My Lords, the noble Lord, Lord Mair, referred to the short inquiry that the Science and Technology Committee undertook earlier this year, just as the Bill was introduced in the other place. It was clear from the evidence that we took from organisations such as BP, the Royal Academy of Engineering and others that they were rather taken by surprise by the way that the Government had implemented the Nurse review in this respect. After all, the Nurse review had been asked to look at research councils. However, when they had participated in the consultation, they had not thought to give their view on Innovate UK because they had not realised that it was part of the agenda. If you read the Nurse review carefully, you will see that it does not make a firm recommendation on this; rather, it states that this is something on which more consultation is required, although there would clearly be benefits from bringing Innovate UK and the research councils closer together—as I think we all accept.
Equally, there are real dangers, which have been referred to. In the letter that I wrote on behalf of the committee to the Minister, Mr Jo Johnson, we said that, if this is to work, the issues of autonomy, funding and business focus simply must be addressed. During any number of discussions that we have had, I have been prepared to give the Government the benefit of the doubt on this. I am sure that while the present Minister and the acting chairman are in their roles, they will be very sensitive to the need to keep this organisation business focused. However, we have to make sure that it survives the test of time when very different people are in those roles.
As my noble and learned friend Lord Mackay pointed out, autonomy is a real issue. We are talking about what is effectively a subset of UKRI, and UKRI has the last word. That is why, on one of the earlier groups of amendments, I suggested that it was absolutely critical to have on the UKRI board people who understood the Innovate UK agenda. That is not to say that they should be in a majority but, if these two cultures are to succeed in working together, it is clearly absolutely critical that there is a great deal of cross-representation and certainly a strong degree of business understanding, expertise and experience on the UKRI board, as well as on the Innovate UK council.
Again, I am absolutely certain that the issue of autonomy can be addressed by an understanding between UKRI and all its councils. The more I heard the earlier discussion, the more alarmed I became at how
the councils could potentially be circumscribed. Clearly, that would be unhelpful. There would be a lack of ability to respond with the sort of flexibility that we heard about in relation to charities. We have a lot to learn from them.
Of course, if the Secretary of State is ultimately responsible, he will probably not abdicate all financial responsibility—I accept that—and, if I may say so, I think that the noble Lord, Lord Mair, is asking a lot if he wants to be free of all such restriction. However, again, there can be delegated powers. I hope that the Government realise that if they are going to set up UKRI with its council of Innovate UK, with a much enlarged brief, they will have to consider a completely different remit.
7.30 pm
When we were taking evidence, the very impressive chief executive admitted that she and her colleagues were on a sharp learning curve when it came to venture capital and new sources of finance. However, over the lifetime of the legislation, that is what will be needed—just look at what organisations such as the Wellcome Trust have done to increase their financial base. I am not suggesting that anyone should be paid the vast amount that the Wellcome Trust pays its finance officer—he gets paid on results and it is an astonishing figure. Nevertheless, the concept is correct: you pay by results and you have to go out to the market and buy in or share the expertise. That is quite different even from what Innovate UK does at the moment.
It is no good thinking that the taxpayer is going to continue to fund this for ever-increasing sums. We all recognise that it will be an expensive business and we know that we are late entrants. The TSB, as it was called, was a relatively new institution and there will be an element of catch-up. Although we may congratulate ourselves by various indices—not all—on our success in the dissemination of innovation and the like, we still have a lot to do compared with other countries. So I agreed with the chief executive of Innovate UK when she told the committee that there will be a requirement to take on a lot of new skills that it does not have at the moment.
Ultimately, I think that the Secretary of State would be wise to aim high on this and look to the organisation that helped change the culture in this country around venture capital investment in new companies. It is a bleat I have heard so often in debates that scientists do not get support for spin-off companies and that we sell out early to get a quick profit. These are all issues on which UKRI could help change the culture. But it is going to need a lot of expertise that is not there at the moment. No one is suggesting that Innovate UK is going to make a dramatic change now, but, if we look 10 or 15 years ahead, surely it is reasonable to expect that it should.
The measures proposed in the amendments, particularly Amendments 495D and the earlier one, head in the right direction. I am not suggesting that the Secretary of State should give carte blanche; that is unrealistic. However, once we have thought through the implications of Innovate UK being within UKRI, it has to be clear to members of the business community—after all, it
rightly looks to Innovate UK as something facing them—that there is not going to be mega-interference from people on the UKRI board who are much more interested in the other end of the spectrum than in its part, which is about developing innovative products with commercial possibilities and possibilities for improving our quality of life.