IAN PEARSON MP AND PROFESSOR SIR KEITH O'NIONS

23 OCTOBER 2007

  Q20  Chairman: That is the time you invest, is it not, when you are doing well economically because you will not be able to do it when you are not, although arguably you perhaps should. Can I ask you another supplementary about the universities. When you look at the funding allocations, the actual capital allocation to universities in the next Comprehensive Spending Review is reduced by 28%. Is that because you feel that the work has been done in our universities?

  Ian Pearson: We discuss this regularly with universities and you are right to say that there is a change. We have seen massive capital investment over the last ten years, and you will never say that the job is done, but a large proportion of the job has been done, and that is why in discussion with the universities we have talked about having a transition to a new form of funding, and that is what we have proposed as part of this CSR settlement, and it is why you will see the university capital figure actually declining over the period. At the same time if you look at capital overall and you look at the Large Facilities Capital Fund you will see that that is a huge increase over the CSR period, so there is additional capital there that is flexible and can respond to circumstances should it be required.

  Q21  Dr Spink: I will start on a very positive note: I am delighted that you enjoyed your trip to Manchester, one of the most excellent science universities in the country. I would like to come to the Sainsbury Review which went under the rather grandiose title of The Race to the Top and the terms of reference of that review talk about "harnessing the challenges and opportunities of globalisation". Were you disappointed, Minister, that the key recommendations were rather pragmatic and pedestrian as opposed to being visionary and exciting?

  Ian Pearson: I do not agree with you. Where I do agree with you is about the excellence of Manchester as a university and the fantastic science that they do there. I was delighted to be able to go and open the University of Manchester Aeronautical Research Institute, which is really embedded in the regional economy, it is doing world-class research and it is going to underpin the 124,000 jobs that we have in the aerospace sector. I think Sainsbury is very helpful in taking the whole debate forward on science and innovation. It is an evolutionary report because we have a Science and Innovation Framework for 10 years and we are only in year three, so it is not surprising that some of its recommendations are about how we build on the existing framework, but what we have in the 10-year framework is something that I think is widely admired by other countries. We have seen other countries wanting to do some of the things that we have been doing for a number of years in the United Kingdom and some of the recommendations in the Sainsbury Review, for instance doubling the budget for knowledge transfer partnerships, is exactly the right sort of thing that we should be doing.

  Q22  Dr Spink: Let us look at those recommendations then. The key recommendations include a new funding formula for the Higher Education Innovation Fund; incentives to get more STEM teachers (that is not exactly new; we have been there many times); a National Science Competition for youngsters; the Technology Strategy Board taking a lead in co-ordinating; and reform of the Small Business Research Initiative. Do these really set the Thames alight? Was this the vision that you were expecting?

  Ian Pearson: I think we already have the vision in the 10-year Science and Innovation Framework and as a Government we will want to respond to Sainsbury and we will want to refresh and produce a strategy document, and I anticipate that we will do that in the spring of next year.

  Q23  Dr Spink: Which of the recommendations do you think are the key priorities that you must push for?

  Ian Pearson: I think the key thing about Sainsbury—and there are ten and half pages of recommendations—is that it is fine-tuning a system that is already working well for the United Kingdom. When you look at what is being proposed on the Higher Education Innovation Fund, for instance, which you mentioned, moving to a formula funding so that you do not have a bidding competition again is the right thing to do, and it has been welcomed by the academic community. There are people who have concerns about whether they will do well under the formula or not, which is not unusual, but the principle of doing it has been widely accepted. When you look at the recommendations with regard to the Technology Strategy Board and the role that it is playing, again I think it is going to help to make a major difference. The Technology Strategy Board will be co-ordinating funding of £1 billion over the next three years, £700 million roughly of its own funds and £180 million from the RDAs and £120 million from the research councils. Again, one of the key recommendations from the Sainsbury Review was about ensuring that we have that co-ordination between the RDAs, the TSB and the research councils. I think that is an important way in which we can maximise the performance of the UK innovation eco-system.

  Q24  Dr Spink: Was this new money?

  Ian Pearson: The budget is going up from currently just under £200 million a year for the Technology Strategy to over £300 million a year by 2010-11, so there is new money for applied research just as there is new money as well for basic research through the work that is being done by the research councils.

  Q25  Dr Spink: What progress have you made as yet on implementing the recommendations?

  Ian Pearson: The Sainsbury Review only reported in September. We are in the process at the moment for internal management purposes of producing the implementation planning work that is required. In some cases some of the recommendations are quicker and easier to implement than others, but what we will do is provide a response in spring next year. I want us to crack on and do this and get on with practically implementing the recommendations. Those are my marching orders for officials at the moment: let us get on with implementing the Sainsbury Review.

  Q26  Dr Spink: And your response in spring, the implementation plan is specifically timetabled?

  Ian Pearson: I do not believe in managing a process where you do not set clear responsibilities and clear timescales for actually achieving these things, and I would like to be able to report on significant progress by the spring of next year in terms of having just got on and done this.

  Q27  Dr Spink: Will you be using Lord Sainsbury to overview the implementation process or will you be doing that in some other way?

  Ian Pearson: When we launched the Sainsbury Review, the launch event was held at Number 10 Downing Street with the Prime Minister present, and the Prime Minister said he thought it would be a good idea to get together with the interested parties around the table in three, four or five months' time, so I think there will be an opportunity for David and for the others that were there at the meeting to be able to oversee the work that I have been doing, and I am very happy for that to be the case.

  Q28  Dr Spink: Could I ask you finally to ask your officials when you make your response in the spring to indicate how you will overview the whole process of implementation and the part that Lord Sainsbury will play in that?

  Ian Pearson: I can certainly take that away, but we do have at the moment an Annual Report on the Science and Innovation Investment Framework. As a result of this Sainsbury Review as well, we are going to have an Annual Innovation Report across government, so we are not going to be short of opportunities for people to actually assess how we are implementing the Sainsbury recommendations and how well we are doing on science and innovation across government.

  Q29  Chairman: Minister, can I encourage you to look at one glaring omission in the Sainsbury Report. The section which he makes great play about, which is about developing a scientific and technologically equipped workforce, is absolutely right and, as you know, and I think I say it on behalf of the Committee, we are very supportive of the Sainsbury Report, we think it is a very, very good piece of work, but what is missing in that is there is no mention of the role of women in science, and yet in terms of part of the workforce they are going to be one of the most significant groups to actually get into this area of science and technology over the period of the Sainsbury Review. I just wonder why you think that was omitted and what in fact you as Minister can do. I will tell you why I am asking this; because tomorrow I am speaking to the Women in Science conference and I would like to take a message from you, Minister, directly to that conference.

  Ian Pearson: There certainly is work to encourage women in science that is going on at the moment that has been supported under the whole STEM programme. There is work to encourage people from black and minority ethnic communities as well and people from disadvantaged backgrounds. It is all being funded as part of the STEM programme. I think David in his report was trying to focus on the general issue of workforce skills rather than to drill down into some of the detail, but I would not want the Committee to think that we are not actively engaging in this agenda because we do want to see more women taking science subjects, we do want to see more young girls making decisions at the age of 14 that they want to do science subjects at GCSE level, and we want to see that pull through to A level and to under-graduate level as well.

  Q30  Dr Harris: Perhaps you would welcome on inquiry into women in science to evaluate the work that the York Centre is doing?

  Ian Pearson: I always welcome work in the field of science because I think the more that we actually are engaged in this as parliamentarians the more—the point I was making right at the outset—the central importance of science to our economic and social well-being can be stressed.

  Q31  Dr Harris: I make this point when there are two male witnesses and six male MPs on this Committee, which I think points up the Chairman's question. The average annual increase in spending on the science base is going to rise at an annual rate of 2.4% on average in real terms; is that right?

  Professor Sir Keith O'Nions: I think it is 2.7. It is about 5.5% cash.

  Q32  Dr Harris: I have seen figures of 2.5%. Total spending on the public science base will rise at an annual rate of 2.5% in real terms, from £5.4 billion in 2007-08 to £6.3 billion in 2010-11. That is from page 12.

  Ian Pearson: That is right across government, if you talk about the ring-fenced science budget it is 2.7, but if you talk overall it is 2.5.

  Q33  Dr Harris: My understanding is the estimated average real terms growth in the economy is going to be more than 2.5% because it is 2.5 to 3.0% in two of the years and 2.0 to 2.5 in one of the years. Would you accept that it is going to be slightly more than the growth in science spending?

  Ian Pearson: I would certainly like to think that the economy is going to grow at 2.5% a year for the next three years. That would be very healthy growth.

  Q34  Dr Harris: I am not asking about the economics; I am pointing up that the Government figures, which I hope we can agree, show an average increase in the growth of the economy of more than 2.5% (and we all have our fingers crossed) but an average increase in science spending annually of marginally less than that, but nevertheless less than that, and as the Chairman said, would it not be better, since one imagines that the policy of the Government is to stimulate growth with spending on the science base, to ensure that it is not a net loser essentially or at a stand-still but is one of the beneficiaries of getting funding above growth, since we know there are departments getting below growth increases?

  Ian Pearson: You have to look at where we have got to in the science budget with the sustained investment in science over a 10-year period, where it has clearly outpaced growth in GDP, to a stage now where we have had a fairly tough Comprehensive Spending Review round, but the science budget overall has done extremely well out of it.

  Q35  Dr Harris: I understand that but this is why I was interested because clearly if you have got that growth of 2.5% or more, nearly 3%, then winners under that will get more than 3% and losers will get less than 3%, or 2.5 to 3%. You describe science as doing very well. In fact, it has done averagely, has it not, because it is getting an increase in its spending rate at growth rate forecast, not more than that?

  Ian Pearson: If you look at the CSR overall it is difficult to conclude that science has not done well. Science and medical science in particular have done very well overall.

  Q36  Dr Harris: Medical science has more, therefore other science has less because it is an average, is it not?

  Ian Pearson: What the Chancellor has to do when he is making decisions on the Comprehensive Spending Review is to make decisions taking into account a number of factors, and the simple fact is that science has done pretty well. When you look at the budgets for health, education, defence, and a range of other things that Chancellors have to take into account when they are coming to the CSR, the sort of judgments that they make have to reflect the Government's overall priorities.

  Q37  Dr Harris: I agree with you but I am just saying that science has done better than the ones that have done worse and science has done worse than the ones that have done better, it is an average, and that is why the investment in science, as I understand it, is going to rise from .38 to .39% of GDP by 2010-11 on the basis of what you are saying, which suggests to me a 0.01% increase in GDP. If that is good then I do not know what average is and I do not know what bad is, Minister.

  Ian Pearson: Sorry?

  Q38  Dr Harris: I am just making the point that if you are saying science has done well to go from .38 to .39 of GDP, which is a 0.01% increase over the three years, if that is good as opposed to decent or okay, then what would bad be?

  Ian Pearson: We can all play with statistics. The simple fact is that the budget is going up from £3.4 billion to £4 billion when it comes to the ring-fenced science budget. It is going up to £6.3 billion in total when you look at science across government. I suspect if you ask the average person in the street how much should the Government spend on research a year, they might be a bit surprised if you say that we are actually going to be spending £4 billion a year on research, which is what we will be doing in 2010-11 when it comes to the science budget allocations, or £6.3 billion across government; those are big sums.

  Q39  Dr Harris: I am giving you percentages of our GDP, because that is the only comparator we can sensibly use with other European countries, and you are giving me round sums, so we are not going to get much further there. I would like to ask about the target of 2.5% GDP for combined public and private investment in R&D by 2014. Are you (a) sticking with that and (b) do you think that target is realistic?

  Ian Pearson: We are sticking with the 2.5% target by 2014. However, I think we have to be aware that this is really a crude input measurement.