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Baroness Ramsay of Cartvale moved Amendment No. 15:

Page 18, line 3, leave out from ("arts") to end of line 5.

The noble Baroness said: My Lords, in moving Amendment No. 15 I should like to speak also to Amendment No. 16, which impinges on Amendment No. 17 in the name of the noble Lord, Lord Skidelsky. These amendments are concerned with NESTA's objects and the means by which it achieves those objects.

NESTA's primary objects are, broadly speaking, to support talented people and to promote innovation, as set out in Clause 15(1). The means of achieving those objects are set out in Clause 15(2), chiefly by helping talented people to reach their full potential and helping to turn good ideas into marketable products and services. NESTA will also need to secure public support for its activities. We have therefore included in Clause 15(2)(c) the activity of promoting public knowledge and awareness of the importance of science, technology and the arts. This activity is currently also reflected in the second part of NESTA's objects in Clause 15(1)(b).

In Committee I indicated that we were coming to the view that including the promotion of public knowledge in NESTA's objects might place too much emphasis on what is in reality a subsidiary activity. We were concerned that this might mean that NESTA felt compelled to spend as much on this activity as on its principal objects. Raising public awareness is an important way of securing public support for NESTA's activities, but we believe that it should only be pursued in this supporting role. Amendment No. 15, therefore, removes the second part of Clause 15(1). This would leave NESTA's objects defined simply as,

The activity of promoting public knowledge and appreciation would remain in Clause 15(2)(c) as a means of securing that object. I hope that this is a welcome clarification of NESTA's purposes.

Amendments Nos. 16 and 17 are two attempts, by the Government and by the noble Lord, Lord Skidelsky, to address the concern that the noble Lord raised when we were in Committee about whether the means set out in Clause 15(2) might discriminate against the support of talented groups or teams rather than individuals. The noble Lord suggested then that some scientific and technological endeavour where the potential output lies in the performance of a team might fail to attract support as a result. We have considered this point carefully and I am pleased that we have been able to respond positively.

Amendment No. 16 extends the first means, in Clause 15(2)(a), so that NESTA will explicitly be able to help talented individuals or groups of such individuals to achieve their potential. We are advised that the words "their potential" in this context can properly be construed as referring to the potential of the group or team as a whole. I am glad that we have been able to respond to the noble Lord's concern in this way, clarifying what in fact

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we had always intended to be the case. I invite him to accept the amendment, as drafted by parliamentary counsel, in preference to his own version. I beg to move.

Lord Crickhowell: My Lords, I rise briefly to make a point which I made at the Committee stage but which I think is worth making again and so give the Minister a chance to say on the Floor of the House something that was helpfully said in Committee. I very much welcome the objects of NESTA but I pointed out in Committee that the promotion of talent, innovation and creativity was perhaps even more dependent on adequate revenue funding for many of the bodies concerned.

I raised again an issue that was spoken to very powerfully when the Bill was introduced at Second Reading; namely, that there was great concern that an extension of revenue funding and perhaps a reduction in capital funding, should take place in the not too distant future. In reply the noble Lord, Lord McIntosh, pointed out that the powers were there in the 1993 Act. He said that the Government would be undertaking a review and were consulting with those objects in mind. This is a crucially important area for many of the bodies concerned. There is acute anxiety about it. Therefore, I would welcome it if the Minister took the opportunity to repeat on the Floor of the House the helpful assurances which were given to me in Committee.

Baroness Ramsay of Cartvale: My Lords, I am grateful to the noble Lord for giving me the opportunity to confirm what was said in Committee.

On Question, amendment agreed to.

Baroness Ramsay of Cartvale moved Amendment No. 16:

Page 18, line 8, after ("individuals") insert ("(or groups of such individuals)").

On Question, amendment agreed to.

[Amendment No. 17 not moved.]

Lord Skidelsky moved Amendment No. 18:

Page 18, line 10, leave out from beginning to ("and") in line 13.

The noble Lord said: My Lords, I begin by thanking the Minister for meeting the point of our amendment in Committee on individuals and groups. I believe that all our amendments are very sensible. I only wish that the Government had accepted more of them and that applies to this amendment.

It is to remove subsection (2)(b). Subsection (2) allows NESTA not just to promote "talent, innovation and creativity" with which we have no quarrel, but to help persons to turn their inventions into marketable products. We believe that that is one function too far. I argued in Committee that NESTA should not become a source of venture capital or a bank of the last resort. Perhaps the paragraph to which we object does not intend that, yet the wording suggests that it does. Its intention is to help,

    "persons to turn inventions or ideas in the fields of science, technology and the arts into products or services--

    (i) which can be effectively exploited".

9 Mar 1998 : Column 52

Perhaps that aims only to bring innovations to the point at which they become marketable and not to help inventors set up businesses.

However, the noble Baroness, Lady Ramsay of Cartvale, contended in Committee that,

    "venture capital often fights shy of creative genius and all its attendant risks",

and that this,

    "clear market failure,"

justifies the use of NESTA's funds to finance business start-ups. I do not myself find her arguments for the existence of market failure at all convincing. The main one seems to be,

    "that 57 per cent. of major technological innovations which have benefited the Japanese economy, stem from ideas and inventions from the United Kingdom".--[Official Report, 29/1/98; col. CWH 113.]

I am delighted that we British are so inventive and that our inventions have been so useful to the Japanese.

But this is not prima facie evidence of market failure, as the noble Baroness seems to believe. First, we all benefit as consumers from better or cheaper products. Secondly, it does not matter to the individual inventor where his product is exploited provided he retains the right to benefit from that exploitation. Thirdly, we also exploit many foreign inventions; for example, in our very successful pharmaceutical companies like Glaxo where many of the ideas have come from the United States.

The argument seems to be that every British invention, which is exploited abroad, imposes a net welfare loss on our country. But the Government cannot remotely prove that to be true and I do not believe that they would even try to do so. I do not think that the Minister would expect me to quote Karl Marx at this point. I am not sure when Karl Marx was last quoted in this House. But he has something rather apposite to say in the Communist Manifesto:

    "the intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible",

but not, apparently, in the thinking of this Government. It is rather depressing to find that they are 150 years behind Karl Marx whose manifesto was published in 1848.

If it is true that inventions are now the property of mankind and that it does not matter economically where they are exploited, then it would be much better that NESTA does not pour its endowment income into business start-ups. It is simply not in a position to estimate the commercial possibilities of different kinds of new products.

We have had almost no indication of the practicalities of the operation. For example, NESTA will be empowered to make grants and loans, form partnerships and joint ventures, acquire, exploit and dispose of land and property. What if these business undertakings fail? How is the risk to be shared? The Government state that,

    "people receiving grants from NESTA will, when they have achieved success, normally be expected to plough something back into NESTA to help develop the talent and creativity of the next generation".

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What if they do not achieve success? Will NESTA be liable for their debts at the expense of the talent and creativity of the next generation? Will NESTA itself be allowed to go bankrupt or will its endowment be constantly replenished, as hinted at in Clause 17(2)?

The more I think of NESTA the more half-baked it seems to be, as though it were put in without enough thought and without the advice of a properly trained economist or lawyer or if their advice was given it was not followed. The whole matter should have been re-thought. It seems to me to be very premature. But at this stage there is nothing much that we can do about it. Even before Third Reading and not in a party spirit at all--I do not believe I have made any party points here--I urge the Government to think about how this operation with these business aspects to it will work in practice. In the expectation of full elucidation of these conundrums from the noble Baroness, I beg to move.

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