given the number of homes we are producing for social rent: we produced fewer than 11,000 last year—nowhere near enough. We should be delivering about 78,000 each year if we are to meet need. We should therefore look in some detail at providing what the hon. Gentleman rightly described as off-site housing, rather than prefab housing.

This is not an easy debate. The hon. Gentleman said that we do not come to this issue in a vacuum, because a number of us have experienced prefab housing built between the wars, and during and after the second world war—housing that had to be demolished in the 1970s and rebuilt. Results varied across the country. Some prefab estates lasted much longer than that, and many people who live in them really like them, but many of those houses were of insufficient quality to last and had to be demolished. We need to be careful to say that we are not talking about that sort of housing.

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The Government’s off-site housing review report, commissioned in 2013, suggested that prefabricated construction methods could form part of the solution to England’s housing supply crisis. It would be helpful to hear from the Minister what the Government are doing about that report, and whether they plan to incentivise the building of that housing in any way.

The report highlighted examples such as Y:Cube, a prefabricated home scheme developed by the YMCA in London that boasts self-contained, one-bedroom flats with their own bathroom, living room and kitchen—all in a compact unit of 26 square metres. Those homes are for vulnerable young people, and it is encouraging that they meet code level 6 energy requirements. A three-week test showed that each home could be lit and heated to 20° C all day and all night for £7 a week. That is really good in terms of energy costs, and the home has a lifespan of 60 years or more.

Damian Collins: That scheme, which was designed for vulnerable people, is very exciting. It also makes it possible for someone who lives in a house in multiple occupation to think about having a home of their own.

Dr Blackman-Woods: I absolutely agree. The task is to try to envisage a wider role for such specialist housing. I think that we can see that, but there is a real issue about how we can spread it more widely. I want to raise a couple of issues that need to be taken on board if it is to have much wider application.

Although the units in that scheme in south-west London had high energy efficiency and insulation specifications, that is not always the case. Some off-site housing still has poor insulation, or uses insulation materials that will not stand the test of time. That must be taken on board.

Points were made about off-site construction using less raw material. That might be the case in construction, because when houses are built in a factory to the same design, companies will create less waste. However, in transporting these units, a lot of wood and plastic is often used; those issues need to be taken on board.

Julian Sturdy: Surely when new houses are built, those materials are moved on to the site anyway, so movement is irrelevant.

Dr Blackman-Woods: I am listing things that need to be taken into consideration. It is as if we had a balance sheet and needed to see the evidence. That is the point—we need evidence, and we need to make sure that these issues are addressed. The hon. Member for Folkestone and Hythe said that he wanted a revolution. I am not suggesting for a minute that there is no role for this sort of construction, but before it becomes more widespread throughout the country and across different types of housing—before the revolution—we need to be sure that we are not building up problems with transport, or with more movement on and off site. We also need to ensure that people have the right skills to construct the units properly.

Damian Collins: One attractive thing about the schemes is that not only can we use a factory at a distance from the site, but pop-up factories can be built on site, to create the units where they will be deployed.

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Dr Blackman-Woods: That is a point well made. If apprenticeships can be attached to those factories, that will be helpful. We need people with the skills to construct the units.

Julian Sturdy: The hon. Lady is being very generous with her time. She is absolutely right that we need a skilled workforce to deliver the units. As I have mentioned, Portakabin employs nearly 2,000 people in my constituency. I have visited and looked at what that skilled workforce has delivered, and the results are huge. Portakabin is an exemplar for delivery in apprenticeship schemes as well. It is driving this sector forward, as are other companies across the country—there is a UK-based industry that can drive this construction forward.

Dr Blackman-Woods: That is helpful. It would be good to hear more about what is happening in the hon. Gentleman’s constituency, and perhaps for some of us to see that work and talk to the company, so we can better understand the industry, how it is emerging and how it could be rolled out elsewhere.

Alan Brown: We should be careful not to associate a potential lack of construction skills solely with off-site prefabricated house building. Whatever type of house building is undertaken, the skills need to be there, and the sector has to be able to deliver the homes we need. The hon. Lady’s point is not necessarily pertinent only to what we are considering. Construction skills are generally transferable, anyway, as tradesmen can adapt to different styles of construction.

Dr Blackman-Woods: I agree with that. We need to develop skills right across the construction sector, as there is a skills shortage, but that is no reason not to consider that shortage with regard to off-site construction.

As the hon. Member for Folkestone and Hythe mentioned, we also need land for the units. That factor needs to be considered, along with infrastructure. When thinking about a unit’s cost, it is easy to get carried away and think it is much cheaper than it actually is, because land has not been factored in. The cost of land varies around the country, but it can be very expensive indeed. Size is also an issue; many costs quoted are for small units. Although such units may suit some people in some sectors of the housing market, they will not suit everyone, and larger units tend to be much more expensive.

Finally, there is the issue of mortgage availability. If prefabricated units are to be rolled out more widely, they have to be of a construction type that will attract mortgages. They must be seen to have some longevity; the fact that the units appear to be short-term seems to be what prevents mortgages from being given. We need to change the thinking about the units; I am simply highlighting the issues that we need to address.

I have looked at what is available on the market. It is good to hear from the hon. Member for York Outer (Julian Sturdy) that Britain is leading the way on innovation in these products, because a lot of the information in the press is about companies abroad— especially American, Australian and German companies—that have developed units for use primarily in their own countries. We seem to rely quite heavily on German companies, so it would be good if we could get an exchange of knowledge going with German developers.

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I will list some interesting examples. Topsider makes two-bedroom homes ranging from 60 square metres to 250 square metres, which can be built at a cost of between $60,000 and $350,000—that range is just huge. I emphasise my earlier point that these units are not necessarily cheap. In Germany, homes made by Baufritz are very expensive, as are some of the Australian-made ones, because they are high-end and use very good materials. They are a premium housing product, rather than a cheaper, more widely deliverable one.

I have talked a lot about issues that need to be addressed in rolling out such units, so lastly I will talk about some of the possibilities. We know that these types of homes can deliver impressive reductions in energy bills. They can also lead to faster construction and so a faster return on investment. Modular construction can reduce an overall completion schedule by as much as 50%. Speeding up housing construction is important, given that we need to increase supply very quickly. Because the units are produced indoors, they are, to a degree, unaffected by weather, increasing work efficiency and avoiding damage to building materials.

The units can be low waste, as the manufacturer is constantly building to the same plans, so often knows exactly what quantity of materials to use for any given job. That avoids the need for skips going on and off construction sites—we have all seen that. Units can be environmentally friendly, and not only because of the reduction in waste; if constructed properly, they can reduce disturbance on site. The properties are flexible, and can be extended or reduced because of their modular components; they could therefore be good housing for families, who could add to their home as their family grew. The builds are also often healthier, because of the controlled environment. Having said that, maintenance and repair can sometimes be more complex and costly; that needs to be factored in.

The real issue is how we ensure that the units and properties are well designed and of good quality to begin with, and that such properties can be produced at scale, as that is where the sector has failed in the past. Does the Minister intend there to be any financial incentives for the sector, particularly for low-cost housing? If so, how will he seek to ensure that we do not repeat the errors of the past and are able to welcome this innovation in housing design and delivery?

10.9 am

The Minister for Housing and Planning (Brandon Lewis): It is a pleasure to serve under your chairmanship, Mr Owen.

I thank my hon. Friend the Member for Folkestone and Hythe (Damian Collins) for securing this debate on a genuinely important subject. We have an opportunity to ensure good-quality affordable housing. Both he and my hon. Friend the Member for York Outer (Julian Sturdy) were right to highlight that this country has the opportunity to lead the way and showcase some of the excellent work done in this sector of the industry. That is why I was rather disappointed and slightly surprised by the remarks of the hon. Member for City of Durham (Dr Blackman-Woods). I cannot quite work out why the Labour party wants to spend so much time talking down the British housing industry. The hon. Lady spent more than five minutes talking about all the things she thinks are wrong in the industry.

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Dr Blackman-Woods: I do not think I suggested for a minute that the Labour party would not support these innovations. I was arguing for good-quality design that could be rolled out at scale without repeating any of the problems of the past. I want to make it clear that the Labour party welcomes these innovations.

Brandon Lewis: I am pleased that we have managed to elicit that statement, given that we spent eight minutes listening to the hon. Lady list all the things in the industry she is not happy with. If Labour Members spent some time looking at what was going on in the British off-site and advanced construction industry, they would see that there is some phenomenal expertise out there. I am sure the industry will want to explain to them some of the things my hon. Friends and I have heard about through talking with the industry and visiting sites. I will talk more specifically about some of that later.

Today’s debate follows on from Second Reading of the Housing and Planning Bill and the problems we heard about then. The hon. Lady talked about the number of housing starts, but she, rather like the shadow Housing Minister, the right hon. Member for Wentworth and Dearne (John Healey), seemed to forget that there were 75,000 and 88,000 housing starts respectively in the last two years of the Labour Government. That is the inheritance we had to build on, and the industry can play an important part in that. Fortunately, despite what the hon. Lady said—her figures are somewhat out of date—we were back up to 136,000 starts in the last recorded 12 months, which is a big improvement on the disgraceful situation that Labour left, with just 75,000 starts in its last year.

My hon. Friend the Member for Folkestone and Hythe will be fully aware that, during the recent election campaign, the Conservative party made it clear that increasing home ownership and house building would be a top priority. He was right to highlight the fact that the industry has a big part to play. We have been working on this issue since 2010 and, as I said, we have built the numbers back up, although nobody disagrees that there is still a long way to go. We want to see a lot more happen, and that is where the industry has a large role to play.

The number of first-time buyers has doubled since 2009, so our success in that respect is already apparent, but our ambition, which we are determined to realise, is to go further. A fully functioning and efficient housing market is vital to meeting the aspirations of working people and to raising our country’s productivity. That is why we are committed to encouraging not only home ownership, but increased housing supply, to make sure that we have more good-quality homes that people can afford to buy and that we support all parts of the housing market and all tenures.

The way we do that is equally important. We need to deliver more new, high-quality homes, with well thought out interior design, built quickly and efficiently. As was outlined by my hon. Friend today and earlier this week by my Norfolk neighbour, my hon. Friend the Member for South Norfolk (Mr Bacon), the industry can play a part by linking with custom build to make sure we remember that a house is built for a customer. We need to design homes that are right for the people who will live in them. The Government’s proposals in the Housing and Planning Bill are designed to achieve that.

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We want to see innovation in the house building and construction sector. I want us to have a diversified industry —one that does not rely on the same old companies and build in the way we have for the last 50 to 100 years. The way we build homes—traditionally using the larger builders—involves the same techniques that have been used for 50 or, arguably, 150 years. On average, it can take 20 weeks to build a house, should there be—I say this only somewhat tongue in cheek—a good flow of weather. We need to move to a system where homes are built in weeks, if not days.

Innovation and new ways of working are key to the sector’s future. Industry needs to innovate to stay competitive. That applies to the construction of homes as much as to any other field. If the larger developers do not take these types of construction forward in the years ahead, there will come a point—even the chief executives of these companies have said this to me—where they risk being left behind. Competition is good for the industry. Homes in China are being constructed using 3D printers, and they are assembled in a matter of hours. It is suggested that such homes cost about £300 a square metre and it is claimed that they will last for 150 years. That might be a bit beyond where our market is, but it is certainly the kind of innovation that is coming. Such innovations should be a key part of our housing industry. Building the housing we need quickly and cost-effectively, so that people can move in within days of assembly starting, could transform this country’s rate of housing delivery from the 20-plus weeks we see with traditional techniques.

We are talking about modern prefabricated homes, but like others I like to use the phrases “off-site construction” or “advanced construction”. In our recent discussions with industry, we have been referring to advanced housing manufacture. Homes built using such techniques—there is a variety out there—are finally starting to set the benchmark for the latest, cutting-edge designs. They are built in highly controlled factory settings and the parts are assembled precisely and on-site. Advanced housing manufacture can not only deliver high-quality homes, but help to build them quickly and efficiently. The method is now being used widely in advanced economies around the world.

The Government are keen to encourage more innovation in the way we build homes, and we are doing that through our housing programmes. The hon. Member for City of Durham asked what we are doing, so let me outline that. Through our housing zones programme, 30 brownfield sites across the country will be developed using £600 million of public funding, and we are encouraging the use of innovative construction on those sites. As my hon. Friend the Member for Folkestone and Hythe outlined, brownfield sites are often in built-up areas, where small plots and busy streets are a perfect match for advanced techniques. It is good to have debates such as this so that we can highlight some of these points, and I hope people will take note of what is said this morning.

We are also funding innovation through our multibillion pound affordable housing programme. So far, a fifth of the homes in the homes and communities programme after 2015 will be built using innovative construction techniques. Our £1 billion Build to Rent fund is also

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helping to build 10,000 good-quality homes for private rent. Fifteen schemes to create more than 4,000 new homes are already in contract and more deals are in the pipeline. Again, we are encouraging innovative construction through that programme, and the private rented sector fits that approach perfectly. We are also backing the market with our £150 million Custom Build Serviced Plot Loans fund, which pays for the preparation of shovel-ready sites. Large numbers of custom and self-builders prefer to use off-site construction techniques, because they appreciate the high-quality, sustainable designs and the rapid construction.

Small and medium-sized builders are vital to achieving the higher levels of innovation we all want. We are supporting them through our £525 million Builders Finance fund, which provides loans to unlock small sites, and the £100 million Housing Growth Partnership run by the Lloyds group—we are partnering Lloyds in that—which helps small builders to invest in new projects and to develop their businesses.

The wider Construction 2025 strategy sets ambitious goals for reducing costs and speeding up the delivery of construction projects, as well as encouraging innovation in the sector. We are supporting construction firm Laing O’Rourke to develop its advanced housing manufacturing factory facilities through a £22.1 million grant from the Department for Business, Innovation and Skills. There is also funding from industry more widely.

The Government are supporting the development of new apprenticeship and training programmes with a focus on off-site construction. Those are being led by industry players such as Laing O’Rourke and Skanska. It is important that we develop skills in the sector. What is beneficial about the programmes is that the skills they develop are different from the skills used in traditional techniques, and they can help with the huge skills shortage we have in the house building industry.

I welcome moves by industry to promote innovation in house building and to point the industry towards the future. I also welcome the opportunities presented by the techniques we are discussing. Last year, Buildoffsite launched its new housing hub to promote the benefits of advanced housing manufacturing. The hub aims to promote knowledge-sharing between clients and suppliers; raise awareness of new techniques; encourage new members; and develop a methodology to demonstrate the value of off-site solutions. The hub is continuing encourage wider take-up of the Buildoffsite property assurance scheme, which aims to give lenders assurance about the quality and durability of homes built using innovative construction methods. As my hon. Friend the Member for Folkestone and Hythe rightly said, the lifespan these construction methods give—in many cases, as I outlined with the China example, it goes way beyond 60 years—makes these homes very viable for mortgage lending. I talk to mortgage lenders regularly about that and other schemes to make sure they are aware of the opportunities.

It is great when innovative schemes are brought forward, and I will describe some that I have seen. The Accord group in Walsall has a scheme providing homes for rent. They are made in a factory and assembled across the road on a housing site, and the staff are people who live in the area. I saw two homes being built in a day—a very impressive rate of building. Even if it was done to show off for “The One Show”, it proved what can be done. Bearing in mind comments made about skills this morning,

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I found it particularly interesting that of the 17 or 18 staff on that site, all but one of them, I think, had either been unemployed or had no experience of the housing industry before starting work, yet within a couple of weeks they were playing a part in building new homes. That is a good example how this approach can change the skills supply for the industry.

Innovative construction is also being used as part of the Bicester garden town scheme. High-quality energy-efficient homes are being built for rent, shared ownership and sale. I have also visited an off-site construction company in the constituency of my hon. Friend the Member for South Norfolk, who is in the Chamber this morning; people are even being taught how to build for themselves. That is a great opportunity for young people to learn a skill and to be part of building their own home. It fits perfectly with my hon. Friend’s ambitions for the use of off-site construction in custom and self-build, which he is passionate about.

I recently helped to launch the Y:Cube scheme in Merton, which has been mentioned by my hon. Friend the Member for Folkestone and Hythe and others. Well designed, high-quality homes have been built there, using advanced housing manufacture; and they are being made available for rent to young people in the local area. Those homes offer affordable accommodation for single people who are volunteering or who are in training, education or full or part-time employment. They are well designed, drawing on the creativity of high-quality architects—some of the best we know, such as Rogers Stirk Harbour + Partners. They use new forms of construction to save time and costs.

I have visited a factory in Derbyshire where homes are being manufactured quickly and efficiently, again showing the possibility of a different skill set. The clean indoor environment extends the working life of people in the industry. Some of the units developed there are being used by Urban Splash, which is developing an exciting custom build scheme in Manchester, using off-site construction to enable buyers to customise their homes and create a bespoke solution, tailored to meet their needs. That is exactly the kind of development we want in the housing sector.

At Creekside Wharf in Greenwich, Essential Living is using an innovative modular technique to produce high-quality homes for private rent. All those schemes are just examples demonstrating the benefits that advanced housing manufacture can bring. They are a sample of what is happening: faster construction and good quality

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design and build, with low energy bills and the creation of jobs and homes. Council and social housing can also reap the benefits, as I have seen from the south Norfolk company that has developed homes for the local authority in Great Yarmouth.

Challenges remain, however, including shaking off stereotypical images of prefabricated housing based on some poor-quality past schemes such as the hon. Member for City of Durham described. We do the industry no justice by making such comparisons. What now exists is different; it is innovative and the quality is high. We need faster and more widespread take-up by a range of industry players who will encourage collaboration between developers and architects and work with communities, home buyers and planners, with the support of lenders. Then we can get things right. We need to build more homes in communities. Buyers, self-builders, renters and communities across the country appreciate homes of high quality and thoughtful design that are affordable and that are built quickly, in the right place. Advanced housing manufacture can achieve, or help to achieve, all that. It has enormous potential to create jobs and growth through a new factory-based industry. I encourage industry to go further with it, and use it more often. I congratulate my hon. Friend the Member for Folkestone and Hythe again on securing such an important debate.

10.23 am

Damian Collins: I thank the Minister and all hon. Members who took part in the debate. As the Minister said, we are at an important stage in the development of the advanced manufacture of homes for Britain. I was pleased to hear about his personal interest in the subject, as well as the Government’s interest, and about the role that advanced manufacture has in meeting the housing targets we have set for affordable homes to rent or buy. I hope that local authorities and public bodies that pick up on the debate will consider the use that they could make of such techniques in meeting their housing targets. I shall talk to the councils in my constituency about it, and I hope that other hon. Members will do the same. I am sure that we shall return to the subject in future housing debates.

Question put and agreed to.


That this House has considered modern prefabricated housing.

10.24 am

Sitting suspended.

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Secondary School Places (London Borough of Sutton)

11 am

Paul Scully (Sutton and Cheam) (Con): I beg to move,

That this House has considered secondary school places in the London Borough of Sutton.

It is a pleasure to serve under your chairmanship, Mr Owen. Some years ago, school place planning around London dictated that a number of schools, especially across Sutton, should contract in size. Across London, though, it was quickly discovered that the plans were horrendously wrong, and that in fact the exact opposite was required: there were more people moving into the borough, there was a higher birth rate than was originally predicted, and during the economic downturn fewer parents sent their children to nearby independent schools.

The London Borough of Sutton moved to expand primary schools across the area. Bulge classes and permanent new buildings sprang up in every school. Despite a number of people asking about secondary education, the council seemed to forget that children have a funny habit of growing up and needing secondary school places. We were assured that the council could cope.

Secondary schools have been through the same process as primaries. New buildings and classes have popped up. Stanley Park high school in Carshalton has moved to a new location and expanded considerably as a result. I was on the project board for that school when it was built; it was one of the last Building Schools for the Future projects. It was built on a former hospital site after more than a year of wrangling between two public bodies: the council and the NHS. Between them, about £1 million of taxpayers’ money was spent on legal fees. From that experience, I know about the difficulties and inertia when working with the public sector.

In subsequent years, the private sector, which on the whole is far more nimble, started to look at Sutton after development opportunities in surrounding boroughs were exhausted. Many of the plots of land that might have made a good school site were snapped up for residential, retail and other mixed development. Now, we are scratching around to find sites that can deliver the infrastructure improvements required to support an expanding population.

Sutton has a particular environment when it comes to schooling. It regularly features at the top of the list of local education authorities for results, which is one of the biggest attractions for families coming to Sutton. At the centre of that excellence are its five grammar schools. Those selective schools have deservedly excellent reputations. However, their existence means that Sutton is a net importer of children, with students coming not only from neighbouring Croydon and Merton, but from central London and even the south coast. Pressure is therefore more acute in Sutton than in many other parts of London. If Wallington County grammar school applies for and opens an annexe in Croydon, as has been reported, that may help to alleviate the situation regarding school places in the east of the borough by keeping children in Croydon closer to home, but there is still a long way to go to secure enough secondary school places in the coming years to satisfy predicted demand.

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I will quickly share the chronology of events that has led us to an impasse in trying to secure the school places that we so desperately need. In November 2012, Sutton council acknowledged that a new secondary school might have to be built in Sutton as early as 2015. Early reports showed that the predicted shortfall in places would be most acutely felt in the centre and to the north of Sutton town centre. In June 2013, Sutton council’s education committee instructed officers to investigate sites for a new secondary school. That October, the same committee noted that a new secondary school would probably be required in 2017 or 2018. In the following January, the council confirmed that a new 10-form-entry secondary school would be required in 2017. That was the advice from the secondary schools partnership—a body made up of senior representatives from all the local secondary schools. The reference to 10-form entry was later changed to eight-form entry, which remains the estimate today. However, it was reported that the council did not have sufficient resources to build that school.

In December 2013, the then MPs came out in public as supporting part of the soon-to-be redundant Sutton hospital site as their favoured location for a new school opening in 2017. That site is in the south of the borough, close to the Surrey border.

In March 2014, the council’s secondary school expansion plan acknowledged the difficulty of identifying suitable sites for new schools:

“Due to the difficulty in acquiring even one suitable site, any new school should be as large as possible…to take greatest advantage of such a site.”

In June 2014, the council’s education committee was told that a site for a new secondary school would have to be acquired

“in the very near future”,

and there was a lead-in time of two to three and a half years for getting the new school open. Therefore any site would have to be sorted as early as 2016 for even a 2019 opening.

At that time, the council was refusing to share with the public the long list of sites that it was looking at, so I starting looking myself and noticed an overgrown, derelict, full-size artificial football pitch at the back of a park in Rosehill, just to the north of Sutton town centre, where demand is most acute. At the time, that was out to tender for a five-a-side football pitch arrangement after years of being left unused and locked up. The council already owned that land, so it would clearly save money. I spoke to the owners of Sutton Sports Village, a world-class tennis academy immediately adjacent to the site. They were supportive of a school being located there and expressed an interest in sparking up a partnership when it eventually opened.

In November 2014, Sutton Council announced that it had identified two sites for a new secondary school: part of the Sutton hospital site and Rosehill all-weather pitch, my preferred site. It commissioned feasibility studies for both sites, despite the fact that the Education Funding Agency, which is ultimately responsible for choosing the plot, would conduct its own. Before the council’s studies were complete, the council spent about £8 million buying land on the Sutton hospital site from the NHS. That parcel of land was not the same as the one first envisaged as suitable for a school. In fact,

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the council’s own feasibility study, when it was completed, showed that it was only 20% of the recommended size for an eight-form-entry secondary school. There would be no playing fields, no recreational area. In reality, to fulfil demand, any school on that plot would have to be in the order of four storeys high, built close to the street line, and just 2 metres from the closest family home. It would be totally out of keeping with the area, and as someone who served on Sutton’s planning committee as a councillor for four years, I cannot envisage how such a proposal would ever get planning permission from anyone with an independent eye.

In June 2015, the EFA confirmed that the Sutton hospital site was too small, but cleared the Rosehill site to proceed, leaving it as Sutton’s only viable new school site. The council and the EFA continued talks over the summer, leading the EFA to believe that heads of terms would soon be agreed when I met the person in charge of negotiations on 16 September. However, just two days later, Sutton council’s political administration pulled the plug on that site, saying that they would not release the land at Rosehill and insisting that the school could be built only on the land at Sutton hospital.

Last month, the approved sponsor for the proposed free school, the Greenshaw Learning Trust, said that the land that the council had bought at Sutton hospital was not sufficient for the school that it has approval for, and that it is still looking for a site. The EFA has confirmed that it is helping it in that endeavour. And so we reach the current deadlock.

There are three options for moving this matter on. The EFA can try to buy more land at the Sutton hospital site, which will cost even more money, leave the school in the wrong part of Sutton, and start to eat into land that is earmarked for an ambitious joint venture for a cancer research hub between the council, the Royal Marsden NHS Foundation Trust, the Institute of Cancer Research and the Epsom and St Helier University Hospitals NHS Trust. That would be an expensive short-term fix that would hamper strategic plans, and all because of an intransigent approach at this stage. A new provider on the site would not get Department for Education approval for a free school until next summer at the earliest, delaying the project for yet another year. There is also the small matter of the chief executive of the relevant hospital trust making it clear that he has no interest in selling off more of the site.

The second option is that another site could be found. There are examples of free schools across the country that have been built in unconventional styles. Fresh thinking may throw up an interesting use of an as yet unidentified site. I like to think that I am up for a bit of creative thinking, but over the last two years nothing, but nothing, has come to mind.

The third option is the most obvious: to look again at the Rosehill site. The political administration of the council—the senior Liberal Democrat councillors—dismiss that site, as it is classified as metropolitan open land, but that environmental argument is inconsistent for a number of reasons. Sutton council was happy to build an incinerator on metropolitan open land in another part of the borough. It is also planning a primary school on metropolitan open land in Hackbridge. It appears that only metropolitan open land on this site, in the ward represented by the leader of Sutton council, is immune from consideration this side of the 2018 local

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elections. In fact, the site has not been dismissed as being unavailable for any secondary school that is required by 2020, so we may see a school here anyway—just too late.

Sutton is fortunate to have many parks and open spaces, so I did not easily reach the conclusion that this site was best. As London expands and local residents wonder how their children will be able to afford housing in the area where they grew up, we need to plan to meet that demand and to cope with the resulting pressure on infrastructure. The Rosehill solution addresses that as best it can. That was echoed by a valuer who looked at the site and said that it was the best site for a school that he had seen in years. The footprint of the school building can be contained on the plot of the derelict artificial pitch. Car parking can be limited to an already-concreted area to the north of the site. Not only can the parkland remain, but if it is used as playing fields it can be maintained by the school and shared with the community.

I regularly speak to the Mayor about the need for a Sutton tram extension, which is included in his plan for London. The proposed route for that tram extension runs along the front of Rosehill. A train station is close by, and several buses run along the two roads that surround the site. That is in contrast to the junction at the Sutton hospital site, which would inevitably have to be remodelled to cope with the increased traffic, and which has fewer public transport links.

There are two secondary schools close to the Rosehill site: Greenshaw, which is the original school behind the Greenshaw Learning Trust, and Glenthorne. Both are incredibly popular and successful schools, and they are regularly over-subscribed. There is only one secondary school near Sutton hospital, Overton Grange. That might seem, at first glance, to suggest that there is a shortage of spaces in the south, but I believe that Overton Grange has been less popular than the other schools in recent years, so it has been under-subscribed. The biggest centre of demand appears to be in the roads around Sutton bus garage, to the north of the town centre. Although the Minister represents a seat close to Sutton and Cheam, I would not expect him to know the exact geography of the area, but I am always happy to show him around. Suffice it to say that Sutton bus garage is only five to 10 minutes’ walk from the Rosehill site.

We need immediate action. Residents have been waiting for years to see something at least get started. Just as we thought that was happening, things came to a juddering halt when the matter became politically difficult. It was put off in the lead up to the 2014 local elections, and again before this year’s general election. We cannot have the 2018 local election dictating school place planning policy in Sutton. We need proper reconsideration of the council’s position in a measured and open way. We cannot allow the council to continue with the approach that it has been taking lately, and that has spurred me to bring the matter to the Minister. The first that the EFA and the approved school provider, the Greenshaw Learning Trust, knew about the decision to about-turn and refuse to release the Rosehill site was via a press release that they received indirectly. That is no way to conduct business. Not a lot gets me annoyed, but playing politics with the education of our current cohort of nine-year-olds, who risk not getting a local school place in two years’ time, frankly appals me.

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I cannot help thinking that when the Mayor looks at the issue when he is considering whether to invest in the tram extension, when international cancer research companies look at the proposed London cancer hub in the south of Sutton, or when developers look to Sutton for opportunities to build the housing that we so badly need, they will think again. They will wonder whether the time, energy and money spent on early planning might not be wasted, because the rug may be suddenly pulled out from under their feet on a political whim. They will be reluctant to work with a local authority that conducts its discussions via press release.

Sutton council says that it can open a school on the Sutton hospital site, but there is no evidence of any achievable plan. We need a school to accommodate 240 pupils in just two years’ time simply to start meeting demand. We know that a school will take two to three and a half years to build, and we still do not have a site. Securing planning permission for any site will not be straightforward. I am all for local decision making, and I am very much in favour of greater local accountability, but I do not believe that the parents of those nine-year-old children are aware of the totally avoidable crisis that we face as a direct result of the locally elected representatives. I hope that the Minister can help to break the impasse by stepping in and getting the council to take a truly strategic, common-sense view, breaking the deadlock, and securing the school places that the council is failing to provide, and that we so desperately need.

11.14 am

The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah): It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for Sutton and Cheam (Paul Scully) on securing the debate. I have noted his invitation to join him for a tour of his constituency. I look forward to a formal invite, and I would very much like to visit the constituency in due course. He has brought to the House an important issue that will have a significant impact on the residents of Sutton in the coming years, and I share his confusion at the outcome of the council’s deliberations on the Rosehill site.

First, I want to take the opportunity to reiterate the Government’s commitment to one of our key priorities: ensuring that there are sufficient school places across the country. We have already shown the strength of our commitment to making sure that every child has access to a good-quality school place. We plan to invest £7 billion over the Parliament to provide new school places, including through basic need allocations to local authorities. That is £2 billion more than was allocated for school places under the previous coalition Government, and almost four times as much as was allocated from 2007 to 2011.

Ensuring that every child has access to the benefits of a good-quality education is a fundamental responsibility of all of us across the education system. As my hon. Friend knows, the statutory duty to provide school places rests with local authorities. Our financial commitment is a concrete demonstration of the level of importance that the Government attach to the provision of school places, and to our wider commitment to ensuring that every child has a good school place.

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We committed in our manifesto to delivering at least 500 new free schools during this Parliament, creating 270,000 school places. Since the election in May, 18 new free school applications have already been approved, and many more are now entering the process. We continue to encourage businesses, cultural and sporting bodies, charities, community groups and parents to come forward with proposals for new schools, to add to the 304 open free schools and the more than 100 that are currently in the pipeline.

It is important that local authorities across the country see, and seek to capitalise on, the opportunity presented by the free schools programme. Such schools work alongside local authorities to create the school places we need to provide a good education for our children, and many authorities are choosing to work actively with the Government to meet that challenge.

As well as funding places, the Department keeps a close eye on the progress that local authorities are making in meeting basic need. Between 2010 and 2014, more than 445,000 new places were created through the work of local authorities and, of course, the Government’s free schools programme. Many more places have been delivered since then, and thousands more are in the pipeline. In 2013 and 2014 alone, local authorities reported adding an additional 110,000 primary and 74,000 secondary places into the system. The free schools programme is also adding significant capacity to the system; more than 153,000 new places have been created by the 304 free schools that have been established, with the promise of many more to come.

I pay tribute to all those in authorities and in schools who have helped to deliver the significant progress we have seen in recent years. The task, however, is not yet done. As the numbers I mentioned some moments ago suggest, the increase in pupils moving through the primary phase is now beginning to be felt at secondary level. My hon. Friend touched on that. Local authorities and academies must rise to that added dimension of challenge at the same time as primary numbers continue to grow, albeit less rapidly than in recent years. We should not pretend that meeting that challenge will be easy, which is why we are committed to helping both with funding and by establishing new schools directly under the free schools programme.

As a thriving global city, London has a large part to play in meeting that challenge. Some 35% of the new places delivered by 2014 were in London, and the capital will have a big part to play in meeting the challenge in the coming years. As my hon. Friend highlighted, the London Borough of Sutton has its own local context, with a wealth of strong local schools attracting pupils from beyond its borders. The popularity of those schools is a healthy sign, and I commend those who work in them.

A key strength of the current system of co-operation on school places, and one that is particularly seen across London, is that pupils can access schools beyond the border of their own local authority and find the school that is best suited to their needs. We do not want to lose that strength, nor the resilience that it helps to bring to the system. However, we need to find ways to support the boroughs that most keenly feel the impact of cross-border movement, such as the London Borough of Sutton.

The way that we provide funding for new places recognises that movement and is based on local authorities’ own assessments of the number of pupils they expect to

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have. That approach has helped the Government allocate Sutton council more than £110 million of funding for school places from 2011 to 2018, making it the 18th highest- funded authority for basic need in the country, and that funding has been put to work. Sutton council worked with its schools to put in place an additional 2,289 primary school places and 1,143 secondary school places between 2010 and 2014, with plans to create many more when they are needed in the coming years. That leads me to the matter in hand.

The Government are helping Sutton council to meet its places challenge directly, with the approval of the Sutton free school, which will see the borough join the many local authorities that have already benefited from the free schools programme. As my hon. Friend mentioned, the Sutton free school is scheduled to open in 2017, and is being built to provide eight forms of entry and a welcome new capacity of 1,550 places to the borough. The new school will add to the variety of options in the area and give parents even more choice in selecting the right school for their children. The school represents an exciting opportunity to broaden provision within Sutton and, with the co-operation of the council, it and other free schools can be delivered to help to meet the need for new school places. I am therefore perplexed by the current situation.

The Department for Education had meetings with officers of Sutton council about the Rosehill all-weather pitch site and was told that the council would agree for the land to be transferred to the Department for the school. I am seriously disappointed that the council has since changed its mind about the site and removed it as an option. Rosehill remains the preferred site for the Sutton free school due to its size, its access to playing fields and being in a good location for a much-needed, large, eight-form-entry secondary school. It is on metropolitan open land, but building on such land would not be a precedent in Sutton. Indeed, as my hon. Friend mentioned, there is an incinerator on metropolitan open land in Sutton at the moment.

The alternative site, the Belmont hospital site, could accommodate a smaller secondary school to help to meet the need for places from 2018 onwards. However, in its current form it is not suitable for the Sutton free school. Other free school proposers have been in talks with the council about a further, smaller secondary school in the next round of free school applications next year. Given the demand for secondary school places that is projected by the council, the ideal solution would be to take forward plans for both sites, with a proposer to be identified for a second school on the Belmont hospital site.

At this early stage, we still have the opportunity to review the options for bringing forward two much needed secondary schools in Sutton. I urge the council, in the strongest terms, to reconsider its plans to meet its basic need for secondary school places. I am grateful to my hon. Friend for raising this important issue.

Question put and agreed to.

11.23 am

Sitting suspended.

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Treasury Support for UK Science

[Steve McCabe in the Chair]

2.30 pm

Angela Smith (Penistone and Stocksbridge) (Lab): I beg to move,

That this House has considered the role of the Treasury in supporting UK science.

First of all, let me say that it is a real pleasure to serve under your chairmanship, Mr McCabe.

I start my speech today with the simple assertion that science is a critical part of our everyday lives. It is important not only because it explains the world we live in—the world we see, hear and feel every day, which we all take for granted—but because it also makes the world of tomorrow. It shapes the future in a way that fascinates most people, and it does so with breathtaking speed. Who knows what will be possible in the future? Without science, our world would be a very different place and many of the things that we take for granted would not exist. We live longer, thanks to science; we live better lives, thanks to science; and we live broader and more expansive lives, thanks to science.

The UK, for its part, has always punched above its weight in science and innovation. Our laboratories, universities, research councils and innovation bodies are world-leading. To exemplify this point, I will refer to the startling statistic that although the UK’s population equates to just 0.9% of the global population, we account for 15.9% of the world’s most highly cited scientific research articles; since the start of the 20th century we have had 78 Nobel prize-winners, 12 of them since 2004.

We are first in the world for the impact of our science. We have built a strong record of converting science-driven discovery into economic gain, with the UK now ranked second in the world for innovation, and for every £1 invested in public research and development, there is a boost of between 20p and 30p per annum in perpetuity. The UK knowledge economy sustains a third of our businesses, with wage rates 40% higher than the average wage in the field. To be fair to previous Governments, investment in science and innovation has delivered impact in many of the areas identified as priorities, such as promoting innovation, growth and—very importantly—improvement in public services.

Maintaining our leading position in science is increasingly difficult, though, thanks to an increasingly competitive global marketplace. With countries such as India, China, and South Korea increasingly competing in the technology stakes, it is becoming clear that we need not only to maintain our research base, but to grow it. To do that, we need a commitment from Government to invest in science. It is time to take stock, to remind ourselves just how important science is to our economy, and to assess how seriously we may be damaged if we fail to support our scientific research base with adequate public funding. In my view, the most persuasive way of making the case for the importance of science to the economy is to seek a simple answer to a simple question—what has science ever done for us?

For a start, let us look at one of the major contributions made by my home city, Sheffield, which of course is where stainless steel was invented, just over a hundred

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years ago. Stainless steel is a technology that literally changed the world, to the extent that we do not even realise now how widely it is applied in the technologies that we all enjoy. Let not us forget either that Sheffield is also the home of Ronseal, which not only does what it says on the tin, but plays a leading role in developing environmentally friendly coatings for use in the home. Sheffield leads the way even now, with two fine research universities and its Advanced Manufacturing Research Centre, the original model for the country’s catapult initiatives. In joint ventures between Sheffield University and companies such as Rolls-Royce and Boeing, cutting-edge materials are being developed for the aerospace industry, such as the use of carbon fibre blades for the next generation of aerospace engines and lightweight aeroplane bodies.

In the chemicals field, the UK leads the way. Chemical and pharmaceutical products are our largest manufacturing export, with the chemicals sector alone enjoying an annual turnover of £60 billion. It sustains some half a million jobs throughout the country—well paid, for the most part—and finds solutions that make life better and more secure for all of us. Let us bear in mind that penicillin is a British discovery that has transformed medicine, saving countless lives. Today, the pharmaceutical industry employs 68,000 people in the UK, with 23,000 of them employed in highly skilled R and D roles.

The work goes on. British scientists from across the spectrum work on projects that impact on every aspect of our lives, helping us to meet the challenges of today—not just the obvious challenges, such as using agri-tech research to help to feed a growing world population or how to use modern science to develop the technologies we need if we are achieve a truly low-carbon economy, but other challenges that are none the less important. For instance, researchers at the University of Leicester have developed new technology that reveals previously undetectable fingerprints on metal objects; the method has been used in more than 100 criminal cases so far and is enabling the reopening of closed cold cases. Also, research into the structure of graphite is extending the lifetime of the UK’s nuclear reactors, resulting in an effective saving of £40 million to date and helping not only to keep the lights on but to reduce the country’s carbon footprint.

As we can see, science is all around us. It gives us hope for the future, for our health, for our security, for our living standards and for the sustainability of our living standards. We are good at science here in the UK—after all, we are the country where Newton discovered gravity and Faraday made early advances in harnessing the power of electricity, fundamental advances that revolutionised our understanding of the world.

Science has done a great deal for humanity and it is precisely because it fulfils such an important role in changing lives that it is also vital to our economy, particularly if we are to maintain and grow our economy and our knowledge base. A modern knowledge economy has to be underpinned by science. For example, my constituency is home to Tata’s Speciality Steels, which works at the top end of high-value steelmaking. Tata knows that it has to stay ahead of the game with its research if it is to survive the challenges presented by developing economies such as China. It almost goes

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without saying that if steel is one of our foundation industries—I think it is commonly accepted that it is—science is one of the vital foundations of steelmaking itself.

Our position on science has been strong. The UK has enjoyed a powerful public research base, creative innovation mechanisms and a supply of highly skilled workers, who help to drive up our productivity and further develop our knowledge economy. Our position on science has encouraged inward investment. The UK is the largest recipient in Europe of such funding, despite the squeeze on public investment and the long-term neglect of our science capability. However, this rather unbalanced approach to investment cannot continue without damaging both the UK’s reputation and our economy. Government investment in R and D acts as a powerful magnet for industry investment, both domestic and foreign, and the announcement in the comprehensive spending review of any more cuts would risk damaging our overall funding profile even more.

Mr Andrew Smith (Oxford East) (Lab): I am sorry that I missed the very beginning of my hon. Friend’s excellent speech. On her last point, does she agree with me that it would be a great mistake if the tax credit grant element of research help to industry was converted into loans, which has been mooted in some quarters and which businesses that carry out a lot of R and D are very worried about?

Angela Smith: I agree entirely with my right hon. Friend that any fiscal levers designed to improve the research profile of UK science should be maintained.

It is worth mentioning that according to a study by the Department for Business, Innovation and Skills, every £1 of public investment secures an increase of between £1.13 and £1.60 in private funding. The importance of public funding for science is underlined by comparisons with our international competitors. The comparisons are not flattering—indeed, since the mid-1980s, our investment in science and innovation has fallen behind, leaving us sixth in the G7 for overall spending and last overall for public investment alone. South Korea enjoys public and private investment in science equivalent to 3.6% of GDP—no wonder it looks likely that South Korea, rather than Forgemasters in Sheffield, will be making the pressure vessels for our nuclear power stations—and in Germany and the USA, the figure is 2.8%. Here in the UK, the figure stands at just 1.7%.

We have punched above our weight, but it is clear that that cannot continue. Comparatively low levels of investment in research and development risk losing any competitive advantage we have over other innovation leaders who are investing more. As we all know, our economic productivity has already fallen by at least 15% from a pre-financial crisis position of steady growth. International studies demonstrate impressive and positive impacts on productivity from increased scientific research and development profiles, and it is clear that our 1.7% GDP investment rate is causing problems.

I acknowledge, of course, that the Government ring-fenced funding during the last Parliament and that that decision helped to keep safe £1.2 billion of private sector investment, but it is also true that the cash limit on research and development represented a real-terms cut of around £l billion. Although that decrease has

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been weathered in the short-term, if extended, it risks serious damage not just to our science base, but to the economy itself. If this Government and this Chancellor are serious about rebalancing the economy and closing the productivity gap—as a northern MP, I include the northern powerhouse in that—we need to see robust and secure funding plans for science put in place. How can we hope to become, as the Chancellor wants, the highly skilled, highly advanced economy with a healthy export profile and a healthy balance of payments if we allow our science base to slide further down the international league tables?

As we come to the all-important comprehensive spending review, we need to see the Chancellor’s warm words matched with a commitment in the review to tackling the underfunding of science in our economy.

Mr Gregory Campbell (East Londonderry) (DUP): I commend the hon. Lady on securing this debate and on making a powerful speech. She talks about the forthcoming spending review. Does she agree that we would like to see more than just words about one nation science? The Minister and his colleagues should liaise with the devolved legislatures across the UK, particularly on universities, so that one nation science becomes the reality, rather than just a soundbite.

Angela Smith: I thank the hon. Gentleman for that. I agree that wherever in the UK a university is, if it is demonstrating real expertise in a scientific discipline and it comes up with good, robust proposals that are approved by its peers in the scientific community, it should benefit from an equitable spread of funding for research and development.

I conclude by asking the Minister for assurances about future public funding for our science and research base. First, will he commit to maintaining the ring fence for Government science spending over the next period, and will the Treasury fund real-terms protection of the science budget? We need funding stability, and we need to encourage business confidence. We also need to maximise our capital investment. I know that the capital budget has been settled, but too many science facilities remain under-utilised, which is wasteful and damaging to our economic growth ambitions. We need to align capital and resource investment to maximise the return, but we also need to rebuild our science base, as I have already pointed out. Will the Minister therefore also commit to an ambition to increase spending on science when sustained economic growth returns to the economy? Such a commitment in the CSR will send out the right signals to investors and scientists everywhere and ensure confidence that the UK is determined to use its science base to build economic success.

The Minister might also like to comment on the need for a broad spectrum of public investment in scientific infrastructure, from lab bench through to mid and large facilities. Equally, it would be welcome if he commented on the principle of allocating scientific funding according to a gold standard, based on independent expert peer review of research. That was the point I was trying to make to the hon. Member for East Londonderry (Mr Campbell).

Finally, it would be reassuring to hear the Minister acknowledge the importance of curiosity-driven fundamental research. It is easy to understand the importance of applied scientific research, but some of our greatest achievements—scientific and economic—came from

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fundamental research. Laser technology is a good example of that and I am sure everyone can think of other examples. Although private investment is important to increasing our science research base, without adequate public support we will see that investment increasingly put at risk. Already we are falling behind our competitors, and in today’s world to stand still is to fall behind.

Today’s debate has been heavily supported by the royal societies and the universities, which I thank for their help and interest, and by numerous organisations spanning food and drink, pharmaceuticals and health. From the British Medical Association and Arthritis Research UK through to the Food and Drink Federation, the interest in the debate has been immense. That all emphatically underlines the sheer extent of the reach of science—I have tried to convey that in this debate—and thus its importance to the economy.

The debate, in title and in application, demanded a response from a Treasury Minister. The fact that the Chancellor’s ministerial team chose to bypass the opportunity to talk about science goes against the spirit of Westminster Hall debates and is deeply disappointing. No blame is apportioned to the Minister here now—we are glad to see him here—but where is the Treasury Minister? The Minister for Universities and Science can do more than repeat the speech—good as it was—that he gave in response to the excellent and well attended debate on this topic that was recently brought to the House by the hon. Member for Pudsey (Stuart Andrew). After all, it is official Government policy to support science. They have developed a science and innovation strategy, which states that

“capital investment alone is not sufficient to ensure our research infrastructure is able to continue to deliver world class outputs. We recognise that our science base requires adequate resource funding, and will give full consideration to these requirements when we take a decision at the Spending Review next year.”

On the basis of that statement, I call on the Minister not only to ensure that Treasury Ministers are made aware of today’s debate, but to commit to being an ambassador for science to the Treasury. He needs to go out there and make the case for science funding. I look forward to his response.

2.48 pm

Chris Green (Bolton West) (Con): It is a pleasure to serve under your chairmanship, Mr McCabe. I offer my congratulations to the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate on UK science. It is an important subject, and it is great to be able again to make the case on behalf of the UK science industry before the spending review. British science is world-leading in many areas, is highly productive, has the capacity for increased investment while maintaining its productivity and is vital in maintaining our competitive advantage.

As the hon. Lady said, the UK population represents only 0.9% of the world population, but produces 15.9% of the top-quality research findings. A productive research environment must have Government investment in science capital and resource, such as the National Graphene Institute, which will secure Manchester as a leading centre of graphene research and commercialisation. We should not allow the UK’s current and historic strength in science and research to lead to complacency. Having worked in the mass spectrometry industry for nearly

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20 years, I know that our science enables world-leading businesses to flourish in Britain, often producing the low-volume but high-value goods that we need. Jobs in science are often the most rewarding and interesting. They also encourage entrepreneurship and the development and commercialisation of innovative technologies.

Caroline Nokes (Romsey and Southampton North) (Con): The hon. Gentleman makes an important point. Research, investment and experience in facilities can often attract investment such as we have seen in Southampton, where Lloyd’s Register has come to the Boldrewood campus of the university, providing the biggest link-up that we have in this country between a university and a commercial enterprise.

Chris Green: It is always good to hear such fantastic examples of link-ups. I am sure all the Members here will have many other such examples.

Science strengthens economic growth, productivity and the UK’s ability to compete in an increasingly competitive market, as was highlighted earlier. It is a highly effective way to invest public money to drive economic growth. Although we in Britain invest less in research and development than many of our competitors, it is not because of the lack of excellent opportunities for research. We can significantly increase our research investment without reducing the quality of the research. That will then increase the base from which innovation and commercialisation starts.

The past five years were about creating economic stability, and it was right that the Government protected the science budget, but the next five years must be about building upon what we have secured. The science and research ring fence was an important signifier of the Government’s commitment to the value of research. The flat-cash protection has maintained the UK’s position during a time of economic uncertainty. Now we should be planning and investing so that we encourage further investment to build and create the industries that we as a country want. By investing in science through the dual support system with a mix of project-based and institutional-level funding, the Government leverage investment from charities and industry, generating further scientific and economic growth. It is estimated that each additional £1 of public funding has the potential to give rise to an increase of up to £1.60 in private funding for both industry and charities.

A strong science industry is a vital base for preparing for our future needs in many policy areas, such as food security, national security, antimicrobial resistance, health innovation and meeting the needs of an ageing population. Government investment levels must take that into account when we decide what message we want to send to investors in Britain and across the world.

Craig Williams (Cardiff North) (Con): I commend the hon. Member for Penistone and Stocksbridge (Angela Smith) for securing this debate and for the manner in which she has conducted it.

Some 68% of Welsh universities rely on UK Government funding, and the ring fence that my hon. Friend the Member for Bolton West (Chris Green) has touched on is extremely welcome. The universities are very much

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looking to the end of this month. I commend GE Healthcare for the work that it has done in my constituency. It has worked with the university, using the block funding, to build an innovation campus and to work with the public and private sectors, much as he has described. They are working together to invest in the Government’s long-term economic plan, but they are also creating jobs in Cardiff.

Chris Green: Our national Government have a huge role in ensuring that we have strong science throughout our United Kingdom. There are many great instances in Wales. I used to do a great deal of travelling up and down the country in my previous job, and I recognise that there is investment right across our United Kingdom, as far as the University of Highlands and Islands in Thurso. It is a bit of a long trek up there, but it is fantastic to see investment right across the country. We must reflect on the needs and benefits that exist in our thriving scientific sector.

Several hon. Members rose

Steve McCabe (in the Chair): Order. I do not want to impose a time limit, but if people try to stick to five or six minutes, we can get everybody in with ease.

2.54 pm

Daniel Zeichner (Cambridge) (Lab): I congratulate my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) on securing this important debate and on her excellent speech.

Supporting UK science should absolutely be a priority in this Parliament and beyond, and I hope the Chancellor will take heed of the points made here today. As Members will appreciate—they have probably heard me say this before—Cambridge is a leader for science in the UK.

Mr Andrew Smith: Along with Oxford.

Daniel Zeichner: Along with Oxford, of course.

Cambridge is a buzzing hub of research labs, biotech companies and innovation centres, and science is fundamental to both our economy and our collective identity. Nearly 60,000 people are employed in the Cambridge cluster alone. It is thought by some that Cambridge and its leading scientific reputation are untouchable. That is not the case. We must not take our assets for granted. Only with careful future planning and sustained, stable economic investment can Cambridge continue to function as a centre for scientific excellence, attracting investment and expertise from around the globe.

I want to see Cambridge’s scientific stature secured, but I also want to see the knowledge economy increasing across the entire country, ensuring that the UK remains a leader for science on the world stage. This is not a zero-sum game. Cambridge doing well will help other parts of the country. Cambridge going backwards causes the whole country damage. A genuine long-term strategy for science is vital if we want to promote innovation and increase productivity in our country. The Chancellor says that that is what he wants, but the wrong decisions over the next few weeks risk sending us in the wrong direction.

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The Government and their cheerleaders helpfully remind us about the long-term economic plan—I see that some Government Members recognise that phrase—but we need that to be a reality rather than a soundbite. The truth is that in the previous Parliament we actually saw a substantial real-terms cut in science funding. The Campaign for Science and Engineering has shown that the resource budget accumulated a real-terms shortfall of £1 billion during the previous Parliament. Data from the OECD suggest that our country’s investment in research and development has been on a downward trajectory for the past few years and is well below the EU average of 0.64%. As Universities UK tells us, the UK comes 27th in the EU27 and eighth in the G8 in total science and research investment as a proportion of GDP.

The argument is familiar. The Minister has told us before that we still do well and that we punch above our weight, but as the hon. Member for Oxford West and Abingdon (Nicola Blackwood), the Chair of the Select Committee on Science and Technology, has pointed out on more than one occasion, it may be that we do well because of funding from the past. We cannot assume that with lower levels of public support we can continue to be competitive when other countries are upping their game.

Let me raise one specific worry. Many are talking about it, but I was struck by a representation from a biotech company in my constituency, Discuva. It develops new antibiotics to combat antimicrobial resistance and recently won an innovation award from Innovate UK. Indeed, I believe the award was presented here by the Minister. Discuva received a biomedical catalyst grant in 2012, which helped grow its business enormously, giving it the necessary risk capital to take chances and ultimately sign the world’s largest preclinical antibiotic drug discovery deal with a major pharmaceutical company. Its products will feed into the UK healthcare system, saving lives, reducing the healthcare burden and consequently increasing GDP.

I am sure we will all champion such businesses, but Discuva is just one of many that have expressed alarm over the suggestion that the Treasury is considering swapping research grants for loans. It tells me that this would be disastrous for companies in its sector. It argues that a significant loan on the books of many small to medium-sized high-tech companies would make them technically insolvent and affect relationships with potential investors, presenting a major business obstacle. I hope the Minister can assure us today that those suggestions are just speculative rumour in the wider rumour mill, and that those important grants will not be converted into loans.

I conclude by reminding Members that the Treasury has repeatedly said that it will prioritise spending in areas that drive productivity and growth. Well, 51% of UK productivity growth between 2000 and 2008 was due to innovation, with 32% being attributable to changes in technology resulting from science and innovation. That tells us that we need to see greater investment in mechanisms that support innovation—more, not less.

I have a suspicion that the Minister is largely persuaded by the strengths of the argument, but for reasons we all understand he will possibly have to be circumspect in his reply today. Those of us battling for science and innovation wish him well in his battles over the next few weeks. Funding for a secure, long-term, successful science and innovation sector is vital for the future prosperity

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of our whole country, and it must not be sacrificed for a short-term political fix. It is important that the Minister is successful and that the dead hand of the Treasury does not win out yet again.

2.59 pm

Sammy Wilson (East Antrim) (DUP): I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this debate.

I do not want to rehearse all the advantages that come from spending on science, other than to say that we in Northern Ireland have found that it has helped us to increase investment. There is a strong correlation between what a company spends on science, research and development and its ability to export and about two thirds of increases in productivity are the result of spending on innovation, research and development.

In a debate such as this, I suppose the first question people will ask is: a lot of the work on improving science spending in places such as Northern Ireland and Scotland is done by the devolved Administrations, so what are they doing? In Northern Ireland, we have focused on a number of areas. First, £45 million is being spent on research facilities in universities, and by 2020 we hope to be funding 1,000 postgraduate research places a year in local universities. That will not only allow universities to increase their research capacity but ensure that there is a pool of skilled labour for the inward investment that we hope to attract. Invest NI has devoted £80 million a year to bringing projects from the lab to the marketplace.

Those are examples of the positive things that the devolved Administrations can do, but it is important to note that the devolved Administrations are dependent on decisions made by the Treasury and central Government. Their ability to do those things and to be innovative in their policies depends on the core funding that comes to them. That is not to say that they should not or do not look for other ways of attracting additional funding, bringing in their own resources and prioritising their own spending, but because the block grant is the main source of the spend available to the devolved Administrations and since most tax policy is decided centrally, there is a role for central Government.

I have four points to make about central Government’s role in spending on science, innovation and research and development. First, although it was ring-fenced over the five years of the previous Government, central Government spending has fallen by 15% in real terms. That affects the resources available here in England, but also, through the Barnett formula, the amount of money available to the devolved Administrations. I know we have difficult spending decisions to make, but look at the success of science spending. I will not repeat the figures that have been quoted already, but that money translates into a very high success rate, as shown by the many research papers cited as a result of the work financed by that spending. When the Government are deciding on spending priorities, surely the priority should be those areas where the spending is actually seen to work.

Secondly, I want to discuss the distribution of money. I was pleased by the Minister’s speech at Sheffield’s Advanced Manufacturing Research Centre about one nation science. I am sure he will regret ever saying this, but he said that one nation science

“means developing that excellence for the whole country, making sure all areas and all groups of people can reach their full potential”.

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That is not happening in practice. If one looks at the money distributed by the research councils, although Northern Ireland has 3% of the population, we receive only 0.7% of funding—indeed, per head of population, seven times more money from the research councils goes to London as to facilities in Northern Ireland. The Minister could well argue that London has greater capacity, but we have proven ourselves. For example, although we account for only 0.03% of the world’s population, 0.3% of the research papers that are cited as being highly significant come from Northern Ireland. We perform 10 times better than our population distribution would suggest. We do need to look at how the money is distributed across the United Kingdom.

Thirdly, there are additional sources of money, especially the Horizon 2020 funding that is available from the European Union. I am no great fan of the EU, but the money is there. A condition of that funding is that there must be collaboration between companies and universities in different member states. What could central Government do to improve performance and encourage that kind of collaboration? It helps to expose companies and universities to new knowledge and markets, and there is value in that.

Finally, the hon. Member for Cambridge (Daniel Zeichner) mentioned research and development tax credits. There is talk about whether they should be translated into loans or kept as tax credits, but the one thing I know is that those tax credits are an important way of levering in private finance. Last year, their notional cost to the Treasury was £1.8 billion, but that drew down £14.3 billion of research and development, expenditure and innovation. To me, that is a good return for a fiscal measure, so those tax credits should be maintained.

I know that not all the points I have made fall within the Minister’s remit, but the Government should consider them when dealing with this important issue.

3.7 pm

Carol Monaghan (Glasgow North West) (SNP): I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing this important debate.

There are real anxieties among the scientific community and associated industries about the current scale of science spending. Following the 2010 spending review, the science budget was frozen in cash terms at £4.6 billion, but that meant a real-terms drop of 10% over the Parliament. By 2012, UK public investment in science fell to less than 0.5% of GDP—a lower rate than any other G8 country had invested in R and D in the preceding 20 years. The G8 average is now 0.8%, whereas the UK Government spend a mere 0.44% on science.

Last week, I had the privilege of visiting the University of Glasgow’s Centre for Virus Research. It is leading the world in developing treatments for hepatitis C and is carrying out sector-leading research into insect-borne viruses such as the dengue virus, which could have devastating effects on the world’s population, more than 40% of which currently lives in a dengue area. The centre recently put together a new funding application; it has increased by £3 million since its last award was received, but staff there told me that the additional

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£3 million is not required to do anything new or make great steps forward; it is needed merely to keep the centre’s head above water. Flat cash really does mean a real-terms cut. Addressing the Science and Technology Committee recently, Universities UK spokesperson Dr Dandridge stated that long-term under-investment in publicly funded research in the UK is leading to an erosion of capacity. That is a really serious allegation.

The Minister for Universities and Science, who is with us today, has previously stated:

“The UK Government is committed to maintaining the strength of the UK’s world-class research base”.

I welcome that, but I would add that we have to balance business innovation with blue-skies research, which, as the hon. Member for Penistone and Stocksbridge said, is research that has no immediate application. It is research for the sake of doing research, and scientists often enjoy it the most, because they have a free hand. When we take from one to the detriment of the other we will have long-term problems.

The hon. Member for East Antrim (Sammy Wilson) mentioned our science infrastructure, and I completely agree with what he said. In terms of current infrastructure investments, the Treasury has recognised that there is a territorial dimension to the science budget. We keep hearing about the northern powerhouse. In the autumn statement, we heard about the £235 million investment in the Sir Henry Royce Institute, which follows a £100 million investment in Manchester’s National Graphene Institute. That is great news for Manchester, but with the majority of science infrastructure projects remaining in the so-called golden triangle, we have a real issue if we are talking about developing centres of excellence across the UK. There is a need to map out investment thematically and territorially to make sure we make the most of the talents we have available. It is important to identify the governmental structures and Departments that are best placed to optimise investment in a local context.

The Chair of the Science and Technology Committee, the hon. Member for Oxford West and Abingdon (Nicola Blackwood), recently asked the chief scientific adviser why the taxpayer should,

“among all other priorities, fund science and research?”

He responded:

“I would…focus resources on the things that so demonstrably contribute to productivity…Against that background, I would back science.”

With his final point, I wholeheartedly agree.

3.13 pm

Jo Churchill (Bury St Edmunds) (Con): I thank the hon. Member for Penistone and Stocksbridge (Angela Smith) for securing this important debate.

The depth and breadth of the UK science sector belie the UK’s size, but people should make no mistake: the UK is in the midst of the fast growth of a modern scientific revolution. Having started slowly during the first half of the last century, that revolution has gathered pace and, as the Government recognise in their productivity plan, it is driving UK growth. Yet we have heard the statistics, which I will not repeat, and about the sector’s worries. I have met many pharmaceutical companies and agri-tech companies, and they have repeated those worries to me, too.

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To turn to the positives, the UK is a leader in Formula 1 racing car development, with seven of the 10 Formula 1 constructors based here. The worldwide revenues of almost £4 billion that we see from the sector are testimony to the fact that Formula 1 has settled here. The industry’s development in the UK delivers improvements not only to our cars and bikes, but to our advanced engineering sector and, more importantly, our hospitals. It delivers innovative design and thinking across sectors. In just five years, the UK has gone from 14th to 2nd in the global innovation index, but it is important that we keep up the pressure. The future of the industry in the UK lies in leading its competitors. We look forward to welcoming the world’s first 1,000 mph car from the British-led Bloodhound Project. That would not be happening if we were not investing in such industries or in other science and research-led fields. If we do not continue to fund the industry, not only will the UK fall behind, but we could well lose its science sector.

We have seen huge medical advances in the last 40 years—indeed, the first test-tube baby was British. Some 380 pharmaceutical companies are based in the UK, employing 70,000 people and with an annual turnover of £30 billion. The medical technology and medical biotechnology sectors employ more than 96,000 people and have a combined annual turnover of a further £20 billion. As we have heard, the life sciences industry is truly a jewel in the crown of our economy. Companies, universities and charities invest hundreds of millions of pounds. Last year, Cancer Research UK alone spent £434 million on research institutes, hospitals and universities across the country.

The Government do provide essential investment in UK science, but we still fall short compared with our major competitors. As the hon. Lady mentioned, we invest over 50% less than South Korea, the world’s leading investor. We need to make sure we are in the premier league. We must support the industry to research, to learn, to fail and to grow. That will ensure that the UK continues the push global boundaries in research and development.

As Members have pointed out, we lead the world in research in many disciplines, and all with a population that is less than 1% of the world’s total. To keep our place at the top of so many fields, it is vital that we do not simply rely on private initiatives, but back our pledge to industry with a commitment. Science has the potential to grow our economy and expand our horizons, giving us far more bang for our buck than most areas.

The science sector can deliver if it is helped, but as in many cases, simply handing over money is not the answer. To ensure that we get the most out of the sector, we must look to schemes that incentivise the best in the field and drive growth. We need competitive bidding processes to reinforce successful organisations and tax breaks to alleviate the load on start-up businesses and to grow cutting-edge enterprises. We also need match funding, especially in the academic arena, for R and D projects. As the hon. Member for East Antrim (Sammy Wilson) mentioned, assistance through Horizon 2020 is a good idea. Greater input from the scientific community in apportioning grants would also give far greater credibility to funding.

The Government invested £198 million through the charity research support fund only last year. One benefit was that that levered in £805 million from charities,

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which was then invested in our universities. The Treasury’s investment in science supports breakthroughs in pharmaceuticals and prevents and cures diseases. Spending and saving are a double win in this ageing society.

It is important that we push the boundaries—that we make a real difference to our scientific heritage. However, while the science industry is proving that it can deliver the results, it is up to a strong and committed Government to deliver the security. I therefore urge the Government to continue to protect the science budget across Departments this November, to unleash the full potential of the UK and the science industry.

3.18 pm

Jim Shannon (Strangford) (DUP): It is a pleasure to serve under your chairmanship, Mr McCabe. I commend the hon. Member for Penistone and Stocksbridge (Angela Smith) on bringing this issue to Westminster Hall for consideration.

I spoke to the Minister beforehand, so he knows which two issues I shall bring to his attention. I want to take up the issue of Northern Ireland, which was raised by my hon. Friend the Member for East Antrim (Sammy Wilson). I want to give two examples of science funding enabling universities in Northern Ireland to move forward with tremendous innovation and long-term vision to create and perfect medicines and research that will benefit people with diseases.

In Northern Ireland, we benefit from funding from a range of sources, including the EU, industry and charitable bodies, and others, including the hon. Member for Bury St Edmunds (Jo Churchill), have mentioned where moneys come from. A raft of funding comes into play. The key to that is the large amount of funding that comes centrally from the UK Government, which could be at risk if the UK science budget is cut in the spending review.

The UK science budget funds UK research councils, which in turn fund l5% of the research done by higher education institutions in Northern Ireland. The science budget also funds recurrent research funding. When I was about eight, which is a long time ago, I played with dominoes; one hits the next, and so on right round. There is that sort of domino effect with funding. The recurrent research funding covers 35.5% of the research income of higher education institutions in Northern Ireland. In addition to funding from the UK science budget, Northern Ireland also receives money from other UK Government sources that are not part of the UK science budget, such as Government Departments and Innovate UK. That represents some 22% of the research income of higher education institutions in Northern Ireland. A significant amount of Northern Irish universities’ research income is provided for by the UK Government. I am sure that that shows how important the budget is to the Province, to our students, and to innovation.

We need to continue with positive steps that will send out a strong signal of stability to the industry not just in Northern Ireland but across the United Kingdom. Evidence shows that private sector funding of science follows the lead of public sector funding.

The Minister for Universities and Science (Joseph Johnson) indicated assent.

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Jim Shannon: The Minister is nodding—in agreement, I presume; and if I am right I will get positive answers later, which is good news. In the UK every £1 invested in public research and development results in an average £1.36 research and development investment by the private sector; spend £1 and get £1.36 in return—that must be good news.

I will give two examples of STEM research in Northern Ireland universities, and the first is at Queen’s University Belfast, which has been doing research on cystic fibrosis and the optimal delivery of antibiotics. Work on cancer and heart research have also been done there. The new drugs being created there, and the advances being made in medical treatment, are world-leading. Professor Cliff Taggart of the school of medicine, dentistry and biomedical sciences has been leading research into the delivery of antibiotics in cystic fibrosis. He has said:

“One of the big problems is getting drugs delivered in such a way that they are effective. Infection takes hold at a very early stage in life and constant treatment with antibiotics through the years will inevitably lead to antibiotic resistance.”

However, with the science funding provided centrally, Queen’s University is building up a drug to respond to the cystic fibrosis lung issues, and the build-up of mucus and other secretions.

Professor Taggart and his colleagues came up with the idea of devising compounds that combine antibiotic and anti-inflammatory entities. That is what they do with the money coming from the Government, along with the other moneys that flow to them. Professor Taggart has commented:

“The life expectancy of someone born with Cystic Fibrosis used to be six months. Now people are living until their thirties, although they need huge numbers of drugs to keep them alive. Our aim is to develop a drug that will dampen the bacterial load and inflammation much more dramatically and allow individuals to have a lifespan that goes beyond what it currently is.”

That is the job that is being done at Queen’s University Belfast. It happens because the Government fund the science budget and help universities throughout the United Kingdom to make advances.

Researchers at Ulster University have taken an important first step towards the first cure for hereditary blindness, pioneering a personalised medicine that targets and repairs genetic damage in part of the eye. The scientists have discovered a treatment that can repair damage caused by cloudy deposits in the cornea, the outer clear part of the eye. That condition, called corneal dystrophy, worsens with age, eventually leading to blindness. Using a novel DNA-editing technology—clustered regularly interspaced short palindromic repeats—Ulster University’s vision science experts have designed a method of targeting the specific DNA or gene in the eye that is responsible for the cloudy deposits, and they are now making progress towards human trials.

I have outlined truly amazing positive developments—world-leading medical advances, to benefit not just the United Kingdom of Great Britain and Northern Ireland but the world; and I am sure that there will be many others. I hope that the Minister and shadow Minister will take on board the importance of the great work done using the science budget. More such work could be done; a budget cut now would be detrimental to innovation and advances.

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Steve McCabe (in the Chair): May I ask the Front Benchers to make sure that they leave a few moments at the end of the debate for Angela Smith to wind up?

3.25 pm

Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP): It is a pleasure to take part in a debate under your wise chairmanship, Mr McCabe. I hope that that quality of wisdom will appear in the Minister’s response. I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on raising this important matter. I have a personal interest in the topic, not least because my late brother chaired the science and technology committee of the OECD at one stage, and was also secretary of the Science Council of Canada. Although I am not a pure scientist as he was, I have a deep commitment to the issues that the hon. Lady raised.

I was particularly interested in the hon. Lady’s opening remarks about the pace of change driven by science. It reminded me that several years ago I attended a lecture by Professor Tom Stonier. He related some statistics to the effect that in the last 25 years of the 20th century, more people had been working on pure research than in the entire previous history of the world. That fact, and advances in new technology and computing science that enable information to be processed very quickly, mean that we live in a world where the pace of change is great and accelerating. People at the forefront of that have a great advantage, but that pace of change means that those who do not keep themselves in the frontline can too easily fall behind rapidly. That is my concern.

Several of this afternoon’s fine contributions by hon. Members from various parties have touched on the balance between blue-sky thinking, and thinking that might be said to have a business-innovatory basis. I have felt concern at times reading remarks by the Minister, which seem to show him as heavily biased towards business-related innovative research. It is too easy to forget the importance of true blue-sky thinking, and how often its results cannot be predicted. Nevertheless, some of the most profound scientific effects and advances happened simply because someone with an inquiring mind was interested in finding out more. I have every sympathy with the 30 academics—including four Nobel laureates—who wrote to The Daily Telegraph on 2 June 2014:

“Sustained open-ended enquiries in controversial or unfashionable fields are virtually forbidden today and science is in serious danger of stagnating”.

No one who has taken part in the debate would want British science—or Scottish or Northern Ireland science—to be compromised in any way, or to stagnate because of a failure to understand the importance of blue-sky research.

I was impressed by the speech of my hon. Friend the Member for Glasgow North West (Carol Monaghan), not least because the statistics she gave mean I can glance past two or three of my own paragraphs. A comment I would make on those statistics is that all current measures of research intensity confirm the same thing: that the UK is now a laggard compared with other advanced societies. We are, as she said, at the bottom of the G8, and we lag behind on a host of other measures.

I was interested, as I always am, in the contribution of the hon. Member for East Antrim (Sammy Wilson), who spoke about the contributions in the Northern Ireland economy, and the way that funding from the Northern Ireland Executive is geared towards research.

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He said that no doubt the same was true in places such as Scotland. I can confirm to him and the Minister that that is only too true. Notwithstanding the erosion of the amount of flat cash in recent years, and the constraints caused by the Scottish Government’s limited powers because of the reserved nature of the spending, they were able to increase expenditure on research and knowledge exchange by 11% in 2013-14, and by 38% since 2007. They did that not because they received extra money, but because they chose to protect the research and science budget as much as possible. Scotland has a long history of supporting science, and I would like to think that the Scottish Government’s willingness to choose to make sacrifices in other areas to sustain scientific research is something that the UK Government will follow in the spending review.

As we have heard from many Members, there is a strong economic case for investing in science, which helps to drive and sustain the economy, but there is much we still need to understand. We need a better understanding of all the connections that are essential to driving progress in scientific fields of endeavour. One of the key means of stimulating progress and innovation is to engage different types of thinkers and researchers though networks, so they can feed off one another—a factor acknowledged by many writers.

One of my teachers many years ago was the late Professor Tom Burns. He was noted for many pieces of research, including a fairly seminal book in the early 1960s called “The Management of Innovation”, in which he pointed to the importance of networks of interacting researchers, scientists and the like. That is something that universities and the academic community are particularly well equipped to do. Hughes and Martin, writing about the value of public sector research and development, captured this pretty well, stating that

“the issue is not so much about isolating and assessing the impact of publicly funded research per se nor about determining its optimal level in isolation. It is instead about analysing how best to understand and manage the connections between differently funded and motivated research efforts in an overall system of knowledge production and innovation.”

A number of Members mentioned scientific infrastructure. Recent work, most notably that of Dr Stephen Watson at Glasgow University, has pointed to the huge significance of the infrastructure spend component of Government investment in science. There is, however, a huge mismatch between UK Government infrastructure spend for the Oxford-Cambridge-London triangle, and the spend for elsewhere in the United Kingdom. National research infrastructure investment is known to play a key role in driving fundamental scientific discovery and attracting business investment. We therefore need to map out such investment, both thematically and territorially—something that no Government have ever done.

In conclusion, I have four questions to pose to the Minister, one of which relates to the tax credit issue, but I am not going to rehearse that argument because other hon. Members have already made it fully. First, what is the Government’s view of my argument that more, not less, investment in blue-sky scientific research is needed? Secondly, will the Government commit to restoring the scientific budget spend to at least 2010 levels, in real terms? In other words, will they undo the cut of the previous Parliament? Thirdly, will the Government commit

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to reviewing infrastructure spend in science to ensure that the talents of the scientific community in all parts of the United Kingdom are properly supported? Finally, will the Minister confirm that there is no prospect of converting any element of research funding into loans?

3.34 pm

Seema Malhotra (Feltham and Heston) (Lab/Co-op): It is a pleasure to speak in this debate and to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) on securing this important debate.

I am grateful for the contributions of hon. Members from all parts of the UK, including the hon. Member for Bolton West (Chris Green), my hon. Friend the Member for Cambridge (Daniel Zeichner), the hon. Members for East Antrim (Sammy Wilson), for Bury St Edmunds (Jo Churchill), for Kirkcaldy and Cowdenbeath (Roger Mullin) and for Strangford (Jim Shannon), and others. They raised a range of issues, including the need for a long-term strategy, which is vital for innovation; the need to focus resources where they work; the importance of research through the universities; the need to build connections to ensure we get the most out of contributions and the progress that comes from that; and the need for strong and committed Government action. Notwithstanding the contribution that the Minister will make, it is disappointing that there is no Treasury Minister here today, because this is essentially a Treasury debate.

My hon. Friend the Member for Penistone and Stocksbridge said that the UK has always punched above its weight in science and innovation. We should be proud of our record, and as politicians we should recognise our role in ensuring that success for the future. I thank all the organisations that have contributed in so many ways to the debate, including the Royal Society of Chemistry, the Royal Society of Biology, the National Centre for Universities and Business, the Campaign for Science and Engineering and many others.

Science matters, and Treasury support for UK science is absolutely critical, not least because of the pivotal role of scientific research in driving innovation and productivity and its importance in building the high-tech, high-skilled economy that we need. This issue is at the very heart of the choices and questions facing our country. We need strategic and sustained investment to secure our future prosperity.

Independent analysis suggests that every pound spent by the UK Government on research and development raises private sector research and development output by 20p a year in perpetuity. Even that is an underestimate of the full multiplier effect of public investment in science and research, because Government investment stimulates additional private sector investment. The scale of public sector investment is greater than what the private sector can do on its own, as the lead that other countries have over us shows. Government investment also has a wider role in developing the wider capabilities that we need.

The Chancellor likes to talk about his support for science, but, as in so many areas, there is a gap between what the Government say and what they do. Their record of investment in our country’s future is not as good as we want it to be. They like to boast about the success of catapult centres, which we support—indeed,

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they were an initiative of the previous Labour Government —but the support that those centres receive under this Government falls short of the amount provided to comparable schemes in other countries such as Germany and France, which benefit from more than 10 times as much public support. We under-invest in the science-industry linkage. Similarly, Finland spends about 10 times as much per capita on innovation funding as our Government do.

The protection that the Government say they are providing to the science budget is only in cash terms, which means that inflation has eaten up about £1 billion of its value over the past five years. The Government’s commitment to science needs to be subjected to critical scrutiny. This is no time for complacency. There are disturbing signs that we are falling further and further behind key competitors when it comes to investment in innovation and technology, which is critical for future business growth and our competitiveness in the global economy.

The previous Labour Government established a target to increase UK R and D, both public and private, to 2.5% of GDP by 2014. The latest official figures from the Office for National Statistics show that R and D expenditure was at 1.67% of GDP in 2013. We are behind many countries and behind the EU average. OECD figures for 2012 show that the US spent 2.8% of GDP on R and D and that new global players, such as China and South Korea, were forging ahead of us. Furthermore, the UK continues to have a lower level of business R and D spending than the OECD average. That has been exacerbated in recent years by short-termism in corporate planning.

A recent report from PwC is clear that the UK lacks the skilled workforce and the necessary skills to complement and drive R and D at scale. As a result, we continue to fall behind our competitors. Recent labour market trends have confirmed the importance of technology-related investment in creating new jobs. As Sherry Coutu’s report for the previous Government shows, we face a worrying scale-up gap, with too many small businesses struggling to access the skills and support they need to grow into global players. Just two of the world’s top 20 companies for R and D spend are located in the UK. One of them, GlaxoSmithKline, is based in Hounslow, which is my borough, and both of them are pharmaceutical companies. We continue to need long-term leadership from Government to ensure that businesses get the support they need to be able to scale up.

All the trends demonstrate that, contrary to the current Government’s outdated laissez-faire attitudes, we cannot rely solely on private sector investment to secure our place in tomorrow’s high-tech global economy, nor can we leave the private sector to fend for itself without the support of an active and strategic state. Although standard figures show that the majority of aggregate R and D investment is undertaken by the private sector, that risks obscuring the fact that the public sector delivers most of the research, so that the private sector can concentrate more on development. Moreover, the public sector has a key role to play in ensuring a smooth division of labour between the two, building the relationships and institutions that can foster horizontal linkages between basic and applied research, or science and industry, to maximise the positive feedback effects between the two.

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To get Britain to be competitive, it is therefore essential that both public and private R and D not only rise but work more closely together. We need not only increased investment but greater strategic focus. That is why we have asked Professor Mariana Mazzucato, a leading authority on the role of the state in creating innovation ecosystems in which knowledge-led enterprises can thrive, to join Labour’s council of economic advisors and to contribute to the development of our plans to ensure that the UK can seize the economic opportunities available to us.

I am glad to be able to add the voice of Labour’s shadow Treasury team to the call for support for science and innovation in this month’s spending review. I can reassure my hon. Friend the Member for Penistone and Stocksbridge, all the Members who have spoken today, and all those who care about the future of our science base and our economy that if the Government do not listen, the Labour party will.

3.43 pm

The Minister for Universities and Science (Joseph Johnson): It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Penistone and Stocksbridge (Angela Smith) on securing the debate, which is the fourth on the subject in as many months. The topic is also the subject of an ongoing Science and Technology Committee inquiry. All that activity underlines the great importance of science to our economy and to Members throughout the House. We have had an excellent debate, which has included fine contributions from Members representing all parts of the country from Bolton to Bury St Edmunds and Belfast, from Pudsey to Cambridge, from Cardiff to St Ives, and from Glasgow to Kirkcaldy and Cowdenbeath. Many issues have been raised, and I will try to touch on some of them later on, but all Members have essentially made the same fundamentally important point, which is that science is vital and so is the Government’s role in underpinning our excellent science base.

A reference was made, somewhat disobligingly, to the “dead hand of the Treasury” in all of this. Given that this debate specifically requests the Treasury’s view on our science budget—I am here representing all of Government, including the Treasury—I would challenge that characterisation and point out that the Treasury hand has fed the science base well in difficult times. Let us not forget the financial circumstances that we were in back in 2010 when the decision was made to protect the science ring fence. At a time when we were making decisions that involved discretionary cuts of £98 billion across the rest of Government, the Chancellor decided to protect the ring fence. We can be proud of that decision, and we welcome any scrutiny of our record.

The Chancellor has subsequently followed through on that big statement about the importance of science in our economy. In April last year, he set out his vision in a speech in Cambridge and said that he wanted the UK to be the best place in the world to do science. He has taken action since then to deliver on that ambition with, most recently, the publication of the Government’s productivity plan, which sets out our proposals to boost the UK’s growth and has science and innovation at its heart. We have a track record of demonstrating our understanding of the importance of science to our economy at a time of difficult decisions elsewhere in public expenditure.

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Going into this Parliament, we made clear the importance to us of setting out a clear road map on the capital side of science expenditure. We committed to invest £1.1 billion per annum in the UK’s research infrastructure, rising with inflation, from 2015 all the way to 2021. That investment will ensure that the UK stays at the cutting edge of research and will help us to meet some of our greatest challenges. We can see the fruits of that commitment around the country. The Francis Crick Institute, which is almost complete and in which the Government have invested £350 million, will be a world-leading bio-discovery centre that will solve fundamental questions of health and disease. I was pleased to announce the other day that we had entered into negotiations with a preferred bidder for the building of a £200 million polar research ship that will keep Britain at the forefront of ocean science for decades to come. Tonne for tonne, the UK will have the most advanced oceanographic research vessel fleet in the world. I am delighted that the Cammel Laird shipyard in Birkenhead was selected to undertake that important work, which is a real boost for our shipbuilding industry. Earlier this year, I launched a £113 million capital investment partnership with IBM at the Hartree Centre in Daresbury, near Warrington, with the overall investment package from IBM being worth £200 million. There are many more such examples.

The Government’s activity is also evident in the constituency of the hon. Member for Penistone and Stocksbridge. We are building on its rich history of scientific discovery, to which she alluded, including stainless steel and Ronseal. Innovate UK has invested more than £61 million in Yorkshire since 2010, including more than £12 million in projects in the Sheffield city region last year. I recently announced £10 million of funding for a pioneering component manufacturing facility at the University of Sheffield’s Advanced Manufacturing Research Centre. In York, we have invested £27 million in a quantum technology hub to harness the potential of an area in which the UK is a world leader. The University of Sheffield is also home to two nodes of the high-value manufacturing catapult, in advanced machining and materials and in nuclear, with well over 100 industrial partners.

The setting up of catapults, the elite centres that commercialise new and emerging technologies, is another major initiative by the Government to entrench scientific excellence in the regions. Since the general election in May we have continued to roll out our catapult network. In the summer the Chancellor announced a new medicines technologies catapult to be based in Alderley Park in Cheshire, building on a pre-existing centre of excellence. We have also announced a precision medicine catapult to be based in Cambridge.