Speech by: Lord Drayson
Venue: Nairne annual lecture – St Catherine’s College, Oxford
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Let me first thank St Catherine’s for inviting me to give this lecture. I’m honoured to do so, and – as ever – it’s great to be back in Oxford. Many of the best things in my life have their origins here.
It was here that I met my wife, Elspeth, and four of our five children were born in Oxford, in the John Radcliffe.
It was here that I helped to build the university spinout PowderJect and made my fortune.
And it was here that I first encountered Professor Brian Bellhouse – Magdalen Don, medical engineer and serial entrepreneur. Brian is the scientist whose research lies behind PowderJect. He’s also my father-in-law.
And it’s through Brian – and I hope this isn’t too complicated – that I know St Catherine’s own Roger Ainsworth. It was Roger’s work on Doppler Global Velocimetry that helped Brian and his team to characterise the supersonic helium flows in the PowderJect device.
Some beautiful images of those gas flows that Roger produced actually featured on the cover of the PowderJect prospectus when we went public in 1997.
As some of you know will know, the PowderJect device led to the development of a whole new area of genetic vaccines and grew to be the world’s sixth largest vaccine company, employing over 1,000 people and valued at £550 million at the time of its sale in 2003.
What you may not know is that it delivered a 40-fold return to its original venture capital investors and £21 million to the University of Oxford – helping to fund the new engineering buildings on South Parks Road.
Now, I haven’t offered this potted history for vanity’s sake – though I’m proud of what the PowderJect team achieved and I’m proud of my place in this Oxford genealogy.
I’ve done so in service of a broader argument I want to make about the strengths and weaknesses of UK science.
This evening, I intend to be more emphatic than I have been previously about the path this country must pursue on science. And I’ll insist – not for the first time – that certain questions which continue to preoccupy some UK scientists are a distraction from what ultimately matters to all of us.
But back to the story for a moment. All of the commercial value I just mentioned can be traced back to a meeting I had with Brian and Elspeth in 1993.
Yet, Brian’s own achievements rely on previous generations of Oxford scientists, who worked for several decades on supersonic gas dynamics and on fluid flow.
An early group, for example, worked alongside Rolls Royce during the Second World War to urgently address a cause of Spitfire crashes – during high-speed dives, where the aerodynamic flow over the plane’s control surfaces was disrupted as they approached the so-called sound barrier.
That line of enquiry was later taken on by Douglas Holder and Donald Schultz here at Oxford – key figures in breaking the sound barrier.
Donald’s entrepreneurial instincts – unusual in Sixties academia – certainly influenced his research student, a young Brian Bellhouse, who borrowed insights from aeronautics when he investigated the mechanics of blood flow. Breakthroughs in renal dialysis, artificial heart valves and a host of other medical devices all followed.
To me, this is a perfect illustration of scientific serendipity and of the way in which research proceeds: questions about why planes go into fatal tailspins increased understanding of basic physics, led to major advances in aeronautics and eventually spawned medical applications that were entirely unanticipated by the original research teams.
More to the point, there’s a golden thread running through the story – whereby, over time, science creates wealth and jobs and capital for reinvestment in research.
But, in truth, we’re still weaving science narratives in this country without that thread.
The UK’s achievements in pure science are legion – in chemistry, in medicine, in astronomy, to just name three.
We’ve always had the brainpower and attracted the best overseas talent, even when these scientists didn’t have the investment to match.
Since 1997, however, Government funding for research has doubled. Total funding for universities in England has risen by 25 per cent in real terms.
And universities themselves are now much better at generating their own income. Total UK university income in 2007-2008 was around £23 billion.
This spending has brought about a genuine transformation in the research base.
In the 1980s, when I was doing my PhD, I was frankly embarrassed to show visitors around some of the labs where I was working.
Today, it’s very different. Our research infrastructure is excellent. We lead the G8 on scientific productivity. Only the US outstrips us on citations.
This performance owes a good deal to my ministerial predecessor, David Sainsbury, and to the new breed of university vice-chancellors.
But where we are now is not where we have to be in order to meet the challenges of the future.
I say to you tonight that UK science doesn’t need fixing. It needs continued investment and a stable framework so that scientists are able to get on with what they do best: excellent research.
The problem remains that our capacity to create wealth from science needs to improve – to deliver the strong economic growth and jobs.
I recognise that commercialisation of university research is responsible for a significant part of the increase in income across the HE sector. I know from my time on Oxford’s tech transfer and VC fund boards – and from my involvement in setting up the
UK Innovation Investment Fund to support promising UK tech companies – that the quality and number of university spinouts is much improved.
Never better, in fact. In 2007-08 university spinouts employed at least 14,000 people and had a combined turnover of more than £1.1 billion.
The Technology Strategy Board, meanwhile, has grown membership in its 15 Knowledge Transfer Networks to over 43,000 business members and 14,000 non-business members.
But wealth creation from UK science needs to improve further still.
We have to spin much more golden thread because the key question this country faces right now is how we rebalance and grow our economy. This is our top priority.
My single-word answer to growth is “science”. We are number one or two globally in more disciplines than I have time to list. This is our ready resource.
I’ve been arguing this for as long as I’ve been science minister, but – truth be told – I still need to make the case, and particularly to the science community.
When I started talking about “impact” last year – about the UK figuring out where our competitive advantage lies and where we can achieve the most growth – perhaps I failed to be sufficiently explicit about my rationale.
Now, things are clearly looking up. We’re coming out of recession. We’ve taken important steps to make key sectors – like healthcare and automotive – more attractive to investors and to make them work more effectively with the science base to achieve growth. The UKIIF is already the largest equity finance fund in Europe.
But the Government has readily acknowledged that the recovery remains fragile. We have to take the right steps now to achieve robust and sustainable growth.
So, as a nation – and in terms of how we use UK science – we are at a crossroads.
This is a critical point in the economic cycle. It is also a general election year.
Science isn’t peripheral to the decision facing the country. It is central: to growth, to prosperity and well-being.
In this context, we can’t – and I refuse to – back away from impact, from translation, from driving home the necessity of UK science delivering profits to the UK.
High-tech, high-growth companies represent a small minority of businesses, but their economic impact is entirely disproportionate to their number. Research from 2009 by the National Endowment for Science, Technology and the Arts – and covering a three-year period – found that six per cent of companies were responsible for around half of all net employment growth in the private sector.
Sometimes I sense a squeamishness about making money from science, and it mystifies me – not least because I don’t sense the same misgivings about bidding for and spending taxpayers’ money on research.
Science that is profitable also delivers clear benefits to mankind – treating disease, boosting food yields, making water safe to drink, improving communications, inventing new forms of entertainment.
So, let’s concentrate on science-based business.
Let science-based companies deliver tangible products and services in low-carbon, in advanced manufacturing, in digital, in bio-engineering.
Now perhaps my own experience has somehow given me a certain perspective on all of this. But science has been the source of my own social mobility.
My parents are passionate believers in education, and I was lucky to get a good one – especially in science. It was the making of me, and – through helping to break new ground in the fields of robotics, immunology and drug delivery as a science entrepreneur over 20 years – I did make a lot of money.
I want other families to benefit from the same mobility as mine – and my priority is to see that occur through science.
So what needs to happen? First, we need to get away from some of the old clichés.
I mentioned distractions in my opening remarks. Let me address those now.
We have to rise above the simplistic notion – repeatedly advanced by a small but vocal minority – that pure and applied science are in conflict; the notion that they come from the same pot of money, so that any increase in applied research requires a cut to pure.
This simply isn’t the case – and yet I constantly receive messages to the contrary.
Take this tweet that came yesterday: “Gov investment in science commendable, prioritising economic impact over blue-skies research disastrous.”
For the umpteenth time, let me say again: this is not what we’re trying to do.
We need to stop portraying pure and applied as mutually exclusive or different in moral terms – where pure science is somehow a more noble or disinterested pursuit than applied.
And we must urgently focus attention on building our capacity to translate science into wealth and jobs – while maintaining our investment in science. Both pure and applied.
We need to drop another old cliché too.
I remind you that it was UK scientists who invented ultrasound. It was UK scientists who sequenced DNA. It was UK scientists who made the breakthrough on plastic electronics. It was UK scientists who got there first on monoclonal antibodies. In each case, commercialisation happened elsewhere.
So I rejoice every time the UK produces another Nobel laureate in the sciences. We do it time and again, despite our size as a country. We are number two in the world for Nobel Prize winners.
Last month, I met Venki Ramakrishnan, one of our latest winners, whose work on ribosomes has laid the foundations for synthetic biology and for treating infectious diseases currently resistant to antibiotics.
Venki’s company, though, is in California.
I know we can win as a focused knowledge economy. But we have to be more determined – more self-interested.
We have to project a positive vision: a country built on science with the talent, the drive and the focus to fulfil its potential.
So much for the message we put out about UK science. What must we do for reality to match my ambition?
Let me explore this first by way of analogy.
A few years ago, in my first spell as a defence minister, I had the privilege to fly in the back of a Typhoon: the RAF’s latest fast-combat jet, built in Lancashire, and powered by Rolls Royce engines, built in Bristol.
We were on a training mission doing fast interception over the North Sea. At the time, I had only about 14 hours’ worth of flying under my belt – but, at 40,000 feet, the pilot offered to give me full control of the plane at the end of the training mission: to, in his words, “See what she can do.”
So, of course – and as invited – I gave it full throttle – full reheat – and pulled back hard on the stick.
The punch in my back was not only the most incredible sensation physically, but the most visceral encounter I could ever have with the science of supersonic flow that preoccupied me here in Oxford.
I won’t pretend I had time to think of Holder and Schultz at supersonic speed, but they were behind it all.
Well, in 2010, we’ve got UK science to full throttle. It’s taken more than a decade. And in that same time period, we’ve made it so much easier to get an innovative business up and running.
The question is how to light the after-burners.
I offer you five principles.
First – and I continue to insist on this – we have to be ruthless about establishing where we have competitive advantage and what are the sectors with the clear growth opportunities. This is where we have to invest: in space, digital, life sciences.
Second, we must accept that there are some sectors where we’re first-class scientifically and we can identify strong growth prospects – but we have no industry. Fuel cells is an example.
Where the task involves building an industry from scratch, I think we need to look to overseas models – in particular Germany’s Fraunhofer Society. The Fraunhofer institutes include small businesses which lack the critical mass to carry out their own R&D. There is a clear role for universities like Oxford to gestate businesses for longer – even without an industry partner.
The Government has invited the entrepreneur Hermann Hauser to review UK technology centres and recommend how they should be developed in future. We have some institutions already which do this incredibly well – like the Laboratory of Molecular Biology – but we need to build a broader capability.
Third, we require a fiscal regime that does a couple of things. One is to incentivise long-term investment in areas where technological development involves great technology risk but also offers the potential for high returns – areas such as carbon capture and storage. The patent box, announced in the pre-budget report, is a step in the right direction here. From 2013, it will provide a reduced corporation tax rate on income from patents, encouraging dynamic companies to locate IP and to manufacture in this country.
The other is to encourage serial entrepreneurs to remain in the UK, reinvest their profits and spin more thread. A third of high-growth firms in this country were founded by serial entrepreneurs. In the US, it’s almost one half.
Fourth, we’ve got to fix the equity gap once and for all, which – despite the boost provided by the UKIIF – is preventing really promising businesses from fulfilling their potential. There has to be greater investment and longer-term investment.
Fifth and finally, we’ve got more work to do on the STEM pipeline. More graduates are now coming through in maths, engineering and the hard sciences. We’ve got to keep them from wandering off into other areas. And we need even more of them.
Yesterday, I was highlighting the potential of our space industry. Growing already at 5 per cent a year, it has the potential to create 100,000 new, highly-paid jobs in 20 years if the UK raises its global market share in space to 10 per cent.
But I want to bring all this back to Oxford to give a sense of what this means in practice.
It allows me to draw on another story that’s personal – one that’s fundamentally about science and impact, talent and wealth creation, about playing to our strengths.
My proudest achievement concerns the role I played in Oxford getting a dedicated children’s hospital.
I led the five-year fundraising campaign for a new building at the Radcliffe, but it took huge effort – locally, centrally – to make it happen.
Anyone who has visited knows what a fantastic place it is – and that the children who go there are getting treatment as good as anywhere in the world.
But here’s the crux. It’s no longer enough for the John Radcliffe Children’s Hospital to offer outstanding treatment and make kids better. Like the rest of the NHS, It has to be an engine for economic growth – through its relationships with Oxford University researchers and others, with this city’s biotech cluster and counterparts elsewhere.
The new treatments which will save lives on John Radcliffe’s wards have to make money for this country.
The researchers and the entrepreneurs who bring innovative drugs and medical devices to market need to be fully plugged in to the NHS: an NHS which will improve on patient care and on cost if it adopts technologies that diagnose faster and treat more effectively.
For me, this is what it’s all about. I’m optimistic and I’m energised by the opportunities for business, for job creation, for strengthening our universities, for science, for making people’s lives healthier and more fulfilling.
Everyone accepts that belt-tightening is unavoidable. It’s the price of our taking decisive action to save the banks and support the UK through the recession.
Nevertheless, the ring-fenced budget for science and research will continue to rise next year.
We recognise that the best antidote to debt is growth. Everything I’ve said this evening has been about making the case for science as the engine for jobs, for sustainable economic recovery.
And that brings me back to PowderJect, whose alumni have gone on to found more than 20 other technology businesses.
Circassia is developing a new class of T-cell vaccines designed to treat allergies and combat organ transplant rejection.
Zeneus Pharma specialises in oncology and critical care.
PowderMed and Glide Pharma are pursuing further applications for needle-free drug delivery.
Together, these firms have so far been responsible for many new, high-quality jobs, and today have a combined market capitalisation of over £800 million.
So – to my great delight – Oxford’s golden thread continues to unspool. It connects Brian Bellhouse and his predecessors to the people based in the spinouts born of PowderJect.
May they now go forth and multiply – and on a biblical scale!
Thanks for listening. I now welcome your questions and comments.