rose to move, That the draft order laid before the House on 23 November be approved. Second Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, in a competitive global economy, innovation and the successful exploitation of creative ideas are increasingly necessary to business success, productivity and long-term economic growth. United Kingdom business is often criticised for its failure to develop and exploit to the full technology and new ideas. The Technology Strategy Board Order will help to address that problem.

The order establishes the Technology Strategy Board, under the Science and Technology Act 1965. Its operational approach will, however, be very different from research councils created so far under the Act in that it will have a very strong business focus. The Act requires that a draft of the Order in Council, declaring the Technology Strategy Board to be a research council and specifying the new body’s objectives, must be laid before Parliament and approved by a resolution of each House. The draft royal charter under which the new body will be incorporated has been placed in the Library to provide a background to our debate.

The present Technology Strategy Board has made an impressive start as an advisory body. Since October 2004, it has advised the Secretary of State for Trade and Industry on business research, technology and innovation priorities for the UK, the allocation of funding across those priorities and the most appropriate ways to support them. The board has been instrumental in the success of the Government’s technology programme. More than 600 projects have been supported, mobilising over £900 million devoted to research and development in many areas of the UK economy.

The Secretary of State for Trade and Industry announced to Parliament on 1 November 2006 that he had decided that the best way to build on the success of the current board and ensure that the programme of technology support continued to be delivered efficiently and effectively was to create a new Technology Strategy Board as an executive arm’s- length body. Its primary location will be Swindon.

The new body will work closely with Ministers in achieving its objectives. It will promote and support research into and the development and exploitation of science, technology and new ideas for the benefit of business, in order to increase economic growth and improve quality of life in the UK through the delivery of key products and services, as agreed with the Secretary of State.

The new body will have executive responsibility for delivering programmes of government financial support to encourage business investment in and use of technology across all sectors of the UK economy. These programmes will include continuing support for collaborative research and development for business investment, and the use of technology, in both manufacturing and service industries. The aim will be to achieve increased innovation in sectors where the UK economy is strong; the development of new sectors, through the creation and growth of research and development, of intensive small and medium-sized enterprises; and support for the use of technology in areas important to the future of existing and emerging sectors in the UK.

The Technology Strategy Board will also support knowledge transfer networks. These are national over-arching networks that aim to improve the UK’s innovation performance by increasing the breadth and depth of knowledge transfer of technology into UK businesses. The establishment of the new body will provide improved strategic focus, better operational flexibility, and greater consistency and coherence in the delivery of the Government’s programme of technology support.

The new body will be business focused, with a business-led board. It will work closely with departments and agencies of Her Majesty’s Government, with the devolved Administrations, the regional development agencies and the research councils. It will collaborate with these bodies and businesses on technological developments and innovations of importance to the UK and to government procurement. A key role of the new body will be to support close working between Her Majesty’s Government and business in developing and exploiting new technologies through its programmes.

In its advisory role, the new body will alert the Government to areas where barriers exist to the exploitation of new technologies. It may be asked to make recommendations on how those barriers can be removed, but responsibility for the overall direction of innovation policy will remain with Ministers.

These proposals were subject to informal consultation in the middle of this year and they received wide support from key stakeholders, including the devolved Administrations, the regional development agencies and the CBI. There was general support for delivery of the board’s remit at arm’s-length from central government. It was felt that an arm’s length relationship would provide a stronger focus and greater effectiveness in delivery and clearer accountabilities for performance. Stakeholders also believed that such a relationship would enhance the influence of the Technology Strategy Board across the Government.

Graham Spittle, the present chair of the Technology Strategy Board, has agreed to chair the new body. That will help to ensure that the successful work of the board is carried forward through the transition period. Mr Spittle has a tremendous record of driving innovation in business and I greatly appreciate the leadership that he has provided to the Technology Strategy Board in its current form.

All contracts, assets and liabilities to be transferred from the Department of Trade and Industry to the new Technology Strategy Board will occur under the terms of a further order made under the Science and Technology Act 1965, under the negative resolution procedure. I expect the new body to be formally inaugurated in the first half of the 2007-08 financial year. I beg to move.

Moved, That the draft order laid before the House on 23 November be approved. Second report from the Statutory Instruments Committee.—(Lord Truscott.)

My Lords, I thank the Minister for introducing this order. We on the Opposition Benches welcome any action to stimulate innovation in business. However, we do have certain questions about this order.

First, can the Minister explain what the relationship will be between the Technology Strategy Board and the RDAs, the research councils and the equivalent EU bodies under the Seventh Framework Programme for research? How will he ensure avoidance of duplication? The Explanatory Memorandum states that the Government believe that the right way to build on the success of the TSB and to ensure that a programme of technology support continues to be delivered in an efficient and effective way is to create an executive arm’s-length body. It portentously states that its objects and approach will, however, be different from research councils created so far under the Science And Technology Act 1965. The first thing it then says, as if this is the most important thing, is that its primary location will be in Swindon. I hope that the Minister can assure your Lordships that this is not just jobs for the boys.

The regulatory impact assessment states that the costs of delivery will not exceed current costs of delivery within the DTI and quotes an annual figure of £178 million. I may have missed it, but I cannot see a reference to the initial costs of the merger and the establishment of the Technology Strategy Board. Can the Minister enlighten us?

I understand the assertion that the encouragement of experimentation in research can be undesirably frustrated by demands for justification of every cent of expenditure. On the other hand, there is a considerable danger that the remoteness of decision- making on spending from the ultimate provider of funds, the hard pressed taxpayer, can lead to insufficiently rigorous justification of such spending decisions. What safeguards are there to ensure that taxpayers’ money is not wasted?

Efficiency gains are stated in the regulatory impact assessment as being anticipated, but the basis on which such savings are expected, and the amount, is not given. Can the Minister enlighten us?

Under the heading “Risks”, and as part of the case for change, the RIA states that an advisory TSB does not optimise strategic focus. We have no way of judging the business case, so can the Minister expand on why the proposed structure will optimise strategic focus?

The RIA states rather baldly that the creation of the TSB is expected to be positive both in terms of improved communications and joint working. We should hope that that is the case. It then gives a long list of categories of public sector stakeholders, followed by a single category of private sector stakeholder. I hope that that is not a demonstration of the Government’s priorities.

The RIA states that the proposal is expected to have a positive effect on small businesses pursuing innovative ideas. However, it gives no explanation of the basis for that statement. It appears to be there simply because of the requirement of the small firms impact test for such a statement. There was a suggestion by the Liberal Democrat spokesman in the other place that small businesses could be overlooked by a grant-awarding body manned exclusively by people with big business experience. I could not see from Hansard that the Minister there had responded to that point. Perhaps the noble Lord can do so.

The RIA goes on to state that the Government will monitor the impact of the measures presented. How will the Government do that and, in particular, how will they monitor the performance and success of the TSB itself?

The RIA states that the TSB will produce an annual report. That is a step in the right direction and we will want to look closely at it. Perhaps the Minister could confirm that it will be widely available. I look forward to his responses to my points.

My Lords, we on these Benches give our general support for the establishment of this board and we, too, look forward to that report, so that in a year or two we will be able to monitor it and, if any changes are needed, they might be introduced then. Otherwise, we support the order.

My Lords, I should first declare an interest: I am a professor at University College, London, and I am chairman of a small company. At University College we work with the insurance industry in the Lighthill Risk Network. One of the problems in dealing with industry and research that has been focused on more this year than normal is the extreme difficulty of industry obtaining data from UK research organisations. I am sure that noble Lords are familiar with the fact that in the United States, data from its research community are pretty well freely available. In the UK they are not, because guidance is given by Government to their research establishments to charge for their data. They often make it very difficult and there is no general data policy.

I am chairman of the Centre for Ecology and Hydrology and part of its remit from the Government is to ensure that it charges for the data that come from its establishment. I support that in the frame with which it is done but I believe there is considerable conflict and confusion in this area. If you really want UK research to get out to small industries, you have to change dramatically the whole structure in which data are made available. You will find in the world of the environment that it is absolutely normal for most people to give up trying to get data from the UK research community. You have to go to the United States or elsewhere. This is an extremely serious position.

A very welcome point about this document, which has been a progressive change by this Government and I understand is now welcomed by the Conservatives and the CBI, is the role of procurement by government agencies in helping industry. When I ran the Met Office, I was told by the then Government that it was not the job of a UK government agency to support small industry through procurement. That was something that they did in France, I was told. I am glad we now do this in the UK but is it possible for UK government agencies to procure new technology under EU rules or will it have to be done on a competitive basis across Europe? It was not at all clear from the statement to what extent it will be possible to focus these activities on UK small industry, as opposed to actually sponsoring research across the whole of Europe.

My last point, which involves the text of the document, is that one of the ways in which the Government can help small industries—that is beginning but much more could be done—is to publicise UK companies working for the UK Government. Many foreign organisations comment that where excellent work is being done by UK small businesses, the UK Government do very little to publicise it. We well know that the UK Government are very good at publicising the Shells, BPs, BAEs and Rolls-Royces of this world, but they are not very good at publicising the very small companies. My noble friend Lord Sainsbury once commented upon that point. I very much hope that you will encourage this and I look forward to some new initiatives and the wider use of the internet for that purpose.

My Lords, I thank the noble Lord, Lord Roberts, for his very welcome support for the TSB. I will have to write to the noble Lord, Lord Hunt of Chesterton, on his points on the data. But I can comment on the points that he raised on how the new TSB will work with organisations such as the European Institute of Technology and other European bodies: the TSB will certainly collaborate with the European Institute of Technology when this is established and the Technology Strategy Board will seek to collaborate with all bodies—international, national, regional or local—with an interest in promoting innovation in the UK.

The noble Lord, Lord De Mauley, mentioned collaboration—the relationship between RDAs, the TSB and so on—and the need to avoid duplication. The TSB will have a duty to collaborate with all these bodies but it will be tasked with having a special care to avoid duplication.

The noble Lord, Lord De Mauley, again raised the question of the move to Swindon and whether, in his words, this was “jobs for the boys”—and perhaps the girls as well. I could say a lot about Swindon but I will say that it was selected following a wide-ranging review of 14 possible locations against a set of objective criteria and specific sites proposed by the regional development agencies.

The criteria covered the local skills base, transport links for the board’s stakeholders and quality of life indicators. Swindon became the strongest candidate because of the following: its geographical situation, given that the body of stakeholders will be coming from government and business; the accommodation immediately available in Swindon, with back-office functions shared with the research councils; the proximity of those research councils; and the likelihood of more existing DTI London-based staff transferring and thus reducing relocation and redundancy costs. It was also felt that a move to Swindon would create benefits, including enhanced efficiency and service delivery, together with social and economic benefits for the surrounding area. So, generally, a move to Swindon was thought to be a very good idea.

I was asked about the nature of the relationship between the department and the Technology Strategy Board. Day-to-day decisions will be taken independently by the board. However, the board will be appointed by the Secretary of State and, under its charter, will be obliged to spend its money in accordance with any directions issued by the Secretary of State. The relationship between the board and the department will be set out in a management statement and financial memorandum, which will specify the detail of the department’s controls over the board.

I was also asked how much the change will cost and what the financial benefits will be. The costs associated with the delivery of the technology programme through the new TSB will not exceed the current costs of delivery arrangements within the DTI, based on a programme spend of £178 million per annum. However, we expect efficiency gains over time in respect of the administrative work that is presently outsourced. In addition, the new body is expected to result in improved effectiveness in delivery of the programme. It is true that transitional costs will be associated with setting up the TSB, but it is currently not possible to give precise costs for the transition process as the organisational design and business processes of the new body are not yet completed, and those will obviously impact on any reorganisation costs.

Again, I shall write to noble Lords to cover any points that I have not dealt with in regard to the Technology Strategy Board being an arm’s-length body. The current board is purely an advisory body. The idea behind that is that the new TSB will have an executive status. That will enable the future board to deliver functions currently carried out within the DTI, including taking over the delivery of the £178 million technology programme, which I mentioned. That includes grants for collaborative research and development and support for knowledge transfer networks.

On Question, Motion agreed to.