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House of Lords Hansard
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Lords Chamber
23 October 2017
Volume 785

House of Lords

Monday 23 October 2017

Prayers—read by the Lord Bishop of Salisbury.

Introduction: Lord Agnew of Oulton

Theodore Thomas More Agnew, Knight, having been created Baron Agnew of Oulton, of Oulton in the County of Norfolk, was introduced and took the oath, supported by Baroness Evans of Bowes Park and Lord Nash, and signed an undertaking to abide by the Code of Conduct.

Oaths and Affirmations

Baroness Trumpington and Baroness Fritchie took the oath, and signed an undertaking to abide by the Code of Conduct.

Consumer and Personal Debt

Question

Tabled by

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To ask Her Majesty’s Government what steps they are taking to deal with the concerns of the Money Advice Service and the Financial Conduct Authority about the level of consumer and personal debt in the United Kingdom.

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My Lords, with the permission of the House and at the request of my noble friend Lord Haskel, I beg leave to ask the Question standing in his name on the Order Paper.

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My Lords, the independent Financial Policy Committee stated last month:

“The overall level of consumer debt relative to household incomes was in line with historical averages”.

We set up the Money Advice Service, which spent £49 million on debt advice last year, and are creating a single financial guidance body to ensure that people can manage their money better.

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My Lords, I thank the Minister for his response, but just last week the director of the Financial Conduct Authority pointed out that domestic debt was rising by about 10% per annum. It is not irresponsible debt; it is debt on food and accommodation. The Monetary Policy Committee has also warned of these increases in personal debt. Behind these economic statistics lie great hardship, stress and concern for families. The Minister is known as a compassionate man. When the Financial Guidance and Claims Bill comes before this House tomorrow, will he impress on his colleagues the need to introduce the measure in his party’s manifesto which would give a breathing space to those with problem debt?

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Certainly it is correct that the Financial Guidance and Claims Bill will introduce a number of measures that will improve the service for debt advice to those in greatest need. We stand by our commitment on the breathing space, which was in our manifesto and the manifesto of the noble Baroness’s party. We will bring forward measures to deal with it, which underscores the importance we place on dealing with debt, particularly among young people.

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My Lords, as people reach or exceed safe borrowing limits, how do the Government expect them to cope with the continued rise in the cost of living and the continued decline in real wages?

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The Financial Conduct Authority placed a duty on banks to make sure that lending is on a sustainable basis. In the wider area, it is also important that we maintain the strong and vibrant economy that has record numbers of people in work and record low levels of unemployment. Those things are the greatest help to people’s ability to service debt and are therefore the primary focus of our attention.

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My Lords, this is all about the horrible situation that people get into because of debt. It is wonderful that the Government are trying to do something to reduce it and to make people more aware of it, but what incentive will they give to people to save? The incentives to have debt are being addressed but there is no incentive at all to save.

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The report referred to earlier contained the staggering statement that more than 40% of Britons have less than £100 in savings as a buffer before they get into debt. That is one reason why my noble friend will be pleased to know that we have established the Help to Save scheme. It will help 3.5 million people save £50 per month over two years. If they do that, the Government will give a 50% grant, which represents a very substantial rate of return to encourage saving.

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My Lords, does the Minister recognise that in our debt-dependent economy, average household debt is 150% of average household income? Unsecured personal debt is now back above £200 billion. Council tax and utility bills are at record levels of default and 40% of mortgage borrowers in our country have no experience of dealing with an interest rate rise. In those perilous circumstances will the Minister join others in strongly urging the Bank of England not to increase interest rates, which would devastate families, businesses and the economy and do nothing to diminish inflation, which is in any case largely the result of the post-referendum devaluation of the pound?

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The noble Lord is a very experienced politician and will know that it would be impossible for me to comment on interest rate policy, which of course, rightly, is now set independently by the Monetary Policy Committee. A lot of the points he made are correct. These are areas of concern and happening at a time when we have historically low interest rates. There are some areas where things are better—for example, mortgage repossessions are at their lowest level since 1982—but we must do more, particularly in the area of short-term debt, which he referred to. That is partly what the Financial Guidance and Claims Bill, which has its Report stage in this House tomorrow, is about.

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My Lords, a poll commissioned by Citizens Advice in June found that 18% of people with credit cards who had debt problems had had their credit limits increased automatically without them even asking for it, thereby enabling them to take on even greater debt when they were already facing problems. I understand that the FCA is looking into this, but will the Minister ensure that it is asked to bring in much stronger guidelines on this situation to prevent it getting worse?

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I was nodding as the right reverend Prelate made his point about this irresponsible lending—it is very tempting—but of course the Financial Conduct Authority was set up to be an arm’s-length body and to advise the Government on what should be done. As he rightly says, the FCA has produced a report, which it is putting out to consultation, and will be announcing some policy changes in this area. Previously, we have seen the introduction of things such as fee-free bank accounts, which are now benefiting 4 million people, and the cap on payday loans—I pay tribute to the most reverend Primate’s role in bringing that about. These are making a practical difference to people and we need action there too.

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Is the Minister aware that as universal credit is rolled out, personal debt is going to increase to unprecedented levels? This is not the fault of the individuals but results from the fact that new claimants have to wait, on average, seven to eight weeks for their first payment. They then get a payment for four weeks. It is not possible for them to survive, and of course we know that their benefits are reduced by the bedroom tax and all the other things, and then debt withdrawals. We heard this morning at a meeting that apparently people are resorting to burglary in order to pay their debts. Can the Minister help them by consulting his colleagues?

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There is no need for people to engage in any of those kinds of activities. Help is there, including in the shape of the advance, which over 50% of people now take advantage of, and which can be based on that element. We need to remember that universal credit was brought in with cross-party support, with the very purpose that it would stop the perverse incentives which meant that, under the previous benefit system, people could work more hours and be worse off, and move them to a system where people would always be better off if they worked. We now need to address the details, which my right honourable friend the Secretary of State is doing.

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My Lords, the crisis is upon us, and it is evident that it is. Will the Minister recognise that the Government have an opportunity tomorrow to accept an amendment tabled by the Opposition for a breathing space for debtors? During the general election, of course, the Conservative Party was in favour of this proposal. Can he not see that the urgency of the situation demands that the Government act positively tomorrow?

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The Bill is about improving the quality of debt advice to those in need of it and has been broadly welcomed. My noble friend Lady Buscombe has tabled a number of amendments which will be discussed on Report. As I have already said, we remain committed to the concept of a breathing space and will bring forward details on that very shortly indeed.

Life Sciences Industrial Strategy

Question

Asked by

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To ask Her Majesty’s Government what is their response to the life science industrial strategy, published on 30 August, with regard to its findings on making the United Kingdom the best place for life sciences businesses to grow and on collaboration with the National Health Service.

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My Lords, the Government support the life sciences industrial strategy’s ambition to make the UK a global hub for clinical research and medical innovation, and are discussing the recommendations with industry and its key partners to agree a sector deal.

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I thank the Minister for that helpful reply, and am delighted to know that active discussions are going on. I have two specific questions. First, as the Minister will know, manufacturing in life sciences is the most productive part of the most productive sector of the UK, so what are the Government doing to attract more investment in that area? Secondly, and rather differently, what are the Government’s plans to support start-ups in totally new healthcare businesses?

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My Lords, manufacturing is extremely important. As the noble Lord says, it is a highly productive sector of the economy. In the first wave of the industrial strategy fund, we are investing £146 million in medicine and vaccine manufacturing. With regard to investing in smaller companies, SMEs, we have a number of schemes that we are introducing, including supporting the AHSNs—the academic health science networks—and setting up innovation exchanges.

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My Lords, the Lancet commission highlighted deficiencies in surgical care across the globe. Recent investment by the National Institute for Health Research, charities and the research councils has increased the number of clinical trials in the UK, particularly in surgery. Does the Minister support investment in surgical and clinical research to improve care in the UK and across the globe?

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My Lords, we have an extraordinary record on clinical research, particularly on trials. In 2016 just under 700,000 patients in the UK were recruited for clinical trials, and the UK accounted for 29% of all trials that took place in the EU. So the story on clinical trials is a very good one and the NIHR is much to be complimented.

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My Lords, the excellent life sciences sector is dogged by uncertainty around Brexit. It is experiencing a chill in investment, has problems in attracting and retaining talent, is losing out on EU scientific grant funding and collaborations and has the potential loss of regulatory alignment with the European Medicines Agency to contend with. Does the Minister not therefore agree that that makes the case for the Government to adopt the target, set in Sir John Bell’s excellent report, to achieve an R&D spend of 2.6% of GDP from the 2015 level of 1.7%? That is the most available and crucial step that the Government can make. What is the case for not doing it today?

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My Lords, there is a strong case for increasing the amount of resources that go into R&D in the UK. It is true that about 1.7% of GDP goes into research at the moment, whereas the OECD average is 2.4% and many countries are aiming at 3%—Germany is looking at 3.5%. We share that aspiration. As the noble Lord will know, we are increasing the amount of money that the Government spend on research by £2 billion a year from 2020-21 and an extra £4.7 billion over the lifetime of this Parliament, which is a very big increase. This is one of those areas where we can almost never spend enough.

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My Lords, the life sciences industrial strategy is a clear and comprehensive review of the biomedical and pharma sectors, but it misses out large swathes of the industry—namely, animal health and plant science. Was that narrow interpretation by the deliverers of the industrial strategy on the advice of the Government, or was it the interpretation of those making it? Can the Minister give us assurances that plant science and animal health will also be included in the industrial strategy sector deal when it emerges?

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My Lords, it is true that the life sciences industrial strategy was largely based on humans rather than plants or animals. That does not mean to say that we will not be having a strategy for other sectors of the economy as well, including plants and animal science.

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My Lords, one of the key proposals in John Bell’s report on the life sciences industrial strategy is the use of NHS data. What is the Government’s view of business, particularly global business, using NHS data?

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NHS data is potentially a hugely valuable resource, with the huge proviso that we must always respect patient confidentiality and privacy. On that basis, the data that we have in the NHS from primary and secondary care, given that it is the biggest universal healthcare service in the world, could be of huge benefit in developing new drugs.

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My Lords, in view of Sir John Bell’s recommendation that the Government should streamline the adoption of all new products into the NHS, is my noble friend aware that there is an explosion of new diagnostic tools using blood proteins and genetics, often led by British companies? These offer earlier and more accurate diagnoses, saving costs, yet these firms are finding that the NHS is very resistant to adopting new blood science diagnostics compared with other countries. Why is this?

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My Lords, that is a good question that applies across the piece: companies find the NHS very difficult to sell into. The Government and NHS England are acutely conscious of that and we are, through our test bed, digital catalyst and EAMS programmes and our response to the accelerated access review, doing everything we can to improve the rate of adoption of new products into the NHS, but I have to say that it is not easy.

Armed Forces: Serious Offences

Question

Asked by

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To ask Her Majesty’s Government, further to the answer by Earl Howe on 5 September (HL Deb, col 1828), what further consideration they have given to reviewing the Armed Forces Act 2006 to deal with serious offences committed by members of the armed forces.

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My Lords, as explained in answer to the noble and learned Lord’s previous Question, the Armed Forces Act 2006 is kept under regular review, and the most recent Armed Forces Acts of 2011 and 2016 renewing those provisions made modest changes. In preparation for the next Armed Forces Bill in 2020, the Government have decided that the time is now right for an independent and more in-depth look at the service justice system so that we can be assured that it is as effective as it can be for the 21st century.

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My Lords, I welcome the Minister’s reply. Should not the courts martial system be brought into line with the civil courts and give the right in serious cases such as murder and rape to be tried by jury with a judge appointed by the Lord Chief Justice, replacing the present hierarchical court system with its bare-majority verdicts, the size of which is secret, which is criticised by the Judge Advocate-General? Should we not fundamentally review the 2006 Act in consultation with the Lord Chief Justice and senior legal practitioners?

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I thank the noble and learned Lord for raising two important points. On the question of referring all serious cases to the civilian police and courts, as he will be aware, the service justice system is capable of dealing with the most serious offences, and has done so. It has been held to be compliant with the ECHR for investigations and prosecutions both within the UK and abroad, but we are keen for the review to take a strategic look at all aspects of the service justice system, and this is one issue to be explored. He also raised the important issue of majority verdicts. We are aware that views have been expressed about this, particularly in this House. Although the system has been held to be compliant with law, the Government recognise that there are differing views about the system of majority verdicts, and this is one issue to be covered by the review.

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My Lords, I, too, welcome the Minister’s Answer and the prospect of a review. I want to ask her about the United Nations’ 2006 Decaux principles. On 7 June this year, the United Nations special rapporteur on the independence of judges and lawyers, in his report to the United Nations Human Rights Council, called on states to ensure that the jurisdiction of military tribunals is limited to military offences committed by active members of the military, in order to protect an individual’s ordinary rights to fair trial and due process. Does the Minister agree that Section 42 of the 2006 Act, which provides for military tribunals trying civil cases, is inconsistent with principle 8 of the Decaux principles: that military courts may try military personnel only for offences of a strictly military matter?

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I thank the noble Lord for raising a very interesting point, which we will all take away and consider in detail before attempting to reply in detail. It is genuinely an interesting issue. One key aspect of Section 42 is the fact that it imports into service law any offence that is also an offence in civilian criminal law. That is extremely important when service personnel are serving abroad and commit civilian criminal offences that the civilian courts here do not have the power to deal with. I thank the noble Lord for raising a very important point.

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My Lords, I thank the Minister for her Answer. The concept of a very serious offence like murder not being tried by jury has made many of us uncomfortable. I am delighted that there will be a full review. I hope that there will be full consultation and that a wide variety of people will be involved, and I hope that the review will look at the particular problem of the boundary between murder and soldiers lawfully killing the Queen’s enemies. As we know, those have presented some of the most difficult cases over the years, and I hope that they will be included in the review, which I welcome.

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I thank the noble Lord for his question. On the consultation process, the Government’s aim is that the service justice system mirrors, where possible, the provisions of the civilian criminal justice system. When the maintenance of operational effectiveness across the Armed Forces requires it, there may be differences from that system.

We are not conducting a public consultation but trying to ensure that the system is tweaked, if it needs tweaking, to ensure that we are in the best possible state to be in for the 21st century. But that does not preclude any interested parties from making representations to the Government on these issues, as and when they think it appropriate. The noble Lord raises a point that he might wish to consider presenting to the Government.

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Given the intention of the Government to allow service on a part-time basis, would the military or civil police investigate an alleged crime committed by an individual while he was on his break from full-time service?

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The noble and gallant Lord raises an interesting technical point. I am not sufficiently sure of my legal knowledge to respond to it with authority. Perhaps he would leave me to look at that and revert to him.

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Should the Government not have a care that there is a danger in civilianising the military system, which has worked well over the years—and have a care also that the military will be judged in a civilian way, when civilians have no knowledge of military procedure or the military system in battle?

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I reassure the noble Viscount that, as he is aware, a protocol is in existence between service and civilian prosecutors which recognises that some cases are more appropriately dealt with in the service system and some are more appropriately dealt with in the civilian system, particularly those with civilian victims. The protocol recognises that any offence can be dealt with by the service authorities. The main principle in deciding who acts is whether the offence has any civilian context, particularly a civilian victim.

Banks: Immigration Act 2016

Question

Asked by

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To ask Her Majesty’s Government what assessment they have made of whether banks and building societies are able to undertake immigration checks on approximately 70 million United Kingdom bank accounts as required by the Immigration Act 2016.

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My Lords, effective immigration controls require action to reduce incentives to illegal immigration and deny the practical means to remain here unlawfully. The Immigration Act 2014 prohibited banks and building societies from opening accounts for known illegal migrants. The Immigration Act 2016 goes further and targets existing accounts held by illegal migrants. The Government are continuing to engage with industry ahead of implementation to ensure operational preparedness.

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I thank the Minister. She might remember that, in 2007, 25 million benefit claimants’ details were lost. How certain can we be that the 70 million bank and building society accounts will be safe and secure? Are the Government committed to that safety and security? As for the claimants, how will the Government decide who will be investigated and who will not be investigated? The Minister will know, of course, that seven out of 10 appeals made against immigration decisions are successful. How can we be sure that no real hardship comes because this Act is not acted on in the proper way?

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My Lords, there were three questions there, but I will deal with the last one, which was about the information not being lost. The Home Office will rigorously check the information before it goes to the banks. The noble Lord talked about vulnerable people being caught by this. It is particularly important that these checks are gone through because many people who have managed to open these sorts of bank accounts may themselves be vulnerable.

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My Lords, apart from the effects on immigration, has compliance with the Immigration Act produced any other positive benefits for society?

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Compliance with the Immigration Act produces a benefit for society, as many immigrants contribute very well to the economy. I count myself as an immigrant; noble Lords can make a judgment about that.

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My Lords, regarding the Immigration Act 2014, whose provisions I take it are actually in force, can the Government identify how many individuals have been identified as being in the United Kingdom without permission only through checks by banks and building societies under that Act? Can the Government say how many individuals have been wrongly denied opening an account and for how long, on average, because of these checks?

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My Lords, it is quite difficult to answer the question of how many people might have been denied access to a bank account under the Immigration Act 2014 because people who are here illegally are part of a changing picture. I do not have to hand information on people who have been wrongly denied access to a bank account, but I can get back to the noble Lord on that topic.

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My Lords, I fear that there is already evidence of a degree of discrimination on the part of banks and other providers of financial services against people of black and minority ethnic origin. What guidance do the Government intend to issue, or have the regulator issue, to banking and financial service providers to avoid this happening when people are called Boateng, or Patel, or Singh, or some other name which might indicate that they were not born in the United Kingdom but in fact does nothing of the sort because many people with those names are and were?

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My Lords, individuals are not checked on because their name is Patel, Singh, or any other name which could designate foreign origin. Individuals will only be affected by the provisions if their details have been shared with firms—ie, they are on a list as being illegal immigrants.

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My Lords, the checks are to be made on known illegal immigrants. How are the banks and the Home Office to know, for instance, whether someone is here having outstayed a visa without reliable and comprehensive exit checks?

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My Lords, the Home Office has a list of people who are here illegally. Exit checks are only one part of the information we have to hand on who has left this country; the International Passenger Survey is another. Exit checks are therefore only one part of providing details of who is here illegally.

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My Lords, like most Members of this House, I am a politically exposed person. Although I downsized my house and cleared everything through all these financial records four years ago, I am now being asked to do it again although the same money is sitting in the account that I put in there four years ago. Is it because of that, or because I am an immigrant and not British, that I am being subjected to these checks, or is it for both reasons?

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Like my noble friend, I am an immigrant and a PEP. I think that my noble friend refers to banks’ anti-money laundering obligations. However, I am absolutely sure—I would vouch for her—that she is not an illegal immigrant.

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My Lords, is the Minister aware that expatriates also have great problems opening bank accounts here, irrespective of whether they are British or otherwise, and that that is quite a problem for people working temporarily overseas?

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I am certainly aware of the problem that my noble friend raises.

Secondary Legislation Scrutiny Committee

Natural Environment and Rural Communities Act 2006 Committee

Membership Motions

Moved by

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Secondary Legislation Scrutiny Committee

That Baroness Blackstone be appointed a member of the Select Committee in place of Baroness Gould of Potternewton, resigned.

Natural Environment and Rural Communities Act 2006 Committee

That Lord Cavendish of Furness be appointed a member of the Select Committee in place of Baroness Scott of Bybrook, resigned.

Motions agreed.

Space Industry Bill [HL]

Committee (3rd Day)

Relevant documents: 1st and 2nd Reports from the Delegated Powers Committee and 2nd Report from the Constitution Committee

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My Lords, it might be for the convenience of the House if those who are not engaged in the Space Industry Bill would like to leave at this point before we go on.

Clauses 50 to 59 agreed.

Schedule 10 agreed.

Clauses 60 and 61 agreed.

Schedule 11 agreed.

Clauses 62 to 65 agreed.

Clause 66: Minor and consequential amendments

Amendment 40

Moved by

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40: Clause 66, page 42, line 1, leave out “enactment” and insert “secondary legislation”

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My Lords, I will in due course also speak to Amendments 41 and 42 in this group.

We have heard a lot recently about Parliament taking back control, yet no Government have done more in recent times to weaken parliamentary scrutiny and strengthen the power of the Executive than this one. They load up Bills with powers to be enacted by secondary legislation, and then complain if either House of Parliament objects to the powers thus taken. The truth is that we ain’t seen nothing yet. The Bill is just a taster of what is to come. We are of course dealing with our old friends the Henry VIII powers. As the Select Committee said on the matter:

“The number of delegated powers granted by the Bill is notable —the Bill has 71 clauses and confers approximately 100 delegated powers. Some of those powers are very broad”.

These should be called the Conrad Russell amendments. During my early years in this House, the late Lord Russell would root out and oppose Henry VIII clauses in Bills from both Conservative and Labour Administrations. As a Minister, I may even have tried to push through the odd Henry VIII power myself. Parliament should be wary of them.

Amendment 40 leaves out the catch-all term “enactment” and inserts the more precise and narrow reference to “secondary legislation”, so that SIs cannot amend primary legislation and only secondary legislation made under Clause 66 can be amended, repealed or revoked by secondary legislation. Amendment 42 would ensure that if we cannot stop SIs amending primary legislation, any regulation under this clause which seeks to repeal primary legislation is subject to annulment in pursuance of a resolution of either House of Parliament.

Whatever the outcome of Brexit, it is clear that the Government wish to find ways more easily to future-proof complex legislation. If we are to put the best gloss on these attempts at Henry VIII powers, this is about government trying to be more flexible as the impacts of legislation become clear. However, it involves weakening parliamentary scrutiny. Although this is a debate on the Space Industry Bill, it raises many important issues, which we should look at ways of dealing with in the long term. Certainly, the Select Committee has a good claim for taking this on as a broader issue, or perhaps the Lord Speaker and the Speaker could set up a Joint Committee. However, current parliamentary procedures are not adequate to deal with legislation such as immensely complex, technical Bills—we will soon have another one: the Data Protection Bill—which try to legislate for rapidly changing technologies. Henry VIII powers are not the solution, and although we put down these amendments in an attempt to proceed with this Bill, this is a longer-term problem that is a long way from being solved. I beg to move.

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My Lords, I will say few words in support of the general propositions that my noble friend Lord McNally has referred to. I have come to the sad conclusion that the Government do not believe in parliamentary democracy but in executive government, and that they use every means they can to avoid Parliament’s scrutiny. The particular example that I am concerned about is what has happened to the Joint Committee on Human Rights; that goes back many years to when the noble Baroness, Lady Corston, chaired it and I first joined it. Lords committees are relatively safe, because we can protect them within this House. However, a Joint Committee of both Houses depends upon co-operation by both Houses. The Joint Committee on Human Rights is a vital constitutional safeguard that looks at every Bill and some delegated legislation for its compatibility with human rights. It is quite unacceptable that on the Commons side, the places have not been filled and the committee has therefore not met or sat, not just for weeks but for months now. It is an outrage and I very much hope that the Minister will pass on that message to some of his colleagues. Without that public watchdog, parliamentary scrutiny is very much weakened, and therefore I support everything that my noble friend Lord McNally has said.

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My Lords, I too support what the noble Lord, Lord McNally, has said. The whole of this part of the Bill—Clauses 66 and 67—raises the same basic point. I will address what I have to say in relation to these amendments and come back, if I may, on Clause 67.

I know that I am being very old fashioned—almost constitutional—but why are we giving a Henry VIII clause the heading of “Minor and consequential amendments”? It is perfectly true that Clause 66(1) provides for minor and consequential amendments. That is because it introduces and gives effect to Schedule 12, which contains a whole series of consequential amendments that follow from the Bill. However, thereafter we are dealing with a regulation-making power that will enable the Executive—in this case, the Secretary of State—in due course to come back to the House to get more power to overrule, set aside and get rid of primary legislation. I do not regard that as minor. It is a very serious issue for regulation, whether through the Secretary of State or anybody else, to set aside Parliament.

I shall have to reserve what I say about Clause 66(6), which concerns the devolved Administrations, to when we come to the next amendment. However, I strongly object to legislation such as this being expressly regarded as minor.

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My Lords, most of us are very much in favour of this Bill. Most of us want to make Britain the sort of place where space exploration right across the board is a natural part of what we offer the rest of the world. That is where we start from. Most of us are perfectly prepared to understand that minor and consequential amendments need to be made to laws as the world changes. However, most of us are here because at some point in our lives we have cared about the British constitution and about Parliament restricting the powers of the Executive by saying that, if primary legislation is to be changed, it is to be changed here in Parliament and not outside it by people who are not subject to Parliament. I am deeply concerned that much legislation will be brought into disrepute because people will believe that they no longer have a say in the proper procedure of making laws.

If this legislation were the only case where such a proposal is being made, I suppose one might be able to argue that so complex, detailed and particular is this matter that some special arrangement needs to be made. However, it is not the only case; it is a regular activity that this House has had to refuse. I have to admit that there were three occasions when the current Secretary of State was the Minister for Legal Affairs and I was one of those who managed to reverse attempts to take into the hands of Ministers power which ought to be in the hands of Parliament.

I say to my noble friend that one danger is that this House will have to take a more active part in secondary legislation if that is where the decisions are to be made. It is a very cumbersome system, and there is a mechanism here that would make it almost impossible to use, so that is not what we want to do. I say to my noble friend that this is not a small matter. Maybe the people in the Chamber who think this Bill is all about space have left it to those of us with an interest in the subject, but the fact is that every Member of this House ought to be interested in ensuring that primary legislation is not changed other than in a primary way in which Parliament plays a proper part.

I would like my noble friend to realise that this is a growing concern on this side of the House—it is not something that is going to slip through. More and more people are saying that legislation is being passed to give Ministers powers they should not have. The point I am making is that I was a Minister for 16 years, and I do not think I should have been given these powers. I know very well that when you are a Minister, you take things very carefully if you are going to have to report to Parliament. It is different from having a power to act on your best intentions. It is a much harder and tougher thing—and so it should be; that is what we are here for. We should not allow the Government to change what has been the attitude and concern of all Governments, of all sides, which is to reserve to Parliament that which is parliamentary, and not to try to steal it for the Executive.

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My Lords, I declare my interest as a member of the Delegated Powers and Regulatory Reform Committee and say that I am speaking personally in this debate and not on behalf of that committee. I support what the noble Lord, Lord McNally, is seeking to achieve in these amendments and the important principle he has raised. I also echo the words of my noble friend Lord Deben as well as the views both of the noble and learned Lord, Lord Judge, and the noble Lord, Lord Lester.

This is an issue which, every Wednesday, I consider in detail during the Select Committee’s proceedings. It is not an issue that is receding—it is growing. In the original draft of this Bill, there was provision in regulations to allow the Secretary of State to do this, and this was consequential on any provision in the Space Industry Bill. It included a Henry VIII power to amend, repeal, or revoke any Act of Parliament made since the beginning of parliamentary history—in other words, completely changing any aspect of preceding law in the context of this Bill.

I recognise that the Government have moved on from where the draft Bill was published to where we are today. I welcome this and thank them. They have taken into account a whole series of concerns that have been expressed very eloquently this afternoon, and in previous debates. Many of the Henry VIII powers have gone. Many of the statutory instruments will now be by affirmative rather than negative resolution. It is all in the right direction to enable Parliament to determine its view on many of the key issues in this Bill.

The Space Industry Bill requires a lot of detail in secondary legislation to achieve the single most important objective—the commercial success of this industry within an appropriately regulated authority. We are focusing on the regulations, but it is all too easy for Government to either make a success or a commercial failure with the industry in terms of the regulations they propose. Because of the importance of the commercial aspect of the Bill in encouraging this industry to come to this country and to provide potentially tens of thousands of jobs and activities in areas of unemployment, what is in that secondary legislation will be critical. That is why I think it is right that the noble Lord, Lord McNally, and others have spoken to this subject in the context of this Bill as well as in principle. If we do not focus now, as we will during this debate, on the nature of the Henry VIII powers and where there will be affirmative or negative resolutions and procedures, we could be putting into law a Bill which actually is of no value, unless the secondary legislation and the negotiations with industry are successful. We will need to come back to this House to look at what is achieved in that context and have our say. That is vital for the success of the objectives of this Bill.

Having said that, I reiterate once more that there has been huge progress as a result of the reports of the Delegated Powers and Regulatory Reform Committee, reports in another place and the fact that the Government have been listening. We should also place that on record, because there are significant changes from the original draft Bill, which have taken into account the importance of Parliament having a say on the secondary legislation that will be coming forward.

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We have Amendment 42 in this group, but I will also speak to Amendments 40 and 41 since that will save me having to go through the points all over again when we come to my Amendment 45.

As has been said, the Bill gives extensive delegated powers to the Secretary of State, and thus the Government, without the policy details and parameters of those delegated powers being spelled out in the Bill. The Delegated Powers and Regulatory Reform Committee has described it as a “skeletal Bill”. Consequently, it is difficult to scrutinise it meaningfully. The Government have not published any draft regulations because such regulations are little more than a twinkle in the Government’s eye at present. Formal consultation will not even start on those draft regulations for at least another year. Even then, the Government do not expect the regulations to be laid until the summer after next—nearly two years at the earliest.

Why, then, the necessity for the Bill now? The Government maintain in a letter the Minister sent to me on 6 September that it is needed to give a, “concrete indication to investors that the UK is serious about promoting growth in the space sector and delivering on spaceflight”. So serious and committed, though, are the Government to promoting that growth that the statutory instruments will be laid in nearly two years’ time at the earliest,

“subject to Government priorities and Parliamentary time”,

according to page 5 of the Government’s policy scoping notes. It does not seem to indicate that this is a government priority when there is apparently still some doubt as to whether those statutory instruments will be laid in nearly two years’ time.

The reality is that, with the crucial regulations, a Bill of 71 clauses and approximately 100 delegated powers not being laid at the earliest for another two years and then only subject to Government priorities and parliamentary time, this proposed legislation would not yet see the light of day if the Government still had a legislative programme to enact at present. Since, because of Brexit, they do not, this skeletal Bill, which seeks to avoid proper parliamentary scrutiny on future key details through excessive use of delegated powers, is being brought forward now to try to fill up some of the gaping holes in parliamentary business arising from the Government’s programme of non-legislation in the current Session.

The Government appear to have very little idea what the surfeit of regulations will say, whose interests they will impact on or what existing legislation or even legislation still being enacted or to be enacted in the present Session will be cut across by those regulations. As a result, the Government want Henry VIII powers, giving them the right effectively to bypass Parliament by being able by regulations to make provision that is consequential on any provision made by this Act, with the power being used to,

“amend, repeal or revoke any enactment passed or made before this Act or in the same Session”.

The Government have produced policy scoping notes, which tell us that, “The purpose”, of Clause 66,

“is to give effect to the minor and consequential amendments contained in Schedule 12”.

If that is the case, why have the Government not put that in the Bill? The reason is simple: the purpose of Clause 66, despite the wording of the scoping notes, is not intended by the Government to give effect to the minor and consequential amendments contained in Schedule 12. Instead, it is merely one of the purposes of Clause 66. As even the scoping notes subsequently say,

“it is possible that other changes may be required and clause 66(2) and (3) confer a power for the Secretary of State to make such changes through secondary legislation”.

The notes then go on to say:

“This power is needed to make any further minor and consequential amendments to other enactments passed before the Act or during the same Session that become apparent during the development of detailed secondary legislation”.

What is the definition of “minor and consequential amendment”, wording used in the Bill as the heading for Clause 66? Perhaps there is not one; perhaps it is whatever the Secretary of State deems minor and consequential. The Government do not use the words, if my memory serves me right, but they use the words “minor and consequential amendments” in respect of the powers in subsections (2) to (4). Why is that?

The policy scoping notes, outlining the content of subsections (2) and (3), state:

“Spaceflight is a complex activity and whilst related areas of law have been scrutinised it is impossible to rule out the possibility that some other rule of law might be engaged in the future. Equally, spaceflight or associated activities might need to be brought in scope of other laws, as the possibility of spaceflight activities from the UK would not have been contemplated when they were drafted. Therefore the content of the regulations in relation to subsections (2) and (3) will only become known as the secondary legislation develops and further regulations may also be made in the future as and when they are required”.

Precisely—so how can the Government now say that any amendments relating to other enactments, including repeal or revocation, will be minor and consequential and go no further than that? Would the provisions of Clause 66 enable the Government to amend, repeal or revoke any part of the Space Industry Bill by regulations, once it becomes an Act?

The wording of the scoping notes and, indeed, Clause 66 makes it clear that the power to “amend, repeal or revoke” is permanent and apparently not time-limited. The Government have not proposed a time limit on the use of those powers; not even up to October 2019, when presumably the main regulations, covered by six statutory instruments, will have been made and dealt with by Parliament. We surely cannot have such largely unrestricted powers on the statute book in respect of effective parliamentary scrutiny of the powers under Clause 66(2) and 66(3) for ever and a day, on the basis of a Government statement in their policy scoping notes that because spaceflight is a “complex activity”,

“further regulations may also be made in the future as and when required”,

when these are regulations that may,

“amend, repeal or revoke any enactment passed or made before this Bill or in the same Session”.

In that context, we already know that the amendments in Schedule 12 alone already cover 20 Acts of Parliament, including two terrorism Acts and the recent Modern Slavery Act. Neither does the argument hold that there will be insufficient parliamentary time to deal with matters under Clause 66 by primary legislation where the regulations involved are amending such legislation, and that is leaving aside the argument that the convenience of government and the Executive should not take priority over the role of the legislature in examining, challenging, amending and passing proposed legislation.

The Government propose in 2019 to lay the tranche of regulations enabling them to exercise the 100 or so delegated powers in the Bill, apparently through just six statutory instruments. That suggests there would hardly be a blizzard of Bills for Parliament to consider if the Henry VIII powers in Clause 66, in respect of Acts of Parliament, were not there.

I share the views that have already been expressed that the Government need to have another long, hard look at Clause 66 and what it actually means, as opposed to what they say it means.

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My Lords, I thank all those who have contributed to the debate so far. I have carefully noted all views.

I know there is considerable concern about the granting of Henry VIII powers—I would be worried if noble Lords did not express such concerns—because of the wide scope of such powers to amend primary legislation that underwent parliamentary scrutiny and debate. However, I assure the Committee that we have given very careful consideration to the need to include such a power. The noble Lord, Lord Moynihan, acknowledged that we have already acted on many of the concerns expressed, and we have modified the Bill considerably as a result of many of the points put to us by committees in this House and the other place.

This power is necessary to ensure that further consequential amendments can be made to other legislation to reflect the impact of the Space Industry Bill. I am sure that noble Lords will agree that we do not want a situation where other legislation may negate the provisions in the Bill or leave a lacuna or some legal uncertainty.

In drafting the Bill, every effort has been made to ensure that all related legislation has been examined and the changes included in Schedule 12. However, as noble Lords will recognise, spaceflight is a very complex area and we want to ensure that we can make changes to cover any new areas that were not contemplated when the Bill was drafted or indeed when the primary legislation in question was made.

Limiting the power to make consequential amendments to changes to secondary legislation only could adversely impact the practical application of the Bill. It is important to be able to make any minor and consequential amendments to all types of legislation by the quicker route of secondary legislation.

Clause 66 provides that any amendments to primary legislation will be subject to the affirmative resolution procedure. Parliament will therefore have the opportunity to scrutinise and debate any amendments to primary legislation. Amendments to secondary legislation will be via the negative resolution procedure. The Government believe that this strikes the appropriate balance for parliamentary scrutiny.

I thank noble Lords for tabling Amendment 42. I note that the same issue was raised by the Select Committee on the Constitution. The committee was concerned that there was some ambiguity about whether the affirmative resolution procedure would apply when the power was used to repeal primary legislation.

I am pleased to inform noble Lords that my right honourable friend in the other place, John Hayes, has written to the committee to confirm that the Government will bring forward an amendment on Report to clarify this point: that the affirmative procedure will apply to the revocation or repeal of primary legislation.

The noble Lord, Lord Rosser, asked about the definition of “minor and consequential”. Of course, there is no legal definition. It is the term used in legislation when changes need to be made to other enactments. Consequential amendments are necessary to make legislation work well. Minor amendments are not in their nature substantive.

The noble Lord also asked why we needed the Bill now if the statutory instruments were still two years away, but, as he acknowledged in quoting my letter to him, we need to provide certainty through primary legislation. Industry understands the need to work with us to develop secondary legislation and believes that we have got the balance right between certainty and flexibility.

I assure noble Lords that this type of power is often used in legislation. Any amendment to primary legislation will be subject to the affirmative procedure, therefore allowing for a debate in Parliament. The reason why we have this power in the Bill is that spaceflight is a new and complex activity. While we have scrutinised related areas of law to identify what legislation needs to be amended, we cannot rule out the possibility that some other legislation may be engaged in the future.

It is likely that other legislation will come to light during the development of the secondary legislation. The power gives us the flexibility to deal with this situation. It does not mean a wholesale rewrite of legislation, as the power is limited to making only consequential amendments in other legislation to take account of the Space Industry Bill. In the light of those assurances, I would be grateful if noble Lords considered not pressing the amendments.

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Certainly, the two amendments over which I have control, Amendments 40 and 41, will not be pressed. The best compliment that Jim Callaghan ever paid me when he was Prime Minister and I was his political adviser was, “You’re my mine detector”, by which he meant that I supposedly had the knack to warn him when he was walking into a major problem. History shows that that did not always work, but that is another story.

I say with all sincerity, this is a small debate in a small Committee at the end of a Bill which, as the noble Lord, Lord Moynihan, indicated, we all want to see pass into legislation. However, the noble Lord, Lord Rosser, made some powerful criticisms which the Minister should read and take note of. When he brings to the House the noble Lord, Lord Lester, and the noble and learned Lord, Lord Judge, as well as a couple of our regulars, the noble Lords, Lord Deben and Lord Moynihan, all saying that this is a big issue that needs a lot more thought, as a mine detector—retired—I recommend that he gives it some thought between now and Report. In the meantime, I beg leave to withdraw the amendment.

Amendment 40 withdrawn.

Amendments 41 and 42 not moved.

Amendment 43

Moved by

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43: Clause 66, page 42, line 9, at end insert—

“( ) Regulations under this section may not—(a) amend or repeal an Act of the Scottish Parliament without the agreement of the Scottish Parliament;(b) amend or repeal an Act or Measure of the National Assembly for Wales without the agreement of the National Assembly for Wales; or(c) amend or repeal Northern Ireland legislation without the agreement of the Northern Ireland Assembly.”

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My Lords, I am sure noble Lords will have noted that this amendment has support from the Labour Benches. That is significant. We are still on Clause 66—not the most popular clause in the Bill. As the Bill stands, the Secretary of State could make “minor and consequential amendments”—that phrase again—to an Act of the Scottish Parliament, an Act or Measure of the Welsh Assembly or any Northern Ireland legislation, without the consent of the relevant national legislature. This amendment would require its consent if any regulations created under this section would amend legislation it had passed.

I set out the arguments for the need for specific reference to the powers of the devolved legislatures in debate last week, so I will not detain the House by going into detail on that aspect again—save to say that a spaceport would have a major impact on its surrounding area, so conflicting views on access to land, rights of way and so forth could well arise. It is therefore essential that there is no possibility that the UK Government have the power to override the legislation put in place by the devolved Administrations. I will give an example. Planning law in Wales has diverged quite considerably from that in England and could be applied in relation to spaceport building in a very different way from the way the UK Government might expect it to be applied. Since the licensing process remains with the UK Government, the likelihood of conflict exists. It is simply not acceptable for the UK Government to have the power, if they find that a conflict exists, to be able to solve that conflict by amending devolved legislation without the specific agreement of the relevant legislature.

I noted the Minister’s definition of “minor and consequential”. The sort of situation I am thinking of would be covered by the term “consequential amendment”. I draw the attention of noble Lords to the comments of the House of Lords Constitution Committee, which stated:

“The Bill does not … make any provision for the devolved legislatures’ consent to be sought in respect of regulations amending or repealing devolved legislation. We noted a comparable issue in our scrutiny of the Wales Bill 2016-17. The House may wish to consider whether it would be more appropriate for the consent of the devolved legislatures to be required when this power is used to amend or repeal legislation enacted by them—as, for example, is the case for certain statutory instruments made under the Legislative and Regulatory Reform Act 2006 and the Public Bodies Act 2011”.

That paragraph means that, first, the Government have previous on this—they tried to do the same thing in what is the now the Wales Act and provoked a huge amount of controversy; and, secondly, that there are ways of doing it, and it was done satisfactorily in both the regulatory reform Act and the Public Bodies Act. I urge the Minister to take the amendment away and give it serious thought. There is cross-party support and the judgment of the House of Lords Constitution Committee is against this aspect of the Bill. Surely those two forces together should persuade the Government to think again. I beg to move.

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My Lords, I will speak very briefly in support of what my noble friend has just said. As a former Presiding Officer of the Scottish Parliament, I must admit that I know nothing about this particular Bill—but the principle she had enunciated is very important. Indeed, it seems to me that this clause, unamended, almost falls foul of the Scotland Act as we passed it in this House. So I hope that the Minister will take this issue away. I see no reason for having this in the Bill at all. It surely should be possible, as a matter of courtesy, simply to talk to the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly—if it was recreated. I do not see the need for this issue to arise at all. It is a very dangerous principle and I am grateful to my noble friend for raising it.

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My Lords, my name and that of my noble friend Lord Tunnicliffe are attached to the amendment moved by the noble Baroness, Lady Randerson. The points have already been made in support of the amendment and reference made to the views expressed by the Constitution Committee in its report. One hopes only that the Government are going to take on board what the Constitution Committee had to say.

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My Lords, I apologise to the Committee that when I spoke a few minutes ago I did not indicate that I was a member of the Constitution Committee. I indicate it now. I do not want to repeat everything that the Constitution Committee said—but, with respect, although I do not speak for the Constitution Committee, there is an awful lot of constitutional sense in that paper.

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My Lords, I support the noble Baroness and the noble Lord, Lord Steel, in relation to this amendment, looking particularly at the devolution settlement which was the subject of the Scotland Act 1998. I think it is also relevant to mention Section 2 of the Scotland Act 2016, which put the Sewel convention into statute and expressed a principle in relation to primary legislation that would apply with equal force to the issue we are considering today.

The area of devolved competence that is most at issue here can be seen if the Minister looks at Clause 46, which refers to:

“Compensation in respect of planning decisions”.

There are two phrases there: “compensation in respect of”—so compensation is something that is devolved, in this field at least—and “planning decisions” are also a devolved competence in respect of the devolved legislatures. Planning is absolutely at the root of the enterprise that one is contemplating in setting out the locations through which spaceflights and other activities might take place.

The Scottish Parliament, for whom I speak, as best I can, because I understand the Scottish position better than the Welsh or Northern Irish one, will take a very close interest in the way in which this Act is put into force—and, indeed, in framing its own legislation for the future. One has to bear in mind that Clause 66 deals not just with the past, and with what is listed in Schedule 12, but with what the Parliament may do in future in this area. One cannot predict exactly what it will provide for but it is very likely that planning and compensation will be a matter of anxious debate in the Scottish Parliament.

None of the provisions listed in Schedule 12 are, I think, devolved measures; they are not measures passed by the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly. So we are looking into the future and at how Clause 66(2) will operate, bearing in mind the way in which the devolved legislatures will look at these crucial issues, especially planning. So these are some words of general support for the point that the noble Baroness is making; I stress the areas of compensation and planning because of how crucial and central they are to how the Bill is likely to operate in future.

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My Lords, without repeating the arguments that I made when the noble Baroness, Lady Randerson, introduced a not dissimilar amendment to the Bill, the one vital example that has been touched upon is that in Scotland planning applications are appealed to the Scottish Government. Decisions may have been made by them and yet there is no provision in the Bill not just for consent but for even entering into dialogue with the devolved Assemblies and Parliaments. I say that in opening because it is also important to emphasise that the Bill, being a regulatory framework for commercial activity, will require a significant commitment from all parties.

Noble Lords will be pleased to learn that I was on the bus at Paisley Gilmour Street this morning, en route to Glasgow Airport, and sitting next to Philippa Whitford, the SNP MP for Central Ayrshire. Her knowledge is second to none on the subject of Prestwick’s application; her commitment is total and her enthusiasm is on the record for the success of the project with gold-medal status. I say to the noble Lord, Lord Steel, that if he does not know anything about the Bill he has an immediate invitation from all parties, not least my noble friend Lady Ford—she is my noble friend on the Bill as she lives on the other side of Prestwick, while I am on the far side of it—to come along and see for himself the tremendous opportunity that a successful application for a licence would being to South Ayrshire.

That is important because support for a bid such as this comes not just as a result of commercial arrangements but from the success of the site in gaining grants on the one hand—it would be on the basis of grants from the UK Space Agency—and of ongoing support and investment from the Scottish Government. Consultation and co-operation between devolved Administrations and commercial parties will be vital for the success of the Bill and critical to its successful implementation. For that reason, it is important to go one step further than we would normally go in Bills of this type by recognising and emphasising the importance of co-operation and consultation in the Bill, and by providing the framework to achieve that goal.

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My Lords, Amendment 43 raises the important matter of consulting the devolved Administrations of Scotland, Wales and Northern Ireland during the development of the Bill. As the noble Baroness, Lady Randerson, mentioned, we discussed this last week in Committee. As my noble friend Lord Callanan said, the devolved Administrations have confirmed with us that they are content with the provisions of the Bill as drafted and that no legislative consent Motion is required.

Last week, the noble Baroness, Lady Randerson, raised the Bus Services Act 2017. I should like to say a few words about that comparison. Section 17 of that Act inserts new provisions into the Equality Act 2010, including powers to make regulations for the purposes of facilitating travel for disabled persons and for exempting certain vehicles from those regulations. The new sections in the Act require that the Secretary of State must consult Welsh and Scottish Ministers. In this case, we believe that is appropriate, although not strictly necessary, because the new regulation-making power was at the intersection of devolved and reserved matters. The operation of bus services is a devolved matter but equal opportunities is reserved in Scotland and Wales. Therefore, the Equality Act extends to the whole of Great Britain and so do the inserted provisions.

We believe Clause 66 should be treated differently as the whole subject matter of the Bill is reserved. Although some consequential changes to existing legislation required as a result of the Bill have been identified and made under Schedule 12, further changes may be needed, especially in an evolving technology market. As such, the power to make further changes through secondary legislation is necessary to ensure the UK has an effective enabling legislative framework for spaceflight activities.

Since the subject matter of the Bill is reserved, any consequential amendments made to legislation of the devolved legislatures under the Clause 66 power could only be consequential on a reserved matter. This means that any amendments to devolved legislation that could be made under this power would not require the consent of the devolved legislature if they were made by UK primary legislation. If included in Schedule 12, for example, they would not necessitate a legislative consent Motion. It would therefore be inconsistent to require the consent of the devolved legislature just because such amendments are made in regulations instead of in primary legislation.

As we have said, we have consulted extensively with the devolved Administrations on the Bill and I can assure noble Lords that we would consult the devolved Administrations on any consequential amendments that amend, repeal or revoke their legislation both at the policy development stage and on draft regulations themselves. This is in line with long-standing government policy set out in Devolution Guidance Notes 8, 9 and 10. We have heard the arguments from the noble Baroness and from all sides of the House and we will reflect on them. I therefore ask the noble Baroness to withdraw the amendment.

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I thank the Minister for her comments. I am grateful for the support across the House for this amendment. We have two forces at work in this clause. One is the Government’s tendency to seize as much power for themselves as possible—that is not unusual in Governments—but it is fatally linked with the desire of the Government to pad out their legislative programme with a series of apparently uncontroversial good ideas. The Bill has support across the House, but we are filling in time before the Brexit blunderbuss arrives. It worries me that we have not been able to see the regulations so we cannot see what the Minister is talking about and it is difficult to imagine exactly how that situation could apply in practice.

Nevertheless, I draw the Government’s attention to the Constitution Committee’s comments. I might be misreading the Bill but I very much doubt that the Constitution Committee could possibly be misreading the Bill, and if it is worried about it, there are serious grounds to be worried about it. The fact that the devolved Governments have not yet drawn attention to it does not necessarily mean that it will not cause a problem in the end. I have tried to explain that planning issues will be at the crux of the matter. It is simply not good enough to rely on the Sewel convention in this. In fact, this undermines the Sewel convention, which states that the Government will not normally legislate on behalf of the devolved Administrations.

When we have discussed in the past what “normally” means, people have imagined that there might be a state of national emergency, where there might be a need for haste that would involve instant legislation. However, this is not the kind of thing that you would think would be an exception to “normally”. I will take this away and read the record in Hansard, but I very much hope that the Government will take this away and look at it carefully. What would the harm be in including the usual provision about consulting the devolved Governments and legislatures? I see no harm in it. We are not going to be setting up spaceports as a matter of urgent emergency—it is something that will take months and years. There would be no delay involved in consulting them, and there is a great deal of good will to be had in committing to consult them. Having said that, I am happy to withdraw the amendment.

Amendment 43 withdrawn.

Clause 66 agreed.

Schedule 12 agreed.

Clause 67: Regulations: general

Amendment 44

Moved by

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44: Clause 67, page 42, line 16, leave out subsection (1)

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My Lords, there appears to be a theme developing in this afternoon’s debate. In moving Amendment 44, I will also speak to Amendments 46, 47, 48, 49, 50 and 51. Again, we are on the subject of catch-all powers. Despite our having about 45 minutes left, I will keep this relatively brief.

Clause 67(1) states:

“Regulations may make provision generally for carrying this Act into effect and for achieving the purpose set out in section 1(1)”.

We regard this as a catch-all power that should be removed, which would be done by Amendment 44.

Amendments 46 to 50 relate to Clause 67(6), which stipulates that general regulations must be made using the affirmative procedure but that for those that will be made under certain sections, only the first regulations are subject to it. In other words, the first go through the affirmative procedure but the rest follow behind without it. These amendments would remove the word “first” in each paragraph, subjecting all regulations that will be made under the relevant sections to affirmative procedure. I believe that Amendments 46 to 50 enjoy Cross-Bench support. During Second Reading, my noble friend Lord McNally highlighted the need for the sector to be continuously consulted to ensure that legislation is fit for purpose.

Amendment 51 proposes that before any secondary legislation is made under the Act, the Secretary of State must consult the various relevant bodies to ensure that this is done. The Minister may have a view as to which the relevant bodies are, but the principles of consultation and affirmative change are enshrined in these amendments. I beg to move.

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I will be very brief. Most of the amendments in this group relate, as the noble Lord, Lord Fox, has already said, to views expressed by the Constitution Committee and the Delegated Powers and Regulatory Reform Committee. The reasons for the committees holding the views that they do are set out in their reports before us at the moment. I simply add that our names are attached to Amendments 44 to 50, and once again we hope that the Government will take note of what the Constitution Committee and the Delegated Powers and Regulatory Reform Committee have to say.

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My Lords, I rely on the report of the Constitution Committee but I wonder what the point of the clause actually is. We have a proposed Act of Parliament, Clause 1 of which tells us that the Act is going to regulate,

“space activities … sub-orbital activities, and … associated activities, carried out in the United Kingdom”.

Then there are the Henry VIII powers in Clause 66, with the Secretary of State able to dispense with any part of the statute. Now we have a regulation-making power in Clause 67(1) that enables the creation of regulations to carry the Act into effect, presumably because something has gone wrong with the way in which Clause 1 operates. If Clause 1 gives statutory power to regulate space activities and so on, what on earth do we need a further regulation-making power for? This Act is brim-full of regulations. Is this just belt and braces, or is it belt, braces and a rather heavy boot?

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My Lords, I declare an interest as vice-president of the British Airline Pilots Association and president of the British Dietetic Association because the point I want to make is a trade union one. Amendment 51 contains an impressive list of bodies. I am sure the Minister will point out that there is no need to consult all the people listed on all the regulations that may be made, and I hope he will then say that it will of course be his policy to consult any relevant bodies to get their opinions before any regulations are made. I would like the Minister to say as part of his reply that that will also include the appropriate trade unions that represent people who will be affected. It is important that the Minister consult all the interested parties, and a specific mention of the importance of consulting the appropriate trade unions would be welcome.

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My Lords, it is of course important that regulations are made within the scope of the delegated powers in the Bill and that they are subject to appropriate parliamentary scrutiny. We have thought very carefully about the delegated powers and the oversight of such powers in the Bill and, as my noble friend Lord Callanan mentioned, we have also taken on board a number of recommendations made by the Delegated Powers and Regulatory Reform Committee. However, I note that some of the amendments we are debating here relate to recommendations by the committee that the Government have not accepted, or indeed have been raised by the Select Committee on the Constitution.

Amendment 44 relates to the broad regulation-making power for carrying a Bill into effect and seeks to remove it. I understand the intention behind the amendment and the concern that it may undercut judicial review in the event that the Secretary of State exceeds his or her delegated authority. I assure noble Lords that the Government do not believe there is any need for concern in this case. The scope in Clause 1(1) provides a limitation on the exercise of powers by the Secretary of State in making regulations. That will ensure that only regulations relating to the activities that are the subject matter of the Bill can be made by Ministers. If the Secretary of State were to exceed his or her delegated authority in making regulations under the clause, that ultra vires exercise of powers would be subject to judicial review.

In Committee last week, some concerns were raised about what “associated activities” were contemplated within the scope. These would cover only matters, such as the regulation of spaceports and the provision of range control services, that have a direct link to spaceflight activities. The purpose of the Bill covering associated activities is to provide for activities to be regulated only where there is no current applicable regulation or oversight, and where it is appropriate and necessary to regulate those activities.

The next set of amendments deal with changing the proposed initially affirmative and subsequently negative procedures to affirmative on all occasions. Noble Lords raised their concerns about this approach during our debate last week. I understand that this procedure could possibly be open to abuse. Noble Lords have argued that the Government may make the initial instruments skeletal and leave the detail to later instruments, thereby denying Parliament the opportunity to thoroughly examine the content of the instruments. I reassure noble Lords that this will not be the case. The Government are well aware that if that were to happen, the Joint Committee on Statutory Instruments would be likely to report it as an unexpected use of powers.

The development of the first sets of regulation—including those on safety and security—will be subject to a rigorous stakeholder engagement process over the coming months. This will include a call for evidence that will give everyone, including noble Lords, the opportunity to input into the development of the instruments. The Government will then issue a full and wide-ranging consultation on each of the initial draft statutory instruments prior to their being laid. I assure noble Lords that if there were any material change to the original instruments, there would be further consultation. In light of these safeguards, we believe that the current procedure set out in the Bill provides appropriate and proportionate parliamentary oversight.

Moving on to Amendment 51, it is of course important that interested persons are made aware of proposed legislative changes which may affect them, no matter how minor the change. Although we welcome the spirit of the amendment, the Government believe that creating a statutory obligation to formally consult all listed bodies and persons on any proposed amendment is unnecessary. It is not appropriate to do this for all changes made through regulations—for example where minor, incidental, transitional or saving provisions are required.

However, if the intent behind the noble Lord’s amendment is to ensure that the Secretary of State is able to demonstrate that he is seeking the views of the parties that will be impacted by the changes, we can absolutely assure noble Lords that that will be the case. In line with existing practice under better regulation principles, the Government will continue to engage with regulators and other interested persons as appropriate, including the devolved Administrations, when contemplating making legislation affecting them. This will involve full consultation with a wide range of stakeholders where substantive changes to regulations that affect their interests are proposed.

My noble friend Lord Balfe mentioned trade unions. As I said, we intend to consult widely and publicly, which will of course include relevant trade unions. I hope that I have responded to noble Lords’ concerns. As I said on the previous group of amendments, we are listening to the concern raised from all parts of the House and will take it back and reflect ahead of Report, but I ask the noble Lord to withdraw his amendment.

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My Lords, I thank the Minister for her answers. Some of them may have been helpful—I will review them, probably with a lawyer sitting on my shoulder to help me—but not completely so, I suggest. The noble and learned Lord, Lord Judge, has described the web of seemingly self-reinforcing executive powers, supported by another Henry VIII Act, weaving their way throughout the Bill. We will need to see what emerges: what the Government think that they have to leave in and what—we hope, having had this debate—they believe it would be more sensible to take out. We need to see that in full.

On the substance of Amendment 51, the point made by the noble Lord, Lord Moynihan, was that an awful lot of parties have to be in line for this to work. In a sense, this has to be more co-operative than many other ventures that this House debates, and to be obviously co-operative and mandate the process in the Bill would be a positive sign to all the parties that have to say yes before it can be a success. I again ask the Minister to reconsider but, with that in mind, I beg leave to withdraw the amendment.

Amendment 44 withdrawn.

Amendment 45

Moved by

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45: Clause 67, page 42, line 43, leave out subsection (6) and insert—

“(6) A statutory instrument containing (whether alone or with other provision)—(a) regulations under section 4(2),(b) regulations under section 5(2),(c) regulations under section 7(4),(d) regulations under section 7(6),(e) regulations under section 9,(f) regulations under section 12(7),(g) regulations under section 18,(h) regulations under section 22,(i) regulations under section 34(5),(j) regulations under section 35(3)(a),(k) regulations under section 58,(l) regulations under section 64, or(m) regulations that create offences,is subject to the super-affirmative resolution procedure.(6A) For the purposes of this Act the “super-affirmative procedure” is as follows.(6B) The Minister must lay before Parliament—(a) a draft order; and(b) an explanatory document.(6C) The explanatory document must—(a) introduce and give reasons for the order,(b) explain under which power or powers in this Act the provision contained in the order is made, and(c) give a detailed explanation of provisions included in the order.(6D) The Minister must have regard to—(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendations of a committee of either House of Parliament charged with reporting on the draft order,made during the 40-day period with regard to the draft order.(6E) If, after the expiry of the 40-day period, the Minister wishes to make an order in the terms of the draft, he must lay before Parliament a statement—(a) stating whether any representations were made under subsection (6D)(a); and(b) if any representations were so made, giving details of them.(6F) The Minister may after the laying of such a statement make an order in the terms of the draft if it is approved by a resolution of each House of Parliament.(6G) However, a committee of either House charged with reporting on the draft order may, at any time after the laying of a statement under subsection (6E) and before the draft order is approved by that House under subsection (6F), recommend under this subsection that no further proceedings be taken in relation to the draft order.(6H) Where a recommendation is made by a committee of either House under subsection (6G) in relation to a draft order, no proceedings may be taken in relation to the draft order in that House under subsection (6F) unless the recommendation is, in the same Session, rejected by resolution of that House. (6I) If, after the expiry of the 40-day period, the Minister wishes to make an order consisting of a version of the draft order with material changes, he must lay before Parliament—(a) a revised draft order; and(b) a statement giving details of—(i) any representations made under subsection (6D)(a); and(ii) the revisions proposed.(6J) The Minister may after laying a revised draft order and statement under subsection (6I) make an order in the terms of the revised draft if it is approved by a resolution of each House of Parliament.(6K) However, a committee of either House charged with reporting on the revised draft order may, at any time after the revised draft order is laid under subsection (6I) and before it is approved by that House under subsection (6J), recommend under this subsection that no further proceedings be taken in relation to the revised draft order.(6L) Where a recommendation is made by a committee of either House under subsection (6K) in relation to a revised draft order, no proceedings may be taken in relation to the revised draft order in that House under subsection (6J) unless the recommendation is, in the same Session, rejected by resolution of that House.(6M) In this section the “40-day period” means the period of 40 days beginning with the day on which the draft order was laid before Parliament under subsection (6B).”

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I will be brief in moving this amendment. When we discussed the first group, Amendments 40 to 42, which dealt with the issue of the Henry VIII powers, I expressed our concern about the extent to which they appeared to preclude proper parliamentary scrutiny of what is, after all, simply a skeletal Bill, and in respect of regulations that were not even expected to be laid for nearly two years at the earliest.

I do not wish to go through again everything that I said when we discussed the first group of amendments, but obviously the points that I made then are applicable to the reason for putting down this particular amendment. The amendment provides for the use of the super-affirmative procedure rather than, when applicable, the affirmative procedure in the Bill for considering regulations and secondary legislation under what is a skeletal Bill. The amendment is similar to the terms of the provisions of the Legislative and Regulatory Reform Act 2006.

The super-affirmative procedure provides that a Minister must lay a draft order and explanatory document before both Houses and take account of any representations. Motions passed have to be passed by either House, and recommendations of a committee of either House also have to be taken into account by the Minister. After a 40-day period, the draft order must then be passed by both Houses. The procedure also gives the committee scrutinising the order the power to kill it by recommending that no further proceedings be taken, with this recommendation being able to be overturned only by a vote of the whole House.

If the Government and any future Government are to be held in check by Parliament to try to stop any novel or expanded interpretations of minor and consequential amendments—including, of course, under Clause 66, since the Government have declined to move on that—the super-affirmative procedure provides the best route, if the Government prove to be determined to keep Henry VIII powers in the Bill. No Government ought to be concerned about the super-affirmative procedure, rather than the affirmative procedure, in the context of a skeletal Bill, which it is difficult for Parliament to scrutinise effectively, since, as I have said, the crucial regulations will not even be consulted on until next year and will not come before Parliament for nearly two years at the earliest. Through using this procedure, at least the political and statutory consequences of any overenthusiastic government interpretation of what it is appropriate to put in regulations requiring the affirmative procedure can be properly drawn to the attention of both Houses before they decide whether to give their agreement to the secondary legislation in question. I beg to move.

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I advise the Committee that, if this amendment is agreed to, I cannot call Amendments 46 to 50 inclusive.

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Over the past hour or so we have been wrestling with the same problem: that there is a deep unease in this House—and probably down the corridor as well—that our parliamentary procedures are not flexible enough to deal with much legislation that deals with rapid technological change. I refer to the Data Protection Bill, which we will soon be considering. Over the period of my involvement, in both Houses, in broadcasting and the media, often, 10 or 20 years have passed before a new technological development has arrived—for example, the introduction of radio in the 1920s, and then television, slightly delayed by the war, in the 1940s. Now, we can have technological change within months. How do we get the proper legislative framework in which our judges can work, in a system that is rapidly changing under our feet and before our eyes?

Every Minister that I have heard has always said that SIs give both Houses of Parliament a chance to look at something. To the uninitiated, that seems perfectly reasonable. However, particularly at this end of the building, we know that, if there is any attempt to mess around with SIs, all of a sudden the skirts are lifted and there is shame and outrage at what is going on—the second Chamber ignoring the democratic wishes of the other House, because the legislation will have gone through the Commons on the nod, or with hardly any debate. The noble Lord, Lord Strathclyde, is then rolled out to give one of his opinions. The great thing about the noble Lord is that he has given an opinion in favour of almost any argument regarding change in this House, over his long and infamous career—I have enjoyed serving with him for 11 years of it.

The last time the Commons rejected a statutory instrument was in 1979. The Lords has passed fatal motions on only six occasions since 1950. Between 2004 and 2015, the House of Lords rejected two of 36,000 new regulations made. Let us at least leave this Bill with the honesty to say that what we have at the moment is not fit for purpose—I hate that term, but I cannot think of a better one—for dealing with legislation such as this, which rests so much on future regulations. I hope the Minister will bring this issue to the attention of his colleagues. Parliament as a whole has to look at how we deal with it, whether through the super-affirmative procedure or some other new device. People have talked about some kind of joint legislation committee of both Houses that could help spot the legislation that is going to need special scrutiny.

The present system does not work, and the distinguished interventions on this Bill have addressed just the tip of the iceberg of problems to come unless Parliament as a whole sets its mind to resolving this issue.

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I thank all noble Lords who have spoken in this debate, particularly the noble Lord, Lord McNally, who made a powerful contribution. I hope he will agree that many of his points did not relate to the detail of the Bill. I am sure he will accept that the issues of the scrutiny of secondary legislation and the powers of both Houses are way above my pay grade, and probably his too. He made some powerful points and I am sure that the authorities in both places will want to look at them. We will return to those arguments when the withdrawal Bill arrives here. We will have many of the same discussions, loudly and at length, late into the evening.

As we have just discussed, the Government are committed to ensuring robust scrutiny of regulations made under the Bill through proportionate use of the affirmative procedure. This amendment goes further in seeking to impose the so-called super-affirmative procedure for some regulations. This would require the Government to publish a draft order with a detailed explanation of its contents and have due regard to any representations made within a 40-day period. Although I understand the strong desire to have detailed scrutiny of secondary legislation, this is a duplication of effort.

I can assure noble Lords that the first regulations referred to in this clause will be published in draft for consultation prior to being laid before Parliament, providing a transparent, proportionate opportunity for scrutiny. We propose that such draft regulations be accompanied by a full explanation of their intent. This builds on the open approach the Government have taken through the life of this legislation. That includes publishing a draft Bill for consultation and, following the introduction of this Bill, publishing policy scoping notes setting out how we intend to use the powers we are taking.

The amendment would also mean that a committee of either House could make a binding recommendation that no further proceedings with secondary legislation take place, unless that recommendation was rejected by resolution of the House. In a case where a revised draft order is brought back to Parliament for approval, a committee of either House could again make a recommendation that no further proceedings be made in relation to the revised order unless that recommendation is rejected by the House. This would cause huge uncertainty for government, the regulators and, most unfortunately of all, our nascent space industries.

My noble friend Lord Willetts spoke on the first day of Committee about the “lively race” to gain the first mover advantage in small satellite launch from Europe. The introduction of this Bill to Parliament was an important first step to enabling spaceflight activities in the UK and a concrete indication to the industries, investors and the international community that the UK is serious about promoting growth in the space sector. We have then allowed for a period of collaborative and transparent policy development to ensure that we create a regulatory framework that is fit for purpose in what is still an emerging market. However, we cannot wait for ever. Following the consultation I set out above, we will need to be clear when we will bring forward legislation, so that industry can have confidence that UK launch is viable and make appropriate investment decisions. This will not come at the expense of parliamentary scrutiny. The regulations covering the central provisions of suborbital activities, space activities, spaceports and range will all be subject to the affirmative procedure.

It may be helpful if I give more details about the timescale. We currently intend to make delegated legislation through three main statutory instruments: on suborbital activities, space activities, and spaceports and range. It is intended that each of these SIs will set out the licensing requirements and any oversight of operations required to ensure these functions are conducted safely and securely, and to ensure the proper functioning of the regulators in overseeing those functions. These SIs would be subject to the affirmative procedure and therefore allow full parliamentary scrutiny and debate. They would be supplemented with three—

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Perhaps I could clarify this. When we discussed this kind of approach in the past, it was suggested that such SIs would be amendable. Am I assuming that these would be unamendable?

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Under the current procedure, as I understand it, SIs are not amendable. However, if I am incorrect on that, I will come back to the noble Lord.

As I said, these measures will be supplemented with three statutory instruments subject to the negative procedure on exercise of regulatory functions, appeals and charging. By grouping powers in this way we hope to provide clarity for parliamentarians and potential operators on the regulatory requirements for each type of activity while minimising the amount of duplication between the various instruments.

The noble Lord, Lord Rosser, referred to the timescales. I confirm that we currently intend to lay these SIs from summer 2019—subject, as he said, to government priorities and parliamentary time. This will allow time for more detailed policy development and consultation as well as the drafting of the extensive range of legislation and guidance considered necessary. We envisage holding formal consultations on the draft regulations and the guidance starting in late 2018. We will continue to invite the views of all interested parties—including trade unions, my noble friend Lord Balfe will be pleased to know—throughout the development of the secondary legislation.

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It was very welcome that my noble friend just said to the House that noble Lords would be encouraged to participate in the very early stage of the transparent and collaborative consultation phase before the Government came forward with their draft statutory instruments. It is notoriously difficult for many people, not least noble Lords, to know when that consultation phase begins, as we are not necessarily directly notified about that. Could my noble friend ensure that all those who participated in the debate are made aware of those consultations immediately they become available?

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I will ensure that all noble Lords who participated in these discussions are made aware of the consultations. I will even try to make sure that they reach some parts of Scotland—in which my noble friend seems to have an interest at the moment. With those assurances, I hope that the noble Lord will agree to withdraw the amendment.

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I thank the Minister for his response and thank the noble Lord, Lord McNally, for his contribution to this short debate. I am sure that the Minister did not anticipate that I would stand here expressing great enthusiasm—

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May I correct something I said earlier? I am told that, apparently, it is possible to amend an SI.

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If the Minister has been told that, perhaps he could write to me and to other noble Lords who have spoken to set out clearly the circumstances in which an SI can be amended. Some of us may be slightly surprised by that blanket answer, which apparently covers all SIs—and which, presumably, means that any SI can be amended. I think that that has caught one or two of us slightly on the hop. So we will look forward to the letter from the Minister setting out how a statutory instrument can be amended.

Before the Minister’s interesting intervention just now, I was saying that I am sure that he will not be surprised to hear me say that I am not overenthusiastic about the response he gave. It is clear that the part of the super-affirmative procedure which causes—or appears to cause—the Government the most problem is the bit which gives a committee scrutinising the order the power to kill it by recommending that,

“no further proceedings be taken”,

with that recommendation able to be overturned only by a vote of the whole House. I suppose that that is a good example of how the Government put their own convenience and that of the Executive ahead of proper parliamentary scrutiny.

The Bill denies us proper parliamentary scrutiny. It is a skeletal Bill; the Minister has never sought to deny that. The consultation on the regulations does not even start until towards the end of next year, and they will not be laid at the earliest until the summer of 2019—and then, interestingly enough, only if they fit in with government priorities, despite the fact that the Minister and the Government have gone to great lengths to tell us that we need to pass the Bill now to provide certainty to the industry. Yet now the industry is told that the regulations may not appear in the summer of 2019 if by then the Government have decided that it is no longer a priority or that there is no parliamentary time to do it.

The reason we are in this difficulty over lack of parliamentary scrutiny is, as I say, because the Government have decided to bring the Bill forward so far in advance of the quite crucial regulations. We all know why: it is because they have a very bare legislative programme and had to think of something to fill the gap. They chose the Bill and were quite happy to see a skeletal Bill, and then to expect all of us to accept that there would be no proper parliamentary scrutiny because it is a skeletal Bill of that sort.

I am not entirely surprised by the Minister’s response. He was not overenthusiastic about the concerns raised about the Henry VIII powers. Clearly, as far as the Government are concerned, anything that will either provide proper parliamentary scrutiny of the Bill or take away some of the draconian powers contained in it are things that at this stage—I hope that the words “at this stage” have some significance—the Government are not prepared to countenance. We have Report to come and I know that the Minister is prepared to have discussions with us and, I am sure, with the Liberal Democrats and other parties. I hope that he will reflect on the very strong feelings expressed today about the powers in the Bill and that he will come forward with at least some proposals to mitigate and address the concerns that have been expressed. In the meantime, I beg leave to withdraw my amendment.

Amendment 45 withdrawn.

Amendments 46 to 51 not moved.

Clause 67 agreed.

Clauses 68 to 71 agreed.

House resumed.

Bill reported with amendments.

European Council

Statement

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My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on last week’s European Council.

Long after we have left the European Union, the UK will continue to be a strong and committed partner, standing alongside our neighbours and working together to advance our shared values and interests. This Council provided a further opportunity to demonstrate that ongoing commitment, through discussions that included migration, the digital single market, Turkey, North Korea and Iran, and it made important progress in moving towards the new, deep and special partnership with the European Union that we want to see.

First, on migration, the UK is playing its full part. The Royal Navy has intercepted 172 smuggling boats and saved over 12,000 lives since Operation Sophia began, while our National Crime Agency is working with Libyan law enforcement, enhancing its capability to tackle the people-smuggling and trafficking networks.

At the Council we welcomed the reduction in migrant crossings and the renewed momentum behind the Libyan political process, but we must also continue to address the root causes driving people across the Sahara and the Mediterranean. So the UK is continuing to invest for the long term in education, jobs and services in countries of both origin and transit.

On the digital single market, it is right to keep up the pressure on completing its implementation by the end of 2018. This will continue to be of benefit to us even after we leave the European Union. At this Council, I also argued that the free flow of data was key to unlocking the potential of Europe’s digital trade, and we secured conclusions which recognised this. As the Government set out in a paper over the summer, such arrangements will be an important part of the future relationship between the UK and the EU.

Turning to the discussions on Turkey, we share the concerns over the arrests of EU nationals and others defending human rights. This is something that I raised personally with President Erdogan when we met at the UN General Assembly, and we are publicly calling on Turkey to protect freedom of expression and release those defending human rights.

At the same time, I believe we must take a long-term view of the enduring importance of our relationship with Turkey—a vital partner in ensuring a secure and prosperous European neighbourhood. We must also continue to recognise the challenges it is responding to—not least that it faced a military coup only 16 months ago. So we must continue to work with Turkey as our ally and partner—in particular, as we respond to the shared challenges of terrorism, migration and instability in the Middle East. But, in doing so, we must do all we can to convince Turkey to demonstrate its commitment to human rights and the rule of law. To turn away from Turkey now would undermine those who seek to secure a European future based on our shared values.

On North Korea, we welcomed the EU sanctions adopted last week and reaffirmed our clear condemnation of North Korea’s aggressive and illegal missile and nuclear tests. We urged all states, including China, to play their part in changing the course Pyongyang is taking. On Iran, the Council built on the joint statement made by Chancellor Merkel, President Macron and myself last week, reiterating its firm commitment to the nuclear deal. This deal was the culmination of 13 years of diplomacy and a major step towards ensuring that Iran’s nuclear programme is not diverted for military purposes. That is vitally important for our shared security. We are continuing to work particularly closely with our French and German allies on this crucial issue.

Turning to our negotiations to leave the European Union, I shared the vision I set out in Florence for a creative and pragmatic approach to a new, deep and special partnership between the United Kingdom and the European Union. It is a partnership based on the fundamental beliefs we share—in democracy and the rule of law, but also in free trade, rigorous and fair competition, strong consumer rights and high regulatory standards. I have also been clear that the United Kingdom is unconditionally committed to maintaining Europe’s security. Both sides have approached these talks with professionalism and a constructive spirit and we should recognise what has been achieved to date.

On citizens’ rights, both sides share the same objective of safeguarding the rights of EU nationals living in the UK and UK nationals living in the EU. This has been my first priority from the very beginning of the negotiations, and it remains so. The negotiations are complicated and deeply technical, but in the end they are about people, and I am determined that we will put people first. EU citizens make an extraordinary contribution to our national life and we want them to stay. I know that EU member states also value the UK nationals living in their communities and I want them to have their rights protected too. We are united on the key principles, and while there are a small number of issues that remain outstanding, we are in touching distance of a deal.

This agreement will provide certainty about residence, healthcare, pensions and other benefits. It will mean that EU nationals who have paid into the UK system, and UK nationals who have paid into the system of an EU 27 country, can benefit from what they have put in. It will enable families who have built their lives together to stay together. It will provide guarantees that the rights of those UK nationals currently living in the EU, and EU citizens currently living in the UK, will not diverge over time.

We will also ensure that the implementation of the agreement we reach does not create complicated and bureaucratic hurdles. For example, I have said that applying for settled status will cost no more than a UK passport and that people applying will no longer have to demonstrate comprehensive sickness insurance. We will also do everything possible to work closely with EU member states to ensure that their processes are equally streamlined for British nationals living in their countries.

We have also made significant progress on Northern Ireland, where it is absolutely imperative that joint work on the peace process is not affected in any way. The Belfast agreement must be at the heart of our approach and we have clearly agreed that the unique circumstances across the whole of the island of Ireland will require specific solutions. There will not be any physical infrastructure at the border and we have also developed joint principles to ensure the continuation of the common travel area. These principles will fully preserve the rights of UK and Irish nationals to live, work and study across these islands and protect the associated rights to public services and social security.

This Council provided an opportunity to assess and reflect on how to make further progress in the negotiations. My speech in Florence made two important steps, which have added a new impetus. First, I gave two clear commitments on the financial settlement: that the UK will honour commitments we have made during the period of our membership, and that none of our EU partners should fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. As the House would expect, we are going through our potential commitments line by line and that detailed work continues. Secondly, I proposed a time-limited implementation period based on current terms, which is in the interest of both the UK and the EU.

At this Council, the 27 member states responded by agreeing to start their preparations for moving negotiations on to trade and the future relationship we want to see. The Council’s conclusions call for work to continue with a view to be able to move to the second phase of the negotiations as soon as possible. President Tusk in his press conference was clear that the EU’s internal work,

‘will take account of proposals’,

presented in the Florence speech, and, indeed, that this agreement to start preparatory discussions would not be possible without the new momentum given by that speech.

I am ambitious and positive about Britain’s future and these negotiations. If we are going to take a step forward together it must be on the basis of joint effort and endeavour between the UK and the EU, but I believe that by approaching these negotiations in a constructive way—in a spirit of friendship and co-operation —we can and will deliver the best possible outcome that works for all our people. That is a belief that was shared by other European leaders.

We are going to leave the European Union in March 2019, delivering on the democratic will of the British people. Of course we are preparing for every eventuality to ensure we leave in a smooth and orderly way, but I am confident that we will be able to negotiate a new, deep and special partnership between a sovereign United Kingdom and our friends in the European Union. That is my mission, that is this Government’s mission, and I commend this Statement to the House”.

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My Lords, we are grateful to the noble Baroness for repeating the Statement. It serves to remind us how interlinked with the EU we are on so many issues, as she outlined. It is not just about having common interests; we are co-dependent on issues that affect not just our economy, but our safety, security and well-being as a nation. We also add our appreciation for the work of the Royal Navy for intercepting criminals involved in people trafficking and smuggling, and for the lives it saves.

At a previous European Council summit in June 2015 the former Prime Minister, David Cameron, said that the digital single market,

“is a prime example of where we need the EU to unlock the potential”,

of the,

“single market for the benefit of businesses and consumers”.

Since then, we in the UK have played a leading role in the EU’s approach. That has clearly been of great benefit, given the comments in the Statement, but can the noble Baroness tell us how we will continue to play that role in shaping policy, given that we will no longer have a seat at the table?

Important progress has been made since the last summit on security and defence across a number of areas, including cybersecurity, which is essential across Europe and here at home. Amber Rudd, as Home Secretary, has been very clear that it is totally unthinkable that we could crash out of the EU with no ongoing arrangements on those issues, yet David Davis, as Brexit Secretary, still maintains that leaving the EU without any deal must remain an option. Liam Fox is adamant that there will not be the Armageddon some have predicted, which implies that all will be okay. It will not. Surely we should aim for better than it just not being Armageddon. Will the noble Baroness clarify that, if no agreement were to be made on the key issues and we crashed out of the EU in what has been described as the no-deal scenario, it would not be business as usual on defence, security or policing? Does she accept that that scenario is the worst possible outcome and totally irresponsible?

Leading into this summit, the Prime Minister’s Florence speech was helpful. We welcomed the change in position and tone, but we await the details. She will be aware of the very deep unease from businesses about what the transition or implementation deal will look like. The importance and seriousness of this is highlighted by the strongly worded letter to the Government from the CBI, the Institute of Directors, the British Chambers of Commerce, EEF—the Manufacturers’ Organisation—and the Federation of Small Businesses. Surely even the most ideological and ardent of Brexiteers recognises the legitimacy of their concerns. With investment being held back, their warnings about the future of the economy must be heeded.

The transition period is now accepted by most as essential. I am happy to call it an implementation period if that helps. I also welcome the Government’s recognition of the so-called divorce bill, without which we cannot make any significant progress. However, the negotiations are complex. The Prime Minister is right to seek out opportunities for more informal discussions as well.

David Davis, the Brexit Secretary, was mocked in the House of Commons last month when he said that no one said Brexit would be easy. Yet that is exactly what Ministers, including him, said. Yesterday, Liam Fox defended his comments that securing a post-Brexit trade deal would be the “easiest in history” because apparently he was talking only about trade and the real problem is politics. Today, Boris Johnson jumped in feet first, as usual, telling EU leaders to “get on with it”. Perhaps Liam Fox is right that politics is the problem—not the politics of the EU, but of the Cabinet. There is no doubt that the progress so far is inadequate for the talks to move on formally to the next stage.

In recognition that some progress has been made, it has been agreed that preliminary talks about the next stage of negotiations should start. In effect, these are talks about talks. That is not, as some in the Cabinet appear to prefer, the EU being difficult; it is quite the opposite. What makes the negotiations harder for the Prime Minister is not the European Union, but her own Cabinet. Every time they speak out to contradict her, every time they speak out to attack the EU, the process or the progress, every time they fly yet another kite about what they think will win them votes in the next Tory leadership election, they seriously weaken her authority and undermine her ability to negotiate. The prime aim of negotiations is clarity about objectives, but for that the Prime Minister needs the Cabinet to unite or to choose one that will.

When Boris Johnson asserts that,

“the entire British cabinet is united around every dot, comma, and syllable of the Florence speech”,

we know he says that in full knowledge of the limits of his own credibility. That is also undermined by the Cabinet Minister quoted today in the press as saying:

“We haven’t grasped the nettle on the trade deal yet and we really have to soon. Theresa’s fear is that the moment we do, half of us will walk out—we just don’t know which half it will be”.

Such division and dysfunction at the heart of government weakens the UK’s position at every single point in negotiations. Given all that, we understand why the withdrawal Bill is now stalled. Can the noble Baroness give us any idea when it will be picked up again and when its Committee stage will start in the House of Commons, given the importance of the issues in the Bill?

On the three issues in the conclusions of the summit, first, we welcome the progress being made on citizens’ rights. It has taken far longer than necessary and the Prime Minister should recognise the urgency and bring it to a conclusion. Secondly, despite the optimism in the Statement, the progress on the Irish border seems a recognition of the issues that have to be resolved rather than a way of resolving them. Agreement on those principles is welcome, even essential, but it is the action that brings those principles into being that is important. What progress has been made on that?

The financial obligations—the divorce bill—are becoming confusing. The Prime Minister put a figure on the financial obligations in her Florence speech. Is there now a recognition that that is not the final word and it has yet to be negotiated? Finally, can the noble Baroness confirm that when David Davis talks about the timetable of the talks being “Barnier’s timetable”, it is in fact the timetable that he agreed back in June? It is as much David Davis’s timetable as it is Michel Barnier’s. I hope the noble Baroness will take the message back to the Cabinet that the frustration—not just of Parliament but of the whole country—with its antics is making it harder for the Prime Minister, and that she will be able to answer the questions I have raised today.

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My Lords, during the past week the Prime Minister has adopted two novel negotiating tactics. First, she decided on a personal diplomatic mission to the Commission, to be conducted over dinner. Yet according to reports, the meal lasted only just over an hour, which was barely enough time for a leisurely pizza, far less the sort of event that was likely to commend itself to the President of the European Commission. What was the purpose of this event, given its brevity and the lack of any new substantive proposals made at it by the Prime Minister? Secondly, the Prime Minister adopted the stance, “Please give me a good deal because my domestic parliamentary position is so weak”. Is the noble Baroness aware of any successful negotiations in which pleading one’s weakness has strengthened one’s hand? Do the Government really believe that the threat of no deal is credible, when the Brexit Secretary has described it as in effect a negotiating ploy just left on the table for the time being and the Home Secretary has called such an option simply untenable?

One of the first issues debated at the summit was the digital single market. The Prime Minister says that,

“it is right to keep up the pressure on completing its implementation … This will continue to be of benefit to us even after we leave the European Union”.

But we will not be members of the digital single market, so it is inconceivable that we will be as well off in respect of it outside as we would inside. What commitment are the Government prepared to make that, outside the EU, they will adopt the standards and regulations of the digital market so that we will gain the benefit of it?

The Government say that they welcome the EU sanctions on North Korea—as does the whole House. We are shortly to get a sanctions Bill in your Lordships’ House to deal with the position post Brexit, under which we will take control of and have sovereignty over own sanctions, but does the noble Baroness agree that, on matters such as North Korea, such sanctions are effective only if we are in lock-step with the EU so that a common front is presented to the North Koreans, or against whomever else such sanctions are adopted? Have the Government given any thought to what sort of mechanism they will put in place to ensure that, as far as sanctions are concerned, it is possible to adopt that kind of lock-step? At the moment, it is completely unclear how that will be achieved.

The Prime Minister states that, up to now:

“Both sides have approached these talks with professionalism and a constructive spirit—and we should recognise what has been achieved to date”.

That is undoubtedly true, but we should also recognise what has not been achieved to date. Last week should have been the point at which substantive progress had been achieved on the three matters which it had been agreed would be prioritised so that we could get on to discussing the future trading and other relationships with the EU, but the truth is that we are nowhere near that point. At best, we might have reached it by the end of December, in which case substantive negotiations on all future aspects of our relationship will not start until January, a mere few months before those negotiations must be completed.

On citizens’ rights, one of the individual issues that have caused the hold-up, the Government come out with warm words, but why have they not simply given an unequivocal commitment that they will protect in full the rights of all EU citizens now? The Government say that we are making great progress and that we are almost there, but we do not know that and, certainly, the 3 million EU citizens in this country do not believe it. They retain a huge degree of scepticism about their status going forward. This is to be “settled status”, which we are told is going to be done easily and cheaply, but what time period have the Government in mind to grant settled status to more than 3 million EU nationals in this country? What resources are available? Are they satisfied that the Home Office and the Immigration Service have either the track record, the ethos or the resources to do this in a fair and expeditious manner?

On Northern Ireland, the principles are all agreed. We want—the Government want and the Irish want—a frictionless border. However, we have had a customs White Paper which should really have been a Green Paper because it asks as many questions as it answers. It said, for example, that more than 80% of north-south trade was by SMEs and there will be no requirement for customs processes at the land border. That sounds rather reassuring, but the weasel words are “at the land border”. What sort of processes do the Government have in mind not at the land border, and what kind of costs do they think SMEs are going to have to incur to establish these processes? In what degree of detail have the Government, somewhere in their mind, any sense of what these processes might look like?

On the financial settlement, absolutely no progress whatever appears to have been made last week.

Finally, the Prime Minister spent quite a bit of her Statement under the heading “Moving forwards”, which is quite an achievement, given that there has been virtually no moving forwards. She says that she wants to leave in a smooth and orderly way. One key element of leaving in a smooth and orderly way is to transpose all existing EU law into domestic law. The withdrawal Bill, a relatively straight Bill in concept, is totally bogged down because of divisions in the Cabinet. What can the noble Baroness say about when she expects that Bill to start in the Commons, far less here? Because once it has gone through, and with a bit of luck it might be done by Easter, we will have 1,000 statutory instruments to get through before we are in a position to begin to contemplate withdrawal in a smooth and orderly way. There is nothing in this Statement to give any objective observer any sense that smooth and orderly is the way that this Government are heading.

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I thank the noble Baroness and the noble Lord for their somewhat gloomy assessment of where we have got to. I hope that during the course of my remarks I will show that, actually, we have made progress at this European Council and that some of the comments made were not a fair reflection on where we have got to and the progress we have been making.

However, I begin with digital, which both the noble Lord and the noble Baroness raised. They are absolutely right that we have played a key role in this area, and in fact our leadership and engagement has continued to deliver concrete results since the referendum. The geo-blocking regulations made rapid progress to reach general approach in council and the portability regulations have reached agreement in near record time, largely thanks to the UK’s involvement. At this summit all the leaders agreed that the free flow of data initiative is critical, but of course this is not just an EU issue, it is an international issue. The single cyberspace is global and therefore we will continue to play an important role with all our international partners in this area. We are absolutely clear, as is the EU, that digital data and cyber will be key areas for our future partnership and we want to continue the work we have done together.

I assure the noble Baroness that we are engaging very closely with business. Indeed, the fact that we want our departure to be as smooth as possible is one of the key reasons behind the Prime Minister’s proposing a strictly time-limited implementation period based on the existing structure of EU rules and regulations. We do not want British businesses to face a cliff edge. We are certainly cognisant of the concerns of business, we are having continual discussions and that is what lies behind that section of the Prime Minister’s Florence speech.

The noble Baroness and the noble Lord both raised the withdrawal Bill. It has not stalled. No date was ever set for Committee in the House of Commons. It was never announced. Of course, with some 300 amendments and 54 new clauses being proposed, it is only right that the Government evaluate these and ensure that they have a suitable response. I know that in this House your Lordships would expect us to take all your Lordships’ concerns extremely seriously so it is good to see the Commons are taking the same approach as we do here.

As I said, I do not recognise the gloomy outlook presented by the noble Baroness and the noble Lord. We did make progress and we have moved forward. For instance, the Taoiseach said he thought the Prime Minister’s speech was “very positive” and:

“I thought it was very good. The language was the right language. It was very strong”.

Chancellor Angela Merkel said:

“In contrast to how it is portrayed in the British press, my impression is that these talks are moving forward step by step”.

The Polish Prime Minister and the Swedish Prime Minister both said that progress has been made and that the Prime Minister’s Florence speech has helped move things forward.

Of course, we very much welcome that the EU has decided to start its own preparatory work on how it sees the future relationship working, as that will allow us to accelerate talks once it is ready to join the conversation. We have always been clear that the issue of sufficient progress and the sequencing of events has been an EU construct, not a UK one. Our position has been clear: the issues around withdrawal and our future relationships are inextricably linked.

The noble Lord asked about sanctions against North Korea. He is absolutely right that we have been working very closely with our EU partners. Again, the approach and response to North Korea is a global one, which is why we have been at the forefront of international efforts to ensure full enforcement of UN sanctions against North Korea, and are working with international partners to maximise the diplomatic and economic pressure on it to change its course. We will of course continue to do that.

Finally, the Prime Minister could not have been clearer—and the Statement made it very clear—that citizens’ rights is a priority for us. We have committed to no longer requiring EU citizens settling here to demonstrate comprehensive sickness insurance, as they have to under EU rules; to keeping the cost of the settlement process a low as possible; to establishing a simple process to allow people who already have permanent residence to swap this for a new settled status; and to setting up a new user group to include representatives of EU citizens in the UK and digital technical experts to make sure that the process is transparent. In the fourth round of talks, we offered the guaranteed right of return for settled citizens in the UK in exchange for onward movement rights for British citizens currently living in the EU. We have put forward a comprehensive package on EU citizens because we recognise—and have said time and again—how valued they are in this country and we want that relationship to continue. We are now waiting for the EU to come back with its response.

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My Lords, I commend the progress made, which was confirmed by several Heads of Government who were represented at the talks. I will ask the Leader two questions. First, will she make it clear that one cannot have an implementation period until one has agreed what is to be implemented; and that a transitional period or an implementation period has to come after the main issues have been agreed, rather than the other way round? That needs to be made clear, both to the Opposition and to the CBI, which has been pressing on this point. Secondly, will my noble friend confirm that while the Government and the Prime Minister in particular have said in the past that no deal is better than a bad deal, the Government’s objective is not no deal—the Government’s objective is to get a deal, and a good deal?

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I thank my noble friend and I can certainly assure the whole House that he is absolutely right: we are working hard to get a good deal. We believe we can get a good deal. We believe there is will on both sides to get a good deal and that is absolutely our focus. He is also absolutely right, as I said in reply to the noble Baroness and the noble Lord, that we have been clear and believe that the issues around our withdrawal and future relationships are inextricably linked. We are very pleased that the EU has now decided to start its own preparatory work on the future relationship and we are sure that once we begin adding that into the mix of discussions, these negotiations will continue to make the progress that we have seen over the past few days.

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My Lords, on Brexit the unstated question which will be asked more and more insistently is: “Transition to what?”. On this point, will the noble Baroness the Leader of the House ask the Foreign Secretary whether he recalls from his days studying classical Greek the play “The Birds”, written by Aristophanes in the 4th century BC, in which having become dissatisfied with the governance of the realm the ruler of his country and his queen—Queen Sovereignty by name—commissioned the sacred birds to carry out a reconnaissance mission to find a more fitting place for the seat of his Government? They duly carried out this mission and reported that the name of this place was cloud-cuckoo-land.

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I thank the noble Lord for those interesting comments.

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My Lords, will the Minister accept my congratulations on two points? The first is the stance that the Government have taken on Iran, bilaterally with the President of the United States and at the European Council. Does she not find it a trifle odd that while we are preparing to leave the European Union our closest allies in this matter, which affects our national security, are indeed the main members of the European Union? Will she confirm that in Washington, the three countries that are so concerned—France, Germany and Britain—are working very closely to persuade Congressmen on the Hill not to move that dangerous step closer to another dispute in the Middle East?

The second congratulation is on the Prime Minister having ignored the letter that she received from some of her colleagues—I noticed that there was no reference to it— suggesting that she should leave the negotiations if there was not agreement on trade straightaway, which there has not been. Does that not demonstrate that it really is high time for the Government to put on the table in black and white what the consequences of leaving without a deal would be? Would that not be the best course and would it not bring it home to people, right across the European Union, that this option needs to be rejected?

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I thank the noble Lord for his congratulations. They do not happen very often so I shall attempt to respond positively. I do not think it odd at all that our closest allies in relation to Iran are France and Germany. We are an international, global country and we have strong relationships across the world. Our three countries are all committed to the Iran deal, and it is working. The International Atomic Energy Agency has released eight reports on Iran’s nuclear programme since the implementation day of the joint comprehensive plan, all of which confirmed that Iran is fulfilling its obligations under the deal. The Prime Minister could not have been stronger in making that message clear and we were very pleased that the Council built on the joint statement made last week by the Prime Minister, Chancellor Merkel and President Macron, which reiterated our firm commitment to the nuclear deal. We will continue to support that.

In relation to the noble Lord’s second question, as I said in response to my noble friend Lord Lamont, the highest probability is that we will get a good deal but it is only right that we prepare for a no-deal situation. What we cannot and will not do is to publish information which will undermine our ability to negotiate that best deal for Britain.

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My Lords, the Government claim that they are committed to European security arrangements and the free flow of data. How will they ensure that those continue if they pull out of reciprocity instruments, the European Charter of Fundamental Rights and the EU court’s jurisdiction? Those moves will all prejudice the vital, mutual recognition and adequacy assessments on which continued co-operation is in fact conditional.

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As I have said, we obviously have a strong and close relationship on these issues from being in the EU. We will continue to do so because we are seen as a world leader in this by our EU partners and we all know the benefits of working together. For instance, as the noble Baroness will know, we are already incorporating the new EU general data protection regulation and the data protection directive within the Data Protection Bill, which is in front of your Lordships’ House. We will have an unprecedented level of regulatory alignment in this area so that a new, ambitious partnership can be built on the kind of relationships that we already have.

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My Lords, my noble friend has reiterated the Prime Minister’s position that we will pay what we owe the EU, which presumably takes us up to the end of the budget period in 2020. However, if we were to leave in the spring of 2019 with no deal, surely at that point would we not stop paying?

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As the Prime Minister made clear, we have said to our EU partners that we need to reach a fair settlement on our rights and obligations. We also made clear in the Florence speech that they do not need to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. Following the process agreed in the last round of talks, we have undertaken a detailed and rigorous examination of the technical detail, aiming to reach a shared view on these issues.

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Can I ask the Minister for clarification of what is meant by “transition and implementation”? It seems to me that business—various bodies representing business have written to the Prime Minister—wants a transition period which gives us more time to negotiate the deep and comprehensive agreement that the Government are talking about, in which period we will remain in the single market. Are the Government rejecting that request, or are the Government still committed to the completion of the negotiations on a comprehensive trade deal by next October, which virtually everyone in the know thinks is a completely unrealistic objective? If that is their objective, why can they not table now their proposals for the framework, at least, for the future economic relationship rather than the three sentences that the Prime Minister devoted to it in her Florence speech?

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We will be leaving the EU and its institutions in March 2019, but at that point neither the UK nor the EU will be in a position to implement smoothly many of the detailed arrangements that will underpin this new relationship, so the implementation period is a bridge from our exit to our future partnership.

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My Lords, will the Minister explain whether the Cabinet and the Prime Minister understand the uncertainty that EU citizens here feel at the moment? They do not understand what settled status means and whether it means that they can go back to their own countries later on if they want to. I spent last weekend visiting someone in one of the large teaching hospitals. Three out of the five nurses I met were from the EU. They all want to stay here for a considerable length of time, but they do not want to stay if it means that in the long term they cannot go home. They are also asking, as are many people, why the Scottish Government have already said that they will pay any costs associated with public servants applying for settled status but the same assurance has not been given to people working in England. We need to know that it is vital that we retain our current health service and social care workers from the EU because we are having such difficulty recruiting people in the short term during this unsettled period.

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I thank the noble Baroness for her question. I do not know how we could have been clearer in the Statement in saying that this is an absolute priority for the Government. It always has been. We have put forward a generous offer and a suggested approach, and we are now waiting to hear from the EU. As I said, in the fourth round of talks we offered a guaranteed right of return for settled citizens in the UK in exchange for onward movement rights for British citizens currently living in the EU. As the noble Baroness will know—we discussed this at length during the Article 50 Bill—we have to look at the rights of EU citizens in the UK and the rights of UK citizens in the EU. That is the position that we have held. I reiterate, and can assure her, that this is a priority for us. We believe we are making progress. There are just a small number of issues left. We are very hopeful that discussions can move on in coming weeks and that we will come to a good deal which will provide reassurance for EU citizens here and UK citizens in the EU.

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My Lords, it is a pity that we did not take the advice of this House on EU citizens, but I very strongly welcome what my noble friend has said about the Government wanting a deal. But would she agree that that would be much more credible if we did not have the sort of carping at the Chancellor that has appeared in the press today? He is doing his very best to bring reality to the economic aspects of this, and it is crucial that he has the support—the united, non-carping support—of the Cabinet. Would my noble friend agree?

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I certainly agree that all the Cabinet is focused on ensuring that we achieve a good deal. We all want that and are all behind the Prime Minister. As I have already said, the response from other leaders at the EU Council shows that we are making progress and that there is a willingness for us all to move on. That is what we must focus on.

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My Lords, I welcome the Government’s change of position on continuing post-Brexit co-operation on internal security and foreign policy. The problem I have is that what I hear from the Government is that we want to continue but are waiting for the EU to propose how. Will we have any of our own proposals on how we will manage when we leave the extensive institutional co-operation in foreign policy which has grown up, often under British initiative, in the last 40 years, or when we leave Europol, if we are going to leave? I remember the nonsense from the leave campaign about how Interpol was perfectly adequate and we did not need Europol. Clearly we do. What proposals are the Government going to make on this, or are they simply going to say that the other side have to tell us how it can be done?

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The noble Lord will be aware that we have published, I think, 14 various types of papers over the last few weeks, some of which were on security. In fact, the EU 27 has made clear in its negotiation guidelines that it stands ready to establish partnerships in the fight against terrorism and international crime as well as on security, defence and foreign policy. We are working on those details. We certainly value, for instance, the role of Europol in helping law enforcement agencies co-ordinate investigations, and there is good precedent for third-country participation in it. Structures are already in place, which we will be looking to involve ourselves in. We want a relationship in this area, and understand the importance of it, but obviously the detail will be for the negotiations.

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The Government claim to have a magic formula for customs. Will they set out the full technical detail of how that works, what it would cost and who would pay that cost? Until they have done those things, no one will be able to evaluate their proposal or agree to it, and there will not be any progress on that item.

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I am afraid I missed the beginning of that question because of other noble Lords speaking.

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Will the Government set out, in full technical detail, their proposal for creating a customs barrier in Ireland without any infrastructure on the ground?

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As the noble Lord will be well aware, there is absolute commitment on both sides to ensure that we do not return to the border of the past. The discussions will continue in the negotiations, and when we are ready to put forward proposals, we will do so.

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My Lords, will the Leader of the House not agree that there is no solution to the Irish border problem if the UK leaves the customs union? If she does not agree, could she say what the solution is?

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No, I do not believe that that will an issue in that sense. We have already committed to not returning to the border of the past and to working together on this. There is plenty of technology and other things that mean we will come up, with the EU, with an option that works for the island of Ireland and for Northern Ireland as part of the UK.

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My Lords—

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My Lords—

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My Lords, I think we should hear from the Conservative Benches and then perhaps we can turn to the Labour Benches.

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My Lords, surely it cannot be that our friends and allies—our partners in the EU and neighbours across the channel—are trying to humiliate us, to obstruct us or indeed, to quote Michel Barnier, to “educate” the British people, which sounds like teaching us a lesson; and yet I read commentators saying that that is the case. I trust it is not. Can my noble friend tell me what the response of Her Majesty’s Government would be were this to be the case?

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As I set out earlier, and judging from the quotes I have read from a number of other leaders, there was a constructive relationship and a constructive discussion at the European Council. That is what we are focusing on and what will lead to these negotiations leading to a good deal for the EU and the UK, because that is in the best interests of both sides.

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My Lords, may I press the Minister on the question of the Irish border? How can we be sure that the customs entry for a container of goods passing through a customs post at Newry, north of Dundalk, is an accurate list of the goods in the container without the right of customs to open the container and check the goods being transported against the entry? Effectively, that means a hard border. How can that be avoided?

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As I have said, we have published our White Paper setting out our objectives for a new customs arrangement. Obviously, there is a lot of detail to work out but we are starting from the same place, which is that we do not want to return to the hard border of the past. We will work through these issues and deliver an outcome for the EU, the UK and Northern Ireland.

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My Lords, is it not the case that without certainty, negotiating a settlement for Ireland without knowing the trading context is putting the cart before the horse? Do we not need these two things, which are inextricably linked, to be negotiated simultaneously, instead of this nonsense of trying to establish what the arrangements are going to be without knowing what the trade arrangements are going to be?

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I entirely agree. That is why I have said that our position has been clear: our issues around withdrawal, our future relationships and the structures we have in place are all inextricably linked.

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My Lords, I wish to refer to two points in the Statement. The first relates to Operation Sophia. I was on the committee of this House that produced the report Operation Sophia: A Failed Mission. We looked closely at it, and I know the EU has looked very closely at our conclusions. When we leave foreign policy co-operation, that will no longer be possible for us to write.

Secondly, I draw attention to the item on Turkey. Traditionally we have been very realistic about Turkey. A number of European partners have been much tougher than us and, in many ways, much less wise. If our moderating voice is missing from the Council, surely that—our foreign policy co-operation—is yet another way in which our departure will weaken not only Europe but Britain’s ability to have our voice listened to with respect and acted upon.

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We have certainly condemned recent developments in Turkey, and obviously there was the discussion in the EU Council. We will continue to have our voice heard even when we leave the EU because we are a key part of other international bodies that are concerned with this area. On the noble Lord’s first point, it is important to recognise that since June, migration flows across the Aegean are significantly down, thanks to considerable efforts on all sides, and there were fewer than 6,000 arrivals to Italy in September. Obviously, we have seen some appalling things happening in that area, but international action—with us involved in the EU, but there is also the great work the Royal Navy is doing there—is making a difference. It is critical that we stop people-smuggling and stop advantage being taken of these very vulnerable people, to try to ensure that we can improve their situation and lives.

Science and Innovation Strategy

Question for Short Debate

Asked by

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To ask Her Majesty’s Government what plans they have for making their science and innovation strategy an effective part of their industrial strategy.

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My Lords, I assure you that the next debate is as interesting.

It is with great pleasure that I open this debate and thank all noble Lords, including the Minister, for taking part. On the speakers list are the names of extremely talented noble Lords with a great deal of experience in the area which we are to debate, and I look forward to their contribution. The subject of the debate is science, innovation and industrial strategy, reflecting on the Green Paper published in January 2017 entitled Building our Industrial Strategy, which identified 10 pillars of industrial strategy that will drive economic growth in the United Kingdom. I will touch briefly on each of the issues and make a few remarks about the latest publication on life sciences and industrial strategy.

The basis of the industrial strategy is, of course, the UK’s strength in science research. This is undoubtedly so. Our universities rank highly in the global league of top 100 universities. For the first time in 13 years, Oxford and Cambridge top the table, with four universities in the top 20 and 12 in the top 100. The Universities of Cambridge and Oxford score highly on research funding as a matrix, but they also rely heavily on—or rather, I should say, gain from—the research funding that comes on a competitive basis from the EU: in Cambridge’s case, it is about a quarter; in Oxford’s case, it is about a fifth.

In the life sciences sector, we have four universities in the top 20—and, similarly, the engineering and technology sector also has the top four universities in the UK. So, yes, we should be proud of our science lead. By the way, in the top 100 globally, we have 12 universities. Seven of them are in the south-east of England, two are in Scotland and only three are in the rest of England—the north of England. That might have implications for where the science funding goes.

When it comes to taking science to innovation, we do not have such a good story to tell. In world rankings for innovation, 51 of the top 100 universities are in the United States, 26 are in Europe and 20 are now in Asia. That is where the current threat of innovation is coming from: Korea, China, Japan and other developing countries. They are the new threats.

I am tempted to consider what a top innovative university looks like. In 1940, Stanford University was regarded as no more than a third-rate school of engineering. Currently, its alumni deliver $3 trillion a year to the economy and employ 5.4 million people. Of the 100 top innovative universities in Europe, the UK has 17, the same as France, while Germany has 23. Of the UK’s 17 universities, four are in Scotland. I am pleased to say that number five in the United Kingdom is the university of which I was Chancellor for 11 years—not any more—the University of Dundee.

All these figures show that we are good at turning money into ideas, but not so good at turning ideas into money. That is what we need to address. Therefore, does the Minister agree that we need to look at ways to support universities that are good at research to become innovative universities? Mr Jo Johnson, the Universities Minister, has suggested developing a knowledge exchange framework rather like the TEP and REF for teaching and research. Can the Minister say more: do the Government plan to do so?

I turn to the document, Building our Industrial Strategy. In 1960, we had the “white heat of technology”, which ended in the demise of the automotive industry and many others. Then we had market competition, in which government spent money on science and left the private sector to innovate. It was successful for a while, but when the financial crisis hit the economy in 2007 and 2008 we had another strategy: rename the department. We got the Department for Business, Innovation and Skills and a new slogan: “New Industry, New Jobs”. Intervention was then followed not by strategy but by an “industrial approach”. The financial crisis, economic stagnation and Brexit has now resulted in this document, Building our Industrial Strategy. It has been well received, shows government commitment and is visionary, with innovation at the heart of it—and succeed it must, because we have nothing else.

But there remain challenges, such as Brexit, with its impact on the economy and the skilled workforce and, of course, the effect of immigration policy. Then there are other challenges, including how to turn science into innovation, which I have already mentioned. The strategy is based on innovation but I see no goals in it for specific innovation, except in sector terms. Why should not there be specific goals of tech-based innovation linked to each of the 10 pillars?

The Government have committed to raise the spending on R&D from 1.7% of GDP to 3% of GDP, comparable to our competitors. Of course, our competitors also have strategies to raise their GDP and, by the time we meet the goal of 2027, if we do, of 3% of GDP, our competitors, particularly in the east, will have moved further along.

The Government have promised £4.7 billion of investment in science and innovation over the next four years and the Industrial Strategy Challenge Fund may act as a catalyst to leverage more R&D from the private sector. However, what evaluation have the Government made of previous policies to be confident that policies to leverage more R&D funding will be successful?

Another suggestion in the document is that the Government will start an institute for battery research, to add to the National Graphene Institute, the Francis Crick Institute, the Rosalind Franklin Institute, the Alan Turing Institute and the Henry Royce Institute. What will be the governance mechanism, how much of the institute will be committed to research as against innovation, and how will it be monitored?

I turn briefly to the report of the Government on the life sciences sector—the life sciences industrial strategy, recently published by Sir John Bell. I add that I am chairman of the Lords Science and Technology Committee, which is conducting the inquiry into the strategy and which will report in due course—no doubt constructively.

The report has been well received and widely welcomed. It is ambitious and identifies the need to increase the science offer; for a growth in infrastructure and an increasing skills base; for regulation to promote innovation; for immigration policies that align with the needs of the life sciences sector; and for the NHS to be both more adaptive to innovations and more innovative. I shall pick out two of those points, because they are connected. One key recommendation is the creation of the Health Advanced Research Programme, or HARP, to create two or three new global industries in the next 10 years, analogous to DARPA, an organisation linked to US defence, which has been highly successful. However, in that case, US defence was its key customer, which wanted to be assured that it could lead the world in defence globally. Is our NHS similarly placed? HARP needs the NHS and the social care system in the UK to be effective, affordable and appropriate to the changing demographic needs of the UK population, and to be recognised as a leader in the world. Do we have an NHS that can be quick to adapt and be innovative? Current evidence does not suggest that that is so.

The report also recommends greater government support for the charity research sector. That sector in biomedical science is extremely strong, but universities need the support of the Government. Do the Government agree with that? When will they respond to the sector report on life sciences, and when will it be implemented?

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My Lords, I congratulate the noble Lord, Lord Patel, not only on securing this important debate but on an excellent speech, which I fully agree with.

I shall concentrate on innovation, especially in the private sector. I should stress the worldwide reputation of the United Kingdom in this field, particularly for the work of Cambridge University, Imperial College and Oxford University. In the last 10 or 20 years, many other universities have joined in the pioneering work, done largely by Cambridge University, of encouraging innovation born out of ideas generated from the professorial—and, in some cases, postgraduate—contributions to innovation. Those three universities are in the top five in the whole world in terms of innovation. I know from my own experience the very high regard which Americans and the American Government have for the work of our universities. Having lived in the United States, I have fond memories of the excellent work of the American Research and Development Corporation, which has been a model in some ways for the work being done in other universities in the United Kingdom.

Twenty years ago, I had the honour to chair the committee at Cambridge University which was examining new, innovative inventions and providing modest finance. That model has been followed by other universities. More universities all over the country should encourage students at an undergraduate—let alone a graduate—level to contribute ideas, seek the university’s support and encourage the support of Her Majesty’s Government. The original pioneering work of some of the original universities has now spread to a great number; in particular, I should mention Bradford, Nottingham, Bristol and Liverpool, which have done an excellent job.

Over the last 10 or 20 years, my involvement outside this House has largely been concentrated on small-scale companies which were trying to innovate new techniques and technologies. Some of them have failed; some have been successful. I pay tribute to the work done by Innovate UK in helping to finance small companies. However, there is a problem because, typically, it can only go up to between £2 million and £3 million. Will the Minister be kind enough to comment on whether there is any possibility of extending the normal three-year period to five years of grant funding, albeit at a fairly modest level?

For much larger support for innovative ideas, Horizon 2020, which is a European organisation to which we belong, typically covers amounts above £5 million. There is therefore a bridge, which is partly not plugged, between that and the £2 million to £3 million which United Kingdom organisations are typically providing. I would very much like to see us remain in Horizon 2020. I see no reason, even with Brexit, why we should have to leave that organisation, and I would like to see us continuing to providing support for it. Our universities and smaller-scale companies would benefit from such continued participation. As I think our former Prime Minister, Lady Thatcher, said, we may be leaving the European Union, but we are not leaving Europe. That is very important.

In conclusion, science and innovation are at the heart of our long-term economic future and should be at the absolute centre of government planning. I congratulate the Government so far and look forward to the Minister’s response.

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My Lords, I echo the thanks to the noble Lord, Lord Patel, for his excellent introduction to this debate. I am fortunate to serve as a member of the Science and Technology Select Committee under his leadership, which followed the able leadership of the noble Earl, Lord Selborne, who initiated this area of scrutiny for the committee. I draw attention to my entries in the register.

This House scrutinises and discusses this subject matter repeatedly. The future industrial strategy is of paramount importance to the UK economy and the big issue, of course, is implementation. What? How? Where? We will rightly hear a lot today about HE and science but in my brief intervention I want to talk about a component that is often not talked about quite so much—the need for a real, quality, deliverable skills strategy that meets the future economic requirements of the country and does not jump to ticking boxes and obsessing about big target numbers: I think about the 3 million apprenticeships. We have been here before. All Governments want to talk big numbers, but all in different ways have failed to deliver the content, quality and skill sets needed to go forward.

We have, of course, talked about this before. In many ways, it went wrong with the Education Act 1944 and our failure to set up technical schools. That established a mindset of academic top dog, and everything else being the poor relations. Like many of us here today, I hark back to the days of ONCs leading to HNDs at strong local polytechnics, which could then be topped up to degree level if wanted. All this was replaced for well-meaning reasons, but the replacement technical structures and qualifications were frankly inadequate. In addition, FE colleges have been woefully underfunded and inadequately staffed for many years. Typically, the recent review of FE colleges looked only at financial sustainability, not skill needs or quality of provision. Employers tell me regularly that they have to retrain young people who come to them supposedly ready for work.

In 2015, the UK Commission for Employment and Skills found that 43% of STEM vacancies were hard to fill due to a shortage of skills. That is the biggest challenge facing London’s tech businesses, while the Tech Partnership says that 72% of large companies and 49% of SMEs are reporting skills gaps, with significant impacts on productivity. Engineering and construction firms are finding the situation increasingly difficult, and that is without Brexit.

The recent productivity figures have to be a huge wake-up call for us all. Put Brexit on top and the need for a complete change of gear in this area and honest appraisal of what is needed is apparent. We spend most of our time and money talking about schools and HE. I give an example of the sort of focus needed by the Government—that is, delivery of technicians. By that I mean workers possessing levels 3 to 5 STEM skills. Technicians are workers who apply proven techniques and procedures to the solution of practical problems. They carry supervisory or technical responsibility and competently deliver their skills across the fields of science, medicine, engineering and technology. They are in very short supply already. Every employer in these fields is desperate. The Government, frankly, are not joining up the dots sufficiently. For example, very little of the advanced learner loans—basically, the only way 24-plus year-olds can get funding for technician awards—are going to level 4-plus courses. In 2015-16, it was £8.6 million out of a total of £162 million.

Paul Lewis at King’s College—I declare an interest as vice-chair of council—has undertaken an interesting and illustrative piece of research on the role of technicians in life sciences. I know that the Minister is particularly interested in this area. The life sciences strategy is, of course, both a strategy in its own right but also an important strand of the industrial strategy. His research found that, as industrial biotechnology, cell therapy and regenerative medicine remain in the relatively early stages of their development and heavily involved in research, the focus has been on graduate and postgraduate skill needs, which are also in pretty short supply. However, sector-level bodies and employers readily acknowledge that any movement in the future to full-scale manufacturing—as we hope there will be —will demand increasing numbers of specialist manufacturing and laboratory technician roles. Significantly, many of the emerging roles in the life sciences sector could, and probably should, be carried out by technicians. These roles are highly routinised but take place in accordance with strict guidelines and standard operating procedures from which people must not deviate. Such roles place a premium on attention to detail, care in following instructions and practical skills—for example, on cell cultivation—rather than on graduate-level theoretical knowledge.

In practice, many manufacturing and lab support roles have hitherto often been filled by graduates. This overqualification can lead to difficulties. The graduates have greater theoretical knowledge than is essential, but they often lack the practical skills required to do the job effectively over a reasonable period of time. They often also become dissatisfied with the job, both with the highly routinised work and the relatively low pay. They may leave pretty quickly, which is frustrating for the employers, who have put the training in.

Apprenticeships could and should help, if planned properly. When it comes to planning and delivering apprenticeships, there are lessons from other specialist sectors, and it is now time to learn from them. We need small numbers. In any geographical area, small numbers make it difficult to get a training provider to collaborate properly under the current funding system. This needs to be planned properly. For example, we should look at centres of excellence, technician training that can cover a range of industries, more distance learning with residential blocks, involving the catapult centres, and so on. The point is that a practical, comprehensive piece of work needs to be done on this now.

I choose this issue of technicians to be illustrative of the wider issues. My plea to the Minister is that collectively we need to roll up our sleeves and deliver a properly thought-out, joined-up skills strategy—not have schools over there, FE here and HE somewhere else, planned by different departments at the moment with different Ministers and different civil servants. We need to try to avoid the big claims and the big numbers and plan a proper, detailed, quality provision that is absolutely essential for our economic future.

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My Lords, I too congratulate the noble Lord, Lord Patel, on securing this debate and on his introduction, which was as excellent as always. He has of course highlighted both the opportunities that arise from the science and innovation and industrial strategies, and the challenge of realising their potential. Like many in your Lordships’ House, I suspect, I was somewhat impressed by the success of Stanford, where the synergy between research and innovation is seamless, focused, well-financed and taken as part of an innovation ecosystem that delivers commercial, health and societal benefits on a massive scale. However, while we can admire what is being achieved at Stanford, Caltech or MIT, trying to replicate their models may prove somewhat challenging, so perhaps we should look at how we can utilise the UK’s own unique strengths to power our own innovation revolution.

We can argue about whether the government strategies are right, but my question is: do we have the infrastructure and, more importantly, the people to power an innovation revolution in the UK? Arguably, the setting up of UKRI was a significant response to this challenge, bringing together under one roof both the traditional research councils and the relatively new Innovation UK. On his appointment to UKRI as chief executive, Sir Mark Walport wrote a letter to all partner organisations—including NERC; I declare an interest as a council member. In his letter he stated:

“Our research and innovation landscape and funding system is world-leading”.

I do not often question Sir Mark, but although he is absolutely right to declare our research base as world-leading—a claim evidenced by the fact that we have four HEIs in the top 20 universities in the world—the global league tables for innovation tell a different story. Despite having a concentration of seven research universities in London and the south-east, our top entry for innovation is at number 13, with few HEIs in the top 100. We are good at research; we are not as good at innovation.

On funding, while UKRI has a £6 billion a year budget for research and innovation and the Chancellor has found a further £2 billion a year to support the industrial challenge strategy, such sums pale in comparison with the United States or China, which spend a significantly higher percentage of GDP on innovation—as do Germany, France and Japan. Indeed, as the noble Lord, Lord Freeman, hinted at in his excellent contribution, this lack of access to capital helps to explain why it is notoriously difficult in the UK to grow our research ideas beyond proof of concept without seeking finance from nations with deeper pockets and less aversion to risk.

However, my principal concern is the gap between research and innovation, and in particular the divide between individuals working in those two communities—that is, scientists and entrepreneurs. It is as though they have a different DNA. What we expect from each group is different and that is a very real challenge for UKRI, which must not say that it is “business as usual” for the traditional seven research councils.

The vision of and for those scientists funded by our research councils must change, and it must change significantly. My own council, the NERC, is 50 years old this year and, although environmental science has grown exponentially in that time and our scientists have made huge discoveries—from the hole in the ozone layer to the disastrous effects on health of sulphur dioxide from coal-powered stations, climate prediction and so on—only relatively recently as a council did we develop an industrial strategy looking at how the NERC science can help find innovative solutions to environmental challenges.

However, as Professor Duncan Wingham, the executive chair elect of the NERC, said at a recent council meeting and in this House last week, for too long our scientists have brought to Ministers a detailed understanding of environmental problems but have not felt empowered to take their research further to offer solutions or to see whether they have commercial or societal benefits, or perhaps have not felt that this was wanted. That is not surprising. Our seven research councils, in addition to funding research in most of the UK’s research universities, support some 18 research institutes, 32 research centres and a plethora of more localised facilities and units. If there is a new discovery, we have a new centre.

Their emphasis is on either research to support national capability or discovery science; it is not on innovation. Perhaps Professor Wingham was not questioning the value of this research—he most certainly was not—but in fact offering a challenge to all the research councils in the new landscape of UKRI not to populate the innovation space with a separate cadre of scientists or entrepreneurs but to encourage existing scientists and research leaders to take their thinking to the next level, which inevitably means working with other disciplines, using the totality of our rich research base to lead innovation and to be part of the solution, not simply asking someone else to find the solution.

If the UK is to deliver on both the science and innovation strategy and the industrial strategy, an early drive by UKRI to redefine the mission for our research communities and the people who work in them is absolutely crucial.

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My Lords, I echo the congratulations to my noble friend Lord Patel on securing this debate and on what he had to say in introducing it. That has saved those of us with a short time in which to speak, who have had to cut a great deal from our own speeches.

I should declare my interests as set out in the register, particularly as chair of an academic health science centre, Cambridge University Health Partners.

I welcome Sir John Bell’s work on the life sciences industrial strategy and the ambition for this country that it represents. It reflects the inclusive process, with the whole sector—industry, academia, the health service, the medical charities, pharma companies and biotech—contributing to its recommendations. I also welcome its recognition of the NHS as a key differentiator for the UK in this field going forward, and the importance of integrating the NHS in two ways: as a basis for innovation and discovery, and as a beneficiary of that innovation and discovery.

We now need to focus attention on how to deliver on the recommendations, including the sector deal. These are long-term aspirations. They will take long-term commitment, and it is important that we understand where the accountability for the delivery of these policies will be. Many suggestions have been made about accountability mechanisms, and perhaps the Minister can refer to them in his wind-up speech.

In my time this evening, I want to discuss some of the infrastructures needed to deliver this strategy. One set of infrastructures concerns the position post-Brexit in relation to Europe. This is predominantly about people. Anyone who visits one of the leading scientific labs in this country will see people working there from all over the European Union. We need those people not only when they work here, but as collaborators when they are back in their home countries. It is crucial that their uncertainties be resolved if we are to ensure ongoing success in this area.

There is the question of the large amounts of money coming into research in this country through European funding. The European Medicines Agency, which was located in this country, has been a huge benefit, but it will no longer be located here. We have to understand how that will be smoothly and effectively replaced. There is the question of how the forthcoming clinical trials directive will be implemented here. Of course, there is the general data protection regulation, which we are looking at in the context of the Data Protection Act. So, there is a whole range of infrastructures.

I turn to Cambridge, which is an exemplar. It is a globally recognised life sciences cluster, one of the largest and most important in the UK, as the noble Lord, Lord Freeman, has said. The core of the cluster includes Cambridge University; three nationally leading NHS foundation trusts; outstanding medical research charities, including Cancer Research UK, the Wellcome Trust and the MRC—which recently added a 19th Nobel Prize winner to the cluster’s tally since 2000—and leading life sciences industry partners, including the pharmaceuticals AstraZeneca and GlaxoSmithKline. There are also 431 life sciences companies working in the cluster. Beyond the Cambridge Biomedical Campus there are some 23 science and technology parks, including the famous Wellcome Genome Campus at Hinxton. This is a fantastic resource that will grow, but for it to do so, some very basic infrastructure issues need to be addressed.

This comes back to the problems we encounter in many other areas of life, such as housing and transport. We are not going to get the scientists, technicians and health service employees if there is nowhere in Cambridge they can afford to live. They are not going to be able to travel in from the rest of the eastern region if there are no transport links. Therefore, things like the new railway station, Cambridge South, at the biomedical campus are tremendously important. If we get those right, we can show how investment in an already globally recognised cluster can support and enhance the rest of the eastern region. In particular, we should look at developing technology institutes with a focus on STEM subjects. If we get that right, we can not only nurture the jewels in the crown but create wealth regionally and for the nation as a whole.

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My Lords, it has been my consistent position that throughout the Brexit process, there must be a clear recognition of the importance of economies of scale for our science and technology sectors. The nature of these industries means they stretch across borders to spur innovation. I thank the noble Lord, Lord Patel, for introducing this debate, and my noble friend Lord Prior for responding. I have not heard much about the industrial strategy since the last election, but I hope it includes an appreciation of this point.

I talked about wings in the last speech I made here, and I will reiterate the point. Airbus can compete with Boeing on a global scale only because it is a truly international endeavour. Had France, West Germany and the UK all attempted to build their own companies, they would have failed, as they lacked the continental leverage of the United States. Together, the idea took off and the manufacture of the planes is spread all across Europe. Britain specialises in the wings, which have been tremendously profitable, supported good engineering jobs and built up our expertise. We even now make the wings for Bombardier, whose tariff troubles appear to be coming to a sensible conclusion, as the Minister will no doubt confirm.

Noble Lords will know that high-tech industries with long payback periods and research-intense development are well supported by the EU. Embedded in the agencies and other bodies are services that bring together scientists, researchers and engineers so that nations can together punch above their weight: Euratom, Horizon 2020, Erasmus, the ESA—I could go on. Collaboration is king if we want to compete against titans such as China or the United States, so some of the dogma I see that prevents us safeguarding that frustrates me.

The row over Euratom made very little sense. There is no issue with allowing limited oversight by the European Court of Justice on these matters. This is not social policy, or fundamental fiscal or economic policy. Complex matters of research funding and collaboration will always need an arbitration body. I understand the frustration of some leavers who argue that the ECJ is an interfering and meddling court. In some ways they are correct, but in this area the ECJ seems to be fair-minded and reasonable. If the cost of continued participation is submitting to that court and a high entry fee, I think that fair enough. I support Brexit and see huge benefits, but I find it difficult to believe that any Brexiteers voted to see less science and technology co-operation, and to make ourselves poorer as a result.

This is particularly important for me because I see our post-Brexit future as a country that produces a higher grade of goods, and with a primarily service-based economy. The implications of cutting ourselves off from EU schemes would be disastrous for our prospects. Biotechnology, one of our blooming new growth markets, would be hammered, and swathes of expertise and capital would move to more hospitable places. Lowering regulations or taxes cannot compensate for access to these schemes. Such beggar-thy-neighbour policies would also remove good will from our allies. Will the Minister confirm that he will seek to remain a member of the programmes that I have already discussed—the ESA, Euratom and Erasmus?

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My Lords, I congratulate the noble Lord, Lord Patel, on securing this vital debate and applaud the Science and Technology Committee for producing an excellent submission to Ministers on innovation’s place in the industrial strategy. I declare my interest as chairman of WMG at the University of Warwick. WMG has a strong record of industry innovation partnerships going back many years. It was set up by the then Prime Minister, Mrs Thatcher. We will be the home of the National Automotive Innovation Centre, which will, in the end, have a funding of just over £1 billion, entirely from the private sector, at a British university. We are delighted to be part of the recently announced Faraday Institution. Getting that sort of funding comes only with delivering impact.

It is very welcome that, for the first time in several decades, “industrial strategy” is no longer an anathema. I remember speaking in the debates here that created the Technology Strategy Board, now Innovate UK. It was a hard slog. The current welcome shift in attitude to industry was spurred on by the Prime Minister’s first speech outside Downing Street. The Business Secretary, Greg Clark, has done an excellent job of focusing the industrial strategy on the pillars of future growth. On top of that, the Engineering and Physical Sciences Research Council’s focus on impact, the Nurse review and the inclusion of Innovate UK within UK Research and Innovation have helped move the agenda forward. I fought very hard to get UKRI and Innovate UK together because I thought that was the best way for us to have technology transfer.

However, as the committee’s letter says, we have had many short-term announcements. We have lacked an integrated, long-term implementation. Creating impact is about using assets well, especially to strengthen partnerships, then monitoring results, tracking outcomes and backing success. For innovation, our most important asset is our science and technology base, as everybody says. As has been said, whether judged on Nobel prizes, citations or any other measures, British science is world-leading. For the past two weeks, I have been in China; everybody there praises British science. For the money we spend, the result we get is world-leading.

The Government cannot be criticised for withdrawing funds. Britain’s science spending has been protected. However, we lack business incentives. As the OECD shows, we are at the lower end of research and development tax incentives. Despite that, as Phil Nelson of the EPSRC has said, at least for patents and licences, our current spending is productive. The big problem is that our scientific excellence has not led to industrial success, whether in products, exports, or employment. Impact has to mean growth and making ourselves technical leaders in the global market. We will not get either without more industrial contribution to innovation. We have one of the lowest rates of business R&D, in both firms and collaborative research. The latest data shows further decline in that investment.

Worryingly, our spending is also limited to very few sectors. Pharmaceuticals, automotive, IT and aerospace do over half of Britain’s business R&D. We need to use our strength in science and technology to encourage business R&D in our strong sectors and expand into new fields. Therefore, the strategy needs to address directly the long-term challenges of real businesses. We have done that in the automotive sector: on connected vehicles, road infrastructure and battery technology, there are innovation partnerships between industry and academia, attracting private investment. As far as the Midlands is concerned, we have the Midlands mayor, who is charged with delivering the impact on funding and who will make sure that happens. Whether it is the Faraday Institution centres for research into batteries, looking at industrial impact—not only now but in the future—everything is being linked for the first time.

One of the keys to that approach is seeking real business investment, in cash, not in kind. The majority of the industrial investments in Britain that are talked about are always in kind. Why do businesses such as Jaguar Land Rover support us in this way? First, they know that their industry is in a state of real flux. They spend more than £3 billion on R&D. Firms are aware they must adjust to new regulatory, legal and consumer demands. That acts as a trigger to invest. Next, they know that there is a long-term commitment and investment from academic researchers to work with them to find solutions that will work in a global marketplace.

We cannot go it alone here, because technology is moving so fast and Britain is a small country. We need to collaborate with innovators all around the world or be left behind. So the final element of a successful strategy must be monitoring economic impact over the long term. We need to measure real job creation, increased productivity and economic growth. We need a focused definition of impact. Otherwise, we will end up with research institutes that do not make a practical difference. I strongly support the committee’s proposal of a body to monitor the industrial strategy. We need a real debate about exactly what should be measured and how we know whether impact has been achieved. If we do not do this, there will be a short-term squabble about where the money should go. Within five years, we will not know which investments have made a real difference.

For British industry to compete, we need businesses to commit to innovation. That is their responsibility. Firms have to choose to invest, but we can, and should, do more to make investing in innovation an attractive proposition.

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My Lords, I declare my fellowship of the British Academy. In this evening’s debate we are dealing with twin themes that have run through the post-war years like a filigree: industrial strategies—the current one is the eighth by my calculation since 1945—and scientific and technological strategies. There have been at least 20 of those, according to a cartography compiled by Dougal Goodman and Darron Stronge for the Foundation for Science and Technology, in which, I should declare, I also had a bit of a hand.

It is interesting that our science and industrial strategies have been run in parallel rather than fused, although it is both cheering and right that science and innovation is the first of the 10 pillars in the latest industrial strategy.

The problems with which both science and industrial strategies have grappled since 1945 have shown a remarkably stubborn persistence. Let us eavesdrop for a moment on the very first: the 1946 Barlow Report on Scientific Man-Power. This is its opening paragraph:

“We do not think that it is necessary to preface our report by stating at length the case for developing our scientific resources. Never before has the importance of science been more widely recognised or so many hopes of future progress and welfare founded upon the scientist. By way of introduction, therefore, we confine ourselves to pointing out that least of all nations can Great Britain afford to neglect whatever benefits the scientists can confer upon her. If we are to maintain our position in the world and restore and improve our standard of living, we have no alternative but to strive for that scientific achievement without which our trade will wither, our Colonial Empire will remain undeveloped and our lives and freedom will be at the mercy of a potential aggressor”.

If we strip out the references to the colonial empire and Joseph Stalin, that, I venture to suggest, could be the opening paragraph of the White Paper which we all await so keenly.

We can pick out three crucial themes from the cataract of post-war reviews and strategies—again, I am grateful for the work of the Foundation for Science and Technology on this. They are these: first, funding. A continuous thread has been the difficulty in meeting the aspiration of successive Governments to raise government spending on science, research and innovation as a percentage of GDP and particularly to persuade the private sector to follow suit—as other noble Lords have highlighted already.

Secondly, commercialisation—the industrialising of our scientific prowess. From the days of Barlow in 1946, there has been a continuous struggle to take the world-class ideas created by UK R&D to the marketplace by converting them into patents which pave the way to commercial opportunities. We have not done well in comparison to most of our competitors.

Thirdly, skills, higher education and productivity. The productivity gap that yawns between ourselves and our chief competitors rings out, tocsin like, as a prime anxiety in all the industrial strategies since the days of the Attlee Government’s Central Economic Planning Staff and the Anglo-American productivity councils established by Sir Stafford Cripps in the years of Marshall aid. It rings out, too, from the latest industrial strategy.

Huge efforts have been put into skills training. The great Robbins report on Higher Education in 1963 placed eloquent stress on the need for more science and technology courses and graduates. Today, the skills, scientific and technical education elements remain a prime concern, with an enhanced national performance ever more vital in a technologically leaping and ever more globalised world.

There are reasons for hope. We are a country and a people distracted by Brexit, edgy and chippy in our often impoverished national conversation, with too many people looking for things to fall out over rather than things to fall in about. I sometimes think, as an old friend of mine puts it, that we have become a country on permanent grudge-watch. Brexit is in danger of making curmudgeons of us all, yet here is an area—the theme for tonight’s debate—where a good, solid consensus is possible, a terrain where science, technology and industrial strategy meet in what is still a great intellectual trading nation. If we get it right this time, great prizes and improved prosperity await. It is tocsin time again. It is time for a burst of shared national endeavour and more than a little dash of optimism.

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My Lords, I thank the noble Lord, Lord Patel, for providing this opportunity to consider the vital importance of science and innovation to the success of the industrial strategy.

As others have highlighted, science and innovation are areas in which the UK excels internationally. With the recent publication of more science and innovation audit reports, we now have a compelling evidence base for the specific innovation and scientific strengths of local areas, covering almost all the UK. Investing in science, research and innovation, doing more to commercialise our science base to drive growth across the whole of the UK, is pillar 1 of the industrial strategy; I argue that all the other pillars rest on it. So it seems clear to me that the science and innovation audit reports will be critical to the success of the industrial strategy. I will say more about this in a moment.

I want first to make a very simple observation. The industrial strategy Green Paper mentions universities 63 times—I am grateful to the Universities UK researcher who did the counting. As UUK points out, this reflects the significant role universities play in their local areas, but it also underlines the fact that universities are a driving force for the future prosperity of the whole UK. Our universities, in all their activities, are intrinsic not only to the industrial strategy but to economic performance more generally. While rooted in their local cities and regions, universities are connected to global growth markets. They maintain thousands of industrial partnerships and they work closely with SMEs in emerging fields. The industrial strategy must make the most of these connections. The industrial strategy presents an opportunity to draw together a number of strands of support for economic growth, but this opportunity has to be grasped.

I said I would come back to the science and innovation audits, or SIAs. The House of Lords Science and Technology Select Committee called for,

“pathways of practical steps ... building on existing research excellence at every opportunity”.

I believe that the SIAs could contribute to the delivery of such a pathway. This body of knowledge about regional strengths in science, innovation and infrastructure is critical to the emphasis on place in the industrial strategy. The SIAs bring together sector and place; I suggest that, precisely because they can be specific about which localities should be at the forefront of which industries, they could be the basis of an approach to investment which combines national coverage with regional focus, through local enterprise partnerships. The industrial strategy could co-ordinate this and also shape the distribution of money spent on innovation through other government agencies, such as Research England, and DfE initiatives, such as the institutes of technology.

The industrial strategy offers an opportunity to make investment decisions that increase the overall funding available to university research and spread this investment throughout the UK. Will the Minister tell us whether the creation of UKRI will support this approach? If so, how? Will UKRI be tasked to ensure that funding reaches all parts of the country? Established industries are dominated by major companies and research-intensive universities. The industrial strategy also presents an opportunity to look beyond the established industries to emerging sectors. I declare an interest here as a member of the council of Nottingham Trent University, and I cite the university’s involvement in the fields of medical technology and advanced materials as an example of the tremendous potential flowing from its involvement in these fields. This has long been a major area of manufacturing in the east Midlands and is one of four major themes picked up in the Midlands Engine SIA.

In what I hope will be a very positive signal on collaboration for the rest of the sector, NTU is partnering with the University of Nottingham on the stimulation of business creation in life sciences through expanding the work of BioCity Group Ltd, which now has four sites across the UK. The university is ensuring a throughput of talent from undergraduate to PhD in life and health sciences, and is looking to ensure that the local institute of technology encompasses medical technology, so that there is a genuine skills escalator locally. NTU also works with medtech SMEs through its European Regional Development Fund programmes to enhance the leadership of some of the smaller local companies, including their ability to embrace innovation. In other words, the university is tying together a number of rather disparate government initiatives and funding streams. If the Government were to adopt a rigorous approach to the industrial strategy based on the audits, it would help enormously. Can the Minister assure us that such an approach will form part of the Government’s thinking?

The additional investment of £2 billion for R&D by 2020, announced in 2016 and restated in the industrial strategy, is welcome as an acknowledgement of the vital role science, research and investment play in economic growth, but it is essential that we do not fall behind. I echo other calls today for increased investment in R&D to put us in line with the OECD average: 2.5% of GDP. The SIAs are the evidence base we need for strategic decision-making on local innovation priorities. They must inform the industrial strategy’s pillar 1—the vital investment in science, research and innovation.

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I, too, commend the noble Lord, Lord Patel, for giving us the opportunity to speak in this very important debate. The transition from science and innovation to industrial strategy inevitably includes the monetisation of basic science, typically from universities. Here I declare an interest, as I have personally made that journey—from research in the Department of Pharmacology at Oxford to founding, in 2013, a completely independent biotech company, Neuro-Bio Ltd, where I am currently president.

Sir John Bell’s report, Life Sciences Industrial Strategy, covers many areas. However, time permits me to comment only on the section headed “Reinforcing the UK Science Offer”, which recommends that we should,

“work more effectively with industry and support high-risk science”.

Let us consider each of those two goals in turn: first, working more effectively with industry. The difficulty here is the very basic tension between pure and applied research. More than 500 years ago, the 16th-century philosopher and scientist Francis Bacon drew a distinction between experiments that were lucifera, those shedding light, and those that were fructifera, those bearing fruit. Nowadays this fundamental divergence in goals is acerbated by a seeming divergence in agenda between scientists in universities and potential private sector investors.

For example, universities often prefer a licensing deal to parting with intellectual property, which makes them less attractive to entrepreneurs. This is because academic institutions are ideas-rich but capital-poor. But from an investor’s perspective it is like acquiring a leasehold interest in a property development of the building only, not the actual land, and even then not knowing the final height, width, build cost or market value of end site, whereas if they can buy the land they have more scope for control. The answer is for universities not to fear, as they often claim, that the new owners of the intellectual property may risk being unable to continue funding it. To the best of my knowledge, such a scenario happens seldom, if at all. Instead, the public sector needs to realise that one size does not fit all and that bespoke packages based on negotiation are deep in the entrepreneurial DNA.

Meanwhile, things may not even get to the stage of filing a patent. Scientists mistakenly think that in so doing, they will never be able to publish in the all-important gold-standard peer-reviewed journals. The answer is to ensure that all university scientists are aware that so long as a patent is robust and filed, they can publish with hardly any delay. Investors, especially early-stage “angels”, may have little biotech experience, may find the work too high-risk, will look askance at the high burn rate, and be discouraged still further that not enough money is needed to constitute a serious return with an exit that is readily identifiable and realistic—which, to make matters worse, it does not appear to be.

The answer is for the scientist to receive training in presenting their work to the non-specialist in a way that is honest, concise and, above all, compelling. The investor really needs to understand for themselves the risks they are taking in the long term but also the implications if the outcome is successful. The scientists, meanwhile, will be baffled as to why the investors are so concerned about the management structure of a nascent spin-out. After all, they might argue, the telephone number salary quoted for a CEO would pay for several lowly paid post-doc researchers. They certainly would not grasp why investors often say that they put their money on the person as much as the technology. Scientists should realise, first, that having on their team individuals who know how to run a business is really important and that the investors are looking at their personal qualities—their innovative thinking, which in turn depends on character traits such as confidence, courage and sheer persistence. This will make all the difference to the eventual outcome, as it will to their attractiveness to investors.

Yet all too often, universities will kill this goose before it lays its golden egg by paying too little heed to the interests of the scientist and how they can be motivated to work as hard and fast as possible. The answer is to adopt a longer view and not necessarily to prioritise immediate revenue. Rather, it is to adopt the model seen so often in the USA and Israel, where handsome and much greater returns arrive, albeit eventually, from grateful alumni. Clearly, much more needs to be done for the scientists and the investment community to understand each other and their respective agendas. Yet despite this misalignment of cultures, funding science from the private sector offers real advantages, such as fast evaluations with a heartfelt belief in innovation, compared to that from the public sector review bodies, which are often perceived as secretive and lengthy, even nepotistic and frequently risk-averse.

For the second goal—to support high-risk science—let us take an example from my own field. There has been no new drug for Alzheimer’s since 2002, yet over £2 billion is spent globally each year on drugs that are variations on the same old theme but are not really effective. We need to risk a new approach by making use of the 10 to 20-year window of opportunity, once degeneration in the brain is under way but before the cognitive impairments appear. For that we would need a blood marker, as for high cholesterol and hypertension, where the problem can be detected in routine GP visits. An effective treatment can then stabilise cell loss by being given early—before the symptoms are apparent, so that they are never apparent. That would be an effective “cure”. But for such a dream, which is so needed, to be realised we need to understand the basic process underlying Alzheimer’s. For that, we need to work effectively with the investment community, and above all to take risks and be disruptive. Only then will science’s lucifera, which shed light, and science’s fructifera, which bear fruit, be as one.

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My Lords, it is difficult to be innovative in this debate, having heard 10 such erudite and thorough speeches, and possibly because I have already left the creativity window that the noble Baroness, Lady Greenfield, has just ably described, but I will do my best. We should first congratulate the noble Lord, Lord Patel, as everybody has, on securing this debate and on the quality of his intervention. We should be optimistic that this debate is being had, and grateful that all sides of the House are doing so on relatively similar terms, because we will and do need a plan, leaving aside the implicit issues around Brexit—which will enable me not to be chippy or curmudgeonly at all when I talk about some of the other issues that face public life.

The world is changing fast. There is the rise of international competitors, particularly from the East, as the noble Lord, Lord Patel, pointed out. There is the emergence of global technology giants, which stand across borders and territories. The looming shadow of automation, machine learning, robotics and all that are also changing the game and we have to step up. But we should be optimistic that our science and technology background may set us up to do that.

We have an industrial strategy on the cards, yet I often get the impression that when we talk about that emerging strategy, we all say what we want it to be. That wish probably differs across the House, so I thought I might give your Lordships some perspective on how we will judge the industrial strategy when it emerges from its current form, in a White Paper. We need to understand whether it will develop the skills we need; I will come back to that. But will it create sustainable and green growth across the country? Will it deliver 21st-century infrastructure, physical and digital? Will it encourage and improve investment in research and development? Will it nurture excellence while supporting and understanding entrepreneurs and innovators? Does it deliver regional and diverse growth across the country and establish the best financial and regulatory framework? That is the kind of framing we need to bear in mind when we look at that industrial strategy.

Underpinning this are skills. The noble Baroness, Lady Morgan, ably set out the case for them. We need a society that can thrive, and we need that thriving to happen right across society. We are not in that position. As noble Lords will have seen, according to the OECD nearly one-third of 16 to 24 year-olds in the UK have weak basic skills. Mark Walport, when he was still leading the Government Office for Science, gave a similar, damning assessment. High-level skills are not equally distributed across the country. There are big gaps. The UK does not do well in ensuring that people are work ready. Even when they get to work, there has been a decline in lifelong learning, so we have a big skills challenge.

As the noble Lord, Lord Hennessy, pointed out, that challenge has faced many Governments over many years, and we do not appear to be overcoming it easily. The noble Baroness, Lady Morgan, set out the need for an overarching skills and learning strategy. The Liberal Democrats support that strategy and have been campaigning on those grounds. Apprenticeships and T-levels have been offered as a solution, but they are not a unique solution. Without a gear change in delivering the basic skills that people need as a starting point to drive them through to higher levels, we will not meet the challenge.

Turning briefly to research and innovation, we welcome the recognition in the last financial statement that research and innovation need investment to thrive. That was a good step, and we hope it is just one step in a more ambitious investment journey.

The creation of the new unified UKRI has been referred to by a number of noble Lords. I was grateful to hear that the noble Lord, Lord Freeman, sees positive effects from it, and the noble Lord, Lord Bhattacharyya, should be congratulated on his role in helping to bring that forward. There is an opportunity and a challenge in bringing the seven research councils and UKRI together. The opportunity is, in a sense, that UKRI infects the research councils with innovation. I think that was what my noble friend Lord Willis was referring to. The danger is that it is the other way around and we move somewhere down the TRLs, into 1 or 2, and UKRI is dragged into research rather than innovation and development. I would like the Minister’s view on how we keep the right side, if you like, of that continuum because we do not want to lose the innovation we have.

The industrial strategy challenge fund seems to be a good idea, and it would be useful to understand the timetable. I understand that the Faraday challenge will be heading out soon. I urge that we get an early assessment of how that process is working because we do not want to keep making the same mistakes. It looks as if this is a way of tackling big problems, but we would like the Government to keep us posted about how that moves forward. The Government have likened this to DARPA, just as they have likened catapults to Fraunhofers. There is an element of delusion in this. The challenge process is not DARPA. It is not big enough or wide enough and it does not have the support of huge industries. We have to be careful how we describe what catapults do. Catapults have been a welcome introduction into the innovation landscape, and we could benefit if the Government were to put more money in and perhaps declare a few more catapults, but we should be careful in the language we use.

Are we fit for purpose? Do we have an industrial strategy that embraces the challenge and delivers the skills and the landscape that we need because we are going to need it? Industry 4.0 will change everything we do. We will need the skills and we will need to maintain, and further, investment in research and innovation, substituting lost funding from the European Union and adding more. We need to step forward with an overarching sense that this is a mission. Here I agree with the noble Lord, Lord Hennessy, and with what he said in the nuclear debate a few days ago. The nation needs to find its momentum, its push and go, around science. We, as people in public life, should be part of that process of developing that energy.

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First, I point to my entry in the register of interests and to the fact that our family office is an investor in UK science and research. I thank the noble Lord, Lord Patel, for securing this debate and for introducing it so well. I also congratulate him on his appointment as the chair of the highly regarded Science and Technology Committee. I have been a huge admirer of his clinical and academic achievements; he is an outstanding figure in this House. I wish him well in that post and wish the committee continued success.

In that vein, I place on record our gratitude to the noble Earl, Lord Selborne, for his excellent stewardship of the committee over the last 11 years. Its reports have never failed to inspire and interest this House. I also thank all noble Lords for their contributions to this debate, which have been absolutely outstanding and quite expert. It shows the importance that Members of the House place on these challenges. There was one point in the speech of the noble Lord, Lord Patel, which I hope the Minister will respond to at the end, about when the Government will respond to the submission of Sir John Bell’s Life Sciences report. It is important for us to get an early indication of that. It is an excellent report that requires a very early response.

We have been through a lot of material about the strength of our research community. Our research base is a global force and our universities produce research of a quality that far exceeds that of our competitors with similar resources and population size. Our public scientific research employs some 100,000 researchers and has a turnover of £8 billion. Private scientific research employs another 150,000. We know the quality; we know the size. But, as the industrial strategy identifies, our problem has been innovation—how we take that tremendous base and move it on. As the noble Lord, Lord Patel, put it wonderfully: we have turned money into ideas but how do we turn ideas into money?

The industrial strategy, in particular its section on this area, is excellent and a very important step forward. I congratulate the Government on it, but it is still extremely worrying to see a number of things inspired by our tremendous research base that we fail to adopt. The story of graphene, discovered in Manchester in 2004, is a very important example. I recently read a research report saying that the graphene sector will have a 34% compound annual growth rate over the next 10 years. As I read through it, the report identified that the country with the largest number of companies who have adopted graphene technology—the market leader—is the United States of America. The growth markets for the use of graphene expected over that period will be in South Korea and other areas in the Asia-Pacific region. We have singularly failed to commercialise one of our greatest modern inventions. That is a very sorry tale.

It also reminded me of the story of two individuals who were considering where they were going to locate a life sciences company to establish the overall solution to Duchenne muscular dystrophy. After looking at where they were going to get the best collaboration and the fastest and strongest access to capital, including in this country, they chose Boston in the United States of America. They raised more money there, in the shortest possible time, than any life sciences company could ever do in this country. We have a real challenge on our hands, which is why I appreciate the industrial strategy and hope that we can really make some huge progress on it.

I have two very quick points to make. One is on productivity. It was only recently that we discovered through the Bank of England that productivity in Q2 this year, measured by output per hour, was just 0.9% higher than a decade ago—which is, quite incredibly, the worst performance for 200 years. The key to our industrial strategy is what it will be able to do for productivity. We have to accelerate massively our attempts to address this challenge, and I applaud and welcome the establishment of a business initiative to try and address productivity, even on a unit basis, which is to be led by the McKinsey alumnus and former director of strategy at the Guardian Media Group, Tony Danker. I wish it much success. It is an important part of this, and I hope that we will see a much broader effort to try and address productivity in the White Paper.

Lastly, the question of governance, implementation and capacity is a crucial area, and I hope that the White Paper will address it in much more detail. In the end we will fail to achieve innovation if we do not have the right institutions, learn the right lessons or have the right leadership. We have had a number of important contributions on this. The noble Lord, Lord Bhattacharyya, commented on integrated long-term implementation, which is extremely important. The committee’s own suggestion of a means, similar to the OBR, of evaluating progress on the industrial strategy is an important one; if we do not measure it, we cannot assess it. We need something that gives a nationwide sense of what the challenge is.

We have to consider the institutions that we have. Do they have the capacity and bandwidth to do what we want them to? This summer I visited Silicon Valley and Stanford, and I can tell you that the reason why Stanford is a great success and a spur of innovation is that it does not impose onerous terms or expect too much from the things that come from its places. The noble Baroness, Lady Greenfield, made absolutely the right point: an American university gets money back in a different form through donations, so our models are not the same, but universities have learned how to make innovation flourish—and it is not about the university’s role and its accretion of value to itself.

There is a lot that has to be learned by our institutions in a very short space of time. We talked about DARPA. The question of whether or not we need such an institution is important, as is the question of whether we have the right range of institutions. In relation to the ones that we have, does Innovate UK have the right money or the right capacity, and can it invest the right money? Surely the Rainbow Seed Fund, the fund that we established to try to promote our research and innovation, is a paltry fund. I must declare an interest: I have co-invested with the fund, which I think is a most outstanding institution. To my mind, the fact that through the fund and others like it we have not invested the billions that are necessary to innovate in our country beggars belief, and I hope the White Paper will address that.

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My Lords, I find myself in the slightly odd situation of being able to agree 110% with what the noble Lord, Lord Mendelsohn, has just said; I do not think there is anything between us at all. I thank the noble Lord, Lord Patel, for tabling the debate today. It has been interesting, insightful and opportune, given that the White Paper is coming out in November.

I am afraid I shall disappoint the noble Baroness, Lady Morgan, and the noble Lord, Lord Fox: I am not going to address skills today. Clearly they are utterly critical, and the cultural divide that we have had between academic and technical education has been a disaster for this country since 1944 and probably earlier—I think we are all in agreement on that—but I shall talk more about science and innovation today, if I may.

When the Green Paper on the industrial strategy was launched earlier this year, the noble Lord, Lord Hennessy, asked with a customary rhetorical flourish, “Where is the magic?”. I think he had read eight previous versions of the industrial strategy and, quite rightly, was saying, “What is different about this one?”. I have thought about that a lot. It may lie in our culture, in our great institutions, in our legal system or in our national character. It may lie in the welcome that we have always given to people from different countries. It may lie in that very difficult and shifting balance between social justice and entrepreneurship. It may lie in all those things, but if I had to choose one—if I had to say where the magic was today—I would say our great universities and research institutes.

The story may be apocryphal—if it is, no doubt the noble Lords, Lord Bhattacharyya and Lord Patel, will tell me afterwards—but soon after India became independent in 1947, Nehru asked John Kenneth Galbraith, the great American economist, for advice on how to modernise the Indian economy. The great man is supposed to have replied, “Establish an independent flourishing university sector and wait for 800 years”. Of course you do not have to wait that long, and Warwick and Bath are two universities that are testament to that, but it is perhaps no coincidence that our two oldest universities, Oxford and Cambridge, are ranked first and second in the world. It has been said that in the Dark Ages the monastery kept alive learning, progress and civilisation; in the Middle Ages the centre of gravity moved to the castle; and in the industrial age the factory became the epicentre of economic growth and power. In today’s age, the age of information and knowledge, it is the university that stands centre stage—not some gleaming academic ivory tower but a seat of learning, driving ideas, innovation and science into a connected ecosystem. This is the magic that has created the world’s most powerful economic ecosystem in Silicon Valley, an alchemy that brought together great universities such as Stanford and Berkeley with great entrepreneurs, with enlightened government support—we have already talked about DARPA today—and with intelligent, long-term, patient capital, as my noble friend Lord Freeman stressed in his speech. As the noble Lord, Lord Willis, said, it is bringing together, fusing science and entrepreneurship, that makes Silicon Valley, Boston and those other great ecosystems around the world so successful.

In the UK, the first industrial revolution was ours. The second, the factory age, was ultimately won jointly by Germany, Japan and the US. The third industrial revolution was unquestionably won by the USA. The fourth industrial revolution, which is now upon us, based on AI, robotics, quantum computing and the like, is what we are now playing for. Clearly, the US and China will be at the table, but we must make sure that we are there, too.

Where are we? We have four universities that nearly always figure in the top 10: UCL, Imperial, Oxford and Cambridge. We have 31 in the top 200. The Elsevier report published last month shows that we account for 9.9% of downloaded academic articles, 10.7% of citations and 15.2% of the world’s most highly cited articles. The UK continues to rank number one by field-weighted citation impact.

If we look around the country, we can start with the Crick and the Turing Institutes at King’s Cross, move to Norwich, where I come from, where there are the John Innes and the Tyndall centres, and move up to York, with its extraordinary work on optics and digital infrastructure. Further north, there is Dundee, where the noble Lord, Lord Patel, was such a distinguished academic clinician. Look at its extraordinary record of drug discovery. We can come past Huddersfield, not a place associated with a great university, but it has an extraordinary hidden gem there in rail technology, and down to Warwick.

The noble Lord, Lord, Lord Bhattacharyya, mentioned the National Automotive Innovation Centre, a joint venture between Tata, JLR and the Warwick Manufacturing Group. It is an extraordinary success how Warwick, quite a young university, has developed that extraordinary technology. JLR invests £3 billion a year in research. That is one company with revenues of £25 billion or so. It is an extraordinary commitment to research, and we are very lucky that it does that.

If we come down from Warwick, we find what is possibly the most extraordinary research institute in the world: the Laboratory of Molecular Biology at Cambridge, the birthplace of modern molecular biology, with 11 Nobel prizes to its name. It is led, of course, by a Nobel prize winner, Venki Ramakrishnan, and, of course, we should pay tribute today to Richard Henderson for his Nobel prize this year for his work on electron cryo-microscopy. I note in passing that Richard Henderson shared his Nobel prize with a US and a Swiss researcher, and that Venki Ramakrishnan was born in Tamil Nadu in India and shared his Nobel prize with two scientists from the US and Israel. Science is international, and respects no boundaries. If we in our country do not accept that and welcome people from abroad, we are cutting off our nose to spite our face.

I turn now to the ecosystem, if you like—the innovation side of the equation. You can look at this through the lens of intellectual property, of royalties, of spinouts, of unicorns, or however you want to measure it. We all know what we mean. The question is: are we capturing for the UK the downstream value added of science, or are our universities instead still to some extent basking in the glory of academic excellence? This is not for one minute to downgrade the value of basic, fundamental blue-sky research, just to raise the question: are we making the most of it? As the noble Lord, Lord Patel asked: are we turning ideas into money?

Historically, the answer has to be a pretty emphatic no. I suppose the most egregious example that I have come across is that of monoclonal antibodies, discovered by two researchers at LMB and humanised by Greg Winter, who is today the Master of Trinity College. Monoclonal antibodies today comprise six out of the 10 best-selling drugs in the world. We hardly make a biologic in this country. Why could we not have just one Genentech in the UK? We have none. As the noble Lord, Lord Mendelsohn, mentioned, graphene was discovered at Manchester University in 2004, yet today we hold just 21 graphene patents out of a total of 2,224. It is now an area dominated by the US, China, South Korea and Japan. I could go on. The British consulate in Silicon Valley says that it fields inquiries from more than 300 companies a year looking to make the move to California. Illumina is based there, with a market cap of $30 billion, based on gene sequencing technology again developed at the LMB.

But that is looking backwards. We are getting much better. UK universities’ knowledge exchange income has increased by 27% between 2010 and 2016, to £4.2 billion. Universities are increasing engagement with businesses, with income from businesses increasing by 6% from 2014-15 to 2015-16, and with 71% of this coming from collaborative research, contract research and consultancy, but that is still nothing like enough.

The knowledge exchange framework announced by my honourable friend Jo Johnson two weeks ago is a start to try to address that issue. We are going to measure universities not just by teaching and research excellence but by how much added value they put into the community. In the US, the Bayh-Dole Act, which came in in the 1980s, fundamentally changed how universities in the United States commercialised their research. Economists say that it was probably the most significant Act passed in the US in the past 40 years. I hope that the knowledge exchange framework will do the same in the UK.

I was very struck by the comments of the noble Baroness, Lady Greenfield, about taking research out of universities. How right she is. Carnegie Mellon University, MIT in Boston or Stanford have a “5% and go in peace” policy. They encourage their scientists to set up spin-outs; if you are not doing that, you are not proper scientists in those places. They take 5% of the equity and go in peace; they do not hang on to all the intellectual property or royalties. A lot of British universities still keep between 40% and 60% of the equity, and they wonder why entrepreneurs find it hard to raise money in capital markets.

I have a much longer speech than I have time to give this evening. We are doing work with higher education innovation funding, the connecting capability fund and, of course, the industrial strategy challenge fund. So the Government are fully apprised of this; nothing has been said in this debate that the Government are not wholly in agreement with.

When it comes to the scale of investment, noble Lords are absolutely right in saying that we are way off the pace. We spend 1.7% of GDP on research and development. The average in the OECD is 2.4%, but Germany spends 3% and wants to spend 3.5%. Our aspiration is to get to the average of the OECD, of 2.4%. We must keep making the argument that returns on investment in this area are as good as you can find anywhere.

I have only one minute left, so I shall end with a point on long-term patient capital. We are making some progress: Neil Woodford has the Patient Capital Trust established in Oxford, but clearly this is an area—particularly in bioscience, where it takes 20 years to bring a new drug to the market—where there is an absence of intelligent long-term capital. I hope again that the industrial strategy will produce that in November and have something to say about that issue.

I thank the noble Lord, Lord Patel, for introducing a fascinating and useful debate, which will certainly help our thinking as we move to the White Paper in November.

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Could the Minister comment briefly on the role of UKRI in ensuring that investment and funding is spread right around the country?

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I have two quick comments on that. First, place is very important. We cannot address this fundamental productivity problem that has been mentioned in the south-east—if this is a golden triangle strategy, we have failed, so place is very important. Secondly, UKRI is bringing together Innovate UK with the research councils, and that is extremely important. I assure the noble Lords, Lord Willis and Lord Bhattacharyya, that Innovate UK is of fundamental importance to this; it would be a disaster if it got captured by the research councils.

House adjourned at 7.09 pm.