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Lord Skelmersdale: My Lords, before the noble Lord moves on, he answered a point which I made, but not the question that I asked. I asked where the next generation of Northern Ireland Members of Parliament will come from.

Lord Dubs: My Lords, that is a very wide question indeed and one which I suspect would be better for debate on a future occasion. If the talks process proceeds successfully, and if the forum proceeds successfully, there will be more opportunities for Northern Ireland people to develop their political skills. That may contribute in some way towards answering the noble Lord's question. However, in other ways, it is a very wide question indeed, and I am sure he will understand why I do not want to answer it just at the moment.

The noble Lord, Lord Alderdice, made a helpful contribution which I welcome. He has made constructive efforts to help in dealing with the problems of Northern Ireland over a period of many years. The whole House will recognise that when he speaks of the importance of bipartisanship and co-operation he does so from the standpoint of knowledge and personal experience. He is right in that and we shall hope for, and indeed expect, bipartisan support just as we gave it in opposition. We look forward to maximum co-operation from within the political parties in Northern Ireland. That, rather than the imposition of any panaceas, is the best way in which we may proceed.

The noble Lord also spoke of the need for openness. He is absolutely right in that. To the greatest extent possible the Government will aim to be as open as possible in all our approaches to the matters of Northern Ireland, even if on occasion being very open will result in us receiving perhaps a little more criticism than we would if we kept things quiet and rather secretive.

A point was made about how women in the forum will be treated. I hope that the forum will show tough and fair debate and that there will also be courtesy from all members of the forum towards all others. I hope and trust that the women members of the forum will be robust enough to speak for themselves. It would be impertinent of me to suggest how they should be treated by other members of the forum except to say that courtesy and fairness should be the watchwords of the way in which the forum will proceed.

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This has been an interesting and useful debate which has gone wider than the strict terms of the order before us. I thank the many noble Lords who have spoken for their helpful contributions.

On Question, Motion agreed to.

EU R&D Framework Programme: Science and Technology Committee Report

12.44 p.m.

The Earl of Selborne rose to move, That this House take note of the Report of the Science and Technology Committee, EU Framework Programme for Research and Technological Development (2nd Report, Session 1996-97, HL Paper 49).

The noble Earl said: My Lords, first let me say what an enormous pleasure it is that this debate affords the House the opportunity to hear the noble Lord, Lord Simon of Highbury, deliver his maiden speech. Any maiden speech is a notable event, but one from the Government Front Bench is a most unusual event. However, it is not quite so unusual today as there are to be two. We very much look forward to hearing the noble Lord's reply on behalf of the Government. I know I speak for all Members of the House in welcoming him to his office.

When the Select Committee is reappointed by the House, as I am very confident it will be, I shall no longer be the chairman. I rotate off under the remorseless but very necessary rules of the House which limit the period anyone can serve on the committee. It has been an enormous privilege to chair the committee, particularly so as I am not a scientist myself. There has been a very strong interest from all sides of the House in the committee. Such has been the pressure from noble Lords to participate that quite the hardest job I have ever had is trying to explain to highly distinguished scientists and captains of industry why at least for the time being there was no room for them on the committee.

The first report produced in my four years as chairman was on the fourth framework programme. It was a short report and we did not take a great deal of evidence. The report we are considering today is on the proposed fifth framework programme, which deals in greater detail with some of the same issues we identified as shortcomings in the fourth framework programme four years ago. But before I refer in detail to the findings of our inquiry, I should like to pay tribute to our specialist adviser, Sir Arnold Burgen, and to the two Clerks who successively helped the committee, first Dr. Philippa Tudor and then Andrew Makower. Anyone who has participated in the affairs of a Select Committee will recognise that that is no empty tribute.

The report was carefully timed to contribute to the discussions on the fifth framework programme which are now under way and which are likely to continue for some months. The new Minister responsible for science, Mr. John Battle, is already engaged in the Council of Ministers. The costs of previous framework programmes have been substantial. We refer to that

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in paragraph 1.12 of the report. The current total budget for Framework Programme 4 is 13,200 million ecus, or about £9,500 million, representing about 3 per cent. of the EU budget. The United Kingdom contribution is £390 million, which is about 10 per cent. of our publicly funded civil research budget. The sums of money are considerable. It is important for Parliament to be satisfied that there is a need for these programmes, that they are appropriate for the European Union budget and that they are well managed.

Our witnesses supported the need for a European framework programme. The United Kingdom does well in attracting funding. Although nobody could tell us precisely how well we do, it appears to be common ground that we do well. To undertake the calculation as to how well we do would apparently not be considered conducive to harmonious relationships between member states.

A successful research and technology development programme goes to the very heart of the United Kingdom's and Europe's ability to create the jobs and the skills necessary for us to succeed in the next century. After the Whitsun break, my noble friend Lord Cranborne will initiate a debate on Europe's competitive status. This research programme will be recognised as an important component in trying to achieve global competitiveness.

Having said how important the European framework programme should be and how it was supported by our witnesses, it must also be recognised that there was widespread criticism, which can be summed up in three ways: too little focus, too many objectives and inappropriate centralised management. Throughout the consultations, which have gone on over the past year or so--the Commission is to be congratulated on the way it has opened up the debate--it has been evident that the Commission itself has accepted the need for the programmes to achieve better focus. The evidence we received from the Commission emphasised how important it saw its focus to be. Yet the working paper from the Commission, which we reproduce in full at the end of the evidence volume, did not meet our expectations.

After our Select Committee reported, the final proposals were published in April. The Commissioner, Madame Cresson, has, frankly, still not satisfied me at least--and, I suspect, other members of the Select Committee--that there will be a sufficiently robust approach to selectivity; that is, to reducing existing parts of Framework Programme 4 before new "key actions", as described in the proposals, are added to make the Framework Programme 5.

We still cannot see a properly defined strategy for a European research programme. That is something which the former Commissioner Davignon, who chaired the evaluation panel for the Commission, also called for in his report published in February. He said that the research policy lacks focus and is under-achieving. Those are his words and not ours.

We accepted that there are programmes which can be better conducted at the European level. We accepted that it is appropriate for there to be a European research

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programme. We noted that a number of projects from the previous framework programmes have indeed proved successful.

But before a review of that nature is undertaken on the components of the fifth framework programme, two questions must be answered. First, are the components of the proposed programme best conducted at member state level or European level? Secondly, will the proposed programmes complement the existing programmes of member states? Without a clear strategy, firmly based on an intimate knowledge of member states' programmes, there will continue to be a lack of focus and a lack of a clearly defined strategy. The Select Committee and, for that matter, the Davignon evaluation panel, both considered that to be the most serious concern.

Again, before putting in place a new framework programme, there needs to be an adequate, systematic evaluation of results. The annual monitoring report is a helpful innovation, but it concentrates on administration and has little to say about scientific quality and results. Present evaluations rely heavily on participants. We are asking for something of a rather more systematic approach.

We are critical of the culture of centralisation, which permeates many of the functions such as planning and financial management. We would like to see much of this carried out closer to the actual research work. In paragraph 2.689 we draw attention to the acronym AMICA. I apologise for having to explain what this strange acronym stands for. It stands for "A molecular initiative in community agriculture". It is an attempt to move the management closer towards the research. We at least thought that it was a precedent that should be followed up. I shall be interested to know whether there is any prospect that that will continue into Framework Programme 5 or at least the concept which is incorporated in this delegation.

The Joint Research Centre is something that we referred to in the previous report four years ago. Since then it is true that an element of competition has been introduced for its funding, but it is still the case that it enjoys an anomalous status. We felt that it should be opened up to competition, peer review and assessment by an independent group, at least to a greater extent than at present. There is a lot of special pleading within Europe about the need for an independent source of scientific advice. Quite frankly, I believe that is overstated. There are many ways of getting independent scientific advice. Bearing in mind the Prior Options Review in this country, it would be odd if we were not to recognise that the element of competition would be desirable.

There is an element of the programme which seeks to achieve the EU's cohesion objectives. The economic and social cohesion of the Community is a desirable objective. But there are structural funds designed for that. If one uses the framework programmes to achieve the same objectives, we felt that there was a danger that cohesion would be used to justify mediocrity.

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Last week this Parliament acted as host in London to a parliamentary conference on the EUREKA programme, which is a separate European research initiative embracing more countries than those of the European Union. The noble Lord, Lord Flowers, chaired the meeting most expertly. From that meeting came a request for greater synergy between the two programmes, EUREKA and Framework Programme 5. I am sure that we would wish to endorse that. Also, I believe that we would recognise that the EUREKA programme is putting in place some organisational and administrative procedures which perhaps can be recommended to the framework programme. Quite frankly, they are simpler and more user friendly.

In paragraph 3.22 there is a specific problem whereby the universities are caught in a cross-fire between Customs and Excise and the Commission over VAT. Can the Minister say whether there has been any resolution of this annoying problem?

We have referred to the undesirable consequences of our policy of attribution. That policy assures adequate accountability for public funds and that of itself is a perfectly respectable concept. It means that someone has to account for the money even if it is spent through the European funding allowance. The only problem is that other member states do not use the same procedures. Therefore, our departments and research councils have a vested interest in not attracting European funds to their area of interest whereas we would obviously like to see them act as champions for their sector. This is a long-running problem which the Select Committee has drawn attention to before. Apparently, it has been impossible for the Treasury to work out how to resolve it. I hope that the Minister, with his fresh mind and great commercial expertise, will take this matter on board and perhaps achieve an easy win here. I am sure that it is a good one to tackle. There must be a way of achieving accountability without making people chary of obtaining research funding in their sector.

I have been, I fear, critical of many aspects of the framework programme, as has the report of the Select Committee. We have been critical in a constructive frame of mind. We are looking for some radical changes. However, we recognise that there is much, particularly in the overall concept of the framework programme, which is good. Perhaps I may look at what we commend; for example, the Training and Mobility of Researchers Programme. We believe that the Commission should be drawing on the best practice within member states. We would like to see Framework Programme 5 succeed and the Commission and the member states achieve focus on a limited number of clearly defined objectives. I know that our new Minister for Science, Mr. John Battle, will be doing battle in what will clearly be some protracted negotiations. Their outcome is of great importance to the future of European and indeed British research and development. I beg to move.

Moved, That this House takes note of the Report of the Science and Technology Committee, EU Framework Programme for Research and Technological Development (2nd Report, Session 1996-97, HL Paper 49).--(The Earl of Selborne.)

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12.57 p.m.

Lord Winston: My Lords, perhaps I should first declare an interest. I am a research worker and an academic professor at London University. I apologise to the House if I find that I have to leave before the conclusion of this debate. I have just had notice that there is a crisis meeting at Hammersmith Hospital because of a deficit in our health budget of over £500,000 for just my own directorate. That means that we shall be cutting the number of beds, reducing the number of nurses and I am also likely to lose a number of research medical staff. So I hope that the House will forgive me if I go to this meeting if I feel that time is pressing.

I am very pleased to have this opportunity to thank the noble Earl, Lord Selborne, for his outstanding chairmanship of the Select Committee on Science and Technology. As undoubtedly the newest member, I was quite scared of meeting him, knowing that his great-great-grandfather was responsible for the launching of Dreadnoughts. I have only experienced his very courteous and skilled leadership of that committee, which he has chaired with great distinction for some four years. Sadly, I did not sit on that committee but on Sub-Committee II, very ably chaired by the noble Baroness, Lady Hogg.

I am sure that the House is also greatly looking forward to hearing the noble Lord, Lord Simon of Highbury, making his maiden speech. I am sure that the whole House would wish to congratulate him on his appointment as Minister of State at the DTI and to wish him well. I do not know whether in taking the name of Highbury we share a certain enthusiasm for a particular sporting club, but some of us can fervently hope that events at Highbury next year might elevate us from third place to first place in the Premier League.

One of the most serious problems which I fear that we face in this country is not only our removal from first place to third place, but actual relegation from the Premier League. I am referring, of course, to the increasing threat to our science base, partly because in my view it is chronically underfunded because it is undervalued, and partly because of the self-evident and increasing threats to higher education, on which much of that base is laid. That will have serious consequences for our national economy in the future. No matter how hard we try, we shall never greatly increase our national wealth through the mere brawn of manufacturing goods which can easily be mass-produced more cheaply in the developing world. We need to invest far more in our brains and to exploit their innovation.

In that respect, although I have no wish to cause my noble friend the Minister any embarrassment, I must say that the mute nature of both major parties in the run-up to the general election left most scientists feeling a good deal of disquiet. It seemed extraordinary that so little mention was made of plans for improved scientific endeavour and their importance to the whole of our economy. I hope that the new Labour Government may grasp that staff for our nation's health much more vigorously. There is huge support for the Government among scientists and academics and we must ensure that

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their enthusiasm and optimism is not only justified but increased. As a research worker, I know how much a feeling of optimism and of the innate value of what one is doing--or attempting--buoys up scientists during the long hours of loneliness that most research comprises.

The Select Committee's report is excellent and its members are to be congratulated. The report is both constructive and usefully critical and I commend it to the House. As the noble Earl mentioned, our spending on the framework programme amounts to about £400 million, which is about 10 per cent. of our non-defence scientific research spending. It is a hefty whack of the total research budget. It needs to be spent wisely.

Perhaps I should say clearly now that what I am about to say does not in any way alter my firm conviction about the value of the European Union and our need to collaborate most closely if we are to maintain innovation and competitiveness.

The report highlights a number of important issues to which I should like to refer. Not surprisingly, my first concern has already been raised. I refer to selectivity. It is frankly ludicrous to have a large sack full of well-sounding projects--a scientific omnium gatherum, as it has been called--designed in part to alleviate all the concerns and pet thoughts of individual contributors and member countries in the way that is currently proposed. Such European-based research should be almost entirely focused on issues which can only or best be dealt with by serious collaboration in a wider environment. Examples might be "big science" (although, as the report points out, on the basis of need rather than on the basis of mere prestige) and those issues which are of clear value to the European Community as a whole. Selectivity, as applied well in this country, must mean emphasising the strengths of European science.

Perhaps I may take just one example of what I mean by the need for selectivity. The thematic objective of the framework programme, "Unlocking the Resources of the Living World and the Ecosystem", covers a huge range of scientific endeavour which is bound to be wasteful and hardly relevant to a truly European endeavour. Given the growing importance of biotechnology to our science base and its particular relevance to the European economy in, for example, the drug industry, how much better it would be to focus on aspects of molecular biology and health issues.

We have already seen the genome project, an international project which was admittedly based largely across the Atlantic but which also had a good deal of European flavour. It will allow us to print out the entire sequence of the code to life--the basic blueprint of life. It will give us a complete encyclopaedia, which is made up of the volumes which make up individual chromosomes. It will give us print-outs of the individual genes which make up the proteins. The problem is that once the genome project is finished, we will have an encyclopaedia, but it will be unreadable. Although we will know the letters which comprise it, they will be meaningless unless we can translate them and understand the proteins which are responsible. That will require a huge international endeavour. It cannot be

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done by a single nation. It is too complex; it requires collaboration. We should try to find some satisfactory solutions to that problem within the European framework programme.

I shall come later to the poor level of dissemination and exploitation of much of the research activity. An issue of prior importance is the evaluation of the programme and the transparency of the evaluation of the research. There is a need for better peer review. That issue was eloquently raised by Sir Dai Rees who gave evidence to the inquiry. The report emphasises the need to take note of the mechanisms of peer review of well-established organisations with an excellent track record, such as the UK research councils and the European Molecular Biology Organisation. That reform of thinking is clearly overdue. Sir William Stewart, another witness, drew attention to the issue when he pointed out that he saw,

    "researchers winning grants in the Framework Programme, who would not stand a chance in the peer review system in the United Kingdom".

That is a particularly poignant remark given that so many excellent researchers in this country are currently turned down through lack of funds. I am reminded of the story of one senior researcher with whom I collaborate occasionally in my own institution. In the past eight months that biochemist has placed four detailed project grant applications with different research councils. Each was alpha rated--that is to say, was rated as of international standard--by peer review. However, none was funded. Effectively, that research worker has entirely wasted eight months of his research. It is true that he might gain something in knowledge, but he cannot apply that knowledge in a more constructive scientific endeavour. That is deeply disappointing, but it is a common theme in the United Kingdom.

The report also mentions the question of cohesion, about which the noble Earl also spoke. As Sir William Stewart mentioned, it justifies mediocrity. Researchers can possibly improve their chances of getting grants by taking on potentially less able researchers from other countries which are still somewhat scientifically depressed. That may be a noble objective, but it is not necessarily the best way to plan a programme. It is not acceptable that some of the less scientifically developed countries can hold the framework programme over a barrel, possibly even considering refusing funding unless there is concentration in a particular area of which those countries are fond. One of the challenges facing the European Union is to find satisfactory solutions to such concerns to ensure the health of the programme.

I have mentioned the dissemination and exploitation of research activity. Much of that will be taken up by the Select Committee on which I have the honour to serve which is considering innovation. Perhaps I should not say any more on that now, save only that there has been some doubt about the evaluation of the exploitation of the framework programme.

Finally, I turn to one of my own pet areas, the public understanding of science. This brings me back to my remark at the beginning of my speech about the lack

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of value that is often given to science. Politicians are influenced by public perceptions, but sadly we live in a technology-suspicious environment and that often acts against the best interests of scientific endeavour as well as against our long-term economic strategy. This may be a minor area to fund, but it is of great importance in Europe.

Perhaps I may be allowed to use the paradigm of Dolly, the cloned sheep. We all saw Dolly in the newspapers, but what was not said in the newspapers was that Dolly was a remarkable scientific breakthrough of great importance. She will give us an insight into the ageing process by helping us to look at how mitochondria act in the cell and where they are important where nuclear DNA is not. A study of cloning will enable us in time to revolutionise transplantation technology by providing tissues which could be used to provide stem cells which might make blood tissue, skin tissue, muscle tissue or nervous tissue to control Parkinson's disease. That is a whole range of activity which is of great importance in medicine.

The central interest of Dolly is the nature of that remarkable reprogramming of the developed nucleus in the cell--the fact that it can be made to go back to its beginning and to start to express genes from the very beginning of embryo genesis. That is truly remarkable. It centres therefore on the way that the cell may be controlled. It is important for a whole range of human diseases such as cancer. There are also useful environmental issues such as the control of endangered species and the cheapening of the xenograft transplants in man. All of those things come essentially within the remit of the framework programme, but the ignorance of science led none of those things to be expressed, and what happened was a largely damnatory press. So much so that political leaders in Europe, including President Chirac, condemned that research and suggested that it should be halted. That is wrong.

This is an excellent report and an excellent example of the value of the Select Committee on Science and Technology in this House. It is a matter of considerable anxiety that the framework programmes, which have been in place since the 1980s, still have so many areas of criticism which have yet to be addressed. The report concludes that Framework Programme 5 must achieve a higher standard of scientific outcomes, with a better record of commercial exploitation. It must be focused and resourced adequately, properly and openly managed, and above all capable of meeting the needs and opportunities of the future. I commend it to the House.

1.11 p.m.

Lord Methuen: My Lords, I, too, thank the noble Earl, Lord Selborne, for introducing this debate on an interesting and comprehensive report on the EU framework programme. I shall therefore confine myself to a few brief remarks. I, too, welcome the maiden speech of the Minister to which I shall listen with interest.

It is obvious from the report, and from the comments of witnesses to the Select Committee, that considerable changes should be made to the framework programme

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before commencement of Framework Programme 5. As an engineer in industry for 40 years, I am well aware of the importance of R&D to our wellbeing and future technology, and other scientific areas.

From reading the report, I was surprising at the vast extent of those programme. I had not realised that Framework Programme 4 covered some 10,000 projects at a cost of £9.6 billion. I wonder whether that number of projects is too large to be managed reasonably. I note also that that sum represents about 3 per cent. of the total public and private sector research budget within EU member states.

The truly international flavour of the framework programme is shown by the statistics for the highly successful project establishing the complete sequence of chromosome III of yeast to which the noble Lord, Lord Winston, referred. Some 140 scientists, working in 35 laboratories in 10 member states, were involved. I wish that we could all co-operate as successfully as that.

However, all in the framework programme garden is not roses. Not only are there concerns about the focus of Framework Programme 5, there are obviously enormous administrative problems at all stages of projects, from the receipt of bids, their authorisation, monitoring and the final dissemination of those results. Those problems are all well detailed in this excellent report, and need to be rectified before the inception of Framework Programme 5.

There are in addition some problems peculiar to our UK administration, to which the noble Earl, Lord Selborne, referred. I refer to the VAT issue, government departmental attribution considerations, and university funding. I do not consider that involvement in framework programme projects should result in such heavy financial disadvantages to our universities, as have been noted in the report.

The report examines in detail the proposals for Framework Programme 5, and their relationship to those of Framework Programme 4. I agree that Framework Programme 5 needs to be far more selective in its objectives and geographical outlook, with its emphasis on the strengths of European research, and on either major supranational projects beyond the scope of national bodies, such as JET and CERN and other large scientific facilities, or major international areas of concern such as global warming and other environmental issues. In any event, value for money is an essential key element.

There are also problems with the termination of Framework Programme 4 projects which need to be resolved before the commencement of Framework Programme 5. I agree with the committee that a contingency fund is a better method of dealing with unforeseeable and urgent research requirements such as the BSE crisis. Suitable provision should be made for that in Framework Programme 5 with controls to prevent its misapplication.

The funding of basic research is obviously controversial, and was referred to in the report. I agree with the committee that provision should be made on a basis similar to that of the UK research councils. It is

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essential to maintain the continuum of basic, strategic and applied research to underpin individual projects, if necessary.

As stated by the committee, the role of the Joint Research Centre needs to be reassessed, and limited to those areas of activity where a distinctly EU view of the questions involved is required.

One point about which I wondered related to national versus European research projects. Presumably there needs to be some process to minimise duplication of effort in such fields. The situation with regard to the involvement of small and medium-sized enterprises is one for which it is difficult to find a totally satisfactory solution. The wide range of such enterprises makes it difficult to propose a single and adequate answer. The most important objective is to ensure that the results of framework projects are disseminated widely in well written and presented reports. Where practical, SMEs should be involved in relevant projects.

The programme for the training and mobility of researchers is, I believe, one of the most valuable parts of the framework programme. That type of programme is most beneficial to an international understanding, in linking the member states of the union and breaking down cultural barriers between them. Once again, I commend this report to the House, and look forward to hearing the Minister's response.

1.17 p.m.

Lord Phillips of Ellesmere: My Lords, perhaps I may begin, like earlier speakers, by saying how much I welcome this first debate on science and technology in the new Parliament and with a new government. In particular, I, too, look forward to the first appearance of the Minister, the noble Lord, Lord Simon of Highbury, and to hearing his reply to the debate. I trust that he will not feel too constrained by the conventions governing maiden speeches by restricting himself to non-controversial issues.

Many of the key points in the Select Committee report on the plans for Framework Programme 5 have been made by earlier speakers, not least by the noble Earl, Lord Selborne, who chaired this study, as he chaired the Select Committee, with his customary tact, skill and firmness. As he is now retiring as chairman, and as a member of the committee, perhaps I may express to him my appreciation of the way in which he has led the committee and introduced me and other newcomers to its procedures and objectives. We shall miss him.

I shall be brief. I have some concerns which are well known to my friends as hobbyhorses that I customarily ride. My first concern is that the DTI and the Office of Science and Technology in their advice on Framework Programme 5 seem still to adhere to a model of research and development underpinning innovation that has long been considered unhelpful. That is often described as the linear model, though my mathematician friends, jealous of their definition of linear, would prefer to call it the sequential model.

According to that model, the development of new products and processes starts with basic research, goes on to strategic research and applied research, then to

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development, production, marketing and sales. There are obvious flaws in that model, which have long been recognised. Thus it is well accepted that successful products require continuous updating, and that that requires the feedback of information from sales to development, from development to applied research, and often from applied to basic research. This feedback, an interactive process, applies equally in the other branches of research, including medical, environmental and agricultural research, as well as that leading to advances, more obviously, in industry.

It was therefore a great disappointment to your Select Committee to hear that the DTI and the OST wished to exclude basic research from funding under Framework 5. As the report observes in paragraph 3.15, this view is in direct conflict with a statement in the 1993 White Paper, Realising our Potential, and I trust that the DTI, now under new management, will adopt a more up-to-date view of the role of basic research, consistent with reality. Happily, the European Commission itself appears to have recognised this need in proposing that each programme in Framework 5 should permit unlimited support for generic technologies and basic research.

Much has been said already about the need for Framework 5 to be a focused programme. Perhaps I may add a plea, which also appears in the report, for the programme to include provision for flexibility so that new problems can be addressed when they arise. One example will suffice to illustrate the need for flexibility and it also relates to my earlier remark about basic research. The problem I have in mind is that of BSE; bovine spongiform encephalopathies. This problem emerged in full force during the course of earlier framework programmes and that made it difficult for a concerted scientific attack on the problem to be made on a European basis under the umbrella of the framework programme. Flexibility is clearly needed and, associated with that, the ability to respond quickly to the need for action.

BSE also illustrates the need for basic research to be a part of the programme. As noble Lords will realise, BSE lays bare the truth that we do not yet have adequate understanding of many aspects of basic biology, as the noble Lord, Lord Winston, has already told us. Although we now have a very promising hypothesis concerning the nature and mechanism of action of the infective agent in BSE, this hypothesis is not yet universally accepted and, as we heard in this House yesterday in a Question from the noble Lord, Lord Soulsby, we do not yet have the ability to detect the presence of the infective agent or the early stages of the disease. Further basic research of the highest quality is clearly needed.

Finally, I must emphasis the point already made by the noble Lord, Lord Methuen. The funds allocated to research groups under the framework programme have not covered the full costs of the research. This has grave consequences for research groups in universities, whose work under framework programmes has to be supported also by resources provided to universities through the Department for Education and the funding councils. I hope that Sir Ron Deering and his committee, who are

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now considering the funding of research in universities, will give proper attention to this fact and that, in responding to the report of the Dearing Committee, the Government and all the departments concerned will ensure that all the universities in the UK are able to play their full part in association with industry in this important research programme.

1.24 p.m.

Lord Gregson: My Lords, perhaps I may add my appreciation for the skilful way in which the noble Earl, Lord Selbourne, conducted this inquiry. It was a difficult task, considering the financial constraints of the research community and the universities these days. It was, indeed, difficult to detect criticism at all from the recipients of these programmes since it must be dangerous, to say the least, to bite the hand that feeds you. We had great difficulty in extracting any real points from people who gave evidence.

Perhaps I may also use this occasion to pay tribute to the noble Earl for his very successful leadership of the Select Committee over the years of the previous Parliament. I would also like to welcome my noble friend Lord Simon of Highbury on making his maiden speech in this debate. We look forward to his winding up speech with great interest. I believe that it is called "jumping in at the deep end".

This is, in my opinion, a most important study. I have been involved with the European R&D programme since the late 1970s. I cannot recall a more complete, subjective critique in all that time, and I must compliment the clerks and our expert advisers on their splendid support in the drafting of this report.

There has, since the beginning of the framework programmes, been a good deal of schizophrenia about the purpose of the whole exercise. It was never clear whether the aim was best science or cohesion; in effect, to spread the work around to bring in everybody, almost irrespective of their capability. That has been mentioned by several speakers, including my noble friend Lord Winston.

In addition it has oscillated between pre-market and near-market research. Almost at the change of the commissioner, the emphasis changed from one framework programme to the other. There is a good deal of difference between these two. The net result has been a scattergun effect where a hell of a lot of activity has taken place with comparatively little result. Please take note; this after expenditure of nearly £20 billion--and that is a lot of money.

Multinational co-operative research is expensive, and a good deal of the expenditure goes to the travel industry and to telecomms as well as the excessive time spent by the researchers on co-operative meetings.

I do not disagree with the Commission that cohesion is important, but it would be far better dealt with as a separate programme with its own finance, and the R&D programme should concentrate on good science. It is interesting to note that the Germans have made the same comment during meetings in Brussels.

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I also do not believe that co-operative research is an effective way of conducting near-market activity. There must be a lack of incentive and a continuing squabble regarding intellectual property rights. It is my opinion that it would be far better for the European Union to concentrate on pre-market activities.

It became obvious to me during the inquiry that there is a lack of sound, objective, independent technical assessment and audit available to the Community. Considering the magnitude of the sums involved, it is clearly essential that this must be rectified.

As I previously said, this is a most important report. I sincerely hope that the new Minister of Energy, Science and Technology will use it in his future negotiations in Europe.

1.28 p.m.

Lord Craig of Radley: My Lords, I too welcome the noble Lord, Lord Simon of Highbury, to this House and to his new appointment, and I wish him well. Furthermore, I strongly associate myself with the well deserved words of praise said today about our chairman, the noble Earl, Lord Selborne. Not only has he been an excellent chairman but, when I had to chair one of the sub-committees, he was extraordinarily helpful, encouraging and kind. I am most grateful to him.

In our committee's invitation to submit evidence to the inquiry, we posed the question:

    "Can it be demonstrated that the UK gets clear value for money from participation in the Framework Programme?"
It came as a surprise to me that a vast sum--no less than £21 billion across Europe--had been devoted to Framework Programmes 1 to 5. And if "guestimates" are right, Framework Programme 5 may well cost more than £11 billion. However those sums are calculated, they are large. We examined a number of witnesses but failed to unearth any evidence of a serious or systematic attempt to evaluate, assess or monitor the out-turn for that large investment in research. Even allowing for the many difficulties in giving meaningful values to research projects, I feel that the European taxpayer who foots that enormous bill should be entitled to some indication as to the value of that expenditure.

The conclusions that we draw in our report are either anecdotal based or peripheral to the actual research effort. There must be added value to garner from getting both universities and firms to collaborate and share knowledge across European frontiers. But it is difficult to quantify. There was widespread support for the training and mobility of researchers' programme, with its focus on people rather than projects. Even though it receives only a small percentage of the Framework Programme 4 budget, it was seen as one of the most valuable--but again unquantifiable--parts of the framework programme. It is fair to ask how much of that value should be attributed to cohesion and social gains rather than to a plus for scientific research.

An area of the Commission's business which should be more amenable to cost-effective analysis is administration. An annual monitoring report is a valuable innovation and will concentrate initially on the many glaring weaknesses in administration. Those are

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well known and acknowledged by the directors general concerned. But it was still very depressing for us to learn of some of the problems at first hand. Witness after witness expressed exasperation about the inefficiencies, whether in the high costs of administration, poor internal communication, inadequate delegation, over-centralised slow and secretive peer review and delays in awarding contracts. It makes a depressing paragraph 3.19 in our report.

I fear that so much effort will be expended on tackling that that it will be a long time before improved evaluation systems are put in place for Framework Programme 5. We press for those, recommending that cost benefit analysis and, where appropriate, targets and milestones are adopted. Those should lead on also to cataloguing the commercial successes.

It is that bottom line which at present features only little if at all in any review of the return on the very large research funds which are made available by governments. Although we pressed our witnesses, their examples of framework programme successes while in individual cases sounded most impressive--and as the noble Lord, Lord Winston, reminded us, there has been a particularly successful one in the genome studies--they did not, in total, seem to deal with and explain the £21 billion which had been expended.

Even a detailed scrutiny of our report will unearth little of substance as an answer to the question that I mentioned at the beginning of my remarks. For more than 40 years, I was exposed to a most searching Treasury scrutiny process of all main Ministry of Defence expenditure. It may have been rigorous, but one had to take that in good part because it was right to account for public expenditure of the large sums devoted to defence.

It is rather galling to find that there appear to be large fields of expenditure in the Euro-scientific areas which do not yet seem to be given anything like that same tight supervision. Bearing in mind the other very large Community programmes which Select Committees of both Houses have examined--for example, fishing and the common agriculture policy--we still seem to have a long way to go to tighten up our Euro-expenditure audits.

Finally, I should like to draw attention to one comment in the POST study which we mentioned several times in our report. It draws attention to the extent to which evaluations rely on framework programme participants to assess the value of the programmes from which they have benefited. We testify to that problem from our own experience in our inquiry. Our witnesses proved reluctant to criticise the goose which lays such golden eggs. I wish the new Government success in their efforts to tighten up in this important area of European financial collaboration, even at the risk, mentioned by the noble Earl, Lord Selborne, of not being conducive to harmonious relations within the Union.

1.35 p.m.

Baroness Miller of Hendon: My Lords, I begin, as have other speakers, by thanking my noble friend Lord Selborne for initiating this debate on his committee's excellent report and my noble friend and

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the committee for their efforts in analysing carefully the complex evidence and representations that were placed before them.

The committee consisted of four Conservative Peers, two Labour Peers and five Cross-Bench Peers. The fact that they could produce such an excellent, clear, unfudged unanimous report shows the important and effective role that your Lordships' House has in the conduct of this country's affairs.

I should also like to congratulate the noble Lord, Lord Simon of Highbury, on his appointment and to wish him very well in his Front Bench duties. It is unusual for a maiden speech to be made from the Dispatch Box but, without having yet heard it, I am absolutely certain that the Minister will do the occasion the fullest justice.

We welcome the Select Committee's report. It has highlighted areas of the EU's research programmes which could be improved. That is essential if European Union research is to be effective and provide value for money. It makes the absolutely key point that research and development are central to industrial competitiveness. By drawing on a wide range of scientific expertise, the report offers an authoritative analysis of the EU's framework programme.

The first of the four chapters into which the report is divided is factual, dealing with present facts and future intentions of the Framework Programme, the present five-year plan and the forthcoming one. The Framework Programmes are an essential tool in co-operation in scientific and technological research throughout the European Union. They are exactly those matters which the European common market was intended to support rather than some of the grandiose plans which emanate from Brussels.

The United Kingdom has contributed substantially to the first four Framework Programmes, taking a leading role. The last Government had committed us to similar participation in the forthcoming programme to begin in 1998. As my noble friend Lord Selborne has told us already today, the United Kingdom's contribution for 1996-97 is £391 million, which is more than 10 per cent. of the Government's planned spending on civil science and technology. Although it is difficult to measure these things, my right honourable friend the former Chief Secretary to the Treasury told the committee that Britain receives back in benefits at least as much as we contribute.

I do not propose to take up your Lordships' time by going through the introductory section of the report in detail. As is clear from the excellent contributions to this debate, your Lordships have read the report carefully. However, I should like to pick out one or two items which have struck me particularly.

The main aim of the successive programmes is to increase European industrial competitiveness. The report states that the record of the United Kingdom in research is an enviable one. Our record in development and taking discoveries to the market is perhaps less to be envied. It has been ever thus since the end of the war, from the development of the hovercraft onwards. That is not a matter solely for

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governments. British bankers and industrialists need to be prepared for more risk taking than hitherto. In that respect, the Minister's former company, BP, is to be congratulated on its plans, announced just last weekend, to increase its sale of solar energy equipment tenfold from £100 million to £1 billion over the next 10 years.

However, remembering that the programme involves research and development, European governments must be prepared to co-operate over the exploitation of discoveries and inventions in the same way that they do over the development of military hardware and civil aircraft. Exploitation of new discoveries also produces for Britain more than a juste retour in the terms of profitable new industries and new jobs. We are glad to see that the Commission in its Green Paper Inventing Tomorrow proposes to give more encouragement to exploitation. That is essential if the programme is to achieve practical success.

The Commission proposes to give grants to bring in young researchers from outside the EU to work on FP5 projects. There must be a caution placed against this, laudable as it sounds. What has to be avoided is merely funding political correctness and tokenism. The one and only qualification for grants must be the academic capabilities of candidates for grants and their ability to transfer what they learn back to their own countries. As the Office of Science and Technology said in its evidence, the framework programmes should not be tempted to stray into the fields properly the province of the structural programmes. The committee accepted the evidence on that point of Sir William Stewart, when he said:

    "Cohesion has been used to justify mediocrity"
and confirmed the belief that researchers think that they can improve their chances of getting EU funding by including a token researcher from what they call a "cohesion country". On the other hand, the projects for training and mobility of researchers and research training networks are welcomed by the committee as a valuable means of sharing the results of research programmes. The committee urges that for Framework Programme 5 the process of selection should be improved.

One disturbing fact brought to light by the committee's investigation is that there is no task force theme aimed specifically at information and communications technology. The vast sum of £691 million swallowed by the Joint Research Centre this year includes only just over 1 per cent. for this very important area. We simply cannot rely on the USA and Japan, nor can Europe allow itself to seize the high ground on this most important development for the future. Equally, we may not be able to rely on the provision of finance by such leaders in the field as British Telecom, if the Government are going to confiscate part of its assets which would otherwise be available to fund research and improved infrastructure.

At the end of the factual part of the report the committee refers to the Commission's claim that, in 1995, 1,782 smaller firms participated in the Framework Programme and accounted for 15 per cent. of the

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budget. But the Commission admits that the current level of participation of small and medium enterprises must be improved; and we agree that it must.

I shall not spend too much time on chapter 2 of the report, which contains a summary of some of the evidence taken by members of the committee who dealt with much of it in their conclusions. The Economic and Social Research Council wanted decisions on the funding of projects to be based on majority voting rather than unanimity on the fallacious grounds that it would reduce "horse trading". On the contrary, it might increase the opportunity for deals on the basis of, "You vote for our project and we will vote for yours".

There is more demand for funding than there are funds available. The only projects which should be helped are those that command unanimous approval. The Engineering and Physical Research Council wants to concentrate projects in states that are capable of undertaking research to the highest standards but giving fair access on a Europe-wide basis, while Professor Routti, the Director General of Directorate XII, is in favour of subsidiarity, defining what we need to do together and what can be done separately.

I am pleased to note that the committee confirms that the

    "focus should be on the strengths of European research and development ... of Europe's best researchers and centres of scientific excellence".
However, I find it strange that, with it being admitted that the resources are limited, Professor Routti and Commissioner Cresson propose that socio-economic research should have an element of the available funding--hardly, I should have thought, within the definition of the type of practical science with which the Framework Programme is, or should be, concerned.

It is also disturbing to note that the administrative costs of the framework programmes are so high--8 per cent. compared with the UK's research councils which cost under 5 per cent. Then there are the inevitable financial irregularities. In November, the Court of Auditors reported irregularities in just eight research projects amounting to some £385 million. The committee makes reference in its conclusions to administrative inefficiency but I very much trust that the Minister in his new capacity of responsibility for trade and competitiveness in Europe will take vigorous action to put an end to those complaints.

I now turn to the succinct conclusions of the committee with which, as I said at the outset, I am pleased to say we substantially agree. I shall select just some of them because I know that noble Lords will have read them for themselves. First, there is the need for the next framework programme to be focused on a smaller range of better defined subjects and to urge the Government to force the Commission to honour its commitments in that respect. Secondly, the framework must play to the strengths of European R&D and its best researchers and its centres of excellence. Thirdly, there is a need not to indulge in too wide a range of international collaborations outside the European Union. Then there is the importance of the training and mobility researchers programme and realistic funding for academic posts.

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Further, in response to the debate on whether the funds should be allocated to basic research or projects closer to the market, the committee recommended that the Commission should follow the model of UK research councils. Perhaps I may add my own personal endorsement of that particular recommendation. When I had the responsibility for carrying a research councils order through your Lordships' House in 1995, I had to brief myself on their structure. I can only agree that our European partners would do well to follow that.

Probably most important of all, we share the committee's view that the Commission should be encouraged to envisage dissemination and exploitation as an important activity, especially in assisting smaller firms, and also to address the problem of venture capital. Making a scientific discovery is one thing; bringing it to the market and making money and creating jobs from it, or curing disease from it, is no less important but much more difficult.

I understand that the Commission's formal proposals for FP5 were to be published at the end of March, when we were all preoccupied with the general election, and that they were to be considered by the Council of Research Ministers on 15th May. Perhaps the Minister will be able to tell us what transpired. However, if he cannot do so today, then perhaps he can write to me shortly. Perhaps we may also have a statement when final agreement is reached between the Council and the European Parliament, which I understand will be some time next year.

The United Kingdom has only 1 per cent. of the world's population but carries out 6 per cent. of its research, produces 8 per cent. of all scientific publications, and achieves 9 per cent. of its citations. Funding for our science and engineering base has risen by 10 per cent. in real terms in the past decade, and the science budget increased by 30 per cent. in real terms since 1979. British companies have increased their R&D investment for six consecutive years--4.2 per cent. in this last year alone. A recent study, the European Report on Science and Technology Indicators, showed that in the 20 to 24 year-old age group there are more science graduates in the United Kingdom than in the USA, Japan or Germany. All of this was achieved under the last Government, disproving the constant allegation by the party opposite that we were neglecting science and industry.

We do want a more competitive and prosperous Europe. Framework Programme 5 should concentrate on that. The committee closes its report with the words:

    "The United Kingdom and the European Union have much to gain from Framework Project 5. All those involved in the negotiations over the coming months need to work together to ensure the Programme is focused, adequately resourced, properly managed on the basis of uniformly open competition and capable of meeting the needs and opportunities of the future".
Those are sentiments with which we can associate ourselves entirely.

1.50 p.m.

The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, it is a somewhat daunting honour to speak in conclusion

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today on this important subject of research and technological development in the European context to which your Lordships' committee has given such diligent attention. Indeed it is perhaps so early in my attendance in this House that it is ambitious to comment on this first occasion where so many distinguished committee members have combined to offer their joint experience.

I am encouraged on this first occasion, however, by my good fortune--which, frankly, one learns to appreciate after 36 years in business and industry, particularly in oil--not only to have been generously welcomed in this House by the noble Earl, Lord Selborne, but also by many others speaking today. I have good fortune not only in that respect; on this occasion I hope I shall also be able to speak from the practical experience of my recent past. I speak both with great respect and much personal enthusiasm for the body of opinion expressed in this report which we are discussing today. I hope this will not turn out to be what we would have called a "dry hole".

My government and ministerial role will no doubt offer further opportunities to speak on the twin themes of Europe and competitiveness. My BP career from university apprentice to the chair of the board which I left but two weeks ago was conducted more in Europe than in any other geographical area. As has been noted kindly today, I am proud to say that BP has not wanted in terms of competitiveness of late, particularly in the solar area. Your Lordships' report offers evidence that we must insist on good research, good science and above all clear focus in technology development and application if we are to win the future battles on competitiveness that this Government are committed to win, both with our European partners and for the UK within the Union. As has been mentioned, the impact of global competition on both manufacturing and, perhaps more recently, on service industry development in the UK and Europe certainly requires a vigorous commitment to improvement on the part of both industry and academic research in order better to use our science base, as the noble Lord, Lord Winston, commented.

The report rightly concentrates not only on the vital identification and selection of research topics but also on the need to improve the management of this large planned expenditure and also on the exchange and communication of learning and the development of individuals in the process. As the noble Lord, Lord Methuen, noted, the crucial building of a first class European network binding researcher and users together is the only way to ensure real value and value added from this important spend of some £400 million annually for the UK, and perhaps, as we noted, up to £13 billion in Europe over the four years of the Fifth Framework Programme.

In this light it was encouraging to hear mention of how well supported was the 8th Eureka inter-parliamentary conference hosted in London by the Department of Trade and Industry. I am glad to say that there was strong support from Members of your Lordships' distinguished committee. This is the year of Britain's chairmanship and the House of Lords Select

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Committee took on the role of host in case there were no parliamentarians from another place. In the event they were only just finding their way around the Palace of Westminster, never mind the Eureka conference. It was a successful conference and it gave more focus to applied research which is an important issue.

After those short personal reflections, as this is my first appearance in the House of Lords I offer the Government's thanks for this timely and perceptive report. I am pleased to be able to say that the Government agree with and welcome most of the report's findings. I hope that our positive attitude to Europe will be reflected in our attitude towards the framework programme. The Government are also particularly pleased that events have conspired to enable us to have this extremely interesting and constructive debate before the Government put pen to paper to frame their written response to the committee. I am extremely pleased about that because it allows me to say that many of the detailed questions of today will be answered in our written response. In saying that, I am also pleased to record my gratitude and my congratulations to the noble Earl, Lord Selborne, and his colleagues for the excellent report and for their skill in securing this debate which has given us the opportunity today to obtain much more information.

Since the report was published on 6th March the Commission has produced its formal proposal for the Fifth Framework Programme. The proposal has responded in some respects to points made by the Select Committee. For example, it recognises the value of support for the training and mobility of researchers and has proposed a significant increase in the resources devoted to that part of the programme. In other respects, however, improvements which the committee and the Government would like to see, particularly on the structure of the programme, are still lacking. The UK and other member states--we are not alone in this--made clear their concerns on these points at the research council meeting which my honourable friend the Minister of State attended last week. The structural questions are still very much under discussion. The committee's report has proved absolutely invaluable as a firm and clearly argued backdrop to the Government's position in ministerial and official level discussions on the Fifth Framework Programme. We are much obliged to noble Lords for their thorough and helpful work on all the issues that have been raised.

Before I end my comments on the programme, I wish to say a few words about the current Fourth Framework Programme. As a newcomer to this rather broader sweep in the area of European co-operation I have been particularly struck by the high level of UK participation in the current framework programme. I hope that that continues into the fifth programme. Our researchers take part in over half the fourth framework projects. In some areas that proportion is higher. I refer to the point made by the noble Lord, Lord Winston, when I say that in biotechnology, for example, UK teams are currently taking part in approximately 70 per cent. of all funded projects. In other important areas, such as communications technology, the figure is over 70 per cent. They are involved in 65 per cent. of the projects in the telematics programme.

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Across the framework programme both industry and universities figure strongly. That performance is a real measure of the quality of the UK's research teams in both the public and private sectors. It is a performance we need to be careful not to undermine in our approach to the next framework programme. That said I in no way wish to underestimate the value to our universities of top class collaboration in Europe but it is clearly vital if we are to maintain and improve on our competitive position in world markets that the framework programme research and development should in future address the sort of medium-term issues and priorities which will attract a strong field of industrial participants from the UK.

I do not think this is the place to comment on linear models and the questions raised by the noble Lord, Lord Phillips. However, we agree with him that linear modelling will not be the answer to the problem. We need to focus as soon as possible on good projects from the activity programme where industrial application is clear. We know that we have to concentrate on improving the European Union's industrial competitiveness. We have currently a disappointing competitive position relative to the United States and Japan in the research field. It is undoubtedly due to the fact that we are spending less on research and development. There is wide scope for discussion on the reasons; I do not wish to go into them now. However, it is not just a question of raising the budgets but of focusing the spend. That point has been echoed often around the Chamber this afternoon.

In summary, the Government's response to the report is extremely positive. We agree that we want our research objective led and on the industrial side with an applications bias to the programme.

With my business training, I should like to respond to some of the points. I believe that they can be responded to quite quickly. The noble Earl, Lord Selborne, mentioned the AMICA project. We are much in support of that and would like to take that process further. He asked about VAT. I am extremely pleased to be able to announce that Her Majesty's Customs and Excise has negotiated the right response. That will be reclaimable. There will no doubt be some administrative problems because then it will worry about double VAT reclaiming. However, the matter is in hand, which is good news.

As I said in reply to the question about biotechnology from noble Lord, Lord Winston, I am sure that it will come through strongly in our bids in the next programme. Indeed, we shall look to Dolly's example and, I hope, take that further in the way that we structure our research bids.

I have mentioned the linear model of research. I do not think that we want to support that very much further.

I much appreciated the businesslike summary by the noble Baroness, Lady Miller, and her welcome, too, to this Dispatch Box. We are in agreement, I understand already--I hope that that may continue long in my career here, however short it is--on many of the points in the summary. We shall be writing a report following the council meeting attended by my colleague

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John Battle. We shall respond to further points; with the election, we have been waiting. With the council meeting now having been held, I hope that we shall be able to give a better response.

With those brief points in summary, and the clarification that we shall respond in written form to many of the further points raised, perhaps I may say how grateful I am for the debate and for the kindness shown on my first opportunity to speak. Perhaps I may add myself to the long list of contributors who have offered particular thanks to the noble Earl, Lord Selborne, on his outstanding chairmanship of the committee. I regard it as a very important committee. I regard it as an important spend in terms of competitiveness, and as regards innovation and entrepreneurship which our country needs to develop as strongly as we can. I thank all speakers for their kind words and encouragement.

2.3 p.m.

The Earl of Selborne: My Lords, it is with great sincerity that I rise to congratulate the noble Lord, Lord Simon of Highbury, on his distinguished maiden speech from the Dispatch Box. He hoped rather tentatively that it would not be a dry hole. I can assure the noble Lord that it was a very productive strike. It has been a most positive response from the Front Bench. All members of the Select Committee will be absolutely delighted. We expected no less. With the noble Lord's practical experience--36 years in industry, a clear understanding of the issues that we debate today, and great experience of the Bank of England--we knew how lucky the House and the Government are to have attracted his services. Perhaps I may say how gratefully we are in the noble Lord's debt for having made his great expertise available to us all.

Normally it is customary to urge a maiden speaker not to wait too long before he rises to his feet again. Quite frankly, the Minister has no choice. He will be back time and again. But we look forward to that enormously. If the noble Lord is as positive in future as he has been today--and I am sure he will be--we shall look forward to that with great interest.

It is clear that there has been a great measure of unanimity from all parts of the House. Everyone has been surprised by the sums of money which were quoted time and again. It is an area where clearly we all feel that the framework programme needs focusing. It needs attention. I hope that when the Select Committee is reappointed it will keep a close eye on future negotiations. I thank all those who have spoken in the debate today. I commend the Motion.

On Question, Motion agreed to.

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