Second reading (Lords) of the Advanced Research and Invention  Agency Bill - Nov 2

Moved by

Lord Callanan
That the Bill be read a second time.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Advanced Research and Invention Agency Bill creates a new funding agency, ARIA. ARIA will support ambitious programmes of research and innovation, seeking the scientific and technological breakthroughs that transform the lives of people across the UK and around the world. It will further diversify and strengthen our UK funding landscape, which is appropriate at a time when public investment in R&D is increasing to £20 billion in 2024-25 and concerted action is being taken across Government to reinforce the position of the UK as a science superpower.

Our science system already benefits from a variety of funding streams: government spending through UKRI programmes such as the Strategic Priorities Fund, investment from businesses small and large, and charitable sources such as the new Wellcome Leap. That plurality is a strength that we are seeking to build on with ARIA. I therefore emphasise at the start that the motivation for ARIA’s creation is to innovate how research is funded, rather than any specific topics or areas which need investment. It is about enabling a new programme-led approach to public R&D funding, optimised for high-risk research—new for the UK, that is, as we have learned from the tremendous successes of this funding model around the world, mostly from the United States, which many noble Lords will of course be familiar with.

I emphasise the two core features of this approach: first, the expectation that the full benefits will be felt only over the long term, which therefore requires patience; and secondly, that for every programme that produces transformational benefits many will not, which requires a fairly unique attitude towards failure. The research community has been clear, in providing evidence and through engagement, that it wants to see these realities of the research process reflected in the new funding body. I hope that these issues similarly resonate with many noble Lords who are concerned with research and its funding. These features are central to the approach that we are seeking to take with ARIA.

Before expanding further on the role that ARIA will play, I must emphasise the existing excellence of the UK’s R&D system. Although the Government have engaged with and sought to learn from similar agencies in other countries, ARIA must be designed sensitively to the UK’s unique context. That means not copying wholesale from elsewhere, or blindly replicating features that might in some places be successful, without carefully considering the fit with the UK system. It also means remaining conscious of the scale of this new agency. ARIA’s £800 million budget is significantly less than 2% of overall UK R&D spending.

Looking at that total spending, ARIA represents a small addition at the high-risk end of the spectrum and is equipped to take a unique approach to supporting that type of research and development. Viewed through that lens, one important point should be clear: ARIA will complement rather than compete with the system-wide responsibilities of UKRI—the steward of our overall research landscape. Indeed, those responsibilities remaining firmly outside of ARIA’s remit goes hand in hand with the autonomy and freedom that we expect it to have.

ARIA is not an institution for responding to the day-to-day priorities of government, whether specific strategic challenges, or the Government’s desired balance of research, development and commercialisation activities. ARIA’s clear remit will be to pursue programmes of research focused on realising specific objectives that have the potential to produce transformative, long-term benefits. These objectives must be set by programme managers with deep technical expertise and brilliant ideas, who are empowered to pursue those objectives with a variety of tools and a single-minded focus and to fund research and innovation projects through contracting and granting in businesses, universities and elsewhere, drawing those contributors and their outputs together to realise their objectives. They must be free to do so, in the expectation that a small proportion of projects will in time lead to things that are truly extraordinary.

Taking this approach requires trust in the good that comes from investment in this type of R&D—the high-risk, long-term and difficult to measure, which we have clearly and repeatedly heard could be better provided for. But it is not only a matter of trust; the evidence for this R&D investment and its spillover benefits is compelling. Research suggests that while the annual private rate of return from R&D and innovation averages 20% to 30%, the social returns are two to three times higher.

Although ARIA will be specialised and—by taking a new approach—something of an experiment in how we fund UK R&D, it should be one that the whole system learns from. Aspects of ARIA’s unique approach might successfully be applied to other UK R&D funders, and I expect the potential benefits of that to act as an incentive for close integration with the wider research system, which will be so advantageous both for ARIA and other actors.

This Bill—and the creation of ARIA—aligns us with many other countries using the funding model that I have outlined. From the US to Japan and Germany, this programmatic approach to supporting the most ambitious research goals has been deployed, in some cases with extraordinary success, and it is entirely appropriate that at this point we seek to apply it through ARIA to benefit UK science, research and innovation.

I will now move on to the specific provisions of the Bill and set out how the key clauses relate to the ambition and approach that I have just described. I will first address ARIA’s functions, as detailed in Clause 2. ARIA is expected to primarily operate as a funder of others, which is reflected in its functions to

“do, or commission or support others to do”.

It is not restricted to operate at a particular point on the technology readiness level spectrum; indeed, individual programmes may require a mixture of projects that seek to solve fundamental science challenges alongside work to develop and apply existing knowledge in new contexts. This is reflected in Clause 2(1), which places development and exploitation alongside the conducting of scientific research. The range of financial support that ARIA can provide is expressly broad. This equips programme managers to tailor the funding that they provide so that it is appropriate to the specific recipient and project. This is essential in supporting a broad—even unexpected—coalition of researchers and organisations, and ensuring the diverse input that is known to be so beneficial in solving difficult scientific problems. The unexpected collaborations and high degree of interdisciplinary work that we expect this to support is one of the most compelling features of the programme-led ARIA model.

Clause 3 gets to the very heart of ARIA’s approach. Implicit in pursuing high-risk research and ambitious programme goals must be recognition that many projects and programmes will not fulfil their stated aims. The risk of failure is high, and that must be accepted from the outset if ARIA is truly to be equipped to tackle the most difficult challenges, with ground-breaking implications. Clause 3 states that ARIA may give particular weight to those ground-breaking benefits when supporting R&D activities which, almost by definition, carry a high risk of failure.

This is a valuable approach for two reasons: first, because of the transformational benefits of success in this arena—the scale of impact of technologies such as the internet, GPS or mRNA vaccines, all supported by the US DARPA, is difficult to overstate; and secondly, because of the spillover benefits that can accrue even from unsuccessful projects, such as collaborations and approaches that would not otherwise have existed, or progress that later proves vital for fields or problems unrelated to the original programme.

I turn now to the role of the Secretary of State, which is addressed in Clauses 4 and 5 and in Schedule 1. It is also notable by the provisions that the Bill does not contain. I have already spoken about ARIA’s need for autonomy, and on that basis, the role for the Government in its ongoing affairs must be limited. The provisions in Clauses 4 and 5 of the Bill represent a baseline to ensure ARIA’s operation, allowing funding to be provided and issues of national security to be addressed. The public money provided to ARIA requires an appropriate level of oversight and, accordingly, there are provisions to ensure core tenets of good governance in Schedule 1. This includes the Secretary of State’s power to appoint non-executive directors and the reserve power to introduce conflict of interest procedures should it prove necessary in future. However, there is no power for the Secretary of State to require a strategy, no specific power of direction over ARIA’s allocation of expenditure, and the Secretary of State’s information rights are deliberately limited to the exercise of their functions with respect to ARIA.

In these matters we have sought to strike a balance between protecting ARIA’s strategic and operational autonomy, which is essential to its remit, and providing sufficient assurances for the important role with which it is to be entrusted. This difficult-to-strike balance has been a theme of much debate on the Bill so far, and I have no doubt that that will continue to be the case in our House.

Continuing this theme, I will speak briefly on the exemptions the Bill affords ARIA from standard public sector obligations around procurement and freedom of information. There are practical and operational reasons for both. Exempting ARIA from the Public Contracts Regulations’ contracting authority obligations is a result of its fundamentally different way of operating compared to our other core public R&D funders. We expect ARIA not only to give grants but to commission and contract others to carry out research. The exemption ensures that ARIA can procure services, goods and works related to its research goals at speed in a similar way to a private sector organisation. This mirrors the successful approach taken by DARPA, which benefits from other transactions authority, giving it the flexibility to operate outside US government contracting standards.

On FoI, the pertinent question to me is where we want ARIA’s staff to direct their focus. Earlier, I spoke about people with deep technical expertise and brilliant ideas who are empowered to pursue their objectives. I believe that of course that should apply to all ARIA staff and that this ambition is the last thing we should move away from if we want this organisation to succeed. In this unique case, I do not think those people should be employed to administrate FoI requests. This approach should be viewed in the light of ARIA’s other statutory commitments to transparency through its reporting and accounts, subject to scrutiny by the NAO, and with the natural incentives towards openness of having an identity to build and collaborators to attract.

Returning finally to the purpose of the Bill before us, it is right that we recognise the existing excellence of our R&D system and that we add to it only in a considered way. However, I believe we should also allow ourselves to consider the possibilities in doing so and challenge ourselves on whether we could do more, or better, in the ways we support UK science and innovation. The creation of ARIA, through this Bill, is an exciting addition to our research landscape, but it is also a judicious one, rooted in historic successes, drawing on international best practice and responding to the current needs of UK researchers. I beg to move.

19:03:00

Viscount Stansgate (Lab)
My Lords, it is a totally unexpected pleasure to follow the Minister as I am the first in the list. It is a great honour to take part in this debate, the first Second Reading in which I have taken part, when I consider the range of other speakers who we are going to hear from this evening, all of whom are so very distinguished. I am also mindful of the fact that the president of the Parliamentary and Scientific Committee is contributing to the debate. As his vice-president, I cannot remember a time when both officeholders were speaking together.

The relationship between the Government and science is subtle, complex and of critical importance to the future of the country. It goes without saying that we have a tremendous record on science in this country, to which I pay tribute, along with everybody else. Our record on Covid vaccine development and distribution is but the latest example. The UK is world class, but it is a competitive world out there and this Bill matters to our future if we are to be the science superpower we all want us to be.

The problem for successive Governments of all kinds is that they have to try to find a balance between giving researchers the freedom to follow their own instincts and curiosity, while at the same time guiding large sums of public money towards wider societal benefits, such as national prosperity and real improvements in the quality of life for their citizens. This balance is not easy to strike. ARIA represents an attempt to strike a new balance by introducing a new organisation with a relatively small staff and a relatively small amount of money with extreme freedom to decide what to do without the existing constraints that apply elsewhere. There is also a difficult and delicate balance to strike between parliamentary oversight and the intellectual freedom which will be necessary to enable ARIA to generate the creativity required to do things differently.

The Minister made it clear in his opening speech that what is being proposed is something very new because we are dealing with high risk and potentially high reward, as he acknowledged. Therefore, the heart of what the Bill is about is not so much an agency as an idea. We are discussing an experiment never before undertaken in the UK, and we are being invited to approve and establish a new participant in what is called the scientific landscape. If we were having a vote today, I would vote for the Bill because this is broadly a good idea and I support additional funding for science, but it raises lots of questions which is going to make the Committee stage very important, and I will return to that in a bit.

First, I hope the House will allow me a brief moment to consider the wider historical context of the proposals that the Government are inviting us to consider today. More than 100 years ago, I think in 1918, Lord Haldane chaired the committee that led to the establishment of the first research council. The Haldane principle that emerged was, in essence, that research should be decided by researchers and not the Government. This has stood the test of time not least because it is convenient for Ministers. It shields them from bearing the direct responsibility for making individual decisions on individual funding.

ARIA takes this a stage further. It will need to offer real scientific independence at programme level. With regard to peer review, standard processes may not always be appropriate for ARIA, as it aims to empower exceptional scientists to start and stop projects quickly. I do not particularly care for military analogies, but when I think about ARIA it makes me wonder whether in times past Barnes Wallis or Alan Turing might have been funded by ARIA. They were both individually brilliant.

Over the decades the structural organisation of science in government has been through endless changes. For about a quarter of a century science was put in with the Department for Education, to create the DES, and, frankly, that is where science languished. I regard the start of the modem era as being when the noble Lord, Lord Waldegrave, launched Realising our Potential in 1993, rearranged the research councils and set up the Office of Science and Technology. Even the current department, BEIS, has over the past 20 or more years been through many changes in emphasis and names from the DTI to the ungainly DIUS, if anybody remembers that, and there may be more name changes on the way. Then there are things such as the Technology Strategy Board, which became Innovate UK until its absorption into UKRI, and even UKRI itself, which was described at the time as the kind of reform that comes along only once in a generation, was formed only in 2018.

Some argue that there is no point in creating ARIA if it is going to be just another entity in the science landscape doing the same things as UKRI but with less money. There is no guaranteed method, and never has been, of successfully identifying commercially successful projects arising out of science research. Too often in this country, as noble Lords will know very well, we have suffered from what is called “the valley of death”—that is, we are good at discovering new things but bad at developing them and exploiting them for commercial success. However, it is hard to legislate for success.

The agency will not automatically succeed. On the contrary, one of its earliest proponents suggested that if ARIA is not failing then it is failing, which is an interesting point. Last weekend, I went to see the latest James Bond film—I recommend it—and it occurred to me that there is a link between those films and this Bill. If the Minister was promoting ARIA as a movie, I can see it now: “ARIA—Licence to Fail.” Whether it does or not is almost impossible to predict because we do not know when a transformational breakthrough will be made, so consistency of funding over the next 10 years will be crucial.

One thought that comes to mind at the start of the many questions I want to put is about the agency’s proposed name. We know that much of the inspiration for ARIA comes from America. When this idea was first mooted by the Government in March 2020, they called it ARPA. They have now chosen the letter “I” for “invention” rather than “P” for “projects”, and that is an interesting distinction worth exploring. “Invention” conveys more of an individual exercise, whereas “projects” suggests a more collaborative approach with many more people involved, so we may discuss in Committee whether we should reconsider the title.

I am grateful to all those organisations that have been in touch to offer advice on ARIA, and I am sure there will be a lot more as we go through Committee. They include the Royal Society of Biology, the Biochemical Society, the Physiological Society, the Campaign for Science and Engineering, the Royal Society of Chemistry and others.

My own list of questions is not exclusive; I am sure that other noble Lords tonight will have many more. But they include the following: what will the relationship be between ARIA and the existing parts of the research landscape, such as UKRI, in particular? What will it be with the new science and technology council, recently established by the Prime Minister, and the new Office for Science and Technology Strategy? What about its relationship with the Council for Science and Technology, currently co-chaired by the chief scientific adviser and the noble Lord, Lord Browne of Madingley?

Baroness Bloomfield of Hinton Waldrist (Con)
I gently remind the noble Viscount that there is an advisory speaking time limit of seven minutes. If we go on from the first speech, we get rapidly out of control.

Viscount Stansgate (Lab)
It is kind of the noble Baroness to mention it. If I had a pair of scissors, I should have to cut this speech in half, and noble Lords would no doubt be only too grateful. I will do so verbally.

One area where I think we will divide in Committee is that the Government are determined to exempt ARIA from freedom of information. Like other noble Lords, I received a briefing from the Information Commissioner’s Office, which strongly advocates that FoI requests should be allowed. The News Media Association has also taken the trouble to write to us on the same issue. I am sure that is something we will explore.

In drawing my remarks to a close, I will mention the famous questions that DARPA used to identify projects which were worth funding. First, what are you trying to do, and can you explain it in jargon-free language? Secondly, how is it done today, and what are the limits of current practice? Thirdly, what is new in your approach, and why do you think it will be successful? Fourthly, who cares? If you are successful, what difference will it make? Fifthly, what are the risks? Sixthly, how much will it cost? Seventhly, how long will it take?

Finally, the Bill proposes that the Government must wait 10 years before taking any action to close ARIA down, so I look forward to taking part in the Second Reading of the “ARIA (Continuation) (Amendment) (No. 2) Bill 2031”, when we will at least have the experience of 10 years to guide us in our debates.

19:12:00

Lord Clement-Jones (LD)
My Lords, clearly we need to discuss the R&D and innovation context in which ARIA is designed to sit. We now know the spending context; the UK has a long-term target for UK R&D to reach 2.4% of GDP by 2027. But the Chancellor has pushed back the target of £22 billion per annum on R&D, from 2024-25 to 2026-27, which may impact on private investment.

Beyond this, there is no shortage of road maps, reviews and strategies which lay out government policy in this landscape. In 2020, we had the well-intentioned R&D road map. Since then, we have had the UK Innovation Strategy with its “Vision 2035”, the AI strategy, the Life Sciences Vision, the fintech strategic review—all, it seems, informed by the integrated review’s determination that we will have

“secured our status as a Science and Tech Superpower by 2030”—

language repeated recently by the Chancellor. I see now that we are due a review of UKRI, on top of the Nurse review. I am sure that they are meant to give us a warm feeling, but it is very unclear how all the aspirations reflected in these documents fit together, let alone with ARIA—

“a brand in search of a product”,

to quote the Science and Technology Committee.

The noble Lord, Lord Hague, wrote a wise piece in the Times a couple of weeks ago. In concluding, he said:

“But the officials working on so many new strategies should be running down the corridors by now and told to come back only when they have some detailed plans that go far beyond expressing our ambitions.”

The problem is working out how and whether the creation of ARIA is any kind of priority, and practically how it will operate in terms of skills and resources. The key to understanding this seems to be the framework document which will outline the operational relationships for ARIA, but we are told this will not be published until after the Bill is through. That cannot be acceptable.

The budget for ARIA, at £800 million over four years, looks relatively modest when compared with the research councils’ budgets, especially when funding is actually only £500 million up to the end of this spending review period. From what one can see, ARIA will be entirely independent of UKRI, as the Minister stated, including Innovate UK. My concerns are the opposite of those of the Science and Technology Committee regarding ARIA’s potential dislocation from mainstream innovation strategy. Given that, what oversight over ARIA will the Treasury have? What will be the public accountability of ARIA, and how transparent its activities? Will it co-ordinate activities with UKRI at all? Will the National Science and Technology Council have any role in relation to ARIA?

It is surely completely unacceptable, as the ICO has pointed out, that it should be exempt from Freedom of Information Act requirements. As it said:

“Without this, there will be a lack of transparency, accountability, trust and confidence in ARIA.”

After all, the US equivalent of ARIA, DARPA, is covered by the US FOIA. As the ICO also says, the FOIA

“includes safeguards which allow a balance to be struck between the public interest in transparency and the protection of legitimate interests.”

As the Minister described, programme managers, it seems, will be appointed to commission work funded by ARIA. But what is the operating model—along the lines of the Crick or the Turing or that of the EPSRC? How will it commission research and collaborate with universities, the start-up community, catapults or research operations of larger companies? Where does ARIA fit with the levelling up regional aspirations for R&D? What is the likely interaction of ARIA with the UK’s technology clusters and with initiatives for regional and local innovation? Of course, as the Delegated Powers and Regulatory Reform Committee has pointed out, ARIA’s existence could be short-lived—abolished by the Secretary of State’s fiat.

The truth of the matter, however, is that we do already rank highly in the world of early-stage research, and some late-stage, not least in AI. It is in commercialisation —translational research and industrial R&D—where we continue to fall down. As the noble Lord, Lord Willetts, is quoted as saying in a recent excellent HEPI paper “Catching the wave: harnessing regional research and development to level up”:

“We all know the problem – we have great universities and win Nobel Prizes, but we don’t do so well at commercialisation.”

The functions for ARIA listed in the Bill include to

“encourage, facilitate and provide advice”

and to provide grants, loans and investments in companies, so what will be the long-term relationship with Innovate UK? Despite the creation of and support from the British Business Bank, our investment culture is more risk averse than Silicon Valley. Our innovators are having to sell out too early. The DARPA model has a powerful relationship with industry. Is that the intention here?

There are many other things that we could improve in our UK R&D and innovation universe, beyond the creation of ARIA. Our research sponsoring bodies could be less micromanaging. I welcome the Chancellor’s moves to extend R&D tax credits to investment in cloud computing infrastructure and datasets, but our patent box scheme is complex to apply for and not cost effective. There should be more support for catapults, which have crucial roles as technology and innovation centres, as the House of Lords Science and Technology Committee recommended. We could also emulate America’s Seed Fund, the SBIR and STTR programmes. On the regional front, we should be seeking to make universities regional powerhouses, tied in with the economic future of our city regions through university enterprise zones.

But finally, will the Minister give us a hint as to which technologies the Government consider will form the core of ARIA’s programmes? I am very enthusiastic about the future of UK research and development, innovation and their commercial translation in the UK, and want them to thrive for all our benefit.  However, I remain to be convinced that ARIA is the answer to many of these questions. It is not enough to say, as the innovation strategy paper does:

“we do not know what ARIA will create. That is the point.”

We need a great deal more assurance about where it fits and whether it will be a useful addition to our R&D and innovation landscape.

19:19:00

Lord Patel (CB)
My Lords, I start on a positive note: I am supportive of the establishment of ARIA. I wish its budget was bigger than it is. ARIA is modelled on the US agency DARPA, which has its focus on research and technology related to the military. DARPA’s success has built confidence among venture capitalists and angel investors, leveraging more funds above its core funding.

The strength of the UK’s research sector is its diversity of funding. Despite the belief of some, research councils in the UK have been very successful at funding discovery science. A good example is the MRC Laboratory of Molecular Biology in Cambridge, which has conducted high-risk, high-reward discovery research from its beginnings. What has been lacking is the freedom that research councils need to explore new ideas and take some risks. The governance structure of government R&D funding, with strong BEIS involvement, ties the research councils, Innovate UK and UKRI in bureaucratic knots, stifling research and innovation.

Having got that off my chest, I think the introduction of a new funding stream presents new opportunities. In being able to support projects that are high risk, it could help broaden and strengthen the UK’s research capabilities, allowing new sectors to emerge. The “I” in ARIA—invention—is good, because it offers an interesting and original creative opportunity. Grants for invention of technologies tend to do very badly in peer review in comparison with grants that aim to discover something. ARIA money explicitly to fund invention of technologies could be very powerful.

I now come to some of my concerns, which I hope the Minister might help allay. The Government have done a good job of framing the structure of ARIA, presented just now by the Minister, taking the best of the learning from DARPA and other US ARP agencies while accepting that some aspects need to be different in the United Kingdom. However, there is a need to better define and articulate the scope and objectives of ARIA, knowing that the agency’s impact will depend on its ability to do things differently. I hope the Minister will comment on this, too.

ARIA will fail if it is not allowed to do things differently. To this end, there is a need for a strong, non-traditional CEO, empowered to shape the operating model of ARIA and given the freedom to do so. Further, the agency’s autonomy and speed to action will require a governance model that protects it from day-to-day politics, encourages and allows it to be driven by greed for learning and progress and not be judged by failure, and ensures an appropriate level of funding over a reasonable length of time. For this and more, the agency needs a strong, respected, politically powerful chair who strongly backs the CEO and is single-minded with an objective of making ARIA a success. ARIA also needs a strong senior political figure who is prepared to bat for it and defend its autonomy and is willing to take the flack when there is bad news. Without this, ARIA will fail. Much of DARPA’s and other ARPAs’ success in the USA is down to the strong backing they get from the Secretaries of State in the relevant government departments. I ask the Minister to comment on the model of governance and on who the senior Minister responsible for ARIA will be. Will it be the Secretary of State for BEIS?

Researchers in the UK are keen to embrace new models of support that allow them to explore high-risk ideas. The opportunity to unlock latent potential in translational research in the UK is enormous. Currently, this is biased towards big industry, while individual scientists are increasingly interested in entrepreneurial models of translation. Such a model could rival US innovation models. To achieve this, more is needed than what is already proposed in the Bill. ARIA grants should waive the 20% cost sharing, which will be a barrier to high-risk research and translation. Can the Minister confirm that it is the intention to do so?

Current requirements for spin-out companies in the UK compared to those in the US are cumbersome, bureaucratic and costly. They stifle innovation and need to change. ARIA should be able to explore funding private and hybrid institutions for research, a highly successful model that DARPA has followed. DARPA’s and other ARPAs’ success in the United States is related also to US Government procurement policies that favour innovations developed by agencies. It is hard to envision ARIA’s success without a comprehensive public procurement strategy alongside. I hope the Minister can comment on that.

I end by wishing that ARIA is a success. If it is, it could be a model for more UK R&D funding.

19:25:00

Lord Bethell (Con)
My Lords, like others in the innovation space, I have come strongly to support ARIA. I know from my experience as an Innovations Minister that UK research bodies—UKRI, NIHR and our research charities—are really productive. We mobilise rigorous, independent teams on research investment decisions; we administer research to a very high standard of accountability and efficiency, and we validate results through rigorous peer review—these are very commendable qualities. That research bureaucracy is why the payback from UK investment is very high.

However, I have had lived experience of big gaps in our national capability. Our research bureaucracy moves at its own pace, to its own beat, and is not always aligned with our national priorities. During the pandemic, I found time and again that the very reasons why we are so successful in peacetime are exactly the reasons why we were not good in an urgent situation. Investment decisions took too long, creating consensus around complex challenges was sometimes impossible, and validation processes were sub-scale, inconclusive and took an inordinate amount of time. That is why I strongly support ARIA. In the heat of battle, too often I was tearing my hair out with the committee-led, network-based, consensus-building, “I’ll get round to it in my spare time”, monthly-meeting approach. What I yearned for was a high-risk approach, which is what ARIA brings to the party.

RECOVERY, the Vaccine Taskforce, the Therapeutics Taskforce and the innovations and partnership team within Test and Trace were all unorthodox arrangements that delivered massive results for the country. That is why I agree with the Minister that there is a clear appetite for high-risk, high-reward research with strategic and cultural autonomy. This will usefully challenge the current orthodoxies, and the experiment will usefully inform reforms in how we do research.

I want to echo one concern raised by other noble Lords, about the strategic direction of ARIA. I am gravely concerned that the emphasis on autonomous objective-setting does not give the impetus and direction necessary for success. My experience is that the most impactful returns come when there is a clear outcome from the very beginning. By way of a metaphor, perhaps I may tell you this: I remember when the Prime Minister made generalised appeals for help during the pandemic. The response was often creative, exuberant and completely unfocused. I remember in one instance the NHSBSA having to stand up nearly 3,000 operators to triage and assess the various offers that had come in. When the final analysis was done, it found that only a handful had any value. But when we published our requirements, we frequently had our needs met within days. This principle applies to even the most brilliant research organisations run by the most brilliant research managers.

I appreciate that we are looking at enabling legislation. I have brought enabling legislation through the House myself, so I understand that many practical arrangements will be solved in secondary legislation, but I want to emphasise two higher-order matters that need to be clearly answered by the Minister at this stage. If they are not, I fear that the process of secondary legislation will be a difficult challenge.

First, I would really like the Minister to give a commitment that ARIA will be orientated around a small number of clear, societal challenges, and play a role in stimulating cross-disciplinary innovation. I would like the Minister to talk a little about where in the Bill that commitment could or should be articulated. If that commitment and orientation can be put into the Bill, what will the framework for agreeing those challenges be? I appreciate that this is not the place to make those decisions today, but the Bill needs clarity now from the Minister on how those decisions will be made, how success will be assessed and how they can be updated as ARIA continues its business.

Secondly, there is a question in my mind about what stage in the innovation cycle ARIA will be targeting. In the 21st century there are very few unclimbed mountains in the world and very few apple-drop moments, when a single inventor has a profound brainwave that transforms thinking. During the pandemic, it was my expectation that this global catastrophe would elicit a number of breakthroughs, particularly in the field of pathology. I spent a huge amount of time with Israelis, Singaporeans and South Africans looking at, for instance, spit tests, breath tests, the MIT cough tests, Covid dogs, a test that involved radar and a test from France involving testing wastewater.

In fact, the two biggest breakthroughs involved high-risk strategies and they were programme-led, but they were iterations of two very long-standing technologies. The first, the lateral flow test, was first used in 1956 and is commonplace for pregnancy, HIV and drug tests. It was incredibly tough to find one that worked to our satisfaction, but when we did, we could send out hundreds of millions to catch asymptomatic illness. The second was the good old PCR test, which benefited from an army of robots automating the process, meaning we could get from a few thousand a day to nearly a million a day. These were unromantic iterations, but they were hard-fought and delivered a huge amount of value.

The same could be said of vaccines. It took the Oxford team just three days to essentially retool a malaria vaccine, though it did take them 300 days to prove efficacy and safety. On therapeutics, dexamethasone was first synthesised in 1957, but, after 10,000 clinical trials, it proved to work around the world.

For that reason, I believe ARIA should be focused not on new scientific discoveries but on transformational applications.

19:32:00

Lord Davies of Brixton (Lab)
My Lords, first, I apologise to the Minister as I was two minutes late coming in, but I had been discussing the triple lock for three hours and I had somewhere to go—I will not go any further than that; I hope that is acceptable. Secondly, it is an honour to take part in this debate with so many distinguished Members.

There is no escape from the fact that we have here an orphan piece of legislation. We have the Minister here as its foster parent, and we must thank him for providing it with as much love and support as he can muster, but the natural parent—the person responsible for the orphan’s conception—is long gone. Perhaps this is why there is a certain lack of focus, as other Members have mentioned.

I will support the Bill at Second Reading, if only because it is a type of natural experiment; a single data point in finding out what is an effective method of funding worthwhile research. Let us see how it works out.

However, it needs to be looked at closely in Committee, as there are obvious shortcomings. Others have mentioned the exclusion from freedom of information. There is no convincing explanation advanced for that, though the “burden” is referred to. But a well-run organisation ought not to find it a burden, particularly as we were promised in the statement of policy intent that the agency

“will be an outward facing body which will proactively provide information about its activities”

—except when people ask.

Concerns were also mentioned by the Delegated Powers and Regulatory Reform Committee of the House. There is the power given to the Government to dissolve an agency that is established by Parliament; the argument is that, if it is established by Parliament, it should be dissolved by Parliament. There are also examples of wide-ranging Henry VIII powers.

The main concern I wish to raise—I have mentioned this before and was grateful to meet the Minister earlier in the week—is the lack of a clear story; a story to tell us, the taxpayers, what the agency is meant to be doing, what it is for and how it will work. The only words in the Bill itself that mark out the agency as doing anything special in the work it undertakes are in Clause 3, “Ambitious research, development and exploitation: tolerance to failure”:

“In exercising any of its functions under this Act, ARIA may give particular weight to the potential for significant benefits to be achieved or facilitated through scientific research, or the development and exploitation of scientific knowledge, that carries a high risk of failure”.


So all we really have is

“the development and exploitation of scientific knowledge, that carries a high risk of failure”.

One good thing, even if it is unfortunate that it needs to be said, is that the term science is defined in Clause 12 as including social sciences. Much of the discussion about the agency has assumed that it would undertake only what is often characterised—mistakenly, in my view—as hard science.

However, what is not defined in the Bill is risk. Risk is, unfortunately, a term that is misunderstood and frequently misused. While I think Clause 3 is right to include risk, the Government need to say more about what it means in this context. What do they mean by risk? There is not much enlightenment in the Explanatory Notes. Clause 2(6) says that the agency “must have regard to” economic growth or benefits, “scientific innovation and invention” and

“improving the quality of life”.

But that goes without saying.

We also have the statement of policy intent document. It is meant to describe the rationale and intended purpose of the agency. But the document is astonishingly vague, full of buzzwords, and depending in practice on decisions that are yet to be taken. Of paramount importance among those decisions is the appointment of both the first chief executive officer and the chair, who are presented as key to the success of the agency, as

“the first CEO will have a significant effect on the technological and strategic capabilities of the UK over the course of generations.”

The appointment of the CEO by the Secretary of State will therefore, in effect, determine the future of the agency. It is not just a matter of staffing or of finding someone with the skills to run an organisation; it is an appointment that will go to the heart of what the agency is supposed to do. We are still waiting, even though we were told last March that the recruitment process would “soon begin”.

Can the Minister tell us where we have got to? Can he also tell us perhaps what questions the Secretary of State is going to ask the candidates in the appointment process? The appointment process is key, and we need to know more about what the Secretary of State will be looking for when they come to make the appointment. It is also the CEO who will appoint the programme managers.

It is worth highlighting the words of the chair of the Commons Science and Technology Committee, the right honourable Greg Clark MP, who has said:

“The Government's financial commitment to supporting such an agency is welcome, but the budget will not be put to good use if ARPA’s purpose remains unfocused. UK ARPA is currently a brand in search of a product. The Government must make up its mind and say what ARPA’s mission is to be”.


It has been renamed ARIA, but we do not have any greater clarity on its purpose. In my dying seconds, I suggest that its purpose be climate change; ask it about climate change.

19:40:00

Lord Lansley (Con)
My Lords, I am grateful to my noble friend for his introduction to the Bill. Like the noble Lord, Lord Davies of Brixton, I had a feeling that we were being handed the Dominic Cummings vanity project. When I listened to my noble friend on the Front Bench, I thought otherwise. It survives beyond him and very much has a life of its own. I look forward to us helping to define that life.

I also look forward to further contributions from the noble Viscount, Lord Stansgate. There was much that I think he was planning to say which I look forward to hearing in Committee.

As my noble friend Lord Bethell said, we need to define the essence of what we are dealing with and what we need to get into focus. We certainly need to inject a greater sense of purpose into the legislation. Its purpose is to be different from the rest of the research landscape. There is much we can do in the legislation to make that a little clearer so that it does not duplicate the work of UKRI. There are great projects which are the subject of challenges and missions by UKRI and the research councils. We do not want to see those duplicated.

What is distinctive about ARIA? First, as the noble Viscount, Lord Stansgate, mentioned, it is letting go of the Haldane principle—it is not that politicians should be determining the objectives of ARIA, but it should not be bound and controlled by a process of peer review and evaluation. These are missions to be pursued. The project teams may well want to do this in ways that would not necessarily engage the support of their peers. This is why it carries a high risk of failure in the minds of others. In the course of our debates, we need to focus on the legislation and the minds of those who come to run ARIA.

We also need to think about what we do well and where the gaps are in our research landscape. The noble Lord, Lord Patel, referred to the Laboratory of Molecular Biology. I declare an interest—I was the MP who represented LMB. It has done a remarkable job and continues to do so. In the area of molecular biology, it has a focus. It did not always necessarily have a specific research objective in mind, but it was clear about its ability to bring together the very best people with the very best ideas to examine the issues. As a consequence, there were some fantastic discoveries —on DNA sequencing, monoclonal antibodies and X-ray crystallography of proteins. It was the recipient of 12 Nobel prizes—more than any other single research institute anywhere in the world.

We must not say that we cannot do this. The question is where and in respect of what should we do it in future? The LMB also gives us a sense of some of the ways in which ARIA could do its job, by bringing together the very best people into project teams and giving them a direct stake in the benefits—including the economic and commercial benefits—derived from their discoveries. The LMB has done this to the point where people have left the laboratory, set up businesses and then come back into LMB in order to undertake further original research with the objective of doing the same thing all over again with some new discovery.

We want to examine and make sure that ARIA as an agency can be an active investor and participant, perhaps even the originating promoter of these enterprises. I believe that this is the Government’s intention. Potentially, the best researchers in the world—in a different area from the LMB, perhaps in artificial intelligence or an information society—would come here to work with ARIA because they knew they would benefit, and we would benefit as a consequence. We really need to focus on this and make sure that this potential lies within ARIA’s remit.

When we come to examine the Bill, we need to look at it very carefully. Clause 3 is distinctive in mentioning what constitutes “particular weight”. What constitutes transformational research, although it is not called that? What do we mean by a high risk of failure? Clearly, we do not mean a 100% risk. I suspect we do not mean 99% either. The noble Lord, Lord Davies of Brixton, had it right. We have to understand the risk-reward relationship. We are looking for projects where, if the chances of failure are relatively high, the rewards for success are transparently potentially even greater. This is why we are prepared to take the risk and to go down this path.

As we think about this, I hope that we do not slavishly copy the DARPA US business model. We should bear in mind the models that have been found to be successful in this country, including LMB. We should look, for example, at where we have deficiencies—such as in engineering and IT, where there are not sufficient opportunities. We should also look at the way in which Germany has used research institutes like LMB more widely in order to give that sense of continuing focus and objectives in a number of different areas of research. I look forward to our debates on the Bill.

19:46:00

Lord Kakkar (CB)
My Lords, I join other noble Lords in thanking the Minister for the thoughtful way in which he introduced this Bill. I declare my own interest as chairman of the Office for Strategic Co-ordination of Health Research.

It is a pleasure to follow my noble friend Lord Patel and the noble Lord, Lord Lansley, with his very insightful observations. I echo my noble friend Lord Patel in strongly welcoming the proposition by Her Majesty’s Government to create this new agency. As we have heard, it represents a substantial opportunity to broaden the different streams of funding available to drive our broad national research and development effort.

Our nation is particularly successful at delivering research and development. There are many fine institutions. We can all draw attention to many discoveries that have had a profound impact during decades of state-directed research funding. Those research interventions have been built over time. They have been based on important principles, such as Haldane, and on the principle that Governments can define national priorities and that research effort can be directed to try to answer those priorities. It is right, therefore, that Her Majesty’s Government should decide to establish a new agency with a different and distinctive purpose.

By definition, research is attended by uncertainty. It is part of the scientific method. This is not so much a criticism as a recognition that many of the agencies and structures that we have developed, such as UKRI, the research councils and Innovate UK, are obliged to conduct their approach to making funds available for research to institutions and entities beyond the public sector in a way that is somewhat bureaucratic. There has not been the tolerance for failure. Indeed, if anything exists in our system, it is a deep dissatisfaction with a failure of research. Where projects have failed or where it has been considered that public funds have been used inappropriately, there has always been substantial criticism.

For ARIA to be different, it needs to be released from some of the bureaucratic constraints that attend other funding agencies, if it is to achieve its principal objective of being able to support proposals for research that will be truly transformational and have potentially the greatest impact. Therefore, some of them will be attended with the greatest risk of failure. I fully accept what the Minister said in his opening comments, that it would be completely wrong to create a new agency that is constrained exactly by the constraints that attend our current funding agencies.

In equal measure, however, in creating such an independent agency, predicated on the basis that failure must be accepted, the real challenge is the potential for risk. There are three important questions which I hope that the Minister will be able to answer, not necessarily in this debate, but while the Bill is in Committee

The first is to provide clarity about the relationship between ARIA and current existing agencies such as UKRI, the research councils and Innovate UK, but also more broadly in our research funding eco-systems—the charities and others which might have an interest in some of the areas of research that ARIA decides to support. I know that in the other place Her Majesty’s Government were unable to accept amendments to the Bill attending the question of a formally defined memorandum to describe these relationships, and that is acceptable. However, there needs to be absolute clarity about how these relationships will be defined, and how in practice ARIA will sit alongside these other agencies and ensure that there is not unnecessary duplication and waste in terms of its use of public funds, as we have heard, in comparison to what other agencies may be doing successfully at the moment.

The second is the question of accountability. Clearly, it is essential for any public body to have a form of accountability. The Minister spoke about this, and, indeed, in the Explanatory Notes, there is clarity about ARIA having to lay its accounts before Parliament and being subject to review by the National Audit Office. Indeed, as I understand it, the Secretary of State will have to answer for ARIA in the other place.

However, I have a concern in this regard, and it is slightly counterintuitive. Although we will all be very enthusiastic about the establishment of an agency that will tolerate failure, how confident can we be that our system will actually tolerate that failure? At some moment in time, will that failure become too much to accept? It might be that, in terms of the scientific approach—the project-led approach by those driving the agenda within ARIA—it was perfectly acceptable to take that approach. However, let us say that the broader political system, the commentators and others, will not accept it. There needs to be some protection for ARIA by way of appropriate accountability so that it can defend itself against the kinds of criticisms and attacks that might happen in the future when failure starts to occur. In that way it will not be undermined, and what is an important contribution to the research-funding landscape will not be inadvertently or too soon undermined and destroyed.

The final point is that we need to be clear about where this fundamental research, invention and discovery go in terms of the next stage. We should not, of course, replicate the model of DARPA in the United States; it has a completely different purpose. The purpose of ARIA, quite rightly, will be much more broadly defined. There needs to be some clarity about how government departments and other agencies might participate in taking advantage of the benefit of the product of ARIA to ensure that there is continued funding and support so that that translation and ultimate application is not lost.

19:53:00

Lord Borwick (Con)
My Lords, I welcome this Bill. I think it is a bold and exciting project. It takes pride in not being able to predict what it is that will come out of it and in truly giving the science a free hand to lead the way. As has been shown by the original ARIA—the American DARPA—really quite incredible technologies and products can be created in this sort of environment, not to mention in a very cost-effective way for the Government. As was evident in the DARPA challenges, much more money was spent by competitors investing in their individual offerings than the prize money offered by the Government to the winners. This saved the Government millions.

I have just a few comments to make. First, although I appreciate the advantages of accounting officers and responsibility being clearly laid down, the truth is that nobody knows what will come in the future. As I said a moment ago, an agency that can try things out to see if they will work is a very positive step for any R&D project. It is perfectly clear to me, however, from looking at the wording of this Bill, that this agency is more than usually dependent on the genius of the chairman and the chief executive. Because they are given such a free hand, they must be aware of their responsibility—as I am sure they will be—to achieve meaningful gains forward in R&D for UK plc.

There is a lot of money at stake in funding this programme. Taxpayers will rightly want bang for their buck, so it must not be allowed for the challenges set by ARIA to stray away from its serious scientific and technological funding roots. I am concerned that the Bill may not have futureproofed this concept securely. I somehow doubt that a chairman and a chief executive who are recruited after a successful career in the Civil Service will have the right abilities to make the most of this opportunity.

Secondly, the non-executives will be more than usually important in this agency and I therefore support what others will say, or have said, about making certain that they declare their conflicts of interests, if any; but whenever I have been a non-executive director of a business, I have learned many things. Will the non-executives be prohibited from co-investing in the bright ideas come across by ARIA? The sorts of people we want to see appointed as non-executives will be those who have successfully judged risks and are at ease with taking them. Many of these may be very wealthy individuals and they may be very much attracted to the opportunity of co-investing. Some funds that face this scenario run blind pools, where the non-executives may invest but not take any decisions to realise their investment or further invest. Others have a limit of up to, say, 15% of the investee company to be owned by the non-executives of the parent organisation.

All this would take careful thought, and I am sure that the Minister will consult with people who have run similar funds to ensure that robust structures on industry standards for this sort of safeguarding are explicitly set out in the framework for the relationship between ARIA and the department. Furthermore, although the Government chief scientist will be one of the non-executive directors—and that is wonderful—we do not yet know who the others will be. Can the Minister tell the House if he has any further information on this? How will the non-executive directors be chosen and screened? That is a point made by the noble Lord, Lord Davies.

Thirdly, Clause 2(4)(b), states that the conditions under which ARIA provides its support may include provisions under which property is to be restored. It is not clear to me as to whether that is real property, intellectual property, or both. Neither does it say what restored means, and to whom it is restored, or whether it is required to be physically restored or some other interpretation is permitted. Perhaps a government amendment to make this clear would be welcomed.

It will be important for ARIA not to duplicate projects that are perfectly well served by other agencies, just because they are fashionable. I can applaud the Earthshot Prize, but the range of subjects it covered should be enough to discourage ARIA from going for environmental matters, however important they are. Similarly, UKRI has great concentrations on various sectors, and I presume that those sectors are best covered as they are at present. This should not really restrict ARIA, because there are so many problems of a long-term nature. I would like to see prizes given out only for only scientific and physical inventions that are made in the UK. ARIA should not be the vehicle for rewarding individuals for thought or teaching, for example, however wonderful. Can the Minister give the House some clarity on this?

Finally, the Minister said that a framework will be provided for the relationship between ARIA and the department. As so often in legislation, the framework can actually be more important than anything else, but we are told that we are going to see it only after we have passed the legislation. Can we see the draft framework before the end of the passage of this Bill?

Overall, I am enthusiastic about this Bill, and look forward to the slight nips and tucks here and there that I believe are necessary to ensure that this agency has the best shot at being an effective catalyst to— hopefully—so many of the future’s brightest innovators and inventions.

19:59:00

Lord Rees of Ludlow (CB)
My Lords, there is surely general agreement of the worthwhileness of ARIA’s goals. What is less clear is whether the small, stand-alone administrative construct conceived in the Bill is optimal, or indeed necessary, for achieving these goals, especially given the multi-layered and complex structure for science governance that already exists.

Not long ago, we had the major reorganisation of science funding that led to UKRI, introducing a layer of administration above the established research councils, such as the MRC. We have also had Innovate UK, and this year two high-level advisory bodies have been set up to oversee all this, adding yet another layer to the hierarchy. Surely we should be cautious about establishing another entity before these changes are bedded in and prove their worth. As the Minister said, 50 times more funds are spent on existing institutions than are envisaged for ARIA. The priority should surely be to ensure the maximum efficiency and minimal bureaucratic problems in these other organisations.

Confidence and high morale drive creativity, innovation and risk-taking. This is true in blue-skies science and equally true in the often greater challenges of the development of new products or businesses. A motive for ARIA is the perception that existing institutions cannot offer this, but the best institutions still do—I am lucky to work in one. But even in these privileged environments, there are dark problems ahead. My younger colleagues seem even more preoccupied with grant cuts, proposal writing, job security and suchlike. Prospects of breakthroughs will plummet if such concerns prey unduly on the minds of even the best young researchers. Worse still, the profession will not then attract the most ambitious talent from the next generation, nor draw in foreign talents. Many of us worry that the UK’s traditional strengths are consequently in jeopardy.

However, these negative perceptions can be reversed. I will mention two specific gripes that can be addressed. The first is that bodies that allocate public funds focus on ever more detailed performance indicators to quantify the output. This has the best of intentions, but its actual consequences are often the reverse: to constrain long-term thinking and prevent even a minority from having the privilege of fully focusing on long-term problems. The second bugbear is the REF, which is not only burdensome for universities but offering perverse incentives to researchers that discourage risk-taking.

The difference in pay-off between the very best research and the merely good is, by any realistic measure, hundreds of per cent. What is crucial in giving taxpayers enhanced value for money is maximising the chance of the big breakthroughs by backing the judgment of those with the best credentials and supporting them appropriately. Research universities do this and should be cherished. They benefit the nation through direct knowledge transfer from their labs to industry and through the quality of the students they feed into all walks of life. Moreover, high-profile academics can seize on a promising idea from anywhere in the world and run with it. Let us not forget that, despite the UK’s strength, at least 90% of the best ideas come from the rest of the world.

Despite these strengths, our universities are not always the most propitious environments for projects that demand intense and sustained effort. Dedicated laboratories such as the LMB are, in some contexts, preferable. Indeed, our national strength in biomedical sciences stems from the existence of laboratories allowing full-time long-term research, which is getting ever harder in today’s universities. Moreover, UK government funding is massively supplemented by the Wellcome Trust, the cancer charities and a strong pharmaceutical industry. To ensure effective exploitation of new discoveries, research institutions must be complemented by organisations, whether in the public or private sector, that can offer adequate manufacturing capability when needed. This fortunate concatenation certainly proved its worth in the recent pandemic. Government and private laboratories are crucial in health, plant science and energy. We may need more of them, and also more innovative ways perhaps of ensuring that IP generated here is optimally exploited.

However, given this complex ecology, do we need an ARIA organisation to achieve ARIA’s aims? This does not seem clear. ARIA’s proponents think that UKRI’s bureaucratic features are chronic—that we must be fatalistic about this and offer a lucky few the chance to bypass it. Indeed, UKRI has a very broad mission and is working hard to reduce bureaucracy, but much of it is imposed by government regulations. Can the Minister tell us why there could not be within UKRI a separate fund for supporting some projects in the ARIA style via a ring-fenced part of its budget that was less constrained by Cabinet Office and Treasury controls, which slow things up and constrain experimentation in funding allocation mechanisms? Could the Industrial Strategy Challenge Fund, a pan-UKRI programme, also achieve some of ARIA’s goals if bureaucratic constraints on it were loosened?

Finally, retaining our scientific standing is crucial. The UK will decline economically unless it can ensure that some of the key creative ideas of the 21st century germinate here and, even more, are exploited here. Unless we get smarter, we will get poorer.

20:06:00

Baroness Neville-Rolfe (Con)
My Lords, it is a great honour to follow the noble Lord, Lord Rees of Ludlow, one of our most distinguished scientists. I agree with him about the modern excess of performance indicators and the valuable contribution the private sector can make. I am very grateful to my noble friend the Minister for his clear exposition of the purpose of the Bill, and I declare my interest as a director of Health Data Research UK—which is largely funded by the Medical Research Council—and of Capita plc.

I am not a scientist. Indeed, perhaps because I went to an all-girls school in less progressive times, I have never had a physics or chemistry lesson in my life. I have, however, always been a huge proponent of scientific innovation and invention and everything that encourages them, from academic excellence to fostering a culture of enterprise. As a former Minister for Intellectual Property, I also regard a sound framework for the protection of IP as a vital necessity.

The context of these proposals is important. I congratulate the Chancellor on an assured Budget performance in very difficult circumstances. There was a cheering ending for those like me—watching from the Gallery—who believe that high taxes hurt the economy, and enterprise and innovation. I would single out his welcome extension of R&D tax credits to cloud computing and data costs, the shift to focusing tax relief on domestic rather than overseas research, and the increase in the UK R&D budget to £22 billion by 2026-27, which is 2.4% of GDP and a cash increase of 50% by the end of the Parliament.

I did, however, find one moment chilling: the growth forecast of 6% in 2022, 2.1% in 2023 and a miserable 1.3% in 2024. This is, of course, not the Chancellor’s fault. It is an OBR forecast, and we need to do all we can to prove it wrong. I want to see growth overshooting substantially. That brings us to innovation and its companion, productivity. We need major change to bring about a new dynamism in our economy so that growth takes off and is sustained. We can build on the success of the Covid vaccine and the legacy of our multiple Nobel Prize winners.

The proposal for ARIA is the most radical I have seen in my time in this House. It sets aside all the most cherished Whitehall controls which envelop all other agencies. It would create a significant, truly blue-sky research base not subject to normal constraints other than, of course, the financial limit. My view—which I think is widely shared if the discussion in another place is to be believed—is that it is both welcome and timely, given the country’s needs.

Given the greater freedom that the new agency will have, the choice of the right people to lead it will be vital, as my noble friend Lord Borwick said. That poses two questions: who will these be, and who will decide on them? I will be interested to hear from the Minister how that vital but difficult task will be managed.

On one illustrative point, we should certainly not specify how the new body should go about its work, as some parliamentarians have already tried to do. That would be absurd. Neither this House nor the other one, nor indeed Her Majesty’s Government, is likely to be the best authority on the development of science over the coming years.

Perhaps not for the first time, I am in a different place from my noble friend Lord Bethell. Societal challenges and fashions move on, as we saw with the pandemic itself. I believe we need independent thinking and that the agency should decide its own programme.

Normally in our debates I press at this point for the provision of a cost-benefit analysis of the proposal. Today I will not do so—I cannot see how such an analysis could be done before the new body is established—but we will need checks and reporting by the agency. I suggest that we need annual reports, while recognising that judgments of success will not be possible for several years and that patience and tolerance of failure are needed, as the Minister has said. However, eventually it will be possible to assess both successes and missteps, and we should not hesitate to do that. As one example, we should have a requirement in the Bill for the agency to make a full assessment of its work ahead of the 10-year dissolution power in Clause 8 so that we can determine objectively whether the experiment should be continued.

In all this, I am influenced by what I have learned of success elsewhere—for example, about the Manhattan Project. I was lucky enough to visit New Mexico before Covid and to learn from its museums, and those who have spent careers in the nuclear industry, of the importance of the people you put in charge of such a project, and of giving them responsibility and space. Those are the two concerns that I have already alluded to. In New Mexico the team was literally hundreds of miles away from any stakeholders.

As some of you will know from my Zoom backdrop, I am an enthusiastic student of the 18th-century Staffordshire potters. Stoke was the Silicon Valley of its day and mushroomed in a way not unlike the pop music business 200 years later. The entrepreneurs pioneered brilliant new chemical techniques and competed in a vibrant and growing consumer market right around the globe. Focus, competition and the stealing of each other’s ideas and master craftsmen were everyday occurrences.

Look at the rise of Japanese, Korean and Taiwanese manufacturing in the 20th century. They copied a lot but that was a skill that drove growth, and there developed in Japan a vital intellectual attitude—“lean thinking”, pioneered by Toyota—which has been an inspiration to successful businesses right round the world. Unfortunately, it has yet to be fully established in the public service or the NHS—but I threaten to digress.

This is a worthwhile initiative. I support the Bill’s Second Reading and look forward to its progress through the House.

20:13:00

Baroness Noakes (Con)
My Lords, it is always a pleasure to follow my noble friend Lady Neville-Rolfe. Like her, I support the Bill. My interest in research and development is not in the science per se but in its link to productivity and growth. I see it as a driver of economic gains and wealth creation and, as my noble friend said, that is important in the context of the economic situation we are facing.

Noble Lords will know that I am not a big-state person. My instincts are to keep government and the public sector well out of the way of the business of wealth creation. However, I back the Bill because I know we cannot rely on private sector enterprise or the research programmes of universities or elsewhere to optimise outcomes for UK plc. Of course there are some fabulous examples of successful research leading to genuinely world-beating and commercially successful products and services, but I do not believe that the UK has maximised the potential in and for our nation. So I am prepared to try another way. We should be thankful that Dominic Cummings was determined to create a UK version of the US ARPA. I know it is not fashionable to say that Dominic Cummings did anything of value but I believe he deserves credit for driving this idea forward.

I see ARIA as a once-in-a-generation opportunity to break out of the old way of doing things. As has been said, this means not only accepting failure but welcoming it. Traditional ways of thinking about how public money should be spent do not accommodate failure, and successful careers in public sector organisations rarely have failure in their foundations. ARIA has to be able to take much bigger risks than any normal public sector body would dare to take.

A crucial part of this is to ensure that the new agency is headed by outstanding people with vision and intellectual boldness. These people do not exist in large numbers. As other noble Lords have referred to, I know that the Government have been pursuing the key appointments of the first chief executive and first chairman, but I understand that the recruitment process for the chairman has been deliberately paused. I hope that my noble friend the Minister, when he winds up, will say something about where the Government have got to with these appointments and the timescale to which they are now working.

The composition of the whole board will also be important if ARIA is to operate outside the risk-averse culture of the public sector. I hope that, when the non-executives are appointed, the Government will focus on genuine diversity rather than ticking Equality Act boxes. Genuine diversity means people with diverse mindsets and thinking patterns, and it means people who reject groupthink. The worst possible thing would be a board that squashed risk-taking and innovation. To that end, I believe that the Government should not appoint any civil servants to the board—with the possible exception of the Chief Scientific Adviser, who is mandated under the Bill. I propose to explore that further in Committee.

Another crucial element is that we should not tie the organisation up in bureaucracy. For that reason, I fully support the exemption from the Freedom of Information Act. If noble Lords wish to pursue this in Committee, as I expect they will, I hope they will remember that Tony Blair, the architect of the freedom of information legislation, said that it was

“utterly undermining of sensible government”.

If it undermines sensible government, what would it do to a groundbreaking organisation such as ARIA? It does not bear thinking about.

I also reject the notion that the Government should be setting an overarching strategy for ARIA. What ARIA focuses on should be the product of the big brains that I hope the Government will be appointing to the organisation. It should not be forced into following the political thinking of the day. The Government have plenty of other opportunities to promote things on their own agenda. We have to set ARIA free in this important respect.

I shall want to explore in Committee whether ARIA should have the power to borrow money. An unconstrained borrowing power, as found in Schedule 1, is dangerous. I support the initial commitment of £800 million because it is limited. We can draw a circle around it and, at some stage—not too early—we can see whether the nation is getting value for money. A power to borrow money could allow it to increase its scale very significantly and, under the well-established doctrine of standing behind, that could leave taxpayers picking up a much bigger bill than £800 million. There is a big difference between placing an £800 million bet, which might produce nothing in return, and underwriting someone’s credit card.

I look forward to the Bill becoming law and to starting a new chapter in the UK’s exploitation of its talent and resources.

20:19:00

Lord Broers (CB)
My Lords, I agree with this proposal. We need an advanced project agency similar to ARPA. However, in setting up this agency, it is important that we understand what makes these agencies successful, and I think we are on the way.

To declare my interests, I worked for IBM in the USA for about 30 years, in its research and development laboratories and as a member of its corporate technical committee and science advisory committee. Additionally, and related to the US agencies, this year I chaired a sub-committee of the Draper prize committee of the US National Academy of Engineering. The Draper prize is the academy’s top prize. It has been awarded to those responsible for ARPANET, GPS and several other outstanding achievements of ARPA and DARPA over the years. The Queen Elizabeth prize for engineering has also been awarded to those responsible for the internet and GPS. I also declare that I drew together and chaired the first committee of judges for that prize.

Therefore, I have spent a lot of time studying how these remarkable accomplishments were realised and the characteristics of those responsible for their successes. As has been extensively discussed over the last year, ARPA and DARPA have contributed significantly to the dominance of the US in many high-technology industries, but of course they have not done these things on their own. They have drawn on industrial companies, other government agencies and universities, weaving together diverse capabilities to provide solutions to perceived needs. They did not invent these solutions, although many inventions emerged in developing them. Their genius was in pulling together the ingredients from the vast worldwide reservoir of science and technology. Their project leaders were noted for their breadth of expertise. They are a select group of highly talented individuals with exceptionally broad knowledge of science and engineering, and of the interfaces between the scientific disciplines—people who, for example, can tell whether a problem encountered in a highly complex computer-controlled system is a software or a hardware problem, or a matter of the science.

These exceptional people are paid a lot of money by UK standards. They are also obsessively focused on attaining the goals of the system that they are building and are not easily tempted to explore the new discoveries that invariably emerge when one builds new equipment. That is the regime of science, where the aim is to explore and extend human understanding. It is not the stuff of a project agency. In the USA, it is handled by the National Science Foundation. I have asked my friends in the US whether it would be a good idea to put their ARPA inside the National Science Foundation. They just laughed. To quote Dr Highnam, the ARPA project manager and office director who spoke to the Commons Select Committee on Science and Technology:

“DARPA is not a blue-sky research place; we do not do that. Even with our fundamental research we know where it will be applied if we can make the science possible, all the way through to the higher technology systems programmes.”


They are not LMBs, which are temples or palaces of scientific genius, not project agencies. ARIA must select leaders who think like project agency managers and have this vast reservoir of knowledge. It is about project management and combining the knowledge and expertise that already exist, more than it is about invention, despite the name that has been given to this agency. I crossed out “inappropriate” but the noble Viscount, Lord Stansgate, sounded as though he would like to put it back in.

Successful high-technology projects need, as far as possible, to be free from time and money constraints. Therefore, the US agencies have been granted a lot of independence and freedom from continuous assessment —something that has rarely, if ever, been granted by the Treasury here. It is reassuring to see that ARIA is to have a minimum life of 10 years. This does not mean that it must be isolated. It will need to have close relations with Innovate UK, drawing from it the raw material of technological advancement and knowledge of where the skills to effectively apply what innovators have already extracted from the science reside. It must also have intimate knowledge of what is happening in industrial R&D laboratories and in universities. It will not be easy to be clear about the interface with Innovate UK, because Innovate UK was itself given many of the aims that have now also been given to ARIA.

The major advantage of forming this new agency is that it will not have to compete directly with the research councils for its funding, nor live within the regulatory structure of UKRI. Fortunately, there have been some very helpful recent changes in the management of Innovate UK, especially the appointment of Indro Mukerjee as its CEO, who understands project management. These changes should enable Innovate UK to play an effective role, working with ARIA, finally to provide competitive technology transfer in the UK.

However, I am still worried that we are at risk and will not learn from the past. After all, if Innovate UK had achieved what it was meant to—to drive technology transfer—we would not need ARIA. I was amazed to read that it was proposed by some that ARIA should be placed within UKRI, ensuring that history would repeat itself and ARIA would also fail by having to compete for funding using metrics designed for science rather than technology transfer. That is not to mention the regulatory structure of UKRI, which, while excellent for pure science, has not been optimum for Innovate UK.

Finally, how will the catapults, which were also meant to solve our technology transfer problem, fit into this confused cluster of councils and agencies? If there was more time—which there clearly is not—I would ask how it all fits with the grand challenges and the industrial strategy, but others have done that.

20:26:00

Lord Patten (Con)
My Lords, the general tone of this debate—one of overall welcome and support for the Bill, in reaction to what my noble friend said in his excellent introduction—was set, if I may say so, by the noble Viscount, Lord Stansgate. I listened most carefully to what he had to say in his entertaining, as well as perceptive, words. I enjoyed it very much, as I enjoyed what his father said a long time back when I was a new Tory MP on the green Benches in the other place, making my maiden speech back in 1979. When I sat down, the then right honourable Tony Benn MP stood up as the next speaker and said all those nice things that you say to a new boy or girl. Very welcome they were, and I thought, “That was very kind”, sat down and thought no more about it until, on the way to the station to go down to the constituency for the weekend, I got a slightly panicky message from my constituency party saying that there was trouble in the party about my maiden speech. I had been a Member of Parliament for only a moment or two and had no idea what I could have said that would have caused any trouble at all until I got off the platform at Oxford station and saw the billboards for the Oxford Times saying, “New Tory Member Makes Maiden Speech Praised by Tony Benn”.

That said, I have four quick points to make. First, I strongly support the Bill, all the more so because it is a manifesto commitment that has been carefully crafted and kept, which does not happen with all government legislation. Long may it become a habit, I say to my noble friend, that we keep our manifesto commitments.

My second remark is that we are setting up for the UK a novel blue-skies body. Everyone else has said this; they are quite right and I will not labour the point. It is right, however, that throughout, our national security, about which we all feel strongly, is protected. Hence the need, contained in the Bill, for ARIA to accept directions from the Secretary of State. I know that my noble friend the Minister said, in his introductory remarks to which I listened carefully and will hold him to, that that is where it would all stop, but the powers must stop sharp there. Ministers must never be allowed to seek to nudge, let alone give direction, to promote other parts of their political agenda. To make up a random example, they must not help the levelling-up agenda by putting something in some part of the country, totally randomly chosen, which might need a leg up.

My general message is “Hands off”, and I look forward to reaffirmation by my noble friend that that will indeed happen. “Hands off” was what got DARPA off to such a cracking start back in 1958. The US is very lucky to have been a leader here, and to have spawned from DARPA a good number of similarly great private sector companies, such as IBM and others.

I have known some of these pretty well, and there has been a bit of copycatting to a very successful degree. Take Boeing, the aerospace company: it has an outfit called Phantom Works, which no one dares, or is allowed, to get near. Or there is Lockheed Martin’s endearingly—indeed trademark—named Skunk Works, which is more difficult to get into than Fort Knox. I must declare my interest as, for some 12 years, I was an adviser and a non-executive director for Lockheed Martin Corporation and my shareholding continues to be declared because it is current in the Register of Members’ Interests. So I know this world a little bit, and I just wish that more UK companies had set up such DARPA-like bodies years ago.

Thirdly, the quality and imagination of the leadership of this new body will be absolutely critical. The noble Lord, Lord Davies of Brixton, was thinking about who might be served up to the Secretary of State and what might be in the Secretary of State’s mind. The noble Lord, Lord Patel, said in his admirable remarks that one of the most important things of all is getting the leadership right. We do not want to have a head hunt as they will be queuing up to earn an honest pound by producing lists of the same old—with respect—FRSs and Nobel Prize winners and the great and the good of the scientific world. We need them to find someone daring, free thinking and original, but of course, responsible, committed and scientifically knowledgeable.

Here I have no interest at all; I have never met, communicated or worked with her, but I think the now—happily—Dame Kate Bingham has just those qualities that some man or woman could well replicate. Some noble Lords will remember her transformation from zero to hero. When she was first given the job by HMG she was excoriated by the worst sort of commentariat and media people, and suddenly, six months later, she was a national hero. So I would like my noble friend the Minister to undertake to pass on my remarks to the Secretary of State in these terms: appoint sensible risk-takers, not referees.

Lastly, I strongly support the determination of the Government to keep the endless FOI regime from getting further and further into it, opening the door of a small, highly staffed and not hugely financially endowed body with the specific mission to risk failure to those tendentious inquiries and time-wasting journalistic fishing expeditions to get a story in which they can say that something has failed. We can all see that coming.

I greatly hope that the Bill is a success and I look forward to it passing. Who is to say, the work of ARIA might even help to solve one of the great mysteries of the day: why the UK continues to have such low levels of productivity.

20:33:00

Lord Ravensdale (CB)
My Lords, I very much welcome the Bill, and it comes at an extraordinary time for scientific progress in the UK and around the world. I first declare my interests as an engineer and project director working for Atkins, and as a director of Peers for the Planet.

As we look to accelerate R&D spend in the UK, it is right that the Government look at the means of delivering that spend, learning from the most successful similar institutions around the world, notably DARPA, from which ARIA takes its inspiration, as many noble Lords have said. ARIA certainly takes one lesson of DARPA to heart: getting bureaucracy out of the way and letting a high-calibre team deliver high-risk, high-reward research. But there are two other lessons of DARPA that are important: first, a clear purpose for the organisation—in DARPA’s case, national security; and, secondly, a client to take on and translate the innovations produced by that organisation—in DARPA’s case, the DoD. This perhaps becomes more important for ARIA. The £800 million is a generous amount of funding, but relatively small in the overall R&D landscape. To maximise the impact of this funding, the Government must carefully consider what the organisation is driving at, as the noble Lords, Lord Patel and Lord Bethell, and others, have said.

The question then becomes: what should the purpose of ARIA be? It should be aligned with the strategic priorities of the nation, and foremost among these are the UK’s net-zero targets and environmental goals, as the noble Lord, Lord Davies, said at the end of his speech. Giving ARIA a sustainable purpose will still allow a flexible approach to research, while at the same time aligning with the innovation strategy, which highlights the need to direct innovation towards

“our top priority societal missions … like the climate and biodiversity crises”.

The recently published UK Net Zero Research and Innovation Framework does not mention ARIA, but stresses the importance of a whole-system approach to address the challenge of net zero. I would be grateful if the Minister would confirm how, without mention of our net-zero or environmental goals, ARIA will align with the Government’s broader objectives of net zero and, in addition, the mission suggested by the new Council for Science and Technology.

I have recently spoken with Professor Richard Jones, who has been involved in much of the thinking on the formation of ARIA, and a number of other academics who agreed with alignments with net zero and environmental goals being a suitable focus for the organisation. This represents an excellent opportunity for the Government to maximise the benefit from the £800 million funding; to demonstrate to international partners post-COP a new model for climate and net-zero R&D; and to develop the new technologies which we will need to help the UK and the rest of the world achieve our targets.

A final point is about how this organisation fits into the levelling-up agenda. The Government must carefully consider the location of the headquarters of ARIA. Another lesson learned from DARPA was that its headquarters location was fortuitously away from some of the main research centres of the United States, thus avoiding inevitable capture of research funding from institutions in a particular area and encouraging take-up of ideas from all parts of the country. I would be grateful if the Minister can add something in his summing up on how the Government intend to select a location for ARIA HQ.

As we all know, DARPA was formed in response to the panic following the launch of Sputnik in 1957. I believe that the response to the climate and nature crises should mirror the response so long ago to a very different threat in rethinking our innovation systems, and I hope that ARIA has a key part to play in that response. I look forward to putting forward amendments in these areas as we move forward to Committee.

20:36:00

Lord Fox (LD)
My Lords, this debate has benefited from all the speakers knowing what they are talking about—I think this is the point at which that ends. It is a difficult debate to seek to summate, but before I try, I shall make a couple of general points. The first is about funding. As my noble friend Lord Clement-Jones said, the Government have pushed their science spending back by two years and down by a couple of billion. That puts us in the position of spending 1.1% of GDP of government money. The Government’s target is 2.4%, so how will the Government raise the rest of that money? It just got harder: analysis by the Campaign for Science and Engineering indicates that, because the Government have pushed that deadline two years further into the future, it will result in a loss of around £11 billion of private R&D funding, so some words on that would be appreciated.

Secondly, the noble Lord, Lord Bethell, spoke about orientating the future ARIA around clear societal challenges, and a number of your Lordships set out lists, not least the previous speaker. I join him in suggesting that this country’s response to the biggest challenge that we face—climate change—is a real rallying point that this agency could pull around.

I shall now move to the specifics of the Bill. The noble Lord, Lord Davies, was a little disparaging about the Minister’s enthusiasm in delivering his speech. I beg to differ. I have sat through many speeches of the noble Lord, Lord Callanan, and I thought this one showed traces of bravura to match the ARIA that he is proposing.

We have heard from almost every speaker that there are many questions about what this agency is for: how decisions will be made, how the organisation will go about delivering funding and how it will do its job, never mind what its job actually is. When the Minister kindly met us, he said that most of these questions would be answered when the CEO and the chair were appointed and the framework agreement was written—but the problem is that all of these appear after the Bill reaches Royal Assent.

This is a crucial point. The framework document is instrumental in how this agency will interact with existing funding organisations. Perhaps it may even set out the risk and reward balance; a number of noble Lords brought up this important point. It should indicate how ARIA operates with the Government and the relationships it will create with its clients. It will be the essential operational blueprint between the Government and the agency but, of course, we will not know all of this. We are not allowed to know all of this. In other words, the Bill is an £800 million blank cheque. We effectively know nothing about it. There are some broad, impressionistic brush strokes but, like many such paintings, those are open to interpretation. One of the reasons we are all able to welcome this agency is because none of us know what it is.

The Government say that ARIA will diversify UK R&D funding streams by having the autonomy to choose and fund high-risk programmes across different research areas—which sounds quite good—and that the creation of ARIA does not impact the UK Research and Innovation’s system-wide responsibilities for R&D. This is the big elephant in the room, because however you look at it, the setting up and positioning of ARIA is an implicit, if not explicit, criticism of UKRI. For example, there have been a number of comments about the level of bureaucracy within UKRI. I would remind your Lordships that UKRI is only three years old and a Conservative Party invention. The research bureaucracy we are talking about is the creation of the Benches opposite. When it was being established, there was a lot of questioning about whether Innovate UK should be incorporated within UKRI; I was one of the people who questioned this. We were assured at the time that UKRI would have no problems funding and managing such diverse streams of research and post-research activity.

So, there are issues, but we need to be careful. The way in which ARIA was invented and set out is, of course, to deliver a different sort of agency, but it was also a deliberate attempt to create an anti-UKRI. It is there to counterpoint the issues that were perceived within UKRI, and in our enthusiasm to embrace the unknown and the new we have to be very careful not to throw out the great things that are being delivered by UK science and by the funding that is going through.

I am very interested by today’s announcement that the Government have decided to have a review of UKRI taken through by BEIS. It would be good if the Minister could tell us a little bit more about the objectives of that review. Those who will carry it out could do no better than to heed the words of the noble Lords, Lord Rees and Lord Broers, who had some very wise things to say.

My noble friend Lord Clement-Jones described the string of publications and activities addressing the whole research, development and technology sector. Like me, he can discern no guiding light, no golden thread and no actual delivery plan in many cases. The day before recess, one more of these documents landed on our metaphorical doormats: the UK Innovation Strategy, which has yet to be discussed in your Lordships’ House. It is a very long and detailed document. While neglecting to include what may be called a solid plan, it is very strong on analysis. Within that analysis is a quite powerful description of the need to move ideas and inventions more effectively up the innovation pipeline and into the market.

This analysis of the real challenge facing the UK, which I assume to be the Government’s settled view, chimes with things we have heard today and for many years about the UK’s shortcomings. That goes something like: “We are good at inventing things but poor at turning those inventions into thriving businesses that deliver future prosperity.” Yet one of the few things we do know about ARIA is that the “I” stands for invention, the very thing that we think is a national strength. Unlike the noble Lord, Lord Patel, who likes the word, a number of other Peers do not—my noble friend Lord Clement-Jones and the noble Lords, Lord Bethell and Lord Broers, are among them. I question whether it points the research organisation in the wrong direction. I know that it was the subject of an unsuccessful amendment in the Commons, and the Minister will shrug and say, “What’s in a name?” He will pledge that the organisation could operate throughout the technology readiness continuum. It could, but will it? If there was a mission statement, a purpose, and goals and measures, to some extent we would have a better idea, but what we actually have is a name that includes the word “invention”.

Along with the name, the budget is the other thing we know, but that is not what it seems either, because £300 million of the promised £800 million falls outside this spending review period and it falls in the next Parliament, over which this Government can claim no dominion. So, in reality, the budget is for a £500 million commitment for three years, yet the Bill emphasises the need for a long-term process and sets the 10-year minimum that we have heard about which the Secretary of State currently can kill using a statutory instrument. As one of your Lordships stated, the DPRRC is uncomfortable with this, and I am sure we shall discuss it in Committee.

Of course, there is more than one way to kill a research organisation. The Secretary of State of the day has the power to starve ARIA of funds. To create a long-term future, it requires multi-Parliament funding, and the best way to create long-term commitment to ARIA is to gain consensus across the political spectrum. If we all bought into this idea, its future would be much more easily assured. The issue around failure, which I think the noble Lord, Lord Kakkar, was wise to suggest, would also be easier to manage if there was a widespread political consensus.

But far from using this process to bring us into a big tent, the Government are erecting a “No entry” sign. Of course, I refer to the exempting of ARIA from the freedom of information obligations. That is wrong. We think that at least £800 million of public funds will be spent, and there needs to be some accountability. As my noble friend pointed out, DARPA submits itself to the US equivalent of FoI and it seems to have nothing to fear. Of course, in this country, the Information Commissioner’s Office is clear in its opposition. If the Minister wanted to engender mistrust and to sow seeds of suspicion about ARIA, I suggest this is one way he could go about doing it.

To enjoy a long-term future, ARIA needs the whole political spectrum to support it, but how can we support something when we do not know what it is and how it is going to do what it does? Why should we support something when the people proposing it seem determined to hide from us what it is actually doing?

This legislation could have been a chance to gain that necessary consensus, a chance for the Government to set out their stall and explain the role of ARIA, but the problem is that the Government do not know what ARIA is for. They have not made up their mind; they are waiting for someone else—the chief executive and the chair—to tell them what it is for. This was a chance to help put some of those pieces together.

I had the same word written down as the noble Viscount, Lord Stansgate: ARIA is an idea—an idea waiting for someone to decide what it is for. All the decisions taken to establish its role will happen after the debate on this Bill is finished. I would describe that as unacceptable; I look forward to Committee.

20:50:00

Baroness Chapman of Darlington (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Fox, and encouraging that there is broad support for this initiative, albeit with some concerns raised by noble Lords on all sides of the Chamber.

As the noble Viscount, Lord Stansgate, said, in his informative and well-informed speech, ARIA needs a licence to fail. I need look no further than some relatives of mine to learn the lesson that repeated failure is often a necessary part of the process. I am distantly related to Orville and Wilbur Wright. They would not have succeeded without years of crushing failure. These self-taught engineers took years and countless attempts to get anywhere close to powered flight, but get there they did. At times, they thought it would never happen, and yet here we are, in 2021, discussing whether there is now too much air travel.

The Wright brothers were, of course, American, but the UK is also a nation with a proud scientific tradition. Alexander Fleming, Dorothy Crowfoot Hodgkin, Francis Crick and Tim Berners-Lee are just some of the names we can look to for inspiration. For a nation with such a proud tradition as ours, it has been disappointing that, for the past decade, the Government have neglected investment in education and our future scientists. Also missing has been sufficient long-term, high-ambition research and development, so it could be that this Bill marks a turning point.

These Benches support the creation of the Advanced Research and Invention Agency, and for that reason we do not intend to oppose the Bill. We will, however, seek to amend it because, in its present form, we do not believe that it properly prepares the agency to succeed in the way that we all want it to do. It is disappointing that the Bill does not offer direction, purpose or mission—as we have been calling it today—for the agency, despite the expectation that it would do so. Various schedules and accompanying framework documents have been referred to but have not yet been made available to noble Lords to assist us in our consideration of the Bill. Without any real accountability or defined strategy, there are obvious concerns that ARIA could end up pursuing vanity or pet projects, rather than the public interest.

We want the agency to work for and invest in all regions and nations, to unlock potential across the UK. We view this somewhat differently from the noble Lord, Lord Patten. Science and innovation have enormous capacity to help address regional inequality and bring opportunities to towns and cities across the four nations of the UK. After all, investment in research means investment in jobs. This will happen if ARIA is given a duty to make it happen. We make no apologies for asking the Government to explain how every region benefits from the £800 million spend, because, as things stand, they are leaving too much of this to chance.

On climate, we meet today as COP takes place in Glasgow, as the noble Lord, Lord Ravensdale, said. ARIA presents an opportunity to enable scientists to do more to find solutions to the threat of climate change. The agency must contribute to action on climate and help in the mission to net zero. That is why the Opposition Front Bench in the other place called for the environmental emergency to be the driving mission of ARIA’s first decade. At that stage, the Government did not want to make climate the priority—and did not want to make anything else the priority either. The danger is that, if we do not prioritise, everything becomes important and less is achieved.

Many noble Lords have made the point that letting a thousand flowers bloom is a lovely idea but if we want to make impact we need to make choices. Labour believes that the prioritisation of climate research is essential. We will continue to put this case to the Government, who may be more receptive to the idea, given the benefits of investment in technology they will have seen at COP. Only through well-defined ambitions such as these can the agency fulfil its potential.

On the issue of governance, as we have heard, ARIA has, in principle, cross-party support, but to stand the test of time the agency does not need a clause in a Bill guaranteeing its survival—as it currently has—as my noble friend Lord Davies explained. I refer noble Lords to the Fixed-term Parliaments Act 2011 as evidence of how to get around attempts of predecessor Governments to bind the hands of their successors. As the noble Lord, Lord Patel, said, the key to ARIA’s survival is that it must act, and be seen to act, in a way that is solely for the benefit of scientific discovery—not following the passions of the chief executive, not benefitting the business associates of any of the board, and with a clear idea of what success looks like, especially given that ultimate success may take years to realise.

Helpfully, in July 2020 the NAO published a paper for the Science and Technology Committee designed to assist the Government in establishing what was then known as the Advanced Research Projects Agency. The report looked carefully at how to balance the independence of what is now ARIA with the assurance that is needed for it to be secure politically. Without this assurance, ARIA will always be vulnerable to attack on the basis of value for money, cronyism or whatever else. I invite noble Lords to imagine the pressure upon Ministers to intervene should it emerge that grants had been given to a company in which a board member, say, or a member of their family, has an interest. We must ensure, therefore, that the public have absolute confidence, not that every venture will result in a scientific breakthrough but that decisions are made in the interests of science alone. It is in ARIA’s own interests to get this right.

The NAO report refers to what it calls the six principles of effective oversight of new bodies that it would like to see ARIA adopt. These are: clarity of purpose; clear alignment of objectives between departmental plans and the new body; a balanced approach to financial risk; a proportionate and transparent approach to oversight; streamlined processes that avoid overlap with other bodies, which was a point raised by the noble Lord, Lord Rees; and taking opportunities to provide greater value by involving the body in policy development. So far, the information available from the Government is insufficient to enable us to assess whether ARIA will meet any of these principles; indeed, some of it has made clear that it will not meet some of these principles. For instance, it has to stop large sums of money being spent on operating costs as opposed to research. What is to prevent ARIA spending large sums of money on projects that benefit close friends or associates?

When I raised this concern with the Minister at the meeting he helpfully organised for us last week, I was advised by officials that, in essence, I did not need to worry about these issues, as Schedule 3 to the Bill would answer my concerns. Following the briefing, I read Schedule 3 and, from my reading, it seems that paragraph 11 amends the definition of “contracting authority” in the Public Contracts Regulations 2015 to exclude ARIA. This means that the obligations in these regulations that apply to a “contracting authority” will not apply to ARIA. It will not be subject to FOI, as we have heard, and it will not be subject to public contracts regulations. This is an issue that we need to return to as the Bill proceeds.

What about ethical issues? What about animal experimentation, publication obligations, intellectual property and conflicts of interest? We will be asking the Government to come up with answers to these questions too.

Often, failure is all part of the long process of discovery. As the Wright brothers show us, it is perseverance, not a quick win, that changes the world. Inventors and scientists need to be allowed to fail, but ARIA does not need to fail. We will challenge the Government on the Bill, not because we want it to fail but because we want it to succeed.

20:59:00

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I thank all noble Lords who contributed for their engaging and, I thought, in general, very constructive contributions to the debate today. Many noble Lords made excellent points, and I will attempt to answer as many of their questions as possible.

Today’s debate, on a tripartite basis, demonstrates a shared passion to foster the UK’s world-class research base. Ensuring that the UK is the best place in the world for scientists, researchers and entrepreneurs to live and work is at the heart of the R&D road map. Despite the small criticisms raised by the Opposition Front Bench, there was generally commitment from all three main parties and from the Cross Benches to those objectives. It is central to the Government’s plan to build back better, and an integral commitment which last week’s spending review and Budget showed.

It is thanks to our dynamic research landscape that we have responded so robustly to the Covid pandemic, as my noble friend Lord Bethell so helpfully reminded us. The challenges that we have faced show just how important it is that we always remain on the front foot of research and development. And, as set out in the UK Innovation Strategy this summer, this can only be achieved through a rich and diverse research and innovation ecosystem.

I now turn to the specific points raised by noble Lords in some of their very good speeches. My noble friend Lord Bethell, and the noble Lord, Lord Ravensdale, asked good questions about why the Government will not be setting a research focus for ARIA’s activities. At her appearance during this Bill’s Committee stage in the other place, the chief executive officer of UKRI, Professor Dame Ottoline Leyser, spoke about how

“the priorities that the Government and Ministers set to solve particular challenges for the nation … fall very much within the UKRI remit”.—[Official Report, Commons, Advanced Research and Invention Agency Bill, 14/4/21; col. 8]

The Government’s innovation strategy also set out our commitment to establish a new missions programme to tackle some of the most pressing challenges confronting the UK in the coming years. These will be decided by the National Science and Technology Council, chaired by the Prime Minister, in due course. Through these new mechanisms, this Government are taking a revised, strategic approach to assessing and funding our national scientific priorities. It would clearly be inappropriate to create another new body to do essentially the same thing. To reach new, brilliant people and ideas, we must diversify our ways of funding research, and I welcome the support of my noble friend Lady Neville-Rolfe on this point. Clause 2 sets out how ARIA could achieve this, offering a broad range of support to R&D and—in response to my noble friend Lord Borwick—we do not expect it to offer prizes as understood in a common sense. What “prizes” refers to in this context is better termed as research competition, where multiple teams of scientists attempt to solve essentially the same problem.

The noble Lords, Lord Patel and Lord Davies of Brixton, asked about ARIA’s scope and objective. The noble Lords, Lord Clement-Jones and Lord Ravensdale, also asked about the technologies which ARIA would fund. The Bill sets out ARIA’s functions, and in the policy statement we have also set out its design principles. But to uphold the autonomy which is at the heart of this new agency, only ARIA’s leadership itself can be responsible for specifically setting out its strategy and its funding priorities. It is not a blank cheque, as the noble Lord, Lord Fox, has suggested.

The noble Lord, Lord Rees of Ludlow, in his contribution asked whether what we are trying to achieve through ARIA could be delivered through UKRI. I reassure the noble Lord that, in designing ARIA, we carefully considered all delivery options to optimise its chances of success. The noble Lords, Lord Clement-Jones, Lord Kakkar and Lord Broers, also asked about how we make sure that ARIA will work hand in hand with UKRI and the wider research landscape. Of course, while we are diversifying our system, it will only work if it is cohesive. It is not always necessary to legislate for these sorts of relationships. Communication, openness and trust are things which ARIA’s leaders will need to have not just with UKRI but with other stakeholders across the entire ecosystem. We have been looking for exactly these qualities in our recruitment of ARIA’s CEO. I pay tribute to the creation of UKRI and the bringing together of the research councils and Innovate UK under one umbrella, a point that was noted by the noble Viscount, Lord Stansgate. His was an excellent contribution, and I hope we can look forward to further from him on this subject.

Viscount Stansgate (Lab)
My Lords, I thank the Minister, and would like to invite him and the Government Whips to approach Hansard and ask them to publish in italics the half of my speech which had to be cut.

Lord Callanan (Con)
I am sure it was equally as good as the first half of his speech and that the Whip has taken careful note. It is a principle of our Committees that we try not to have the same speeches we got at Second Reading made again—a point most Members tend to ignore—so the noble Lord is well positioned to make a new contribution in Committee. Most other Members could perhaps take note of the excellent example that he will be setting them.

I also recognise the sentiment of the noble Lord, Lord Rees of Ludlow, that the setting up of UKRI was not that long ago in the grand scheme of things. With an £8 billion budget, UKRI has system-wide responsibilities and with this comes a certain operating model. I refer the noble Lord, Lord Fox, to Professor Leyser’s other comments, where she said at her select committee appearance that UKRI’s responsibility to make the whole system work sometimes makes it harder to do the wild experimental things.

In contrast, as enabled by Clause 3 of the Bill, which has been the focus of a number of contributions from noble Lords, it is ARIA’s mandate to do the experimental things and push the frontiers of science. To achieve this, it must have a streamlined structure and minimal bureaucracy. In response to the noble Lord, Lord Rees, this goes beyond what is possible or desirable under the legislative framework and governance arrangements in place for UKRI as the system’s core funding agency.

In reply to the question put by the noble Lord, Lord Fox, as part of any Parliament it is usual to review our partner organisations to ensure that they are successfully fulfilling objectives on the Government’s behalf. The independent review of UKRI to which the noble Lord referred began yesterday under the leadership of Sir David Grant, and it will be reporting to Ministers in due course.

The noble Lord, Lord Rees, also mentioned a very important point about how ARIA’s success will be measured without constraining creativity. There are is a key point I would like to put to the noble Lord here. One of the key features of the ARIA model is its hands-on approach to project management, with projects constantly being re-evaluated and reassessed. ARIA’s agility means that programmes can not only start quickly, but they can also be halted quickly too. ARIA should not be judged on projects that fail in the short term because that is the nature of high-risk research.

The noble Lord, Lord Kakkar, in one of his typically excellent contributions, asked about how ARIA can truly be risk taking as a government arm’s-length body. We will have both legislative and non-legislative mechanisms to enable ARIA to operate boldly and autonomously. Clause 3 in the Bill equips ARIA to give particular weight to the potential benefits of high-risk research in carrying out its functions—not just what research it funds, but how it funds it. We will also set out in a future framework document and other agreements, a unique and specific set of financial and non-financial arrangements to cut unnecessary bureaucracy and ministerial control from ARIA’s operations. I hope that will also allay the concerns raised by the noble Lords, Lord Patel and Lord Broers, on protecting ARIA from day-to-day political pressure. The independent review of research bureaucracy being led by Professor Adam Tickell will also consider bureaucracy from a system-wide perspective. Interim findings will be produced this autumn, and we are expecting a final report to follow in early 2022.

In terms of governance, the noble Lord, Lord Patel, asked who the senior Minister with responsibility for ARIA will be. As my noble friend Lord Patten helpfully reminded us, as a manifesto commitment ARIA is a priority for the Prime Minister and the Cabinet. The Bill provides a specific role for the Secretary of State and any delegation of ministerial responsibility would be at the Secretary of State’s discretion.

I move on to the decision to exempt ARIA from freedom of information requests, which was raised by a number of noble Lords: the noble Lords, Lord Clement-Jones, Lord Davies of Brixton and Lord Fox, and the noble Viscount, Lord Stansgate. I reassure the House that the decision to omit ARIA from the FoI Act has not been taken lightly. To create the extraordinarily lean operating system that I have spoken about, we have had to consider what the most appropriate mechanisms to assure transparency and accountability are within ARIA. I thank my noble friend Lady Noakes for her support on this. Together, robust arrangements are in place that will provide a clear picture to Parliament and taxpayers about how ARIA’s activities are funded and where it spends its money. So I politely refute the views of the noble Lord, Lord Fox, on this.

First, the Bill requires ARIA to submit an annual report and a statement of accounts, which will be laid before Parliament. Secondly, ARIA will be audited by the National Audit Office and will be the subject of value-for-money assessments. Thirdly, ARIA will interact with Select Committees of this House and the other place in the normal way. Finally, we will draw up a framework document, detailing ARIA’s relationship with BEIS and further reporting requirements, such as details of what is published in the annual report. It is also an important fact that other bodies subject to the FoI Act, such as universities and government departments —including my own, BEIS—will still process requests about their activities with ARIA in the usual way.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests in DARPA. It is an interesting fact that, when making an FoI request in the US, requesters are required to consider paying applicable fees of up to $25—I think that that is an excellent idea. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, there is not a like-for-like comparison to the FoI process in the UK, where, as I am sure the noble Lord will be aware, we get hundreds of what I call “sweeping requests” from people fishing for information when they are not really sure what they want but think that there might be something there, so they pour in FoI requests. Therefore, it is not right to assume that ARIA will receive a similar amount of FoI requests to DARPA.

The noble Lords, Lord Clement-Jones and Lord Fox, and my noble friend Lord Borwick asked about whether the Government will publish the framework document during the passage of the Bill. I should be clear that the framework document will not set a vision or strategy for ARIA—as I have said, that is for the organisation itself. It is a governance document that will follow the Treasury’s standard template and set out the role of BEIS as ARIA’s sponsoring department, its accountability, decision-making and financial management. Given the nature of its content, the framework document must be agreed with ARIA’s senior leadership, for which we are still recruiting. We are therefore not able to publish a draft framework document at this stage, but I would like to reassure the House that I will do so as soon as I am able to.

I thank the noble Baroness, Lady Chapman, for her general support, from the Opposition’s point of view, for the Bill. She rightly asked about the provisions in the Bill to exempt ARIA from public contract regulations and how we assure the appropriate propriety. We have provided a non-legislative commitment for an independent internal auditor to report on ARIA’s procurement activities, demonstrating transparency and good governance. ARIA’s framework document, which I just referred to, will also set out the expectations for conflict-of-interest procedures, in line with practice across government. I thank my noble friend Lord Borwick for his thoughtful comments on this. However, as a further safeguard, Schedule 1 provides the Secretary of State with the power to set out a procedure in legislation should it be required in the future. We will bring forward draft regulations for this power, for illustrative purposes, as the Bill goes through the House.

The noble Lord, Lord Davies of Brixton, and my noble friends Lady Noakes and Lord Patten asked about how we attract these high-risk ideas and the exceptional people who will pursue them, or, as the noble Viscount, Lord Stansgate, eloquently put it: today’s Alan Turing or Barnes Wallis. The recruitment campaign for the CEO launched on 1 June and will aim to conclude in the coming weeks. We are looking for the ability to provide inspiring leadership to high-performing teams.

In response to my noble friend Lord Borwick, we will soon be launching campaigns for the chairman and other non-executive members through an open and fair ministerial appointments process so that we are able to recruit the right talent to work alongside the CEO as a complementary leadership team. We recognise the need to ensure a competitive salary for this position and are in discussions with the Treasury. I will update the House as appropriate.

I welcome the considered contributions from my noble friend Lord Lansley, the noble Lord, Lord Kakkar, and the noble Viscount, Lord Stansgate, on the Haldane principle and ARIA’s use of peer review. It is right that at its core this is about scientists judging ideas on their merits, and that is at the heart of ARIA’s approach. However, the concept that funding proposals should be assessed by peer review is embedded within the Haldane principle, and I agree that that will not always be appropriate for ARIA, which will have an innovative approach to funding and will seek to empower exceptional scientists to start—and stop—projects quickly.

The noble Lord, Lord Patel, asked about research cost sharing, by which I assume he means with universities. We are considering the appropriate arrangements for funding research projects in universities to ensure both that they are properly costed and that those costs are met to enable transformative scientific research. Details on expectations for ARIA in that regard will be set out at a later date.

My noble friend Lord Borwick queried the definition of “property” in Clause 2. The Bill uses the definition “that which a person owns”. In exercising its functions, ARIA may acquire and own both physical property and intangible property, such as intellectual property. “Restoration” means “to return”, so ARIA can own a piece of research equipment that it can loan out on the condition that it is returned to ARIA within a specific timeframe. I hope this clarifies the issue for my noble friend and that he agrees that an amendment is therefore unnecessary.

Lord Fox (LD)
I do not wish to labour the property point, but if ARIA is not doing research then I do not understand why it would own research equipment. Sorry, I am confused.

Lord Callanan (Con)
It can fund the purchase of a piece of research equipment, which ARIA then owns, and it can loan it out on the condition that it is then returned within a specific timeframe. I am not quite sure why the noble Lord is confused but perhaps we can return to this issue in Committee.

I have tried my best to address most if not all of the points that have been made today. I am sorry to detain the House at such a late hour but I am deeply encouraged by its general support, albeit with some reservations, for the dedicated funding of high-risk research. I look forward to continued engagement with all sides as we progress the Bill through the House. I therefore commend the Bill to the House and beg to move.

Bill read a second time and committed to a Grand Committee.

Advanced Research and Invention  Agency Bill

Order of Consideration Motion

21:18:00

Moved by

Lord Callanan
That it be an instruction to the Grand Committee to which the Advanced Research and Invention Agency Bill has been committed that they consider the bill in the following order:

Clause 1, Schedule 1, Clauses 2 to 7, Schedule 2, Clauses 8 and 9, Schedule 3, Clauses 10 to 15, Title.

Motion agreed.