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Innovation Policy

Volume 455: debated on Wednesday 24 January 2007

Before I call Dr. Ian Gibson, I ask hon. Members to bear it in mind that the winding-up speeches have to start at about 3.30 pm. I am sure that everyone will be able to speak if people keep their remarks reasonably brief.

Thank you, Mr. Atkinson. It is a pleasure to deliver our ideas about innovation to you this afternoon. I am pleased to see here the doyens of the science and technology fraternity. There are no sisters, but the fraternity—the brotherhood—is here to ensure that we talk about science and technology at a level that is necessary to deliver the innovation and determination of economic development in this country which will not necessarily surpass but will equate with what is happening in the far east, in countries such as China and India. We are not scared pantless about that, but we do worry about how those countries are taking up the issues that we, too, have taken up. We hope that, ultimately, it will be an environment not of competition but of co-operation, in which we can learn from one another, because the science and technology community has always been international and has been very important.

I take the issue of innovation quite seriously. I do so because I heard the ambassador from the United States talking this morning on Radio 4 about innovation and because I hear Prime Ministers, Chancellors and thousands of other people talking about innovation. I have always thought that, as with the term “entrepreneurship”, when people use the term “innovation”, they do not really fully understand the process, how it works and so on. I put myself in that camp, too. That is why I have raised the issue of what innovation really means. I welcome the support that I have had from many different groups, which I shall mention in a moment. It is interesting to learn how they see innovation. They are scientific groups and non-scientific groups, but they are all people who have taken the issue quite seriously.

Of course, the Department of Trade and Industry has been the organisation in the UK that has taken up the issues, and it has produced copious documents—which spoiled my weekend. It was good that the Norwich City football game was off, because I had more time to read the documents. They are indeed copious: there are pie charts, histograms, graphs and so on. I would not want to argue with them but gosh, they are very interesting. That shows that the DTI takes the issue seriously, which means that the Government take it seriously, too. I see the Hansard reporters looking at me assiduously. They do not have to worry. They will not have to publish the whole thing—it is quite a serious tome.

What is innovation from the point of view of this country, and across the world? Ambassadors and others talk about it, and the term falls from people’s lips quite easily. Very simplistically, it is defined as the ability to translate serious ideas into products and ways of doing things that will benefit the people whom we serve, and people across the world. There are ways of measuring innovation, to which I shall come. There is great argument about how we measure innovation and whether companies and individuals understand what innovation is all about. What I am trying to say, which others will take up in specific terms, is that one size does not fit all. Innovation is not something that people are born with; it is something that they learn, accrue and can develop through their activity in this country and in other parts of the world.

There are people who I think are bona fide innovators—people who always want to change things and do things better, make products and develop things. There are people who are entrepreneurs, who want to change things and see the way forward. I do not think that people are born that way; I think that they accrue it from the world that they live in and interact with. Much research goes on with regard to the successful exploitation of new ideas. Innovation gets things done and it makes things. In this world, I have always been brought up to think that if we do not innovate, we die. That was the phrase for years and years—innovate or die. It probably emanated from US culture, which is gung-ho in many ways, but successful in many other ways, too. We have learned lessons from that.

The differences that we can make in the world—innovation is part of this—are either small, incremental things or large paradigm differences. There are Nobel prize-winning ideas, which make amazing changes, and there are the little things that individuals do in their lives that make things different, not just for them but for the people with whom they interact. Innovation is very important because UK plc depends on it, as has been acknowledged by the DTI and the Government as a whole. We need to survive in what is now, sometimes, a vicious, competitive global environment, which is growing. We hope that it will not be that way and that there will be more interaction, but things are not often put forward in that way or in that language.

Innovation includes many things. In business, it includes products and services, but it includes many other things, too. Nothing can be more important than climate change, as we know, and the new technologies and how we develop them and encourage an environment in which they are developed in order to change the world for everyone’s benefit.

The situation is the same in the health service, and I shall talk more about that later. A report that has just been published by the National Endowment for Science, Technology and the Arts shows that innovation takes place without us even knowing that it is taking place. It is not planned; it just happens because some people are naturally like that. They find new ways of doing things.

I came to this debate having spent a day in the bath—well, an hour or so in the bath—thinking about what innovation meant. I remember simple, daft things such as pipetting things with your mouth. Sometimes you got a slurry of acid in your mouth, and suddenly I thought, “There must be another way to do this”—to suck fluids up into a pipette.

My hon. Friend has also had a mouthful of acid in his time, or alkaline. I welcome the fact that many of us, in our professional lives, have been through the process of doing things in different ways and saying, “Gosh, why didn’t we do that?”, “How did that idea come about?” and “Why didn’t we develop that?” The world is like that, and we should welcome and encourage such activity. No one mouths pipettes any more; there are now good instruments to suck things up accurately without the need for that. People may wonder why that was not possible before, and there is a real issue about how we get innovation into our world.

New challenges arise. My right hon. Friend the Prime Minister has said in relation to information technology and computers that we need new ways of doing things, so that there is interaction between Departments—so that the press of a button suddenly acknowledges the fact that people have similar problems and they can interact and make things happen that did not happen before. We are encouraging new technology in that respect and making that happen. My hon. Friend the Minister and the rest of us will acknowledge how very difficult it is to make it happen. We want to ensure that the environment and the circumstances are right, so that we can interchange such information.

The health service provides an example. I have had reports and I am very grateful to the many people who have put ideas to me about health services and whether we are innovating to the extent that we should be. An organisation representing the pharmaceutical industry has said, “We’re not really up to what they do in America.” There are criticisms, under the surface, of doing things better. I think that, in relation to innovation, we always have to admit that there might be another way of doing it and we ought to encourage people or individuals to think about that. I shall talk about the processes involved in how it might happen.

I am also very grateful to the Design Society, which says, “It’s great to have new products, but why do we not think of design at the same time?” It says, “It’s great having a wine glass that’s a certain shape, but how do we design that shape?” It is not just a question of functionality or of having something that we can put something in—things have to look good too. The process is a matter not just of designing the product, but of designing it well, and I shall talk later about countries such as Finland, which have taken up that major issue. I am grateful to the Design Society for saying what it has.

I am also grateful to the Royal Society of Chemistry for saying that innovation is important in its world. Indeed, it has produced documents to show the interaction that takes place not only in Britain—I shall talk in a second about who interacts in this country—but across Europe and the world. The excitement of chemistry—or whatever the science involved—and of developing new products in the light of what people do or do not know is important. That is all part of the innovatory process.

I have combed the DTI website, and it really is hard work to get through the initiatives that the Department employs to handle some of the problems. Before I come to that, however, let me say that, underlying all this innovation, is the post-neoclassical endogenous growth theory. Hon. Members may not instinctively understand the connection, so let me explain it briefly—besides talking about the Norwich football team, the Economic Secretary to the Treasury and I spend hours discussing post-neoclassical endogenous growth theory at Carrow Road football ground.

Speaking of the theory, Michael Heseltine, who was a right hon. Member of this House at one time, said:

“It’s not Brown’s. It’s Balls.”

Hon. Members will remember that clever quote. The theory, which took over from neoclassical theory, was an attempt to engage with the origin of growth and ideas and to see how we could make the economy grow. It required that policies had a long-run growth rate in the economy and did not engage aggregate savings. It saw subsidies for research and development and for education increasing the growth rate in an endogenous way by—this is the main point for our debate—increasing the incentive to innovate. That amazing idea, which linked those areas with the economy, is now pervasive in the Treasury.

Of course, there are many critics of that theory. One of its failings is that it does not explain non-convergence and why some countries are much richer than others. Exogenous growth theory explains the income divergence between the developing and developed worlds, but post-neoclassical endogenous growth theory has still not come to terms with that divergence. However, that is a bit beyond the scope of this debate, although it is fine for Oxford, Cambridge and other places to debate it. I simply make the point that innovation is all part of the theory, and we should remember that when serious politicians talk about innovation.

I am very interested in the DTI’s point of view because it has published much serious work on this issue. I have been reading its work—letter by letter, page by page—since its 2003 report. I pay credit to those who produced that report, and some of them are probably surreptitiously in the room. They have seen that innovation is very much part of developing business and markets and that it provides the products. They have also seen that we need to invest in research and to have a knowledge-based economy. All those phrases fit together around the word “innovation”. I agree with the DTI that Britain is much more innovative than it is has ever been. The report shows how many graduates there are in different parts of the country and it makes it clear that university education plays into and encourages innovation, with university degrees promoting innovative, active enterprises.

Of course, universities are supposed to interact with business, but there is a problem there. I have looked at the report, and elements of that interaction are beginning to take place. However, the academic people to whom I talk despise business; they believe that working with it amounts to getting their hands dirty and that they should not get involved with it. I am old enough to remember a culture in which Nobel prizes were the thing—indeed, they still are in many places—but there has been a sudden change in that culture. People are saying to themselves, “Maybe this thing we are doing in the laboratory is marketable.” That idea has suddenly taken hold among some people, but it is not pervasive enough. Many of us in the room have worked in laboratories, and we must have done something innovative every day of our lives when carrying out experimentation, collecting data and managing things. We did not write those things up in academic papers, but they were always clever little things. I remember people saying, “That’s a clever way to do it. Why did you think of that?” and someone else saying, “It just seemed natural.” However, people did not think that such things were marketable and patentable or that what was going on would improve the process.

Things are better now, however, and there are more patents; indeed, that is one way of measuring innovation, but it is not the only way. On this small island of ours, there are thousands of people doing smart things all the time in their jobs. I am talking not just about the academic elite, but about the financial quarter and the health service. People are not doing anything formal, but they are making a difference to how things are measured. However, they do not even know or care that they are being innovative, and that is the problem. The DTI is talking about innovation and is trying to measure it, but the problem is how we get to the reality to see what is happening out there and what people are doing.

Perhaps I could bring the hon. Gentleman back to his post-neoclassical endogenous growth theory and his point about universities.

Well, I think that the hon. Gentleman is making an incredibly important point. Will he comment on the disincentives to universities becoming involved in knowledge transfer and translational research, because the underpinning grant system goes in the opposite direction from encouraging such involvement? Universities see citations and publications as a way to assess the quality of their research work and get the next set of grants, but translational research and knowledge transfer do not attract the academic kudos that impresses the research councils and gets the money. Post-neoclassical endogenous growth theory suggests that we have to put in resources to innovate, but that does not seem to be happening, or have I made a false assessment?

No, I absolutely agree and I thank the hon. Gentleman for that contribution. In general, that is what happens. Of course, we can all point to areas in which people have discovered things and made things happen. The previous Minister of Science staked his money on us putting all our energies into ensuring that universities developed small spin-out companies, and that happened in places such as Manchester, Oxford and Cambridge. However, I can mention other places where that was not the priority for the university department. Instead, the priority was the research assessment exercise and getting money in to do anything at all. That culture is still pervasive in our country, and there is still a research exercise.

I mentioned all the little things that people do to measure and understand things, and they do some crazy things to take measurements or get things designed, such as going to the workshop and so on. However, that was not really encouraged, and those people did not get any awards as a result of research assessment exercise. As I shall say in a minute, research councils are now trying to interact to develop a different culture. However, they are blowing in the wind, because many of the young people I meet have been brought up in a different culture and would never work for industry. Now I think it is good that they do not all work for industry and that there is blue-skies research, of course, in which brains ask silly questions and do silly things—which come off. However, at the same time we need to foster a culture in our universities and institutions in which people consider whether what they do might be valuable for other people.

Order. Before the hon. Gentleman intervenes, I ask that interventions be short. The clock is ticking and if hon. Members want to contribute they will have to keep an eye on it.

I recognised, Mr. Atkinson, that I will not get to speak, so I wanted to make a couple of interventions on the hon. Gentleman, in the hope of contributing to the debate.

Does the hon. Gentleman accept that to have true innovation we must maintain a level of basic science—certainly at the present level, although I would argue that we must enhance it significantly really to take advantage of the opportunity for translational work and innovation? As to the hon. Gentleman’s last comments, how does he feel about the research councils putting so-called business experts on their panels, to judge some of the applications for research grants on their innovative aspects? Does that worry him?

Yes, that has worried me. It has always happened, actually, that research councils have included business people on those panels. It worries me in relation to the interaction between those people and the more pure academics and their research. I am describing a world in which opinion diverges on what is important. If that is also reflected in the relevant committee it does UK plc and the development of innovation no good. I shall say something about the training of young people, and the science plan, in a moment.

The DTI report, with all the pie charts, does not just deal with science and technology, but goes into the creative industries as well. There is a report by the National Endowment for Science, Technology and the Arts showing clearly that on this small island we underestimate the true innovation that happens in hospitals and health, in design and in the creative industries. Those creative industries are advertising, architecture, the art and antiques markets, leisure software, publishing software, computer games, films and video—and I could go on. There is more innovation than we know about in those industries, and I challenge the DTI on whether it knows about it, and on what it is doing about it. I may have revolutionary things to say about how we can change the DTI to bring out some of the ideas. As in the case of the Home Office, there may be too many functions in one big building down the road. We may need to take that on.

We can consider why some businesses, as the report states, do not innovate. I know people who do not know their regional development agency and do not care. They do not think that they have to innovate, because “we are doing all right”: the profits are up, and so on. That is how they measure success. That is not success. In this competitive world businesses must keep moving, or things will crowd in on them.

I congratulate my hon. Friend on securing the debate. He talks about business success, but does he agree that courses on innovation are one avenue we could pursue, which the Minister should perhaps consider? We should be looking to universities to train people or enable them to educate themselves on that topic. That happens in other countries, but not necessarily here. That might train the scientists, engineers and other people about whom my hon. Friend talks, to stretch out further and take opportunities to innovate and make things happen.

As someone who has spent a lot of time trying to teach people ideas, I should say that the best ideas have in many ways always come spontaneously. What is necessary is to set up an environment, not just in universities and institutions, but in schools, so that young people can say, “Let me do this; let me try to find out about this,” and suddenly there is the explosion of an idea. I am not sure that it is possible to structure that in the same way as is relevant to other kinds of success.

This island has produced so many good people. I was at a Scottish night—and shall be at another one tonight—where the Scots always talk about Simpson, who invented chloroform, and about Kirkpatrick Macmillan and the bicycle, and so on. How did all those inventions and ideas come about? The environment might have been dominated by poverty and might have been excited by a grant from a research council—although there were no research councils in those days; but we can never know how we get bright ideas to emerge. We need to create the environment and encourage them. My major criticism of school teaching is that young people are not allowed, in the sciences, technology and engineering, to do experimentation. There is a point where someone knows how to find out about things and test them, and how, when a bad result is produced, to try again and learn from it, perhaps getting a good result. We all have experience of seeing people trying and trying again, to explain what happens.

I take my hat off to such people as David Attenborough for his series “Blue Planet” and other work. We hear the simplistic view that it is only about the natural world, and is not real science. However, he has excited a generation to ask questions such as “Why do wildebeest charge into a river full of crocodiles? What a mad thing to do; haven’t they learned through evolution?” We can think up explanations, but such things excite people and stimulate their imagination. If that does not happen we do not have civilisation. That is what is lacking in much of our training in schools.

Cambridge university can run entrepreneurship courses, but in the end does it stultify real creativity? I am not sure. I am very aware of the Massachusetts Institute of Technology-Cambridge course that would involve people from MIT working with people in Cambridge; it was going to be wonderful, with great ideas and innovation. I do not know how that works, really. There has been a rough passage for the administration, but nothing has really emerged from it. That is the point. Innovation does not just happen tomorrow. It is an environment that is created, so that results emerge over a period of time. I remember the discovery of DNA, published in a simple little paper. Gosh, what a discovery that model was—published in a paper that I should probably have thrown out if I had reviewed it, because there were not enough data; it was an idea. Nevertheless, it really excited people to do other experiments.

The DTI, and the way in which it accepts science and technology, is important. We have a very important plan. I was so excited about the 10-year plan, for the years 2004 to 2014. It was a real move forward. We have all studied it and we all welcome it, but we want to make it happen, because if it does not, we shall fail. We must take the science and technology part of the innovation process seriously. I have said something about what we can do about education. It is appalling that many of our brightest young brains will not go into science and technology because of terrible contracts and because there is no future or encouragement for them. We would say that that is not true, and that they will get more money as PhDs. However, that is not how they feel. They do not see that world as a welcoming place in which to use their creativity and brains. The scientific world is not about Isaac Newton any more, or people with money; it is about young people who get married and want mortgages. We must engage with that to make sure that they are excited. They are excited by science, and are enthusiastic, but we must make things happen.

We need a strong supply of scientists, engineers and technologists; that is explicit in the plan. How do we make it happen? If we do not make it happen soon, we shall lose out. It is not just a question of the current generation. We are brilliant at science. We do very well, winning our Nobel prizes and all that. However, we must keep the next generation, who are coming up fast, in the game. It does not help when we close chemistry and physics departments, because—the Royal Society of Chemistry has been very active in this respect—it is necessary to understand how to make chemistry and physics part of the innovatory process. Chemistry is valuable not just for its own sake; it is part of developing a culture, society and civilisation, and an industry that can compete with the best of the world. I am never sure whether we are really in the shadow of the United States—perhaps the figures show that we are—but some of the Americans’ ideas have come out of collaboration with people in Britain. We need much more of that kind of interaction.

We have talked about research and development, in relation to the DTI document, how we have increased it, our ambitions for it in terms of gross domestic product percentage and how we are making that happen. We must continue to do that, but we have to think about which industries we are talking about. Is it only science-based industry or any industry? How do we make that kind of thing really happen? Do industries talk together?

We have talked about universities and business. There is a huge culture gap between university and businesses. We still have a culture, although not 100 per cent., of failing to make that interaction happen. People will say that there have been spin-off companies in Oxford and Cambridge and so on. There are thousands of chemistry and other students out there who have great ideas that could be taken up in the right environment and developed into some new product, if that is how we measure these things, or some new way of doing things.

The NESTA document, which is quite revolutionary in some ways, has clearly shown that we measure innovation in funny ways. We measure it in a pipeline way about research and development and pharmaceutical companies. Other companies innovate all the time—indeed, we all do. If the US ambassador thinks he innovates, I am sure that people here innovate in the way in which they handle their finances. The financial sector innovates all the time. We can argue about whether it is advantageous for people like us, but they are always changing things and looking for new ways of doing things.

There are interesting ideas in design and architecture. Our way of measuring innovation varies from one industry to another. I have a whole list of ways in which it is measured. The success of science in Britain used to be measured by the number of spin-off companies we had, and we sat back and said, “Wow, aren’t we doing well?” That is just one way of measuring innovation. Another issue to consider is whether those spin-off companies carry on. Do they become big companies or do they just fall? Is it a couple of guys at Cambridge who met in a pub and had a good idea about injecting someone in a certain way with a new drug and then that is the end of it—they make a million and retire to the south of France? That is innovation, but not continuous innovation. It does not stimulate other things.

There are other ways in which people can measure innovation, such as through the market share, brand value and customer satisfaction. It varies between sectors. It is no use saying that something has grown by 15 per cent. if the world market on which it competes has grown by 60 per cent., because that means that we are still behind in the game.

Many people are still researching this field. I know a lot of them and it can go on for ever. Somewhere it has to stop. They talk about knowledge spilling over from one organisation to another, and do I know it in Norwich. We have several networks there that are trying to shape the Norfolk future—and, wow, does it excite me when I go to their meetings! There is not much innovation there; it is all about playing administrative games. There is a Norfolk network of young people that is much more imaginative, but that cannot make things happen because local regional development agency money is not there for them.

RDAs have scientific committees, but some of them are appalling. I have had a running battle with the one in East Anglia about wanting to call Norwich a science city. It wants to know why I want to call Norwich a science city. It has three major research centres, a university with five departments, C-Red and the Tyndall centre on climate change, and science schools. The agency told me that there is no use in having a science city because there is no money in it. When I asked, “What do you mean, no money in it?” it replied that it does not get any money from the DTI or Government. But that is not the point. As Nottingham and York have found out, the point is that people will work together. It is about young scientists in schools who want to do science interacting with industries, universities and structures. It is about building up a complex.

I once asked Sir David King what he thought a science city was and he said, “Oh you just stick a notice up and say this is a science city.” I said, “Yes, but you’ve got to build something behind that as well.” People are basically interested in science, technology and engineering and want to make things happen. We have to use every device. Calling Norwich a science city will not cost a penny but it will bring together people from different areas.

My experience in our area of the north-east is very different from the hon. Gentleman’s. We had tremendous support from one north-east RDA in helping to set up a centre for process innovation three years ago. The agency went out of its way to make things happen for us, so I am alarmed by his comments. There must be something wrong in his agency. Ours has been a tremendous success. A lot of effort has been put in by all those involved.

Of course, there is variation between agencies. I can look at agencies where things are happening too. I believe that RDAs meet once or twice a year. Why do not they learn from their scientific committees? The best can tell the worst what they can do. They have lots of money, but I shall not be critical about where that money goes, even though there are local reporters present who have heard me talk about that already. There is lots of money about in RDAs. If science and technology can get the right development for good innovations, that should be a priority. Spreading it around is not the way to do things. We are trying to improve the function and lives of people across the board, but some RDAs do not have the money because there is no money in it. Money is accumulated when people interact and get the support that they need from industry and other groups.

A whole load of issues still need to be looked at, such as the differences between regions and spin-offs. What are spin-offs? Every meeting I went to with Lord Sainsbury—the last Minister for Science and Innovation—was all about spin-off companies and clusters. Do hon. Members remember the idea of clusters and that all the companies should be in the same place? That idea seems to have died a death. Why does it happen in other places and not here?

In the north-east, we have one of the most successful clusters in the vibrant chemical cluster. It has worked because there is spirit and a desire for the companies, academics and think-tanks to work together for the cluster to flourish. It has been going for three or four years in great spirit.

I absolutely accept that it can happen. When it does happen, it is because individuals who have ideas and who want to work together make it happen. Underwriting all that is the idea that innovation is important. It is about getting people with ideas together. One does not have to have brains to be an innovator; one simply has to think of other ways of doing things. That has obviously happened in the hon. Gentleman’s part of the world through collaboration between universities, industry and school, but it does not happen in other places, so the hon. Gentleman is lucky. We have to make it happen, but who will do it? I have lots more to say, but I think that I have gone on for too long.

Public procurement is another area that we should look at. The Government have millions of pounds to spend. A document has come out of the CBI and my favourite company, Qinetiq, which used to work only for the Ministry of Defence. I know from my time on the Select Committee on Science and Technology—the hon. Member for Esher and Walton (Mr. Taylor) will remember this—that Qinetiq made many discoveries, but put them in the bin if they were not useful to the military. That has changed. It may now develop something—a new plastic, for example—that is not useful in a gun but might be of use in a kitchen or elsewhere. Some of us have been to the company and seen how successful it is.

Qinetiq’s document talks about procurement pulling ideas and discoveries into the marketplace. That is what it needs. The document also says that the United States has an organisation that undertakes such work, and it recommends one for Britain. It is a major document, which challenges the way in which we do things. Important discoveries should not be put in the bin; they should be pulled through. The document says that regional development agencies may be important in some areas, but that generally we need one in this country. I cannot remember how many billions are invested in procurement, but it is much more than that which is invested in research and development. Nine times as much goes in, I think. It is billions. Using that money, we should encourage production and take activity into the public sector.

The issue is about risk and vision, too. People have to take a risk and think that innovation will happen. We think of ourselves as a risk-averse society. We are rather conservative and we do not want to make things happen. Our education is much the same. Young people learn about Newton, but we do not ask them for new ideas. The links between universities and businesses could be much improved, as the Campaign for Science and Engineering in the UK continually says. It also says that public procurement and the pulling through of new ideas and discoveries is important.

The public, too, have a large part to play. They can sometimes stimulate people to think about how they want to develop something that people want. The flow is not one-way but two-way: we make people’s lives different, they become part of that culture, and they say, “Why don’t you do it this way? Why don’t you invest in something like this?”

I always remember the argument about matches that one could strike more than once without having to put them in the bin—and the argument about why one could not do so. I never quite understood it, but I was crazy and young at the time. One can make such discoveries, but what is important is a system that the public can influence.

People make those things happen. Other people will talk about innovation in their areas, where they see it and at what level: big, small, in small ways and so on. At the end of the day, however, we must say to the Department of Trade and Industry, “You produce lovely documents, you’re a lovely Department and we love you dearly. You’re like the Home Office: we love you dearly.” But sometimes we must ask, “What are the important things that are going on in your Department, which you should perhaps take out?”

I have always been and always will be in favour of a Ministry of Science. We talk about different Departments talking to each other. Oh yes, they tell me they do it, but I do not believe it. I should have a Ministry of Science where the staff are all stuck in one place and talk about scientific and creative ideas. We could put the arts in there, too—I do not mind. They can talk about things together, and say, “This is what we’re capable of doing. How do we make it happen?” If people do not drink coffee together, they do not work together. The family who drink coffee together, stay together.

Order. Before I call Mr. Ian Taylor, may I remind hon. Members that there is just over a quarter of an hour left before the winding-up speeches start? If everybody wants to get in, they will have to ration their remarks considerably.

Thank you, Mr. Atkinson. I shall obey your ruling.

First, I welcome the Minister to his position—particularly because he is a Member of the House of Commons. Although I much admired his predecessor, he sat in the other House, which meant that debates in this House on science or space were less well informed. I am sure that they will no longer be like that.

I shall provide the Minister with one memory from when I was Minister for Science and Technology at the Department of Trade and Industry. I was about to give a speech at the university of Durham, but the vice-chancellor misread the agenda and announced the speech that the person after me was to make on catalysis and its impact on industry. I could not remember what I knew about catalysis and its impact on industry, so after pausing for breath and thought, I said, “I’m from the DTI and I’m here to help,” and someone in the audience said, “That’s an innovation.” Early on in my ministerial career, I learned what innovation was.

I largely agree with the hon. Member for Norwich, North (Dr. Gibson), although at Coventry City football matches we do not discuss endogenous growth theory. It obviously means that among my local support, I am less elevated than the hon. Gentleman.

Let me focus. First, the international challenge is no longer about outsourcing, but about the knowledge economy that is obviously growing in countries such as India and China in particular, although other Asian countries are catching up rapidly. The battle is not only to produce engineers and scientists of quality, but to make the UK an attractive place for them to work. We must attract them to this country.

Secondly, we must change the culture in this country so that it is much more receptive to those people who make the knowledge economy possible. One bizarre characteristic of this country is that we love new gadgets and applications and we want instant solutions to complex problems, but we do not admire as heroes the people who make it possible—the engineers and the scientists. We must therefore have people with skills in this country.

I do not have time to go into the problems in education, but the Prime Minister admitted in a speech in November that the Government have not succeeded in securing the right scientific output from schools. That is a serious problem—the present Government did not create it, but they face it—which has a knock-on effect for universities: they do not have the right mix of people. We must work out how to encourage more young people to study science, engineering and computational subjects, including mathematics.

My third point, which the hon. Gentleman picked up, is that in this country, the people who admire scientists tend to admire them because they work in blue-skies areas and make discoveries. The problem is that we do not have the same esteem for people who turn a discovery into an application. The Minister must consider the research assessment exercise and work out how a bibliometric approach that values publications and citations can be adjusted to value departments with a good track record of turning a discovery into an application. Such work is usually multidisciplinary, taking place not only within one institution, but between different institutions.

I have been doing some thinking for the Conservative party, which is not a contradiction in terms, despite the fact that in our last election manifesto, we did not mention science. That was our mistake, and we are now doing some serious thinking. My hon. Friend the shadow Chancellor said in an article in The Daily Telegraph on 22 November:

“We are broadening our approach to boost innovation, encourage science”,

as part of remaking our economic policy. Hooray! It is in the national interest that we all take an interest in those subjects.

My committee has made two proposals. First, we should use smart public procurement, which the hon. Gentleman mentioned. The figure for Government purchases is about £150 billion, against an Office of Science and Innovation budget of £3.4 billion. We should also use set-aside, which the Americans use, so that small and medium-sized companies benefit from Government procurement.

Our second idea is for an innovative projects agency. I was delighted when, on 30 November, the Financial Times said:

“It has been one of the big ideas of 2006… the re-emergence of serious thinking about research and innovation in the Tory party”.

The reality is simple. Many of the things that the hon. Gentleman mentioned and those in the Department’s documentation are so spread out that they do not make a collective impact. Many are based on a linear approach to knowledge transfer, which is not appropriate for most of this country’s industries, excluding perhaps the pharmaceutical industry. Another problem is that the hon. Gentleman and the Department push at the supply side, whereas I want to emphasise demand pull.

We have suggested the innovative projects agency, which would have a budget of £1 billion taken from existing sources, so I am not promising vast sums of new money. When one looks at the figures, it is interesting to consider the regional development agencies, for which I do not have a high regard. I think we could do a lot better: perhaps the best people from the RDAs could work with the innovative projects agency. The RDAs have several hundred million pounds that could go towards the agency’s budget. Some of the DTI’s activities could be transferred to it, and the Technology Strategy Board, which has a budget of £178 million, would be absorbed, too.

Those are key ideas that would help people in this country to collaborate to ensure that ideas are taken from discovery to application—obviously, that application would be commercial. I am enthused by those ideas, and I hope that the excitement resulting from a big initiative that we propose would permeate society more widely. It is essential that British people see that scientists and engineers can provide solutions that help to improve quality of life. That would be a great innovation in itself and it is one of the challenges that we all face.

I shall speak extremely briefly—for less than five minutes, if I can. For me, there is something of a feeling of déjà vu every time we discuss innovation. My hon. Friend the Member for Norwich, North (Dr. Gibson) and I have been involved in this field for more than 10 years during our time on the Select Committee on Science and Technology. It seems to me that the same problems are still with us to a large extent. The position is not quite as bad or grim as it was when we started, but we have not yet cracked the solutions. We have not made it possible for a bright scientist or engineer to get his or her idea or product to the market without going through some pretty awful challenges.

The science is almost the easy bit. Most people think that the original science is the difficult bit, but in many ways it is not. The engineering is not that difficult either because there are problems that people can work with. The difficulty is taking the idea, spinning out a company and ensuring it survives until it develops into one that earns revenue and can stand on its own feet. That is incredibly challenging and difficult. I have watched many companies go through the process; no company’s history is the same as any other’s, but they all have a lot of things in common.

All the support mechanisms, for example, tend to be far too diffuse and slow to respond—I am talking about conditions in the UK, not in America in silicon valley or in the Boston, Massachusetts corridor. It is difficult for companies here to access the capital support at low interest they need when they need it. If they fail, they run into the biggest brick wall of all. If they are quite near market when they fail, they face the catastrophic cultural attitude towards business failure that exists in this country, which is to condemn someone as a pariah. In America, they just say, “Hard luck. Try again. You’ve done it twice, you’re going to be even better the third time. We’ll back you.” That is totally different to the English culture. In England, failure means it is curtains.

The other possibility is that such companies find themselves simply swallowed up. If they have virtually got to the point of going to market, but do not have the capital to go further, a larger, established, less innovative company will just pick them up for nothing and take the benefit of all the work that has gone into the original company, which will not get any benefit from the process. The British venture capital industry has no solution to that problem at present. It will not invest in anything that is too small or a risk. It will start to invest seriously only when it can virtually see the profits on the table. That is not a promising situation. We in this country do not have the business angels that other countries, notably the US, have. There are one or two, but they are a rare breed. We need to do an awful lot to develop and improve the commercial circumstances surrounding the process that currently make it so difficult. The Department of Trade and Industry has a major role to play. I am not suggesting that it should put money towards the process, but there is an awful lot it can do to facilitate it.

The problem is not exclusive to the UK. We have found exactly the same complaints in Australia. Perhaps it is a phenomenon of the English-speaking world as opposed to the American-speaking world, but clearly there are a lot of problems to overcome. It is not just a question of willingness to be entrepreneurial or innovative, or of scientific or engineering genius, but of getting the whole package together. The commercial elements are just as important and that is where the greatest difficulties lie.

I congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson) on securing the debate. I declare a registered interest in that I am a fellow of the Royal Society of Chemistry and I am its parliamentary adviser on the Labour Benches.

In my view, innovation is a spectrum of activity. It is not just the production of an idea or the invention of a new product, but everything downstream and upstream of that. I do not think that people can work in isolation to produce an invention: they gain ideas from other people and we have to create the right policies and culture. I congratulate the Government because I think that we are getting there. We are not there yet, but more money is going in and the policies are becoming right.

There has been a lot of criticism of regional development agencies, and I have to say that the one in the north-west is one of the best. It was certainly the first to spin out a science council. It is innovative and willing to take risks, and I shall refer to one of the risks it has taken. I am chairman of this particular enterprise, which is called the Bolton technical innovation centre.

A schoolteacher in Bolton came up with an idea, and I want everyone to know about it. He thought that if we can bring children to perform in orchestras much better than they would individually at school by, for example, creating a music centre in the town, we could do the same thing for science, technology, engineering and mathematics. That was his idea: to bring children together from different schools all over the Bolton area and further afield to help them to excel in STEM subjects.

We have a £3 million building in Bolton called the Bolton TIC. Children aged nine to 19 come to this building and the idea is to tap their virgin minds. Children have such fantastic ideas, but somewhere along the line they lose those ideas and become cemented into the conservativism of the education structure. Our idea is to get those ideas out of them while their minds are completely fertile through discussion sessions or by giving them state-of-the-art equipment. We have laser cutters, plasma cutters, colour three-dimensional profiling machines, virtual planetariums, robotics, lasers and equipment the like of which they would certainly never see in a school, and many of them would not even see at university if they went there.

We have an artist in residence who bridges the gap between the humanities and the sciences and gets the children to think across the bridges that been knocked down over the years. The children are beginning to design some pretty incredible products. Our aim is to protect the children’s intellectual property rights and eventually—30 years down the line, say—for those rights to deliver royalties to carry on running the building. The college is a model. If it works in the north-west, it would work in any region with a regional development agency.

We got £3 million in funding, of which £2.5 million was for the building and £500,000 was for the state-of-the-art equipment. Bolton metropolitan council has been supportive. The idea was first proposed to Lord Puttnam when he was at the National Endowment for Science, Technology and the Arts, which I also thank. Without the risk that NESTA took with its £100,000 grant, the idea would not have got off the ground. I thank all the industries that have been involved with us so far. The Department for Education and Skills has put in an enormous amount, but we are looking for sponsorship from industry as well.

If my hon. Friend the Minister has time, I encourage him to come and see the Bolton TIC and help us to spread the idea that children, too, can innovate and produce useful products. If we can protect those products with intellectual property rights, that will be the way forward. Finally, we have to start early, instilling into children a culture whereby they can think about new ideas and products—a culture in which education is not just about the basic academic subject that they are studying.

I shall start my remarks, which must perforce be brief, by welcoming the Minister to his new portfolio, as the hon. Member for Esher and Walton (Mr. Taylor) did. This is the first time that I have seen the Minister in the Chamber with his new portfolio. From the point of view of the Science and Technology Committee, I also welcome the fact that he has agreed to continue the tradition of his predecessor in having a question time four times a year. That was an innovation of his predecessor, who is in the House of Lords, and the Minister’s decision is to be welcomed. I would not say that it was a brave decision, because we are very nice, but it was open and engaged of him to do that. I am sure that my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis), who is the new Chairman of the Committee, shares that view.

I should like to thank the former Chairman of the Committee, the hon. Member for Norwich, North (Dr. Gibson), for giving us the opportunity to debate this issue. It is hard to do justice to a big subject in 40 minutes, as he showed, let alone in the 20 minutes or 10 minutes that we have. Nevertheless, many of the key issues have been touched on in the debate. We also had the fascinating image of wildebeest leaving the Mara and surging into a river. I am not sure exactly how that image came into the hon. Gentleman’s speech, but it has stayed with me.

The hon. Gentleman raised a number of important issues, including the importance of improving links between business and universities. The Government commissioned a report on that. The 10-year strategy and the “Next steps” report asked specific questions of researchers and the science community. The response of that community was published in September. It listed a number of responses and a number of positive suggestions, which the Government have said they will take forward. We look forward to the next “Next steps” report, as it were, to take the issue forward.

The hon. Gentleman mentioned that there might be something in the water in this country that makes us a little more risk averse. He also suggested that there was something in the education or culture. The issue is a particular problem. There is no doubt that there must be levers that the Government can use to give us the spirit of entrepreneurship and risk-taking that the US has, as I think the Government recognise. There is nothing in our genes that makes us unwilling to go down that path, so it is to be welcomed that the Government are seeking, as far as they can, to find ways of addressing that.

I hope that the Government will accept that it is not clear that there is sufficient evidence that the R and D tax credit is working sufficiently—it is not that it is not working—to encourage more risk-taking by business. It is also not clear whether the research assessment exercise inhibits people in universities and in basic science from taking risks, as my hon. Friend the Member for Harrogate and Knaresborough said in discussion with the hon. Member for Norwich, North. If we are to make progress towards the Government’s target of 2.5 per cent. of GDP going into R and D—a target that is well below the Lisbon fantasy figure in any case—we have to ask whether R and D tax credits, among other policies, are working in their current form. I should be interested if the Minister could clarify what research is being conducted into whether they can be used more effectively.

The hon. Member for Norwich, North also talked about the need to have adequate numbers of physics and chemistry departments. That is an issue on which the Committee, under his chairmanship and the new chairmanship, has made recommendations, to ensure that we do not lose capacity in certain regions because of the closure of departments.

The hon. Member for Esher and Walton, in a well-thought-out, albeit perforce brief contribution, pointed out the role of smart public procurement. We would all agree that something must be done to use that huge budget to encourage innovation, and to provide support for small and medium-sized enterprises, not just for the big fish. What is emerging from his work for the Conservative party is new and valuable thinking. It is reasonable to say that the Opposition parties have not, until recently, kept up with the pace on policies coming out of the Department of Trade and Industry in respect of science, and we need to do that.

In the little time available to them, the hon. Members for Brighton, Kemptown (Dr. Turner) and for Bolton, South-East (Dr. Iddon) brought their vast experience to bear. They gave local examples of what can be done, but it is unfortunate that we do not have more time.

In the brief time left to me, I want to make three points about how we can focus on innovation. We need to focus on innovation without a threat being made to basic science, as my hon. Friend the Member for Harrogate and Knaresborough said. That can be done not by withdrawing funds from basic science, but by removing barriers to innovation, so that the research councils can, as they have said they will do, spend small amounts of money—not grant-sized amounts—on training people who receive grants in innovation and entrepreneurship. We can arrange a proper career structure for those academics who need to spend a lot of time drawing up business plans, to ensure that they do not lose out. We can also find ways of either reducing the risk that has to be taken or cushioning it through laws relating to those who have had a financial lack of success in the past. Finally, we can provide a positive climate.

I do not think that it is appropriate for the research councils to set targets for spending on translational research. Indeed, that was discussed at the Committee’s sitting this morning with Sir David Cooksey, and I had an exchange with the Minister and Keith O’Nions on the issue. In a desperate attempt to meet those targets, there will inevitably be pressure not to think, but just to transfer money from other budgets to translational research budgets, so we should avoid such targets.

We have to think about capacity. As the hon. Member for Norwich, North mentioned, we have to have a supply of scientists to start with. We face a vicious circle of not enough people studying physics and chemistry at university or going into teaching as specialists, and therefore not enough people encouraging others to study physics and chemistry at university. It is no good the Government’s citing increases of a quarter in the number of science undergraduates since 1997, when we know that there has been no such increase in the core hard sciences. If we strip away information and communications technology and the softer science courses, such as forensic science, we do not see that increase. I hope that the Minister will recognise that the true figures are not what we thought they would be.

Another factor is that we must secure the right climate for innovation and science. It is important to take on the forces of anti-science, so that people and businesses are not worried about going down the science path, based on their past experience of how the country as a whole responded to the possibilities offered by genetically modified food and crops, which I considered unfortunate. In a speech in my constituency, the Prime Minister said:

“The anti-science brigade threatens our progress and our prosperity. We need political and science leadership that stands up to them.”

He also said:

“Government must show leadership and courage in standing up for science and rejecting an irrational public debate around it.”

He went on to say that

“in many instances, a powerful and vocal lobby, with access to all the media channels and an interest in polarising the argument, frames the debate.”

The Prime Minister also mentioned the success of Government policy in stem cells. After that speech, everyone was struck by the fact that the Department of Health produced its White Paper on stem cells, which effectively called for a ban on some stem cell research lines that might lead to therapies later on, but without giving good reason. The Committee is conducting an inquiry on the issue, but it does not work for the Prime Minister to say all the right things—I endorse everything that he said—but then to cave in to an anti-science lobby, or at least not to give reasons why the Government will not support such research.

There is not enough time to mention some of the other things that need to be said, but I urge the House to look at the Science and Technology Committee report “Research Council Support for Knowledge Transfer” and the thoughtful Government response, which set out many of the issues that the hon. Member for Norwich, North would have wanted us to consider in great detail. I thank him again for introducing this debate and look forward to hearing the Minister’s response.

It is a pleasure to take part in this debate. I join others in congratulating the hon. Member for Norwich, North (Dr. Gibson) on introducing it, and doing so with his customary enthusiasm and passion. His wide-ranging speech addressed many of the issues that we need to think about.

I also join others in welcoming the Minister to his new brief. He and I spent a lot of time working on energy issues together—well, not always working together, but certainly discussing them jointly. He won many admirers for his work as Minister for Energy; perhaps that is why the Prime Minister moved him. I hope that the Minister will bring the same commitment, energy and humour to his new brief. I am sure that he will, and that he will win as many admirers in his new role.

This debate has made it absolutely clear how vital innovation is to our future prosperity as a country. Much of what is going on is working well, although we have to be wary of the increasing threats posed by other countries and work out how to maintain our competitive advantage. In fact, in many fields we are looking at how to close the productivity gap rather than how to maintain an advantage.

Historically, it is fair to say that our record on science, development and innovation, under this and previous Governments, has been good. Many good initiatives have been undertaken; it is no accident that British research work and scientific papers are among the most cited in the world. However, that does not automatically lead to commercial success or mean that such innovation leads to the commercialisation of the new ideas in this country.

All our lives, we have been aware that other countries have taken advantage of and got commercial benefit from great British inventions. We owe a great tribute to the British businesses that carry out such work. At the cutting edge of technology and innovation, British businesses still lead the world. A few weeks ago I was fortunate enough to visit the Rolls-Royce factory in Derby. Rolls-Royce is not just an engine company now; much of its innovation goes into its role as a service company. From a base station, it can monitor every single one of its engines in the sky. It knows whether something is going wrong well before the pilot, and that makes it one of the most successful companies in this country and globally.

From the perspective of energy, we can see how a new need for green energy production has transformed the whole debate. Even big companies such as BP or Tesco want to get involved, see what they can do and innovate more. A range of people in universities, often working in conjunction with business, are putting their thought processes to work to see how they can generate the new source of energy that will make the difference.

Business is absolutely in the lead on these issues. It is easy for us to think that it takes part because politicians have been urging it to do so, but at the motor show last year, the centrepiece of every single stand was a new hybrid or energy-efficient car. Five years ago, the same companies were thinking about what consumers and political leaders would want and they were prepared to lead the investment on that.

We need fresh thinking if we are going to maintain our lead—or, indeed, to close the gap with other countries. I commend my hon. Friend the Member for Esher and Walton (Mr. Taylor) on his work. The great advantage of having a policy review is that a great expert in the field comes in with many new ideas and we benefit from a range of other people who would not normally be involved in Conservative party politics. We are seeking to work with my hon. Friend to generate the best ideas.

Everywhere I go, people say, “Of course, you’ll never be as good as Ian Taylor.” I recognise that, but it is wonderful to have him generating new ideas. He has previously given the example of the solar fridge, which could be fundamental in many developing countries, particularly Africa. If the Government used their purchasing power to carry that project through, rather than just giving it research grants, we could make a difference. If from their international aid budget, the Government placed a contract for, say, 10,000 such fridges, that would make a massive difference to whether production could become commercially feasible. I have also read with great fascination my hon. Friend’s suggestions in respect of an innovative projects agency to see how we can use existing funds more efficiently and encourage cross-fertilisation and a more general enthusiasm for science, technology, engineering and mathematics.

I agree with my hon. Friend across the board, particularly in what he said about the research assessment exercise. Too often, that focuses not on commercialising ideas but on generating them. It needs to change so that commercialisation becomes a more important part.

The key to success is people. In this short debate, there has already been discussion on how we can encourage more people to study science and related subjects at university. I agree with the hon. Member for Oxford, West and Abingdon (Dr. Harris) that the headline figures do not show what is happening. Psychology is certainly important, but if we want to compare like with like, we cannot include psychology graduates among science graduates. We should be concerned about the closure of chemistry, physics and, now, mathematics courses. We need to look at what the rest of the world is doing.

I commend “The World is Flat” by Thomas Friedman to every Member; it should be read by every politician, media commentator and business man, because it is a salient call on what is going on in the world at the moment and the threats that we face. Friedman talks of meeting the mayor of Dalian, which is in China and where a lot of outreach work is done for Japan. The mayor told him that in that one city there are 22 universities with 200,000 students, more than half of whom graduate with an engineering or science degree. Even those who do not are directed to spend a year studying Japanese or English and computer science to make them employable. The purpose of that approach is not only to create a scientific community, but to benefit from the business gain that it will bring to that city and province. We need to do more to encourage an enthusiasm for science among our young people and dispel the myths that the work being done is boring, when it is often on the cutting edge of what is happening on our planet. We also need to dispel the myth that if they worked in the sector, they would be on low salaries.

There must be a combination: if a company is to be encouraged to innovate, it must have access to the people and the right fiscal framework. It must believe that it will be truly rewarded for its work and that its environment will not be over-regulated. We need to address that issue. The forms that people have to fill out when they apply for a Government grant and support are too long and complicated. We need to focus on that and make it easier for them to do. That issue was also raised by the Society of British Aerospace Companies, which says that there must be a

“full review of the administrative processes of the Technology Programme. This must lead to more consistent bidding arrangements, call content more applicable to the sector and monitoring that is cost effective and minimises the administrative burden on companies.”

The Organisation for Economic Co-operation and Development has also been helpful in putting forward things that we should be doing. It has called for the streamlining of fiscal measures to support R and D; as it says, there is still a potential overlap between R and D tax incentives and remaining grant schemes. It calls for the balance of direct funding for R and D between small and medium-sized enterprises and larger companies to be reconsidered to make sure that SMEs get their fair share as well. It says that there is scope to exploit the strength of the science base through further promoting university-business collaboration, on which many have focused this morning.

If we had more time, we could focus on other issues—for example, the contribution that science centres make. I listened with interest to the hon. Member for Bolton, South-East (Dr. Iddon) talk about Bolton TIC and its contribution to enthusing a new generation of young people about science. However, every single science centre faces budgetary cuts, and some face potential closure. I hope that the Minister will consider such issues and see what more can be done to support them.

We should be considering, too, things such as the science week exhibition that we had in the House last year when many brilliant young scientists brought their work to show what they were doing and to talk about how they want to take it to market and to commercialise it. Many other schemes, such as Young Enterprise, will help young people to have the spirit of enterprise and innovation and to consider how the ideas that are generated can be made commercially feasible.

This is an extremely exciting time for innovation in this country. The Government have aspects of it right, but if we are to continue with our dynamic approach, we need to address further issues, such as those that I have just outlined.

This is the second time today that I have been before you, Mr. Atkinson, although that phrase might suggest that I am in the role of defendant and that you are in the role of a stern magistrate. I do not think that I will pursue that route.

I thank the hon. Member for Wealden (Charles Hendry) for his kind words, and I thank other hon. Members for their kind words, too. Long may they continue. I also congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson) on securing this important debate, in which we have had a number of individual and distinguished contributions; there has not been a wildebeest in sight, intellectually. My hon. Friend shared with us—rightly or wrongly—the fact that he thought the subject through in his bath. It is a great privilege to be appearing before such a latter-day Archimedes on this occasion.

Our policies on innovation aim to maintain and improve the United Kingdom as a knowledge economy by encouraging the successful exploitation of ideas. Maybe that is as good a definition of innovation as any can suggest. Many of those ideas will emanate from a science base, and many will have science-based solutions. It is worth noting that, as colleagues have conceded, not all innovation is about science. Wherever ideas come from, we regard it as a priority to create the opportunities for interaction between knowledge creators and innovators.

As many Members present will know, the word “science” comes from the Latin word “scientia”—the pronunciation of the “c” depended on which side of the river one came from in those times—which means knowledge. That is a nice coincidence for us today, because in the United Kingdom we are trying to develop a knowledge economy—and therefore a knowledge society and a knowledge democracy, given some of the issues about society and science mentioned by the hon. Member for Oxford, West and Abingdon (Dr. Harris). Globalisation means that we no longer expect to compete merely on price or to trade in traditional products alone. Indeed, more than 70 per cent. of the economy is in the service sectors. The UK is a truly modern global economy in prime position to take advantage of the opportunities presented. Innovation has contributed to our success in both manufacturing and services. We have open and free markets, we are global players and we stay competitive through innovation, hence the importance of the debate.

Innovation is obviously important. Only this week a report from McKinsey considering why New York is losing its lead as a financial centre highlighted that London now has a more attractive legal and regulatory environment—an environment that enables innovation in financial products. Many of the challenges that we are discussing are challenges for the private sector, but there are challenges for other sectors, too, including our learned professions. The Royal Society of Chemistry is an example of a leading professional body that has now put innovation at its core through its mission statements.

I want to focus on what the Government can do about all that to ensure that our economy remains competitive. I shall highlight some developments, almost by way of headlines, given the time that we have available. We are working across government to ensure that public sector procurement—my hon. Friend was looking for a figure, and it is worth more than £125 billion a year—stimulates innovative solutions. The Financial Secretary to the Treasury announced yesterday a series of reforms to help promote technological innovation and innovation in public services. Given the size of the procurement budget, in that way alone the Government can drive innovation.

A number of agencies play a role. We heard some critical comments about at least one regional development agency, but I believe that the RDAs’ innovation policies are working to address challenges in commercialisation, knowledge transfer, the promotion of innovation, the creation of networks and improvements in skills. Science and industry councils have been set up in each region to guide RDA innovation spending. My hon. Friend paid tribute to the work in his region. Innovative businesses need intellectual property protection and clarity on standards and measurement. The DTI and its agencies provide that clarity and protection. Of course, we are considering the implications of the Gowers review of intellectual property.

We are working with the Design Council, which is developing a network to improve supply and demand of creativity skills following the review of creativity by Sir George Cox. Design is crucial in terms of modern day products and competition. I look forward to learning more about the work of designers and the Design Council in the months to come. In December, the Leitch review identified the UK’s optimal skills mix in 2020. We will be working with the Department for Education and Skills and the Department for Culture, Media and Sport, among others, to respond to that report.

We are at the forefront of EU thinking on innovation policy. The research and development scoreboard and value added scoreboard produced by the DTI allow businesses to benchmark themselves against peers. They have also enabled us to dig down into the reasons why, for a predominantly service sector economy such as ours, simple research and development measures are not enough for good policy development.

Knowledge transfer has been given a high profile since the Lambert review of business-university collaboration in 2003, the policy set out in the 10-year framework for science and innovation and the more recent updates of that framework. The business-led Technology Strategy Board is increasing the opportunities for business to exploit science and technology through collaborative research and developing the knowledge transfer networks. Of course, one is interested by the ideas that emanate from the distinguished review associated with the Conservative party. I shall not make quips about thinking in the Conservative party as an exciting piece of innovation that has started from the most unlikely sources; this has been a learned and distinguished debate, and it would be wrong to make any such quip.

In July, the Technology Strategy Board will become a non-departmental public body, which will improve its ability to operate with flexibility. I shall give two examples of its work. By supporting the integrated wing programme, a pioneering programme led by Airbus UK, the board is putting Britain at the forefront of next-generation, greener, cost-effective aircraft design. By working with a UK-based consortium of companies developing in-body micro-generators that will convert energy from human body movement into power for implanted medical devices, including pacemakers, electrical stimulators, instrumented joints and body area network applications—an example of our technology being at the forefront—the board is contributing not only to wealth creation, but to the welfare of people around the world.

Innovation platforms, which bring together business and government, are another important example of the work that is going on. Through the higher education innovation fund, the Government provide resources to all universities to increase knowledge transfer activity and business engagement. In addition to the oft-quoted growth in spin-out companies, HEIF has also led to a wider culture change in universities’ innovation activity.

I took careful note of the remarks made by the hon. Member for Esher and Walton (Mr. Taylor) about the research assessment exercise. We have to get the balance right between the absolute emphasis on pure and basic research, blue-skies thinking and the rest and the need to find measures to complement the well-accepted and traditional measures of academic excellence. This is not about one or the other, or about a conflict or a contest, but about searching for some complementary approach. That is important.

Research and development tax credits got a mention. They are important, but we shall consider some of the new evidence on that issue. I listened with care to my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) and to his thoughts about innovation. Of course, the contribution of the Bolton TIC was also notable. Indeed, we are working with the DFES to introduce innovation and entrepreneurship training to the school curriculum, with pilots starting last week. This has been an important debate, and one that I have enjoyed.