Oral evidence: The science budget, HC 340Tuesday 8 September 2015

Oral evidence, 8 September 2015.

Witnesses

David Sweeney, Director (Research, Education and Knowledge Exchange), Higher Education Funding Council for England, Professor Rick Rylance, Executive Group Chair, Research Councils UK, and Professor Philip Nelson, Executive Group Chair-elect, Research Councils UK, gave evidence.

Chair

May I welcome the second panel to our science spending inquiry? Thank you very much for taking the time to come here today, and for your patience in sitting through the first panel’s evidence. I hope you found all of that interesting. As you heard, we are all trying to get our heads round the spending landscape, to get a sense of how Government could improve and simplify it, and how we can spend that money in a more efficient and effective way. I am haunted by this piece of paper. If I am haunted by it, imagine how businesses and researchers feel. It might be helpful if the research councils and then HEFCE could start by giving us a very brief sense of where you sit in that landscape.

Professor Rylance

I am Rick Rylance, the current chair of Research Councils UK’s executive group. I am also CEO of the Arts and Humanities Research Council. As you recall, there are seven different research councils. As to where we sit, we are one half of the dual support system, which means we fund largely on a project basis. People make applications to us; we make decisions about whether to fund them, and off they go with their project. The other part, for which David is responsible, is the quality of research—QR—component, which is an unhypothecated periodic allowance through universities. We are project based. The two parts match up quite well. You will be aware that the UK is an international research leader. I am not sure how many things we have in the UK to be really proud of, but research is one of them. We are contributing to that on the basis of maintaining core disciplines. We are funding projects of worth, distinction and achievement, and surveying the landscape to look for strategic investment as technology and research parameters change.

Chair

David Sweeney, Professor Rylance has slightly stolen your thunder with the block grant comment. Would you like to add anything?

David Sweeney

We fund universities, as Rick said. Universities are at the heart of the research effort in the country. Over 90% of our highly-cited, world-leading publications have university authorship, and we have universities in all parts of the country with diverse missions tackling global and local problems. We fund on a performance basis, as Rick said. The core funding for research is the base on which project and private funding is built. Universities tell us—Universities UK has put this in its response—that our funding is used to attract the best staff to work in our universities; to support interdisciplinary work; to fund partnerships with universities but also with business, very much supporting the work that Innovate UK does; to move into new areas of research before they are identified for grant funding; and to provide the infrastructure—the buildings and equipment—that run research. It is not just research that is one of our jewels in this country; our universities are. We are delighted to fund university institutions to unlock their work for the benefit of the nation and the world.

Chair

I am the Member of Parliament for Oxford; I have Oxford University and also Oxford Brookes University, so I echo your sentiments. Can I start with the basics and make the assumption that you are unanimously in favour of the continuation of the dual support system? Or not?

David Sweeney

We are a world leader in research. What is distinctive about UK research is that both the funding for universities as institutions and the project funding are performance driven. Although we always look to do better, the dual support system has over the last 20 years brought us to a place I think we should all be proud of.

Professor Rylance

Unequivocally.

Chair

Excellent. I would like to move on to the letter which the Secretary of State for BIS sent to HEFCE regarding an additional reduction of £150 million, and focus particularly on the request to prioritise STEM research, high-cost subjects and widening participation in small and specialist institutions. How are you going to achieve that?

David Sweeney

We have announced how we are going to achieve that. That £150 million is a 9% cut in our teaching funding. None of the ring-fenced research funding is affected by it; it is teaching funding, but, as you will see, we use teaching funding to support research, because research and teaching are integrally linked in our universities. The same people do both; you cannot separate them. The most immediate effect of this cut is that, where universities take more STEM students, we are unable to provide additional top-up funding to cover the extra cost in teaching STEM subjects. Universities will have to teach STEM subjects for less money in the immediate future, but everybody will have to bear the consequences of a 9% cut. Although we can attempt to protect things, we cannot make 9% go away. It is teaching funding, but in order to handle the transitional effects of changes in our research budget, following our performance exercise—the research excellence framework—we had allocated £52 million of transitional funding to cover research matters. Unfortunately, we had to withdraw that. We are unable to fund the extra money we put into PhD students, where there is the biggest gap in funding for universities, but we have been able to continue to fund the STEM protection because the Government have found additional capital money, which we can use to ameliorate the effects of the loss of transitional funding. There is a hit on the research budget because we fund research and teaching together.

Chair

Could you clarify that? There is a paragraph here which says, “In order to support this I will, on an exceptional basis, provide additional financial flexibility to ensure it can achieve this. Due to the one-off exceptional nature…my officials will work with you.” Is that for the £52 million?

David Sweeney

That is £28 million of the £52 million to be provided through exceptional one-off capital funding, which makes a tremendous difference. We realise that these are very difficult times, and the Government have been working with us to do what we can to mitigate the effects of the cuts.

Chair

We heard from the Science Minister in our first session. One of the comments he made in July was that the research councils’ horizon scanning and strategic thinking function “has been at times a bit deficient”. What do you think prompted him to say that? How do you interpret it? Do you think he is right?

Professor Rylance

Phil will kick off on that one.

Professor Nelson

I am Philip Nelson, chief executive of the Engineering and Physical Sciences Research Council. I think the answer to the question is that the research councils individually do a tremendous job in their own horizon scanning, within their remits. I know for sure that my own council takes that role very seriously and spends a lot of time and effort making sure that we are abreast of new developments. We have quite a sophisticated structure of strategic advisory teams from the academic base, the user base, industry and Government all contributing. I am sure the other research councils are the same in that regard. The Minister was perhaps referring to how we collectively look at cross-council activities. We are already working on that process so that we can refine it and make it better and address the point that the Minister made. While we are not complacent, it would be wrong to suggest that we are not good at that, because I think we are.

Chair

We also heard from Sir Paul Nurse who commented on the fact that the balance of research council funding had been largely constant for a significant number of years. He did not say that necessarily it should change but that perhaps there needed to be a bit more strategic thinking, and implied that that was perhaps behind the Nurse review. What do you think about that?

Professor Nelson

I think that is the source of the anxiety. To reiterate, we already do an awful lot of work across councils that is highly effective. For example, we have very strong cross-council funded programmes in energy, the digital economy and so on. These are very successful programmes. The perception has developed that perhaps we are not as strong at interdisciplinary research as we might be. That is sometimes misplaced, but we are working on better systems for ensuring that we can properly address and tackle effectively the work of the future, which will very often fall between disciplines, from what is already a very strong science base. While there is no complacency, I think these things can be overplayed.

Chair

What do you fear from the Nurse review?

Professor Nelson

I do not think we fear anything from the Nurse review. We welcomed the Nurse review. We have not heard from him yet. I think he has some recommendations about how we might work better together collectively. That would be an exciting prospect. I am taking over from Professor Rylance in October. I am very excited by that. It is a fantastic opportunity to build on the remarkable strength of the UK science base and take us forward over the next 10 years in a way that will be really exciting. I am not at all fearful of what Paul Nurse has to say. I have huge respect for Paul Nurse, and I am sure he will be making some very sensible suggestions to us about the way we might work better together.

Professor Rylance

Phil is absolutely right. When you look at a group of disciplines within a council they are extremely good at seeing the cutting edge and where the emerging things are, because this is what researchers are looking at day in, day out. Where I think there is a problem, and it goes back to your bowl of spaghetti-type diagram, is in how you make the links between the different agencies involved in funding. That will involve not just the research councils but other parts of it—charities, Innovate UK and also bits of Government—and how you see the emerging general issues. What I would hope for from Paul Nurse’s review is active deliberation about that issue—how we try to convene a national conversation about joining up these different things.

Daniel Zeichner

I would like to continue the discussion on funding. There are huge pressures on public spending. If you are asked what you need, almost everybody will say, “More.” We have had flat levels of funding for a few years, with costs rising, which means effectively cuts. The board of the Science and Technology Facilities Council has calculated that a 10% increase in funding over the next five years would be needed just to maintain current activity. I note that the written evidence from the Babraham research institute, which is close to my constituency in Cambridge, warns that if there is not an increase in funding and it continues flat-lining, it will not be possible to maintain existing levels of scientific enterprise, innovation and output, and it is likely that world-leading scientists will leave the UK. That is quite a strong point. What are your feelings about that?

Professor Rylance

I think there is truth in that. Over the past Administration, there have been five years of flat cash. Figures vary, but there has been a real-terms cut of something around 12%. The Campaign for Science and Engineering—CASE—reckons it is more than that, because the cost of running big facilities or paying high-salaried people is greater than normal inflation. You cannot absorb that for ever. It is a simple, straightforward truth. We are coping as well as we can and keeping things going as well as we can, and all the indicators are that we are achieving that in terms of international respect for the kind of work we produce, the inward investment and all of those measures, including the stimulus of wider economic growth. But there will come a tipping point where you cannot sustain it, where those deeply impressive citation measures internationally are living on the achievements and investments of the past and where the future is in jeopardy. I do not think the STFC is alone in this; it runs across all seven research councils, and indeed the university community as well. We recognise that we are in tight times, but there is a jeopardy here. It is not going to happen tomorrow and it probably is not going to happen next year, but it is not too far away.

David Sweeney

We are determined to make our money go as far as we can. I have mixed views about that diagram that so horrifies you, because some elements of it are additional sources of funding that were not previously available. It is a good thing, and we are determined to go after new sources of funding where that can be achieved, notably from Europe. We are also determined to use what we have to leverage greater private investment, because one of the problems in this country is private R and D investment. We can make progress there, but we are the lowest public spender on research in the G8; we are at the lowest point in our investment per GDP over the last 20 years. It is very difficult. We have to go with what the Government can afford, but we want to do the most we can to work with private and other public funders. The charities have also done a great job for this country.

Chair

Some very challenging questions were thrown back at us by Dr McKernan. How can Government funding be made to go further?

Professor Nelson

I absolutely concur with what my colleagues have said. During the last Parliament we were very grateful for the settlement we had, given the background. We know that times are still tight, but over that period an awful lot of work has been done to maximise the leverage we get from private funding. We do that remarkably successfully. My own research council brings in private investment of getting on for £300 million a year, which goes into our universities and is co-invested with our own inputs. We have done an awful lot in that regard. We look for co-funding with other charities and bodies as well. That works very well. We work with CRUK, the Wellcome Trust and so on. We are doing an awful lot to make the public spending go as far as it can. Let’s look at the positive side of this. There is a fantastic opportunity for this country in the next five years that we must not waste. I absolutely understand the fiscal background, but we need to get back on to a curve that is perhaps gently rising at some stage—I appreciate it will take time—to reap the benefits of the investments that we have had. The real warnings around the citation indices are absolutely right. We are looking at citation indices that are probably the result of funding decisions made 10 or 15 years ago. My nervousness is that problems could be being stored up at the moment that have not surfaced yet but, looking at the positive side, there is a great opportunity.

David Sweeney

Being very specific, we are second in the world for inward investment from companies. Multinational companies want to partner with our world-leading universities, and we want to do everything possible to create an environment where that can happen. We are supporting our university institutions to build those partnerships, and we are offering some matched public funding where private partners are willing to invest substantial amounts of money. We have some great stories in our universities of industrial partnerships. That is a very positive way forward, but it requires universities to have the headroom for that investment.

Professor Rylance

The indicator David did not mention is that in the UK we get back more for each pound spent than anywhere else in the world, so we are already extraordinarily efficient and productive. The data about the proportion of GDP which is spent, both private and public, are quite alarming.

Chair

We have had this in written evidence. The question is whether we are as efficient as we can be or whether there is more efficiency to be achieved and, if there is, where those innovations are to be found.

Professor Nelson

An awful lot has been done. Rick has made the point that if you look at output per pound we are undoubtedly the best in the world. In terms of how we convert public spending into scientific output, it is pretty irrefutable that we are immensely efficient already. I look at the opportunity and the number of people in the research excellence framework exercise that HEFCE runs. There were about 10,000 full-time equivalent engineers and scientists who would qualify as world class or internationally excellent, with three and four-star-standard outputs. We can fund only about half of them at any one time. We could get still more from that science base, and it has a proven economic impact. We have looked at the results of the research excellence framework. For example, over the period 1993 to 2013 the EPSRC—my own council—spent about £7.8 billion on publicly funded research. We can look at £80 billion of economic activity associated with that. It is about 10 to one. If we could get more input we could get more output to help propel this economy. We need a science-based economy, and it is absolutely critical that we get it right.

Graham Stringer

You do not agree with one of our most distinguished scientists, Lord Rutherford, who said that because he had very little money he had to think.

Professor Nelson

Of course, there is an element of truth in that. I have often heard it said that our scientists, given the facilities they have, compared with what is available in the United States, still do remarkably high quality work as a consequence. I go back to the point that we are fantastically efficient at converting taxpayers’ money into scientific output. There are limits to that argument, especially in the modern age. If you are to have a well-equipped science base, you need the facilities and equipment to be able to keep pace with international developments, as other countries invest significantly in strengthening their research base. You have already heard the numbers in terms of fractions of GDP and so forth; we are way behind other countries. I take the point, but in the modern era we need proper facilities that are well funded and for which the batteries are included, to use a somewhat hackneyed phrase, and all those put together sensibly. I understand what you say, but I do not buy the argument in its entirety.

Graham Stringer

Is the balance right between the funds flowing through HEFCE and the research councils?

Professor Nelson

I would say yes.

Professor Rylance

I would say yes as well.

Graham Stringer

We live in the best of all possible worlds.

David Sweeney

Universities UK has said, as the collective group of universities, that it considers that to be the case. What do we know? We know that the research councils are unable to fund grants of the very highest quality that they think have potential for great research breakthrough, so we know that the research councils could do very well with greater investment. We also know that, as I mentioned earlier, we are not managing to leverage as much money as we could from other sources because the funding that flows to universities through HEFCE is constrained. We know that we are underfunding doctoral students quite significantly. We know the shortfalls on both sides of dual support. I think it is a very difficult decision to say that it is absolutely more critical that we should spend more money on grants in one particular area, or on doctoral students, or that we should leverage that inward investment from multinationals. We have got to a strong place with the balance we have now. It is right we should debate whether some variation in that balance is required, but there seems to be consensus that we are roughly in the right place, and nobody has produced evidence that we are in the wrong place. We would appreciate that evidence, because we are trying to invest every pound for the best return. If we could invest it differently we would do so.

Graham Stringer

How is the balance determined? Is it determined by BIS, or is it in effect determined by history, inasmuch as it has always been that balance?

David Sweeney

It is determined in the spending review by the Government.

Graham Stringer

Yes, but in that determination do you think the largest factor is the historical spend levels?

David Sweeney

We are in a very strong position, so a significant perturbation to that balance would be a risk, but you have to ask colleagues in government to comment on how they take that decision.

Professor Rylance

I would say more or less the same as David—it is a decision for Ministers, but clearly they are governed by historic precedent. One thing you can say about historic precedent is that one interpretation of it is that it could be right.

Graham Stringer

On the other hand—

Professor Rylance

The balance could be as good as you are going to get it, and the cost of disturbing it radically, and certainly suddenly, could be quite considerable.

David Sweeney

Universities have multiple sources of funding and they have tailored their activity to match those sources of funding. To an extent the research units have optimised what they do to meet what is available.

Graham Stringer

You sound like two Dr Panglosses; you really do live in the best of all possible worlds. How would you go about studying and examining the balance? What analysis or research would you do to find out whether the balance is right so you could advise Government on what it should be?

David Sweeney

BIS has done work. The recent economic insight report talked about the returns from research. There was a report earlier on by Tera Allas, a senior economist, that looked at the returns. To an extent you have to do experiments to judge. That is quite difficult when you are in a long-term stable funding arrangement, but we have unleashed our best economists to look at the returns and it is for Government to evaluate their responses. I do not think we are Panglossian. We are determined to do things better and we struggle to find better ways to do it. We are having a good set of outcomes, and you would not expect us to be negative about the glorious position of our universities, research institutes and the international statistics.

Chair

Can I ask you about one more funding pot: the HEIF? This has been mentioned to me by the Russell Group as an important funding source. What is your view about another bubble on my organogram? What is your view about its value to the innovation or research landscape?

David Sweeney

For some reason, it is the fund that is most looked at. The Witty report a couple of years ago suggested that it should be doubled in size. The Dowling review has also endorsed its importance, so there is agreement. It is about unlocking the research strength in universities for business and society, so it is encouraging universities to have the infrastructure in place. When we say that academics are not terribly entrepreneurial—some of them are not, although quite a lot of them are—we have to put alongside them people who are entrepreneurial, who make those introductions to business and ensure that some time can be bought out of teaching for those academics to do the entrepreneurial things. HEIF is unique, because it is for universities to unlock innovation, whereas Innovate UK funding is business driven. It makes perfect sense, surely, to have some incentives driven by the needs of business, which Innovate UK does, and some incentives driven by getting universities to do the very best with the work they do. It would seem that universities value it very much because we have had universal support for it. I think we get a phenomenal return. The economists have been hard at work on that scheme over a period of more than 10 years. I can understand why people are supportive of it and why they keep telling you they are supportive of it, because it is in a space—university-business relations—that is reviewed time after time after time.

Chair

Is it ring-fenced for that spending? Is it always used for innovation?

David Sweeney

It is. It is the only HEFCE funding that is hypothecated. Although our research funding is used for research, because there is a tremendous shortfall, we do not tell them they have to use it for research. HEIF funding has to be used for knowledge exchange and innovation, and we ask them to report annually on how they have spent it and to produce strategies every four years. We give them the money only if they both produce a return on that investment and their strategy aligns with national objectives. For a relatively small pot of money—roughly 10% of the HEFCE research budget—it receives a lot of strategic attention.

Professor Nelson

In my former life I was a pro vice-chancellor for research and enterprise. That particular funding stream was transformational in the UK. It moved the universities a long way towards equipping themselves to be able properly to exploit their intellectual property. It has been absolutely crucial. It is a relatively small amount of money, but hugely instrumental in helping us transform the landscape. If you look at the statistics, you will see that much more entrepreneurial activity has come out of UK universities since that funding stream was introduced, in about 2000 if I remember correctly. I think it is very important.

Carol Monaghan

As a former physics teacher, I do not agree with Rutherford. That is a dangerous thing to say. We can be creative up to a point, but then the wall is hit. That is really what is being said. I would like to go a little more into the idea of batteries not being included and the balance between capital and resource expenditure. We already have an indication of the level of capital expenditure for the coming years. What do you think would need to be the resource funding to make full use of that capital investment and, first of all, the science infrastructure?

Professor Nelson

It is a complex question. Across all councils, we are concerned about this, so we all have our own issues depending on the infrastructure in which we are involved. It is a common problem. We could certainly get back to you in writing with the sort of sums we think we would need to ensure the capital investments currently coming through the system, and we are hugely grateful for them. It is an excellent move on the part of Government to allocate over £6 billion to capital in the next three or four years. It is important that we do that. The answer is that we are concerned. I am sure we can get the numbers, but probably the right answer is that we do not have them at our fingertips at the moment.

Professor Rylance

Given that these investments are very strongly forward-looking and very adventurous, it is about getting the maximum return from building the buildings and putting the facility in place. We need to make a calculation about what it can deliver maximally and what would then follow. Like the Crick Centre, very often they are coming from different funding sources, so it is not a straightforward calculation. Nor would you necessarily assume that it is all going to come from public sources, because there would be commercial and charitable investments as well. Quite a bit of work has to be done on trying to think about how over, say, a five-year timescale you will get the best and the most from these things. When you think about capital investments, it is naturally tempting to think of the new, the best, the forward-looking and all that stuff, but there is a bricks and mortar question about maintenance, replenishment and so on. As we think about the way in which we are going to invest capital in those sorts of things, we have to make sure the guttering is all right, the computers are fit for purpose and the windows do not leak—all that sort of stuff as well.

Carol Monaghan

Do you think that should be considered whenever we are looking at funding?

Professor Rylance

In that calculation, you are always making decisions about immediate priorities. If there are, for example, additional funding streams if you invest in a new facility, the temptation will be to steer your money in that direction. That is probably right, but you must not forget the more mundane, pedestrian and unphotogenic bit of it.

David Sweeney

We did an analysis more than 10 years ago as to why UK science and research was not as strong as it could be. A lot of independent work done on that clearly identified that we had not invested enough in infrastructure over the period before that. The Government responded, as did private funders, and we had a period of substantial investment in infrastructure, which, along with a number of other factors, led to the improvement in the quality of UK research. We are very stretched on capital expenditure and on the balance between excellent new research facilities and the core infrastructure that enables universities all over the country to keep going, not just on the global research challenges but the local challenges as well. That is one of the things we argue about with Government. We are not Panglossian on that.

Jim Dowd

Can I pursue with the second panel the questions I put to the first, largely on the question of the share of expenditure on innovation? To what extent do your organisations take into account innovation to build upon basic research? Is it a significant consideration when you are making allocations?

Professor Nelson

We do an awful lot. I am speaking as chief executive of Engineering and Physical Sciences, which has a very strong remit in that area. We want to ensure that we keep up with science developments that lead to technology developments, and vice versa; technology drives science as well. We always encourage our applicants for grants to think about the impact their work might have. That happens every time. They have to think through their impact. Some of that impact can be in the foreseeable future, within three, four or five years; some of it is difficult to foretell because it is basic science that may have a longer-term impact. When we looked at our REF impact case studies we saw that the impacts varied almost uniformly between 20 years and nought years. The time to impact was plus or minus 10, so there is a huge range of possibilities within the remit of our portfolio. It has been absolutely central to our mission for some time that we encourage our researchers to think this through. We encourage them to work with industry and business to develop collaborations, and that is a very effective way of moving technologies from the science base into practical application. We do an awful lot of that with strategic partners. We encourage them with new technologies to spin out new companies. In particular, we work closely with Innovate UK to try to help that process. It is absolutely central to the mission. I have spoken for EPSRC. I am sure the same is true across all research councils. We are deeply conscious of the need to get the process right, and we work very closely with Innovate UK in trying to do so.

David Sweeney

In our case, we established the infrastructure fund HEIF, which we have just talked about, more than 10 years ago, but the critical step in the last five years, to which my colleagues have referred, is telling universities that the performance-driven funding they get for their core research would be based not just on an assessment of academic excellence but on the impact that research had had in society. Both my colleagues referred to that. That sends the message very clearly to universities that, if they want an optimal financial return, they have to involve themselves critically in innovation—not that they can do it themselves but they can work with partners to help unlock that knowledge. However you look at the statistics, there has just been a phenomenal response not only from universities but from their business partners. It is at the heart of what we do and it is at the heart of our most recent changes, and the way forward is to understand even better, because of the work we have now done, how we get impact and innovation from core research to spend our money more efficiently.

Jim Dowd

Is the budget big enough at the moment to maximise that impact?

David Sweeney

There is a constraint on university budgets to do the work all the time, so of course there is a constraint. There is also a constraint on the ability of businesses to take up the research. We could put quite a bit more money into universities working with business effectively. There is certainly an enthusiasm from the universities to do that. I think there is enthusiasm from universities all over the country. This is not something that only Oxford does, although Oxford does it brilliantly. It is something Oxford Brookes does, and virtually every university understands the problems of companies and the cultural sector in its own area and is determined to make sure its research supports that.

Professor Rylance

I think this is a win, win, win situation. It is a win because it gets universities into their communities more effectively; it is a win because of the dividend in terms of growth, impact and other forms of benefit; and it is a win because it improves the research. One thing that is happening in research is that more and more of it is collaborative. It is collaborative between different institutions, both private and public; it is collaborative internationally; and it is collaborative between disciplines, in interdisciplinary endeavour. There really has been a transformation over the last five, six or seven years. It has been hard won, but the impact agenda has really made a difference. You can see this generationally within researchers. It is the young who have embraced this, and they will carry it forward. I think it is one of the things we ought to be quite proud of.

Jim Dowd

In your estimation, has that development occurred because of the advantages it has brought in terms of the quality of research or the increasingly tightening financial circumstances in which institutions find themselves?

Professor Rylance

I think the latter has stimulated it, but clearly tightening circumstances can in the end discourage as much as they can encourage. The real issue is how, as we think about the future, we get a balance of engagement between the universities and the research cohort and those outside. You hear stories about places which have queues of researchers outside their door, growing daily, and eager to work with them but they do not have the capacity to do it. If we are to think smarter about how to make more of this, it is about trying to invest in those collaborations.

David Sweeney

There are benefits not just for research in universities but for teaching students in universities because you are engaging more of them with local employers and business activity. The benefit to universities is not just a simple one. However, this question is normally posed in the context of whether we should shift money from one to the other. It seems to me we are so successful in the research we do, but there is so much we cannot do, that that is the wrong question to answer. We have to invest better in research because we can generate a tremendous return on it, and alongside that we have to invest in ensuring there is an impact from that research.

Jim Dowd

If the innovation budget was brought within the ring fence, do you think it would result in an alteration of the balance between research and innovation?

David Sweeney

The problem with the innovation budget is that it is a budget. About 75% of our budget for innovation is within the ring fence. The budget for business-focused innovation is different in character, as Ruth described earlier, from the funding for research in universities. I am not sure that something totemic about the ring fence is the right way of looking at it. You have to analyse how you get best value for different pots of money.

Matt Warman

With increased collaboration in mind, given the levels at which different research councils are funded, are we getting that right? Does it take into consideration the fact that you are often funding big assets where there are different pressures?

Professor Rylance

That is a version of the earlier question about the historic precedents for doing these things.

Matt Warman

I am thinking about between research councils as well.

Professor Rylance

But in a sense the disposition of those relative to each other is historically derived to a certain extent. I do not know of a single research council which would not say it was grossly underfunded for one reason or another, meaning you could do a heck of a lot more than you do at present. Phil talked earlier about evidence of the quality of the applications we get. To repeat what I said earlier, the worry is that, if you start shifting too suddenly or too drastically, you will rob Peter to pay Paul and you run the risk of causing more damage than any possible good you can do. That may sound Panglossian, but it is a serious anxiety about perturbing the system.

David Sweeney

We should be clear that, if you perturb the system, you are going to close down university departments and academics in some numbers are going to lose their jobs. Research takes place over a pretty long period. You take big decisions like that with incredible difficulty, for all sorts of very obvious reasons. We went through a very difficult period with STEM funding where university science departments were shutting, partly because not enough students were going and because of shortage of funding. Collectively, the nation has turned that around by changes in schools and by universities doing outreach, and we have a much more stable environment for university science departments. During that period, we lost capacity that now we miss, and we do not want to put the future at risk by doing that again.

Matt Warman

In an idyllic future where funding increased rather than decreased, are you saying collectively that you would maintain the relative funding of the different research councils, or are there some where you might wish to increase it compared with others?

Professor Nelson

As I tried to explain earlier, the future is full of possibilities and a lot of them will be between research councils. The issue is how much you put into individual research councils versus what we do collectively. That is an interesting question to answer. My colleague has already made the point that a series of Ministers has seen the balance of research council funding and not interfered too much with it, frankly for fear of undoing good work.

Professor Rylance

Even though council x gets this and council y gets that, what that does not count is the amount of money that is pooled between two or more councils to produce particular kinds of work. If you think of an area like design, which is growing in importance, my council does a bit of that, Phil’s council does it, and so on. It is a common enterprise and that is not clear in terms of the budgetary allocations on a unitary basis.

Chair

David Sweeney, we asked Dr McKernan about the McKinsey review of BIS-funded bodies. We understand that HEFCE has also taken part in it. I wondered whether you had participated in the review, and what that participation had been.

David Sweeney

I did not. My chief executive met representatives from McKinsey and gave them information about what we did.

Chair

Have you had a report back from that meeting?

David Sweeney

I am not aware that we have had any significant report back from that meeting.

Chair

Have you discussed it with your chief executive?

David Sweeney

Yes.

Chair

What was his view?

David Sweeney

Her actually—Professor Madeleine Atkins.

Chair

My apologies.

David Sweeney

We are awaiting the outcome. We have given information but not received significant feedback.

Chair

Do you think that the level of consultation is sensible? Did you think the questions were sensible? What do you think is the purpose of the review?

David Sweeney

I am not sure that I can comment fully on the purpose of the review. The questions we were asked were generally sensible. They allowed us to make the case for what we did and explain why we did it, but I am not sure I can say more than that because I was not present at the meeting.

Chair

I know that the research councils have participated as well. I am not sure whether it has been at RCUK level. Are you able to comment?

Professor Rylance

The person who spoke to them was the executive director, Hilary Reynolds. They were mainly seeking information about operational costs and how the seven different councils articulate together and share costs—that kind of area. That is my understanding of it.

Chair

Thank you very much. This brings us to the end of the oral evidence session today. Are there any last points or comments that you want to make?

Professor Nelson

I just reiterate that we have a fantastic opportunity in this country, and we must not waste it.

Chair

Thank you. I think all of us on the Committee share your view that we have outstanding universities and research in the UK, at the risk of sounding Panglossian—the word of the day. I would like to thank you for coming to give evidence. It is very helpful for us as we go forward into the spending review, which will be crucial to the future of science and innovation in the UK. I hope that you will take any future questions we might have and write back to us as we go forward. I am sure that we will also want to ask you to come and give evidence at different points in the future as the spending review unfurls. Thank you very much. That brings this session to an end. Oral evidence: The science budget, HC 340 2