Advanced Research and Invention Agency Bill

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 1, 12 and 14. If the House agrees to any of these Lords amendments, I shall ensure that the appropriate entry is made in the Journal.

Clause 2

ARIA’s functions

I beg to move, That this House disagrees with Lords amendment 1.

With this it will be convenient to consider Lords amendments 2 to 15.

I am delighted that the Bill to create this exciting new agency has returned to this House and that I am able to speak to it for the first time in my role as Minister for Science, Research and Innovation. I pay tribute to my ministerial colleague Lord Callanan for his work on the Bill in the other place. Not for the first time in matters scientific, their lordships have kept our Minister very busy on the Front Bench. I also pay tribute to my hon. Friend the Member for Derby North (Amanda Solloway), who so capably led the Bill when it was first before the House.

There are 15 amendments for our consideration tonight. Fourteen of those were tabled or supported by the Government. I will summarise them quickly. Amendments 2 to 8 relate to changes the Government made in response to the Delegated Powers and Regulatory Reform Committee’s report on the Bill. In doing so, we demonstrated the seriousness with which we take the DPRRC’s recommendations and the Government’s commitment to acting upon them. The effect of those amendments is to omit clause 10, which contained a broader power to make consequential provision, and to replace it with a narrower, more specific power in clause 8. The new power can be used only in consequence of regulations dissolving ARIA. Other amendments are needed to tidy up the rest of the Bill and reflect that change. I hope that the changes are, in general, welcome.

Amendments 9 and 10 remove a power for ARIA to pay pensions and gratuities determined by the Secretary of State to non-executive members. We have tested that thoroughly and are content that in ARIA’s specific case, that power is not needed. Again, the two amendments reflect the usual process of improving the Bill in response to scrutiny and the expertise that colleagues here—and in particular in the other place—have brought to bear.

Amendments 11 and 13 remove the amendments previously included in the Bill that had the effect of reserving ARIA. I have had productive discussions on this with my ministerial colleagues in Wales, Scotland and Northern Ireland, to reiterate the importance of ARIA and our broader science policy to help strengthen the Union. I am delighted that they share my vision and ambition for ARIA and that we have reached an agreement on the independence of ARIA—a memorandum of understanding that is a shared commitment to safeguard the organisation’s most important characteristics, and which means the reservations are not needed. I am delighted to be able to report that legislative consent motions have been passed in all three devolved legislatures on the basis of that agreement, and I similarly commend it to the House.

The Minister will know from previous discussions that the question of freedom of information has come up before. Would it not be much simpler just to make ARIA subject to the Freedom of Information Act? In the current climate, would that not reassure the public?

It may reassure the public, but we also have to take into consideration the fact that to succeed, world-class scientists have been recruited to ARIA to lead in cutting-edge science. That very small staff need to be sure that they will not be tied up answering 101—often spurious—freedom of information requests from the media, who are keen on running stories. We want to make sure the agency is accountable properly but not bogged down in what can be hugely onerous freedom of information requests.

In that connection, could the Minister give the House some brief guidance on what he, as the accountable Minister, would expect by way of discussion and influence over corporate plans and budgets and onward reporting to the House?

I am grateful to my right hon. Friend for that question, and he will not be surprised to know that it is one I have also been asking since coming to this role. The point of ARIA is to be a new agency for doing new science in new ways, and it has been structured specifically to avoid meddling Ministers, even those with a good idea, and meddling officials, even those with good intent, and to create an agency that is free.

My right hon. Friend asks an important question. As we appoint the chief executive officer and the chair, the framework agreement will set out, a bit like a subscription agreement, the agency’s operating parameters, which will be published in due course. Each year ARIA will have to report on its stated plans. Crucially, as is so often not the case in scientific endeavour, ARIA will report where happy failure has occurred so that we do not continue to pour more money into scientific programmes that have not succeeded, which I know will reassure him. We want ARIA to be free to be honest about that, and not embarrassed. ARIA will be annually accountable through the framework agreement.

Finally, Lords amendment 1 deals with the conditions that ARIA may attach to its financial support. This arises from a series of important discussions in the other place relating to ARIA’s duty to commercialise intellectual property that may be generated, which I am keen to address properly. However, the amendment, as drafted, does not actually prevent ARIA from doing anything; it adds examples of conditions that ARIA may attach to financial support, but ARIA already has the general power to do just that. Legally, the amendment simply represents a drafting change. As such, we cannot accept it, but we understand and acknowledge the importance of the point that the noble Lord Browne had in mind.

It is our firm belief that, although it is not appropriate at this stage to specify ARIA’s contracting and granting arrangements in legislation, we recognise the substance of the concerns underlying the amendment: namely, that ARIA should have a duty to the taxpayer to ensure it is not haemorrhaging intellectual property of value to the UK. I will outline our position on that.

I welcome the Minister to the Dispatch Box for the first time on this Bill. He is saying that ARIA can already do this, so the Government do not need to legislate in this regard, but that the Government would, none the less, be keen to see ARIA do it. There seems to be a discrepancy in that thought process.

There is no discrepancy. I will explain why but, essentially, the Bill already sets out ARIA’s statutory responsibility to generate economic return for the UK, and the hon. Gentleman will know, as I do from my career negotiating intellectual property agreements, that at this stage it would be wholly inappropriate to mandate in statute the form that these intellectual property agreements will take. To be blunt, we do not yet know what programmes the chair and chief executive will put in place. It is only when we know the sort of science that ARIA is doing that we will possibly be in a position, through the framework agreement, to set out the appropriate ways to ensure that value is maximised.

Security issues will also be a core consideration in ARIA’s governance arrangements in the framework agreement to ensure its effective functioning as an organisation. I confirm to colleagues that the framework document, which deals with those issues, will include obligations on ARIA to work closely with our national security apparatus. That is prudent to ensure that ARIA’s research is protected from hostile states and actors and to stay connected to the Government’s wider agenda on strategic technological advantage.

The Government’s chief scientist, who will be on the ARIA board, will bring intelligence and expertise across security issues within Government, supported by the new Office for Science and Technology Strategy and the National Science and Technology Council. ARIA will of course have internal expertise to advise its board and programme managers, while also working with recipients of its funding in universities and businesses on research-specific security issues. That will be vital for ARIA to stay at the forefront of responding to the challenging nature of the UK’s interests in this area.

There is also the question of how ARIA responds to the UK’s strategic interests in science and technology more generally where they may not quite fall under the national security umbrella. The integrated review, the creation of the new OSTS and the National Science and Technology Council, on which I sit, outline our ambition to ensure that there is a serious, strategic machinery of government commitment to the strategic industrial advantage of UK science and technology. That is a fundamental priority for me and the Government more broadly.

The Minister is being admirably blunt about keeping interfering Ministers and officials from controlling or influencing ARIA, but there is also influence from the scientific establishment, which has its own programmes and would like the sums of money in ARIA to go to them. Given the structure of the board, is he satisfied that ARIA will maintain its independence not just from the civil service and Ministers, but from the scientific establishment?

The hon. Member raises a very important point. Yes, I am satisfied, and for this reason: the way in which the agency has been established through the Bill and our plans to appoint the CEO and the chair on the basis that they will set out a very bold vision for ARIA to be the agency for new science in new ways. All the support that we are providing is specifically designed to allow them to operate in an environment where they can draw on the very best of UK science infrastructure and expertise, but not find themselves bound by either the short-term grant application process that dominates or the often substantial interests seeking investment in their own field. We will be able to attract the people we intend to attract because of that freedom. For that reason, I am confident—as that will be set out in the framework agreement and held to account by the board of ARIA and the scientific advisory board—that we will be able to ensure that that is the case.

Although ARIA will operate independently, it will be guided by key obligations regarding economic and UK benefit. ARIA must, in all its activity, have regard to the economic growth or economic benefit in the UK, alongside other considerations. That statutory obligation is set out clearly in clause 2(6), and it is right that that is in the Bill. Public investment in R&D must drive long-term socioeconomic benefit and deliver value to UK taxpayers. ARIA will be scrutinised by Government and Parliament on how effectively it fulfils its functions, including that one.

I can confirm that mechanisms for that scrutiny will be in the framework agreement. This includes requiring an internal evaluation framework for ARIA programmes—that deals with the point made by my right hon. Friend the Member for Wokingham (John Redwood)—and looking at, for example, their expected benefits and alignment with the organisation’s strategic objectives. It also includes setting the terms on which ARIA produces annual accounts and reporting, through which ARIA’s CEO will be accountable to Parliament for how the resources allocated to it are used. The National Audit Office will be able to examine the value for money of ARIA’s activities, and we in the Government must be assured of that value, on which ARIA’s future funding will depend. Everyone involved is clear about that.

I welcome the Minister to his place in leading on this important Bill and echo his thanks to the former Minister, the hon. Member for Derby North (Amanda Solloway). I also thank colleagues in the other place who have worked so hard to improve the Bill. In particular, I thank my noble Friend Lord Browne for his successful and much-needed amendment to protect Britain’s intellectual property.

The UK has a proud tradition in science and innovation. We are renowned around the world for the scientific breakthroughs and discoveries that have pushed humanity forwards. From the discovery of penicillin to the invention of Stephenson’s Rocket—in Newcastle—UK science has again and again pushed the boundaries of humanity’s knowledge.

UK science is not only inspiring but key to our health and that of our economy, as the pandemic has shown. Our university research base alone contributes £95 billion to the economy, supporting nearly 1 million jobs in science institutes, charities and businesses of all sizes. We have many innovative start-ups throughout the country that require only the right support to contribute to the innovation nation that our history, economy, security and future prosperity all demand. That is why it is so important that we get the Advanced Research and Invention Agency right.

ARIA, originally the brainchild of very-much-former adviser Dominic Cummings, is positioned as a high-risk, high-reward research agency, based on the Defence Advanced Research Projects Agency in the US. Labour welcomed ARIA and continues to support it—it has great potential to fill a gap in the UK’s research and development landscape and help deliver fantastic inventions—but we are clear that the benefits of ARIA’s investments must be felt in the UK. We are equally clear that without Lords amendment 1, that may not be the case.

Lords amendment 1 would give ARIA the option to treat its financial support to a business as convertible into an equity interest in the business and thus to benefit from intellectual property created with ARIA’s support. It would also enable ARIA to require consent during the 10 years following financial or resource support, if the business intended to transfer intellectual property abroad or to transfer a controlling interest to a business not resident in the UK.

We have to start by acknowledging that the UK does not provide a sufficiently supportive environment for innovation start-ups to thrive. That is why we have already lost so many of them. Too often, tech start-ups face a choice between relocating outside the UK and being bought out by a larger multinational, and the UK loses out. In 2014, Britain had probably the most important and groundbreaking artificial intelligence company in the world, DeepMind, but instead of capitalising on this cutting-edge technology and instead of introducing an effective support system for start-ups, the Government allowed it to be sold to Google for £400 million, with no investigation or action. In 2020, early investor Humayun Sheikh estimated that DeepMind would be worth $30 billion now. That is a huge reward on the investment, but not one that has gone to UK taxpayers or UK citizens, and the UK is now in effect losing out on billions in economic benefits.

In the Labour party, we want to support our start-ups. The Government—and, indeed, the Minister in his comments—have tried to claim that Lords amendment 1 is not needed because they believe that the National Security and Investment Act already gives sufficient powers to scrutinise and intervene in takeover bids. However, the Minister must acknowledge that, despite our attempts to include economic security in the NSI Bill, the Government insisted on a much narrower definition of national security. While it is progress that the Government are reflecting national security in takeovers and mergers policy, for which we have been calling for a long time, the NSI Act does not address the issue of intellectual property and its economic value.