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Science and Technology

My Lords, I join others in thanking the noble Lord, Lord Bhattacharyya, for introducing this very important debate. I declare an interest: roughly between 1980 and 2000, I was a leading researcher at the science and technology policy research unit (SPRU) of the University of Sussex. I hold an honorary degree from that university and remain a visiting fellow at the science and technology policy research unit. I am not a scientist by training; I trained as an economist. As noble Lords will know, economics is the gloomy science. It was so labelled in the 19th century because the work of economists such as Ricardo and Marx was dominated by the law of diminishing returns. The noble Lord, Lord May, referred to that when he said that the more you apply the variable factor of labour to the factors of production, land and capital—particularly, land as a fixed factor—the more that returns will diminish in time. Marx and Ricardo failed to recognise that, over time, technology would raise the production function. The noble Lord, Lord May, referred to the fact that, looking at total factor productivity, we cannot account for improved productivity and production through increases in labour or capital. Much of it comes from increases in the supply of knowledge of technology, the application of technology, and increasing skills. In response to the fundamental question posed by the noble Lord, Lord Bhattacharyya, of what contribution science and technology made to the British economy, it is increasing productivity. It is a global effect, and in some senses Britain has perhaps not gained as much as other countries. As the noble Lords, Lord May and Lord Turnberg, identified, attempts have been made to measure the contribution of science and technology to the economy. The Treasury’s statement in its publication of July 2002 Investing in Innovation sums up the results of the work undertaken:"““Estimates of the contribution of a firm’s own R&D effort to productivity growth are typically high—estimates of private annual rates of return to R&D tend to be around 10 to 15 per cent, although some studies have estimated them to be as high as 30 per cent. Recent analysis of returns in the UK put this figure at between 10 and 20 per cent. To set this in context, the average net rate of return on capital employed for UK manufacturers over the period 1970 to 2001 was 5.7 per cent per year””." As the noble Lords, Lord May and Lord Turnberg, emphasised, given the degree to which knowledge trickles out from basic research and development here—I will say much more on that in a moment—the actual social rate of return, as opposed to the private rate of return that I quoted, are far higher. They are at least 50 per cent; in other words, for every pound we invest, we get at least 50 per cent back. The noble Lord, Lord Turnberg, suggested that for every pound we invest in medical research we get £5 back. It is a very good investment by any standard, so I am very glad that the Minister has been so influential in encouraging the Government to undertake it. I was part of the original SPRU study in the 1990s on how to measure rates of return. It is worth identifying how the benefits come through. The first way is through what everybody knows: the increasing stock of knowledge and publications. The noble Lord, Lord May, referred to the importance of publications and how well the UK does in terms of the indices of the highly cited publications. The UK tops the list in value for money. But, picking up a point made by the noble Lord, Lord Soulsby, one reason for the value for money of our highly cited papers per pound invested, is that we pay our researchers so badly. We need to pay our researchers much better; some of the benefit ought to go to them. As well as codified knowledge there is tacit knowledge. When you write up an experiment you try to express what you have done in words, but people learn by doing: standing next to the surgeon or scientist, watching the experiment and learning how to do it. For example, initially the breakthroughs in recombinant DNA were understood by only the small teams around the researchers involved. They taught others, and those individuals taught others, spreading the knowledge, so the techniques of recombinant DNA are now well known, practised widely and included in sixth-form textbooks. We should not underestimate the importance of passing on tacit knowledge and learning by doing. That is why the second main way in which investment in science and technology makes itself felt is through the training of skilled personnel and graduates. We must be aware of two things: anyone with a scientific PhD is expected to have a basic knowledge of scientific principles and methods. They must know how to carry out a piece of research on its own, understand the concept of scientific method and how to monitor and evaluate the results. There is an important further aspect of the training of scientific labour. If we are to understand science, we must have people working at the leading edge of science. The UK produces something like 8 per cent of the world’s total publications in science. Therefore, 92 per cent of those publications are produced elsewhere. If we are to benefit from those 92 per cent, we have to have people in the UK who act as receptors to that knowledge. They must understand it, interpret it and use it to the benefit of the UK. Therefore, the whole business of training people who can be at the leading edge is vital, which is one of the reasons why it is important to invest in research and development, and why companies need to invest in research and development. Unless our companies have the capacity to receive, understand and interpret the knowledge, they will not be able to use it. I have two slight qualms about what is happening. The first is the training of mathematicians. Mathematics is the language of science. I do not know how many of your Lordships are aware that in 1989 roughly 85,000 young people took an A-level in mathematics. That has now dropped to just over 50,000. That is very serious because unless people are being trained in mathematics—the A-level is, in a sense, the entry qualification required to enter into science—we will not produce a new generation of scientists. We can make up for it at university, but I am not sure we are doing that. There is a very real question over the teaching of mathematics in schools that we have to answer. The Minister knows that, because it is an issue that I have raised several times in the House. My second qualm was raised by the noble Lord, Lord Soulsby. Partly because we have paid our young scientists so badly we see many of the junior posts in our universities now filled not by British-trained people, but by people who were trained abroad. In many senses, that is a good thing, because it brings in a whole lot of people. But there is a danger that we are not training a new generation of young scientists to take over from those who are currently in their forties and fifties. I must quickly talk about the other issues. There is an important aspect of participation in networks. Tacit knowledge means that you have to be able to be working at the leading edge in order to participate in networks. As regards new instrumentation, we have talked about the MRI scanner. Solving complex problems is another issue that comes forward, as is the creation of spin-off firms. I do not have time to say any more than that. A huge challenge was facing UK universities at the end of the last century. They have risen to it. The Lambert report shows very clearly that the real problem lies not in the production of new ideas and the creation of spin-offs but in the picking up of those spin-offs by large companies and their failure to invest in R&D.