"We will best prepare our economy for the future by making the right investments in science and technology"
Royal Academy of Engineering, London
19 February 2009
Good morning. I’m grateful to you all for taking time out your busy schedules to attend.
Two weeks ago my colleague Lord Drayson started a debate about our investment in science and engineering research – many of you with be familiar with that debate.
Paul asked whether the UK science base was properly organised to enable this country to meet the global economic challenges we will face after the downturn.
He argued that the science and engineering community, business and government must agree on how we move forwards, so that the UK can focus on those areas where there are significant growth opportunities over the next 20 years; where the UK has a realistic prospect of being a world-leader; and where we have clear competitive advantage.
Today, I want to develop Paul’s theme. I want to draw out more of the implications of his argument. My starting point is the same as Paul's, it’s one that we both share with the Prime Minister: we will best prepare our economy for the future "by making the right investments in science and technology".
This is a debate which would have been much harder to have had 10 years ago. British science was good then – but there was much less of it.
The massive investment of the past decade has made our research base outstanding, and a huge national asset.
The most productive in the G8, it remains second only to the US in the global rankings, despite the efforts of other countries to overtake us. The first draft of the complete human genome sequence was published at the Cambridge Sanger Centre. The Large Hadron Collider was built, in part, to test the theories of Edinburgh physicist Peter Higgs.
Of course, we can’t rest on our laurels, and this is not a position we can take for granted. It's not only the US with the resolve – under a new administration – to spend heavily on research. Increases in China are proportionately greater than the US. And it's a similar story in India.
We should compare our budgets with others. But not just budgets. Because all countries, even those with a growing commitment to research, have finite budgets. Choices have to be made.
Paul Drayson raised the question of what choices we need to make in the interests of science and of the nation. We also need to ask how we should make those choices.
Now I’m well aware how hard it is to get people to engage in real debate here - sometimes. There’s sometimes a feeling that this is an old debate, in which everyone knows everyone else’s position and no one needs to listen. I don’t think any recent secretary of state has made more speeches in defence of fundamental science than I. Yet I still go on research visits where vice-chancellors greet me with the words, "I know what you are really interested in is immediate economic relevance."
But, of course, any research base which does not include a substantial element of fundamental, curiosity-driven research conducted by researchers who simply want to know, will not be relevant economically in anything but the shortest of terms.
Many defining moments in science are the fruits of research started and funded years ago – research which proceeded unevenly and serendipitously over time.
So stop such work and we kill the goose that lays the golden egg. (We would kill a lot of other geese who would not lay anything at all of course, but knowledge for knowledge’s sake is also well worth having). While the driver of fundamental research is curiosity, we shouldn’t, though, lose interest in its links with economic value. A recent MRC and Wellcome Trust report suggests that the average return on investment from the exploitation of fundamental research is 39p annually for every pound invested from the outset. But there can be long gaps between investment in research and new knowledge feeding into the economy and public services. Other reports, for example from Science Policy Research Unit, have found high rates of returns in other research disciplines.
So those who are concerned about relevance must recognise the case for fundamental research. So should researchers recognise the importance of explaining the relevance of what they do – not only in terms of today's problems but in terms of the long-term challenges facing people in this country and elsewhere.
It has been suggested recently that researchers should refuse in principle to name any short-, medium- or long-term relevance to their research even if it can be identified. But it can’t be right or reasonable to expect billions of pounds of public funding and then systematically deny the taxpayer any insight into its potential applications to the economy, public policy or popular understanding. It is the duty of scientists and engineers in receipt of this public support to ensure that the taxpayer is aware how this investment may benefit him or her.
I think it is worth defining once again, very clearly, what is being asked. If there is no clear relevance, then it is perfectly acceptable to say so. But there must still be the commitment to harvest any benefits which subsequently – perhaps serendipitously – appear during or after that research project. Where there is a potential at the outset for some impact on the economy, then it is only right that it should be identified.
As a country we face huge challenges. As if the global challenges of environmental sustainability, climate change, food security, disease and poverty were not enough, we have to re-shape our society – with a more diverse and more equitable economy, with greater resilience in terms of our energy and food supplies – all within an increasingly competitive world.
Our ability to respond to those global challenges will be inextricably tied up with the way in which we re-shape our economy. Global cooperation and real partnerships in scientific collaboration – alongside multilateral funding – will be essential to address these challenges. But we are not alone in wanting to ensure that we benefit nationally from our success in doing so.
And this simply cannot be done without the full and appropriate engagement of the research base.
In part it means undertaking the fundamental research which will inform our responses. In part, it means undertaking the applied research and the translational research which enable the solutions to be developed for direct public and economic benefit.. But it’s more than that.
The way we organise our research base will determine whether globally mobile companies will want to locate here, or – equally likely in today’s world – outsource their research here. And whether they will want to invest in both research and development.
The way we organise our research will determine whether home-grown companies can get started, grow and sustain themselves as global leaders. And, in turn, generate the tax returns from which future research can be funded.
And the way we organise our research will determine whether we make the best use of the considerable pool of scientific and engineering researchers we now have in this country.
And last, though by no means least, the way we organise our research will determine whether we can attract additional funding, establishing the virtuous circle of high-quality research that attracts the best researchers that draws in new public and private money, and expands the research base on both the fundamental and applied sides.
Those are the challenges; I think those are the opportunities. What should we do to make them a reality? Let me suggest a few basic propositions.
As a society, we need to spend more on research. At the moment, the UK spends 1.8 per cent of GDP on R&D – less than Germany (2.5 per cent), the US (2.7 per cent), and Japan (3.4 per cent). Looking solely at government-financed R&D, we are behind the likes of France and Finland.
We cannot look only for public research funding. We can all make a case for more public funding. And other countries are increasing their public research investment significantly. But we have to increase investment from private sources too. As we know, the pattern of R&D investments reflects the sectoral mix of our economy. In high R&D sectors like pharma and aerospace, the level of private spending matches that elsewhere in the world. But if we want to grow and rebalance the economy in the future, with more R&D-intensive activity, then we will need to attract more private investment and in other fields.
As in the past, Companies such as Sharp, Hewlett Packard, Hitachi, Schlumberger and Boeing have all come to the UK because of the strength of the UK research base. And the Research Councils have developed strategic partnerships with global companies such as Microsoft Research and Proctor & Gamble because of their need for continued access to underpinning knowledge and the best scientific skills.
I don’t believe myself that the key to attracting more private investment is a shift away from fundamental research. It’s surely no coincidence that universities which receive the most private research funding also gain the highest place in the international research league tables.
But do our systems of funding encourage the longer term collaborative relationships which industry may be seeking? We have gained great benefit from our disaggregated organisation of research. The constant round of competition for research funding sharpens proposals and guards against complacent reliance on reputation. But it can be argued that it makes life unnecessarily difficult for the research-orientated company wanting to develop strategic research relationships.
The shape of our research base reflects, quite rationally, the current incentives which flow from the Research Councils and HE Funding Councils across the UK. As we move towards the next Comprehensive Spending Review and the REF, it’s a good time to ask whether a change to these incentives could produce more effective collaboration with industry, perhaps through teams which cut across institutional boundaries. This would need flexible responses from Higher Education Institutions.
Secondly, we should become more clearly and explicitly concerned with the people who do research, and the people who are trained in the skills of research.
High-technology companies, especially in the engineering sector, can only thrive in an environment of a highly trained and competent workforce. Our universities are the bedrock of the UK’s ability to deliver this essential resource
We can’t afford to waste valuable and expensively developed skills. The drive to encourage academics to be research-active has increased the number of researchers, thereby reducing the success rate in response mode funding. At the same time, major research-orientated companies, particularly in pharmaceuticals, are shedding staff. We need to find ways of re-engaging them in active research. And at least some of the STEM graduates leaving the City could be won back to research. This creates tensions and opportunities.
And these opportunities will be enhanced if the research base was even more successful in growing strategic private investment.
Many globally mobile science and engineering companies want to recruit from a pool of people trained in the very best research groups. These companies may not conduct fundamental research, but they need people steeped in those skills and disciplines. By investing in fundamental research themselves in certain fields we can attract major companies, attract additional research funding and strengthen our competitiveness in those fields.
Fifty per cent of EPSRC postgraduate students move to employment in the public and private sectors immediately after completing their PhDs. In doing so they help strengthen our economy and contribute to our economic development It is vital that we continue to encourage this.
So using our research base – together with the Technology Strategy Board – to strengthen our key areas of national competitiveness is much more complex than simply funding applied research in those fields. In many cases it is the decisions we take to invest in fundamental research that will determine our national capacity in developing the people with the requisite strategic skills.
We need, surely, to be more conscious and deliberative about these links. We need to understand how the decisions taken by, for example, Research Councils or by universities will influence the rest of the economy.
Thirdly, we need to look at whether universities could be better organised to realise the full benefits of research.
Now, I don’t need to repeat the significant changes at great length which have taken place in recent years. Universities have expanded business cooperation, become more adept at exploiting intellectual property and are better able to support spin out companies. And these trends need to continue. The quality of tech transfer support needs to improve further. We need to ensure that there is sufficient critical mass in these activities, and that there are the right incentives in place for researchers to develop this aspect of their work.
We could perhaps go further to break down barriers to new ways of working. We should not allow any obstacles to stand in the way of researchers who wish to combine blue-skies and translational activities, or who wish to cut through traditional disciplinary boundaries. The most successful universities already think along these lines – as I have seen for myself on many recent visits.
The international competition, including Harvard, Stanford and MIT, win contracts with major businesses seeking large scale, complex and multi-disciplinary research facilities. The offer of engagement with multiple universities and research teams can be less attractive. So, are we sufficiently well-organised to compete?
Fourthly, we need of course to set this debate in the international context. There is competition from other nations who are taking a leaf from our book and increasing their science investment. But our strong science base also gives us advantages as global science expands. Our research universities need to continue to develop as genuinely global institutions, our best researchers collaborating with the best researchers around the world, attracting leading researchers here. Doing this makes this a more attractive country in which to develop science and technology-based business. It also makes us better equipped to tackle the big global challenges.
Fifth, government itself needs to become better at creating the environment in which the best use can be made of research.
Ministers have made it clear that the renewed interest in what some call "industrial policy" does not mean developing individual companies as national champions. But we do need to have a better collective idea of the areas of strength and potential in our economy, and to ensure that these are well nurtured.
Last year’s White Paper, "Innovation Nation", highlighted the importance of government policy in key areas of the economy. Investment in the supply side of research and development is important. But so is the government’s ability to create market certainty by setting clear policy on, say, nuclear power or renewable energy. Regulation, too, can create the market incentives to exploit research – for example, by setting standards for low-carbon buildings.
The establishment of OSCHR reflected awareness that the capacity of the NHS to pull through the translational aspects of scientific research into clinical practice was poorly developed. And more widely, Research Councils and government departments are continuing to work together to get the most they can out of research.
And it will usually be government which needs to take the initiative, as we did with the TSB and the ETI, to develop the intermediary institutions which can bring applied and translational research together with business.
Government is also likely to play an active role in the development of major research facilities like Diamond, which is now producing a string of breakthroughs in both fundamental and applied research.
So if I may, to summarise my argument to so far. We need to ensure that the research base is able to make its full contribution to this country's future prosperity and our ability to help resolve the big global challenges. In this work, fundamental research will be as important as applied or translational research. But we need to ensure that the research base is better organised to attract the best talent and inward research investment. We need to be more sensitive to the impact of research on the wider economy, including its contribution to our skills base. And government needs to be clear about our own responsibilities.
And we need to do all these things as our national policy increasingly identifies the areas of greatest economic potential and competitive advantage.
Many of the elements we need for this new approach are already in place.
The Research Councils have already begun to provide funding to universities according to their critical mass of academic excellence. The EPSRC has recently announced 44 Centres for Doctoral Training, with an investment of £250 million that will train over 2,000 young engineers and scientists. The ESRC has established research centres and groups, including the Centre for Economic Performance. NERC, ESRC and EPSRC are partners in funding the Tyndall Centre for Climate Change Research.
The MRC funds 22 long term partnerships with UK universities requiring dedicated commitment and investment from both partners. BBSRC, NERC and MRC also have their own research institutes and laboratories.
The Research Councils are well experienced in melding research programmes with the needs of industry, working with over 2,500 companies.
And, with government support, the Research Councils have developed strong mission programmes in Energy, Living with Environmental Change, Security, Ageing and the Digital Economy. These programmes stimulate new basic research in areas of global importance. The active encouragement of multidisciplinary work enables academics to identify new challenges as well as solve known problems. And longer-term and large grants aim to encourage ambitious, transformative research – giving researchers the stability and flexibility of long term funding to sustain large multidisciplinary teams.
Our own guidance to the Funding Council (HEFCE) recently stressed the importance of STEM research and of research concentration. The Higher Education review is looking at research careers, the development of a postgraduate research policy and the better exploitation of IT. The TSB and ETI are developing well and have the capacity to undertake more activity. Our understanding of the strategic skills needs of the country increasingly include higher level skills as well as the important but lower level vocational skills, and we are encouraging employers in general, and the Sector Skills Councils in particular, to pay more attention to these needs with higher education Institutions.
Throughout all of this work we have and will maintain the science ring fence. We have and will sustain the dual funding system. And we have respected, as I promised here nearly a year ago, the Haldane principle – that decisions to fund individual research projects must be decided, through the Research Councils, by scientists themselves.
Going forward I want to make a number of suggestions:
Firstly, Research Councils must inform the debate about our national strengths and potential. Obviously, theirs will not be the only voices, but we need to hear views from the cutting edge of research. As priorities emerge we will need to ask the Research Councils and research teams to engage with industry in the appropriate areas.
Secondly, we will expect the Research Councils to lead the research base in its response to these priorities. And in doing so, they will need to engage in a proper dialogue with the TSB, other Government departments and agencies, business and with the research base itself.
Thirdly, it’s one thing to have this aspiration, but another to make it successful. We will also have to draw on the research base to understand how to implement policies successfully. I think the next steps would be for Ministers and officials to engage with the Research Councils to discuss in more detail how this approach will work.
And having done that, we must make sure that we bring together the other necessary elements for success: the broader skills needs, government policy shaping demand, and the right framework for investment.
At this stage, I don’t think the question now can be whether we go in this direction. But of course there are a great many questions about how we do so most effectively.
Before ending, let me say that I’m pleased to be sharing the platform with John Armitt, Chair of EPSRC council and the Olympic Delivery Authority, and Ian Diamond, Chief Executive of ESRC and Chairman of RCUK. RCUK has played a very significant role in leading the developments of recent years, and I am sure it will do so in the future. Just as it has also shown the ability to respond swiftly in meeting the current challenges of the downturn.
Now I look forward to receiving their reflections and I welcome yours.
I now welcome your comments and ideas.
