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Advanced Research and Invention Agency Bill

Volume 817: debated on Tuesday 14 December 2021


Clause 2: ARIA’s functions

Amendment 1

Moved by

1: Clause 2, page 2, line 6, at end insert—

“(ba) financial support provided by ARIA may be treated as convertible to equity interest in the business entity which has received such support; (bb) for a period of ten years after ARIA has provided financial support, or made property available, the business entity which has received such support must obtain the consent of ARIA before—(i) transferring specified intellectual property rights from the United Kingdom to any territory outside the United Kingdom, or(ii) selling or otherwise transferring a controlling interest in that entity to another entity not resident in the United Kingdom;”Member’s explanatory statement

This amendment would enable ARIA to make it a condition of the provision of financial support to a business that it is convertible into an equity interest in the business and that, for 10 years after ARIA has provided financial support, or made property available, the business requires the consent of ARIA either to transfer abroad intellectual property rights or to sell or transfer a controlling interest in that business to another business not resident in the United Kingdom.

My Lords, Amendment 1 would enable ARIA to make it a condition of the provision of financial support to a business that it is convertible to an equity interest in the business and that for 10 years after ARIA has provided that financial support, or made property available, the business requires the consent of ARIA either to transfer abroad intellectual property rights or to sell or transfer a controlling interest in that business to another business not resident in the United Kingdom. I am grateful for the support from my noble friend Lady Chapman of Darlington and the noble Lords, Lord Morse and Lord Clement-Jones, who have added their names as supporters of the amendment. I am especially grateful to the noble Lord, Lord Morse, who prepared the first draft of the amendment—although, anticipating that its drafting may be criticised, I make it clear that I take full responsibility for its revised form.

In moving Amendment 1, I support the other five amendments in the group in the name of the noble Lord, Lord Lansley, and have added my name to Amendments 2 and 8. I am pleased that these amendments have been grouped, as they are a response to the same concern. The House will be pleased to hear that I do not intend to rehearse the arguments that I advanced in Committee. I am grateful for the support that I received then from the noble Lords, Lord Fox, Lord Lansley and Lord Broers, and my noble friends Lady Chapman and Lord Stansgate.

Yesterday, I and other noble Lords received a letter from the Minister, which I will come back to later. First, I will explain exactly what the amendment would do, because it is relevant to the letter, which was extremely welcome; it covers the issues that have been raised and shows that those who have amendments in this group have common concerns with the Government —we are broadly on the same page. The degree to which we differ is marginal now, and much less than it was at the beginning of these issues being raised in Committee. So that is progress, but I do not think we are yet where we want to be.

This amendment is to Clause 2, headed “ARIA’s functions”. It would amend Clause 2(4) to add to the conditions that in particular, in exercising its functions, ARIA may attach to financial support or making property available to other parties. It would do this in the context of a clause which has six subsections, five of which are permissive, including that being amended. They are permissive to the extent that they set out what ARIA may do and are designed to give ARIA the flexibility needed for it to carry out the challenging function it is charged with.

However, Clause 2(6) is instructive. It requires ARIA to have regard in exercising its functions to the desirability of doing so in a way which, as the Minister summarises it in his letter, ensures that

“public investment in research and innovation should drive long-term socioeconomic benefit and deliver overall value to UK taxpayers”.

That is a very good summary of what is required, and it is demanded of ARIA by this section of the Bill.

By going to the permissive elements of ARIA’s function, these amendments go beyond willing the end; they help ARIA by willing the means, specifically in relation to intellectual property. This amendment would do so by ensuring that the successes of ARIA stay for a sufficiently long time in the hands of those who have the UK’s best interests at heart.

I thank the Minister for his letter, and I welcome the invitation to a meeting with the Minister for Science, Research and Innovation, George Freeman, and himself to discuss further the concerns that underlie these amendments. I accept, as the letter says, that these concerns are broader than just this Bill, but we only have this Bill to deal with today and they are very significant in the context of what we are asking ARIA to do.

I thank the Minister not only for that invitation but for the all-Peers session that he arranged on 1 December to brief noble Lords on the devolved Administration agreement and ARIA’s governance. Those who attended were delighted that George Freeman turned up unexpectedly and generously shared with us, candidly, his views about several matters relevant to the establishment of ARIA and the policy implications of setting it up.

I was very pleased that, in response to a question about ownership of intellectual property posed by the noble Lord, Lord Lansley, the Science Minister shared his concern about the risk that publicly funded research and innovation may lead to foreign, as opposed to British, private or public gain—the issue at the heart of these amendments and mine in particular. We all now know that the Science Minister shares the concern that lies behind this problem. In fact, he shares it so much that he deflected the specific question about intellectual property and said, “I am much more worried about a very successful ARIA development falling into the hands of foreigners”.

In Committee, I pointed out that twice before the Committee stage I had tried to engage the Minister on this very issue—what is happening in the United Kingdom and has been happening for some time to some of our best and brightest businesses, and the effect it is having on our ability to apply these developments to the benefit of the United Kingdom. I even quoted on one occasion the concerns of the Bank of England about the way in which those businesses are funded and the damage this leveraged debt might do to the UK economy in the long term, but I could not engage the Minister on these issues. I was repeatedly told that we are an open economy that welcomes this investment, when in fact, in most cases, it is not investment at all

Since receiving the letter yesterday, I began to wonder what had caused this apparent change of tack by the Government and this Minister in particular: the debate that we had in Committee, or the Science Minister who is responsible for this Bill expressing the view at that meeting that he shares the objective we have set ourselves by tabling these amendments, and that it is a matter of concern that needs to be addressed.

On the content of the letter, as the noble Lord, Lord Lansley, pointed out when he responded to it, there is a lot in common between those who support these amendments and the Government. The concerns have been identified; we know that they are serious; we know that they sit in a broader set of circumstances that will need to be addressed. But we still think it important that they be addressed in this particular case and that, in meeting the objective which the Government have set for ARIA in exercising its functions and later, in Schedule 1, in the supplementary powers it is given, it is advised and helped by us, protecting its ability, if necessary, to take equity in businesses in which it invests and to insist that, over a period of time, those businesses stay in the hands of those who have the UK’s economy in their interests.

That is essentially what the letter sets out. However, it does not go as far—nobody would expect it to—as we seek to do in this Bill, for reasons which are articulated. The first of them is that the Minister does not

“think it is appropriate to mandate a particular ‘one size fits all’ approach through the Bill”—

that is why I explained what Clause 2 did in the first place. In this particular subsection, nothing is mandated; it only facilitates ARIA including these conditions if it thinks that is appropriate—a power which the Government, as they set out in the letter, are willing to give ARIA and wish it to have.

Secondly, the letter states:

“The type of obligations referenced in the amendment should not be applied inconsistently. The approach taken by ARIA to IP ownership must reflect the approach taken by other public R&D funding bodies in equivalent situations, or it would create an unlevel playing field. If funding from ARIA comes with strings attached, or fewer IP rights compared to funding from IUK—

that is, Innovate UK—

“or elsewhere, it would act as a further disincentive to the most innovative businesses choosing to participate in ARIA programmes. This discussion should therefore encompass our wider public R&D funding system.”

I agree that there may be a problem in the wider R&D funding system, but we are dealing with this Bill. The Bill cannot keep a level playing field for this reason. It is interesting that Innovate UK was the example the Minister chose to put in the letter. If this Bill is passed in its present form, there will be an unlevel playing field for this reason.

Innovate UK helpfully publishes on its website a brochure for those whom it wishes to engage. It states on page 3 that

“we do not take any equity in the business or make any claim on the intellectual property created in the innovation”.

That is its stated position. Therefore, to get a level playing field, according to the Government’s ambitions, it will mandate ARIA not to hold equity or intellectual property, because otherwise, there cannot be a level playing field. If the Government get their way, there will not be a level playing field.

We recognise that that level playing field does not exist; we recognise that ARIA needs these powers to prevent what has happened to far too many British businesses happening to the businesses it supports during their developmental stage or when they begin to produce significant profits. It has happened to too many British businesses; the Government were slow to wake up to it. Substantial potential income for the United Kingdom based on government R&D has gone abroad, and this should not happen to ARIA.

The Minister, I think, wrote in the hope that I might accept the generous offer of a meeting instead of taking this amendment to a vote. This is my position: I gratefully accept, as I am sure other Members will, the invitation to have a meeting with the Science Minister so that these concerns can be addressed. I do not accept, however, that in accepting that offer, I give up the right to ask your Lordships’ House to vote on this amendment. Clearly, the Science Minister wishes to explain how he is going to deal with these concerns in the way set out in the letter. He ought, of course, to do that for us. But much more importantly, he ought to do it from the Dispatch Box in the House of Commons, and I hope that this House will give him the opportunity to do so by agreeing to this amendment.

My Lords, as the noble Lord, Lord Browne of Ladyton, said, there are six amendments in this group, five of which have my name. I am grateful to noble Lords who have also put their names to those amendments, including the noble Lords, Lord Browne, Lord Ravensdale and Lord Broers, and the noble Viscount, Lord Stansgate. I am particularly grateful to the noble Lord, Lord Broers, not least because of the impetus I derive from his contributions in our Committee debates—about the centrality of the acquisition, use and deployment of intellectual property to ARIA’s activities being central to its task. If I may be so presumptuous, I am looking forward to hearing some of the noble Lord’s arguments again, if he has the opportunity, because I am sure he will convey the arguments behind a number of my amendments better than I could. If it is not impertinent on my part, let me say that we will miss his counsel and advice when he retires from the House at the end of this week, and I am glad that we have the opportunity of hearing his advice today before that happens.

I draw noble Lords’ attention to one simple fact: at present, nothing at any place in the Bill refers to intellectual property. It refers to property and rights, and I suppose Ministers might say, entirely correctly, that they are within that thought. But intellectual property is the essence of what ARIA will be doing. As the noble Lord, Lord Browne of Ladyton, said, the Minister most helpfully sent us a letter explaining the centrality of intellectual property activities. Ministers wish for ARIA to devise its own strategy for the intellectual property it creates. For that to happen, as the noble Lord, Lord Browne, said, we want the Bill to make it clear to ARIA, in law, what its powers and responsibilities are. The powers it needs in relation to intellectual property need to be specified.

There are other ways in which Ministers have decided to say that ARIA can set conditions for its financial support, but it does not refer to the conditions relating to intellectual property. Ministers can attach conditions to the grants and funding they give to ARIA, but those do not refer to intellectual property; listed in the schedule are the supplementary powers that will be available to ARIA to do various things, including create partnerships and join ventures and companies, but they do not refer to intellectual property.

The purpose of five amendments in this group is to fill those gaps; Amendments 2 and 3 propose that when ARIA is providing financial support to its research projects, among the conditions it can apply are those relating to the acquisition, disposal, retention and assignment of intellectual property. It clearly ought to be able to do those things. Ministers may say that of course it can because it has the necessary powers. So why are other things specified but not this, since it is central to its activity?

When we look, for example, at the supplementary powers in the schedule given to ARIA, various things are mentioned. It can

“borrow money … acquire and dispose of land … accept gifts … form and participate in partnerships … and … form companies;”

but the schedule does not refer to the ability to acquire, retain, assign, license or dispose of intellectual property and related rights. Indeed, even where it refers to acquisition and disposal of land, as we discussed in Committee, it does not refer to land or other property. These, it seems to me, are all the ways we should better define, in legislation, what ARIA’s powers are.

I have left out one amendment. Amendment 8 relates to the Secretary of State providing grant funding to ARIA. Clause 4 says that this may be subject to conditions, and the only condition which is then referenced is the provision under which sums paid by the Secretary of State to ARIA may be repaid with or without payment of interest.

We have not been provided with, is the framework document that will establish the relationship between the Treasury and ARIA as a publicly funded body. That being the case, if we regard something as important enough, should we put it in the legislation so that it has to be addressed in the framework document? When ARIA, as a result of its funding, has rights relating to intellectual property, can it retain the revenue derived from that investment, or does it have to give that revenue back to the Secretary of State? The frame- work document will, I suspect, provide a reference to this; we know this is important.

In my former constituency, the Laboratory of Molecular Biology, which the Medical Research Council provided funding to, had major research projects, including with highly talented individuals who created immense value. They were enabled to participate in those projects and retain some rights in that intellectual property, and the LMB itself retained revenues which then, by way of negotiation, served to enhance and sometimes substitute for the grant funding received from the Government. If ARIA is to have a strategy for the funding it receives from the Government, it needs to know in advance whether it can retain revenue derived from investment. Can it retain it, or does it have to give it back to the Government? All Amendment 8 does, essentially, is require the Government, when they provide such grants, to set out under what circumstances that revenue can be retained by ARIA for further investment in additional projects to meet its functions or whether it has to pay it back to the Government.

That is where I want the most specific assurances from my noble friend that the Government will provide that opportunity to ARIA. In the absence of that, at a later stage, when we reach Clause 4, depending on the nature of the assurances I receive from my noble friend, I may wish to test the opinion of the House. But we will leave that for a later moment.

For the moment, I am very glad to express my support for what the noble Lord, Lord Browne, said. There is a wider issue, of course there is, but we do not really know the extent, for example, to which the National Security and Investment Act is enabling Ministers to intervene and to protect intellectual property in this country. In any case, that is in relation only to national security issues, and the intellectual property that we are concerned about here will inevitably go much wider.

Finally, I hope that, in this context, my friend, the noble Lord, Lord Broers, will be able to amplify the question of adding technological advance into the benefits that ARIA should be aiming for. At the moment, we have a reference in the Bill to “scientific innovation and invention”, but by its nature what we are looking for is often wide-ranging technological advances that will be derived from the nature of the scientific research that is undertaken. At the moment, the interpretations in the Bill define scientific research but not scientific innovation, and they do not specifically reference technological advances as a benefit that ARIA should be aiming for.

I hope that explains these five amendments, and that we will take this opportunity to put intellectual property right at the heart of ARIA’s functions and the Bill, as it should be.

My Lords, I thank the noble Lord, Lord Lansley, for his kind remarks. I have spent most of my life in this environment working on very complicated projects, and I feel very strongly about this issue. I therefore support Amendments 2, 3, 21 and 22, which would secure ARIA’s rights to retain and exploit the intellectual property generated by its research and to obtain intellectual property from elsewhere in order to advance its projects. As I have mentioned before, the projects that ARIA will be working on will draw upon knowledge from all over the world. It is unlikely—almost impossible—that it can generate all its own intellectual property. The world has changed; that is not the way high technology develops today.

It is also of prime importance to the creative engineers and scientists working on ARIA projects that they feel that their creativity is recognised. There are various ways in which this recognition can be granted, but the most straightforward is for them to receive financial benefit, usually through shared ownership of the intellectual property. High-technology companies and universities have found it effective to have a fraction of the income from patents and other intellectual property go to those who create the intellectual property. This creates a sense of fairness and generates loyalty. The result is highly motivated employees who are not tempted to keep their ideas to themselves and go elsewhere where they can be more fairly treated. This is essential. There is massive competition for the top technological brains in this country. We will not get them into ARIA if they think that they will be entangled in a whole lot of bureaucratic government regulations that prevent them from getting the benefits of being entrepreneurs who are free in the world.

I notice that Amendment 17 seems designed to deal with such errant behaviour—how dare they consider doing such things?—but this sort of thing has its dangers, in that its very existence shows that the organisation does not trust its employees, even encouraging them to take their talents elsewhere. It happens with everybody. When you are working on a project, you suddenly have a brilliant idea. You know that you have cracked the nut and really opened up a way for progress, and your first thought is, “My God, I could be rich if I took this off and formed my own company”.

This happens with big companies. I spent a lot of time in IBM, which had to be terribly careful because it provided huge resources for people to make immense progress, but at the same time we did not want people, when they made that progress, to be immediately motivated to leave and exercise that somewhere else, and make more money; I am afraid that money is a motivation. In IBM, in essence you got points towards quite a lot of money when you invented something. You also got a very large award if you did something that opened new pathways in a technology, over and above your salary.

That is the way a company such as IBM in the great days, and Bell Labs subsequently, kept their brilliant people working there. ARPA has that reputation. You will be treated fairly, do well and get paid a lot if you work in ARPA or DARPA; they are prestigious places to work. I imagine that ARIA will be just like that; it will be a prestigious place to work and there will be lots of reasons for that. At times, there has been concern in the UK about the brain drain out of the country. Of course, this has been largely because the incomes offered to creative engineers and scientists have been higher elsewhere, but it is also because it has been perceived that their creativity will receive more recognition.

Those are my remarks on intellectual property for the noble Lord, Lord Lansley. That is the core of what we are doing; it is the intellectual output. It is a very familiar feeling among academics.

I also support Amendment 1, because I believe that it should help to arrest the flow of technology businesses that originate in ARIA being acquired by overseas businesses, which is a concern that everybody has. I just wonder whether 10 years is sufficient time for this to be effective. There are two very important examples of our losing, or potentially losing, outstandingly successful companies originating entirely in the UK.

The first is Arm, which designs the microelectronic chips for the majority of the world’s portable information and communications equipment. Founded in 1990, it went public in 1998, and was then acquired financially by Japan’s SoftBank for about $32 billion in 2016, 26 years after it was founded. If conditions similar to those in this amendment had been in place in the UK, it would have had little or no effect, and its effect would have been even smaller today in preventing the threatened takeover by the US company Nvidia, which began in 2020. Fortunately—as an aside—the American Federal Trade Commission looks as though it may prevent that takeover anyway because of the threat it presents to world competition in the semiconductor business.

The second company is Solexa, which was based on the fundamental research of Balasubramanian and Klenerman in Cambridge that enables the high-speed decoding of DNA. They obtained their initial seed funding to form Solexa in 1998, and in 2000 Solexa’s corporate facilities were established. Solexa was then acquired by Illumina in early 2007, and now generates billions of dollars of revenue. The conditions of this amendment might have slowed if not stopped this takeover. The amendment would help to retain businesses emerging from ARIA in the UK, but it is also important to enhance the activities of the Competition and Markets Authority, which is looking at that, to solve this problem much more widely in the UK. The loss of Solexa was a laughable mistake— one of the most exciting companies in the most exciting scientific field being pursued, and we just wave it goodbye.

We have to fix these problems. I will vote for these amendments if they are put to a Division.

My Lords, I rise to speak in support of Amendment 2, to which I have added my name, and the other amendments in this initial grouping. I begin by paying tribute to my noble friend Lord Broers, who, as the House now knows, will leave this House at the end of this week. He is president of the Parliamentary and Scientific Committee and, as noble Lords can see for themselves, he has carried on, to the very end, making excellent arguments for science. I thank the Minister very much for the letter and the offer of further discussions and a meeting with the Minister for Science, which I welcome.

In view of the points that others have made, I will be very brief. As has been said more than once in its passage through your Lordships’ House, the Bill is more about an idea or experiment than it is about anything concrete—at least at this stage. No one, including the Government, can be entirely sure what will happen after we establish ARIA and it sets out to fulfil its mission. We can probably all agree that this is what makes it an exciting venture. But one thing that we can be sure of is that, if it all goes well, ARIA will amass a great deal of intellectual property over the next 10 years, and it will certainly be dealing with successful ideas about which we know nothing as yet.

So these amendments—Amendment 2 in particular—are essential to enable ARIA to benefit from the intellectual property that it creates, and we must ensure that, whatever it comes up with, its intellectual property cannot be sold off or acquired by others without its agreement. Not to agree this amendment would run a risk that I do not think we should run.

I too will speak to support the amendment advanced by the noble Lord, Lord Browne, who has explained it very clearly. It is worth getting back to basics on it—if I may use that expression—for a second. The ARIA scheme is about driving our national research frontiers forward by publicly funded risk taking, if I can summarise it as simply as that. It is a good idea that is widely supported.

But this is the reverse of what will happen if foreign-owned companies are allowed to acquire companies that own intellectual property derived from ARIA or to take that intellectual property offshore. If this happens, the reverse of the objective of the scheme will be achieved. This possibility is not far-fetched. I spent 10 years as Comptroller and Auditor-General at the National Audit Office, and, during that time, I saw cases relating to a series of companies where exchange of control provisions in the hands of government were not exercised properly or the scheme was administered rather feebly. As a result, these things became faits accomplis and the property went offshore. Sometimes, you would be told, “Well, we believe in the market operations, so we really don’t like to interfere with this sort of thing”.

Actually, we need strong, clear decision-making about this now. We need to make it clear in this amendment that we are not prepared to see intellectual property that has been paid for by British taxpayers go offshore. It makes mugs of British taxpayers.

My Lords, I rise to cast some doubt on Amendment 1. It is very well intentioned, but I fear that it may be mistaken. The background to my concern is my regret that ARIA is modest: some £200 million a year is being provided, which is a pinprick compared with the vast sums spent on other things, such as Covid and bailing out the banks.

The Bill is meant to set up an agency that can take risks free from bureaucracy and the day-to-day constraint of politics—a latter-day Manhattan Project, if you like. Bureaucratic and other constraints are being applied to the R&D budgets of many billions in the hands of UKRI. That is fine, but I do not think that they have a place in ARIA, which should be run leanly and efficiently and not encumbered by expensive experts—on IP, for example—and large legal departments. It should be able to think and act outside the box.

So I object to the provision in paragraph (bb)(ii) in Amendment 1, and I am slightly surprised that the noble Lord, Lord Clement-Jones, has signed the amendment, because we generally agree on these IP issues. However, I agree with my noble friend Lord Lansley that we need to know whether ARIA can keep the income that it receives from IP and rights. To answer his question, I see IP and rights as being in the same box—but no doubt the Minister will clarify that when he speaks.

ARIA should be able to choose what to do about the IP that it creates. It should not have to be involved in monitoring et cetera for another 10 years, as the amendment implies. Sometimes it will want to hold on to the IP; on other occasions, it will want to grant all IP rights, or a share of them, up front, to provide a greater incentive to a supplier, especially perhaps a small supplier. Having been IP Minister, I know that practice will vary from sector to sector, and of course we do not know where ARIA will place its firepower. That is the whole point: it is meant to be able to look ahead independently. So we want to avoid a situation where the possible loss of, or constraint on, IP rights acts as a dampener on the involvement in ARIA’s work of the most innovative partners, businesses or suppliers.

Some noble Lords will know that I have been both an IP Minister and a Business Minister, and of course I served on the board of some creative companies, such as ITV and Tesco. I have two brief tales of woe that illustrate my concern. First, I came across a firm providing fancy and efficient legal systems and software to the Ministry of Justice. It wanted to provide consultancy doing a similar thing in export markets around the world. However, it had been required to agree to a contract some years earlier, under which the MoJ owned all the IP. So it was frustrated and UK plc suffered because it could not establish an export trade.

Secondly, when I was on the board of ITV, we invested through our Studios business in the United States. We found that the treatment of IP and rights was different in some of the vehicles that we wanted to buy: the broadcasting company owned the IP and did not share it with the creative supplier of original programmes. So, in time, the latter could fail, having insufficient income from past hits to keep going independently. In the UK, the creators shared or even owned the IP rights completely, so a vibrant and creative film and programme industry built up in our country. Strangely, this helped our creative companies, some of which are quite small. The result was that the many companies that have become the backbone of our success grew and flourished. I do not know what the situation is now, but I am doubtful about the proposed amendment, because I fear that it would have a perverse effect, and without evidence to the contrary—which I have not heard—we should be very careful about agreeing to it.

On equity sales, which are also the subject of Amendment 1, I doubt whether we should have special arrangements for ARIA. We now have a new law dealing with sales of sensitive businesses overseas—the National Security and Investment Act—and perhaps the Minister could confirm that it applies to ARIA and would deal with the risk, which the noble Lord, Lord Browne of Ladyton, mentioned, of ARIA falling into the hands of foreign players. I believe that the Arm deal, which I opposed at the time because of its effect on IP, would have been caught by the Bill—and I am not sure that we need to duplicate that.

So, finally, I agree with what was said by the noble Viscount, Lord Stansgate, about the record of the noble Lord, Lord Broers. We will miss him from today and on future occasions.

My Lords, I will speak to the centrality of intellectual property to the Bill and, in particular, on two themes, very briefly. First, on the protection of intellectual property, the noble Lord, Lord Browne, spoke very movingly and interestingly about the concerns that were brought up by George Freeman in the meeting that we had. It was reassuring to hear George Freeman speak so clearly and emphatically. That is why Amendment 2 is very interesting and worth a really good look.

I am very concerned that, in our efforts to build Britain into a science and research superpower, all that we will be is a laboratory for others to borrow from and that we will simply supply the unicorns of the future from overseas. Somehow, we have to capture that value here in the UK.

The second point, which the noble Lord, Lord Broers, spoke so movingly about and selected such a good example of, is about how we encourage the breed of entrepreneurs that I hope will come out of ARIA. We must encourage this. We should not have something like Amendment 17, which somehow suppresses the entrepreneurialism of our researchers and scientists. I have been to Kendall Square on the MIT campus, next to the Harvard campus, which is buzzing with excitement, with start-ups and major new enterprises feeding off the intellectual energy of those great universities. That is what we need to have here in the UK.

On Clause 1, I am torn between my noble friends Lord Lansley and Lady Neville-Rolfe, who both put their arguments so well. I would like to split the difference and agree with the noble Lord, Lord Browne, that these are things that I would like to hear about from George Freeman from the Dispatch Box. That argument has merit.

My Lords, I am largely going to speak to and support Amendment 1. I commend the noble Lord, Lord Browne, for raising these important issues on the question of ARIA’s ability to impose investment conditions. Unlike the noble Baroness, Lady Neville-Rolfe, I do not see those as bureaucratic constraints.

One key issue in delivering technology into the market in this country is the commercialisation and translation of that technology. We have seen report after report telling us about that. The UK is a top nation for the global impact of its R&D but not so effective at innovation, where it ranks 11th in the world for knowledge diffusion and 27th for knowledge absorption, according to an October 2021 report by our own BEIS department. The greater risk averseness of the VC and private equity market for technology start-ups in the UK compared to that of the US is common ground in the investment community itself; we need to hang on to our unicorns. As a result, outside fintech, we have seen too many high-technology companies sold to overseas companies at too early a stage. We have heard examples from the noble Lords, Lord Broers and Lord Morse—and, in Committee, the noble Lord, Lord Browne, took the risk of quoting the Daily Telegraph.

The National Security and Investment Act will impact on that to some extent, but in a limited number of sectors involving national security. Without this kind of scale-up support we cannot become—to coin the phrase so often used by this Government—a science and tech superpower by 2030. This excellent amendment will, I hope, ensure that those making decisions about future financing at least have some friction in the system to ensure that they have to think twice about where and how to raise capital for the future; at the same time, it gives ARIA skin in the game to help it do so. The Minister has said in correspondence that he shares the objectives of this amendment, so I hope that he will agree at the last stage to accept it.

As regards the other amendments by the noble Lord, Lord Lansley, in this group, I agree in principle with many of the issues that he has raised and the support for intellectual property rights that should be retained by ARIA in certain circumstances. He had powerful support from the noble Lord, Lord Broers, whose expertise we are certainly going to miss when he retires from the House.

As the noble Lord, Lord Browne, says, we have only this Bill today. We cannot solve all the problems relating to the taking of stakes by companies or our research institutions, but we can put this into ARIA’s terms; I very much hope that we will do so today.

My Lords, I find myself listening to some excellent speeches and frantically scratching sections from my own contribution as I do not see the point in repeating the points that have already been made. I put on record my thanks to my noble friend Lord Browne, in particular, for his generosity with his expertise and time in working so collaboratively on this issue, which has support on all sides. The principle is very simple: the state is taking a big risk by granting funds to speculative research projects. In cases where that risk pays off—we hope that is not an infrequent event, but we understand that this is about high-risk ventures—ARIA should have the ability to protect the potentially significant benefits that will arise from initial taxpayer support. It seems equally appropriate that ARIA has a say in potential takeovers or transfers of intellectual property. We know that there is a big market for speculative purchases of new technology. While ARIA may decide that there is no public interest in preventing certain events from taking place, there might be other investments that should be safeguarded.

It is clear from the debates that we have had in Committee and this evening that there is a shared desire on all sides—including, to be fair, from the Minister—to deal with this issue. He has correctly observed previously that the problem we are trying to fix is not limited to ARIA; that is understood and agreed with. However, while the amendment by the noble Lord, Lord Browne, does not fix everything, that does not mean we should not try to fix the thing that is in front of us now. It moves us in the right direction and is appropriate given the specific activity of ARIA; the Opposition are solidly in support of Amendment 1.

I thank noble Lords for what has been an excellent and very well thought-through debate. While the noble Baroness, Lady Chapman, was lucky enough to be scratching bits from her contribution, I found that I was adding lots more to mine to take account of some of the excellent contributions. The debate showed the House at its finest, even if I do not necessarily agree with all the points raised, as I will outline.

Amendment 1, introduced by the noble Lord, Lord Browne, imposes a number of conditions on ARIA’s financial support. He made his case well, raising a number of important issues regarding the UK’s approach to capturing value from public investment in R&D, the role of public IP retention within that, the Government’s powers to intervene in acquisitions and our approach in so doing. I have listened carefully to all the contributions made by noble Lords on this matter, and I think that there is some measure of common agreement. We are all agreed that public investment in R&D should indeed drive long-term socioeconomic benefit and ultimately drive value to UK taxpayers who are funding it. We are clear across this House that exploitation of IP will play an integral role in creating these benefits, and that our paramount concern should therefore be generating the maximum public value from that exploitation; I will return to that specific issue shortly.

The debate that we have had today on the benefits derived from public investment in R&D speaks to a much wider issue, which extends beyond intellectual property, ARIA and this piece of legislation. I respectfully say that I do not think that Report on the Bill is the most effective forum for setting precedents to this very expansive and wide-ranging area of government policy. While I will do my best to address the range of points raised this evening, the Government’s approach to foreign investment and how IP rights are treated within the public funding disbursed across the entirety of our considerable R&D system are indeed extensive areas of policy.

I recognise that there is some common ground, as the noble Lord, Lord Browne, has set out—although perhaps not as much as he might have indicated. As he said, I offered to facilitate a meeting with the Minister for Science, Research and Innovation, who came along to our all-Peers meetings to discuss these issues in the round. I still believe that this is the correct forum to discuss this issue in sufficient breadth—something that I do not think could be provided through this amendment to the proposed arrangements for ARIA alone. I suspect that the noble Lord will not be satisfied with my offer but nevertheless I repeat it here.

I have welcomed the insightful contributions of noble Lords in the scrutiny of the Bill so far, and I recognise the importance of Amendment 1 in providing a vehicle for this debate, but I hope that the noble Lord, Lord Browne, will recognise that this represents an unusual and strong restriction and we would have serious concerns as to its proposed workability.

To respond directly to the noble Lord’s amendment, let me set out the Government’s current position. The UK is a premier destination for foreign direct investment. I recognise the concerns the noble Lord has expressed about the current context and the issue of leveraged loans highlighted by the Bank of England, but, in general, I think we all have to recognise that this investment brings tangible economic benefits and the Government are rightly cautious about introducing wider powers to act on the grounds of public or economic interest, as such an approach could destabilise investment into the UK, reduce economic growth and ultimately, therefore, risk jobs and prosperity.

Of course, it is worth saying that, where necessary, the Government have statutory grounds for making interventions. The Enterprise Act 2002 enables the Government to intervene in mergers or acquisitions on media plurality and financial stability grounds and, recently, in relation to public health emergency. I say to my noble friends Lady Neville-Rolfe and Lord Lansley, for the sake of clarity, that the National Security and Investment Act 2021, shortly to commence on 4 January, gives further powers to scrutinise and to intervene in acquisitions of control of entities and assets that may pose a risk to national security. This includes areas of emerging technologies, such as quantum and artificial intelligence, which draw on significant previous public investment. I add, again for clarification, that the powers and provisions of the NSI Act will apply to ARIA and that it does cover intangible property.

Today, as outlined by the noble Lord, Lord Clement-Jones, and in Committee, we have heard desire to increase the scale of investment available to our most innovative businesses from within the UK to support their growth in this country. This is not an issue that the Bill alone can solve, and I do not believe that acting in isolation to curtail the access of these businesses to investment from elsewhere would be to our long-term advantage. I hope the noble Lord will recognise that this is a genuine concern.

I return to the issues of intellectual property more closely connected to the Bill. It is a clear ambition of the Government to become world-class at securing economic and social benefits from the research. I thank my noble friend Lady Neville-Rolfe for her contributions and I agree with many of the points she made. In the case of ARIA, we wish to equip it to take a case-by-case view of the most appropriate IP arrangements for individual programmes by varying its contracting and granting arrangements. I think we have some common ground across the House for this approach.

Depending on the route to market for the innovation or technology in question, on some occasions ARIA may retain IP generated through its programmes to reap the greatest public value. For example, if a programme is fully funded by ARIA and creates IP with commercial application but strategic importance from a security perspective, it may be appropriate for the IP to be retained directly by ARIA. In such circumstances, ARIA would draw on the new strategy outlined in the Mackintosh report as part of a concerted government effort to identify how to get greater value from public sector knowledge assets. ARIA would be responsible for developing its own knowledge assets strategy, taking into account the draft guidance in that report. It would also be able to utilise specialist support of the new government office for technology transfer to get advice on the best way to protect or to exploit public sector IP.

However, most often, we expect that the businesses or universities that ARIA has funded or contracted to conduct research will be best placed to exploit the IP generated. ARIA, seeking to take a greater role, would likely then disincentivise the very people that we most want to draw in to participate. For many SMEs, ownership of IP is critical to their businesses. Restricting their IP access and ownership would likely deter them from engaging in any collaborative ARIA programmes. ARIA acting as a powerful convener of multiple, disparate collaborators in pursuit of a single, ambitious, programme-level objective is an integral feature of the agency’s design.

As attested to by the noble Lord, Lord Broers, in Grand Committee, when he spoke about DARPA’s development of GPS, ARPA-like agencies play an important convening and co-ordinating role in drawing in technologies and IP. Done effectively, these agencies can drive progress and can pull through a novel idea to a prototype or to the market.

Let me take a moment at this stage to pay tribute to the noble Lord, Lord Broers, for the contribution he has made to this House in scrutinising this Bill and many others, and in sharing his immense expertise. I totally associate myself with the remarks of my noble friend Lord Lansley and others—he will be greatly missed and we will be poorer for not having his contribution to many of these debates. I place that on record.

Any restriction on ARIA’s IP arrangements that would deter broad participation in its activities would be detrimental to its collaboration and ultimately to ARIA’s potential achievements. More broadly, I would also argue that we should be very cautious about introducing additional obligations on ARIA’s IP arrangements which would place it at a disadvantage to other R&D funders. As the noble Lord, Lord Browne, reminded us, Innovate UK, for example, generally does not retain IP generated through grants and loans, on the grounds that the business closest to the innovation and the research will be best placed to exploit it and to generate value from it, which will, in the end, of course, benefit the public finances.

Our exact concern is that if funding from ARIA has additional conditions attached, or if the agency can make available fewer IP rights compared to funding from Innovate UK or others, there is a risk that the most innovative businesses will be disincentivised from participating in ARIA’s programmes. Where IP generated through ARIA programmes was vested in private entities, there would remain a variety of mechanisms to ensure that public value was generated as a result. I have previously highlighted existing initiatives aimed at retaining public investment in R&D within the UK, such as the patent box tax, which supports the retention and exploitation of IP rights by UK businesses by allowing them to pay a reduced rate of tax on profits arising from exploiting patents and other qualifying products. In addition, we expect that ARIA may use clauses that enable it to claw back funding provided to entities that do not then exploit the outputs of projects in the UK, as Innovate UK routinely does.

I believe that these points lead on well to Amendment 2, in the name of my noble friend Lord Lansley, which seeks to explicitly include in the Bill ARIA’s ability to retain IP rights and specify that rights held by beneficiaries should not be sold or assigned without ARIA’s approval. As I have just outlined, these things are important but they are not unique. There are many other conditions that ARIA may need to attach to the funding it provides: they cannot, and should not, all be listed in the Bill.

As I have stressed previously, the legislation as drafted already enables ARIA to acquire, retain, share, license or dispose of IP. ARIA can, and will, use this full suite of IP options. No amendment is needed for it to negotiate and tailor its IP arrangements to suit each project or programme.

The noble Lord, Lord Browne, has suggested that his amendment is not intended to impose a particular approach on ARIA but rather signal what it may do. If that is the case, I can assure him that ARIA may already attach conditions on its funding through its contractual arrangements, if that is agreeable to its research partners and helps it to achieve its objectives. I believe that the decisions ARIA takes on IP should ultimately be a matter determined and detailed in its contracting and granting arrangements within individual programmes, not in its founding legislation. As drafted, the Bill enables ARIA to have the greatest flexibility in its IP arrangements.

Amendments 21 and 22, in the name of my noble friend Lord Lansley, would add explicit reference to ARIA’s ability to own, acquire, retain, assign, license and dispose of intellectual property into its supplementary powers. I thank my noble friend for his consistent engagement and challenge on this issue but, as I have assured him, we have discussed this drafting very closely with lawyers. We are in clear agreement that IP will be a central consideration for all of ARIA’s activities, and IP arrangements and rights will be considered, tailored and embedded in the contractual arrangements for every project that ARIA funds. I am certain that the activities covered in these two amendments are entirely possible through the Bill as currently drafted, and that adding these references in ARIA’s supplementary powers would not enable the agency to do anything that it cannot already do currently. It is my view, therefore, that such legislative changes are unnecessary, but I thank my noble friend for continuing to champion the centrality of IP and the integral role it will play in ARIA fulfilling its functions.

Moving to Amendment 8 to Clause 4 from my noble friend Lord Lansley, this extends the arrangements in place for where ARIA retains IP and relates to ARIA’s ability to retain income generated through the exploitation of intellectual property. On the point made by my noble friend Lord Lansley, the framework document is a governance document between BEIS and ARIA and does not primarily involve the Treasury, although obviously Her Majesty’s Treasury will review it and will be required to approve it. The power in Clause 4 to attach conditions to grants reflects the usual process for allocating budgets to public bodies. Such conditions are usually attached through letters of allocation and delegation and would usually set requirements for resources to be managed in line with the principles of Her Majesty’s Treasury’s Managing Public Money.

I assure my noble friend that the Bill as drafted and the provisions of Clause 4 are already entirely compatible with ARIA retaining income. However, as was set out in Committee by my noble friend Lady Bloomfield, these arrangements are not dealt with in legislation. The 2020-21 consolidated budgeting guidance states that income generated by the exploitation of IP would be retained within a public body as standard, but Her Majesty’s Treasury would need to consent to the precise arrangements for ARIA and the implications of retaining such income. This is a live matter of discussion between my department and Her Majesty’s Treasury and, while I very much appreciate my noble friend’s support on the matter, I do not believe that it would be appropriate to introduce a legislative commitment on this issue at this stage.

Finally, Amendment 3, from my noble friend Lord Lansley, would add reference to ARIA having regard to technological advances in the UK as one of the benefits which it should seek to promote. Similarly, I believe that this is perhaps more a difference of opinion on drafting than a difference in policy intent. Driving and promoting technological advancement in the UK is indeed intrinsic to ARIA exercising its functions. I hope this is already evident from the existing drafting of Clause 2, and again I do not think that the amendment adds to or clarifies ARIA’s purpose. For those reasons, I am unable to accept it.

I apologise for the length of my contribution, but it brings me to the end of this very important group. I hope that the detailed explanations of the Government’s approach, the further assurances on the robustness of the existing drafting in permitting the full suite of options that ARIA might need, and my offer of a meeting with the Science Minister for the noble Lord, Lord Browne, and others will be sufficient to enable the noble Lord to withdraw his amendment.

My Lords, I thank the Minister for the care he has taken in responding to this debate and I thank all noble Lords who have contributed to it. I find myself in the position—other than in the Minister’s case—of saying that I agree with everything everyone else said, and I include in that the noble Baroness, Lady Neville-Rolfe. I agree with everything that she said, other than that she has, with respect to both her and the Minister, made the same mistake in that they characterise this amendment as imposing or mandating behaviour on the part of ARIA. With respect to both of them—I pointed this out in my opening remarks to the Minister—this is a misreading of the Bill.

The amendment is placed in a position which does not mandate or impose anything. It enables ARIA to choose what it wants to do but directs its attention to what all contributors to this debate have made clear is an issue of necessity as far as they are concerned if we are to achieve what this letter I have received from the Minister expresses as our common objective—that is, to generate the greatest public value from ARIA’s exploitation activities which will be publicly funded. There is a common understanding that if these exploitation activities fall into the hands of businesses that are based abroad, large amounts of money and great improvements in our society and our socioeconomic affairs will be denied to the people of the United Kingdom. There is no doubt about that.

With respect to the Minister, I think he is complacent about the degree and the extent to which that has been happening over the past decade. I repeat that it has been happening so much over the past decade that the Bank of England expressed concern about it because of the financing mechanism that is used, which is not investment. It is leveraged debt that is imposed on our economy to such an extent that it undermines our economic performance. I have in the past endeavoured, as have others, to have the Government engage on this. The success of these amendments, in this context, in this Bill, is that the Government have engaged more at the Dispatch Box and in debate than they ever have before, and I am delighted at the opportunity to have a meeting with others and with an important Minister in the Government who is now willing to discuss extensively how the Government intend to deal with this issue.

In thanking all noble Lords for their contributions, I repeat that my intention is to use this important amendment—it is not perfect in the sense that it does not solve this problem extensively, but it does here and it draws ARIA’s attention to the danger of this and concentrates its mind on it—to get the Minister, who shares the concerns we all have because we heard them in an earlier meeting with him, to share them where he should share them, which is at the Dispatch Box in the House of Commons.

Finally, I echo noble Lords’ words on the contribution that the noble Lord, Lord Broers, has made to your Lordships’ deliberations and the insight and wisdom he has brought to the House. I am proud—in fact, I am honoured—that one of his last acts in this House has been to support my amendment. If he could persuade the Government that perhaps they should draw to ARIA’s attention the opportunity it has to extend the period in which it can protect its intellectual property and its exploitation of it for the people of the United Kingdom, I would be happy that he did so. This amendment has not yet served its whole purpose, and it will not unless it is supported by your Lordships’ House. I wish to test the opinion of the House.

Amendments 2 and 3 not moved.

Amendment 4

Moved by

4: Clause 2, page 2, line 18, at end insert—

“(7) In exercising its functions ARIA must give due consideration to the following—(a) compliance with the duty imposed by section 1 of the Climate Change Act 2008 (UK net zero emissions target),(b) adaptation to climate change, or(c) meeting other environmental goals (such as restoration or enhancement of the natural environment).”Member’s explanatory statement

This amendment seeks to include the UK’s net zero target and environmental goals as matters which ARIA must give due consideration to when exercising its functions.

My Lords, in moving Amendment 4 I will speak to Amendment 19, in my name. I declare my interest as a director of Peers for the Planet and as an engineer and project director with Atkins.

I thank my supporters who have signed these amendments, the noble Baroness, Lady Chapman, and the noble Lords, Lord Browne and Lord Oates. Alongside them, I thank the noble Baroness, Lady Brown, and the noble Lords, Lord Lansley and Lord Broers, for their invaluable support and advice throughout this process. Like others, I pay tribute to the noble Lord, Lord Broers. His will be a huge loss to the House; we will much miss his expertise. I particularly pay tribute to his work leading the All-Party Parliamentary Engineering Group, which is all about getting schoolchildren excited about engineering and exposing them to the latest ideas. It has made a huge difference, as I know from the involvement of a school that is local to me. Maybe one day we will see some of those children pushing new frontiers with ARIA—who knows?

I spoke at Second Reading and in Committee on the progenitor organisation for ARIA, DARPA. In 2013, DARPA took the gamble of awarding a small firm called Moderna $25 million to develop the idea of using messenger RNA to make vaccines. So I had reason to be personally thankful for the work of DARPA at the weekend, having received my Moderna booster on Saturday. I could also mention the GPS technology that guided me to the vaccination clinic, and the internet that I used to book the appointment—innovations that were both seeded by DARPA. DARPA has literally changed the world in so many ways, creating trillions of dollars of value. We all look forward to ARIA doing the same within the UK.

Starting with Amendment 4, I thank the Minister for taking the time to meet me to discuss the amendment, and for all the work that he and his team have done to investigate its implementation. As I stated at that meeting, I want to clarify a potential misconception about my amendments. I am not seeking to implement a mission or purpose for ARIA. I listened carefully to what the Minister said in Committee. It is clear that the Government want to maintain flexibility for ARIA, and so I have withdrawn my original Committee amendment, which attempted to implement one. Instead, I am looking to put a “have regard to” statement in the UK’s primary strategic goal of climate and the environment, similar to the other statements in Clause 2(6) of the Bill on ARIA’s functions, which talk about economic growth, promoting scientific innovation and improving quality of life. ARIA would still be free to choose whatever missions it likes within the constraints of Clause 2(6) and this proposed new subsection, as the Government intend.

Part of the argument for this amendment is consistency. The Government have sought to implement similar climate and environmental amendments across a whole range of recent legislation—the Skills and Post-16 Education Bill, the Pension Schemes Act and the Financial Services Act—and these are all “have regard to” amendments. My amendment uses the same wording as these amendments, specifically using wording from government amendments to the skills Bill.

I know that the Government want to ensure that they are taking a systems view of net zero, with climate as a golden thread through all relevant legislation. This certainly is relevant, given that we know how important R&D is to our net-zero and environmental targets and how important ARIA could be to those. As we know, the International Energy Agency stated that almost half of the needed emissions reductions for 2050 are expected to rely on technologies that have not yet reached the market. This is a great opportunity for the Government, given the focus on delivery post COP. It is a minor but beneficial amendment which would ensure that the organisation has regard to the primary strategic goal of the UK, but which does not detract from what the Government want from ARIA overall.

Amendment 19 simply calls for ARIA to develop its own environmental and social governance, or ESG, strategy, to consider the impacts of the exercise of its functions and the projects which it funds. It would allow the board of ARIA to consider their own strategy for alignment with the environmental and climate goals, and so is consistent with the other amendment. I note that other government-created bodies are also developing ESG strategies. For example, the FCA recently published an ESG strategy, and the national infrastructure bank has a requirement to develop an ESG strategy in its framework document. Bringing ARIA in line with other government organisations would again ensure consistency and that it is playing its part in the principal strategic goal of the nation.

Finally, these points relate to a substantive proposal that the Minister has offered relating to both amendments, so I look forward to hearing his proposal in detail when he sums up. I beg to move.

Amendment 5 (to Amendment 4)

Moved by

5: At end insert—

“(d) meeting Sustainable Development Goals 1 (no poverty), 2 (zero hunger) and 3 (good health and wellbeing).”

In moving Amendment 5 in my name, I will briefly comment on Amendments 4 and 19. Had there been space in our procedures, I would have attached my name to Amendment 4; I note that it has broad cross-party support. It addresses the Climate Change Act and imposes a legal requirement to comply with the duty of Section 1 of that Act, which concerns net-zero emissions. That is an important and good way of expressing it, and I hope that we will see that eventual outcome.

Amendment 19 talks about ARIA having an ESG strategy. This would not be my preferred way forward. In a way, it is better than nothing, and I see the point that was made by the noble Lord, Lord Ravensdale, about lining up with other vaguely similar institutions. However, we have seen a great deal of criticism of ESG as not always being a very strong or effective tool.

My Amendment 5 calls for ARIA to include sustainable development goals 1, on poverty, 2, on zero hunger, and 3, on health and well-being. These are internationally recognised and accepted goals, with targets within them to which the UK, like every country on this earth, is signed up. Surely these should be the goals of every element of the Government, both direct and arm’s-length parts.

I thank the Minister and his staff for engaging with me in discussions on this, but before I get to that I want to address why it is so important to talk about poverty, health and hunger in this ARIA Bill. When people talk about what ARIA will achieve, very often it sounds as if we are talking about Silicon Fen, often known as the “Cambridge cluster”—the region around Cambridge which has so many high-tech business, including software, electronics and biotechnology. But if you look at the reality of life in Cambridge, the top 6% of earners take home 19% of the wealth generated in the city, and the bottom 20% of earners get 2% of the wealth generated in the city.

I encourage noble Lords, if they have not yet seen it, to have a look at an article in the Guardian by Aditya Chakrabarti, who visited a foodbank in Cambridge recently. In his reflections there, he noted that this is a tiny city with a population half the size of a single London borough, yet in one postcode in Cambridge you can expect to live until 87. In a postcode just down the road, it is 78. This is the kind of development that has delivered a miserable life for many, many people. This is why I tabled this amendment.

In the discussions that I mentioned with the Minister and his staff, which raised some very interesting issues, they pointed me to Clause 2(6) of the Bill, which states that, in exercising its functions,

“ARIA must have regard to the desirability”

of various things. Clause 2(6)(c) states that one of those is

“improving the quality of life in the United Kingdom”.

I would be very interested to hear from any noble and learned Lords who might be able to assist me. I am not a lawyer and I am not quite sure what the legal definition is of “quality of life”. I suggest that it is open to political contention and discussion. More than that, in the context of what I was saying about Cambridge, whose quality of life are we talking about? That is a very important question to ask. In your Lordships’ House, I often comment on the Government’s pursuit of GDP as a goal in itself, but here we are talking about quality of life, which surely has to include a distributional element.

That was my purpose in tabling this amendment. I was asked whether I intended to put it to a vote. Given that I called a Division yesterday, and given that I have not had as much time as I would have liked to devote to thinking it through and finding a form of words that really works, it is not my intention to put it to a vote. However, I would be very interested to hear from the Minister what the Government mean by “quality of life” in Clause 2(6)(c). Do the Government acknowledge that that has to address distribution as well as GDP growth? I cannot see any way that it could not. If the Minister is looking for a way of measuring this, I point him to the Living Standards Framework used in New Zealand, which directs the New Zealand Treasury and the actions of the New Zealand Government. That is a good measure of the quality of life. I beg to move.

My Lords, I rise to support Amendments 4 and 19 in the names of the noble Lords, Lord Ravensdale and Lord Browne of Ladyton, the noble Baroness, Lady Chapman of Darlington, and myself. I commend the noble Lord, Lord Ravensdale, in particular for his tireless work on this issue. I too join in the tributes to the noble Lord, Lord Broers, and wish him well in his retirement. I also have some sympathy with the intention behind the amendment of the noble Baroness, Lady Bennett, which raises very important and wider questions, but I am going to focus on Amendment 4.

As the noble Lord, Lord Ravensdale, has said, a number of Acts of Parliament that have gone through this House have had “have regard” amendments relating to climate change made to them. I was pleased to be a signatory to the cross-party amendment to the Financial Services Bill, which the Government substantially accepted in this regard. This point of consistency is extremely important. However, I would have preferred it if the Government had been willing to accept a stronger amendment on the purpose of the organisation, but I recognise that political pragmatism is wise on occasion.

In Committee, we had a very useful discussion about whether the agency would benefit from the sort of mission and focus that helped the Defence Advanced Research Projects Agency in the United States—mentioned by the noble Lord, Lord Ravensdale—achieve its success. The noble Lord, Lord Lansley, told us that DARPA’s mission had been to not be taken by surprise by new technology and, perhaps by implication, to surprise others with the advanced technology of the United States. That may well have been the mission, but the purpose of the mission was surely what drove DARPA’s success: to maintain the national security of the United States against the threat of Soviet communism. It is that purpose which provided DARPA with its edge, its sense of urgency and an understanding of the stakes of the mission on which it was engaged.

While Soviet communism posed an existential threat to our freedom then, today the threat we face from climate change and ecological destruction is even more acute: an existential threat to life itself. Surely, there can be no more profound purpose to drive our new advanced research agency, no greater focus to inspire research, innovation and the practical application of science, than that of tackling a threat to humanity itself.

Personally, I would have liked that to have been ARIA’s explicit purpose; nonetheless, I am heartened by indications that the Government might be prepared to move on this issue. I am very pleased to support this amendment because I think it would represent important advances to some degree on this issue. I very much commend the noble Lord, Lord Ravensdale, for—hopefully—his persuasive powers in getting the Government to the right place. I will listen carefully to what the Minister has to say, but I still suspect that future generations will look back with a degree of surprise that at this time, and in the knowledge of the climate and ecological threat we face, our advanced research agency was not more clearly harnessed to this, the gravest and most important task at hand.

My Lords, it is a great delight to hear from the noble Lord, Lord Ravensdale, who brings his business acumen and passion for both innovation and climate change to the feast. We have discussed these together often in Peers for the Planet.

We have the climate change Acts, and a huge amount of attention is paid to climate change in every part of government life and in their multi-billion-pound R&D budget. ARIA is a small, independent body and should be left to decide what is most important to our future and to the inventive opportunities that it is set up to create. That might include climate change, health, poverty or the quality of life. Technology, for example, improves our lives, but it also brings risks. ARIA should be left to decide what is most important. It should be able to think completely outside the box and make its own choices, and not be bound by precedent. I am afraid that I am therefore sceptical about these amendments.

My Lords, the noble Lord, Lord Ravensdale, the noble Baroness, Lady Bennett, and my noble friend have made a compelling case for supporting this amendment, based on the climate and ecological emergency that we face. Tackling those challenges will require massive innovation and ingenuity and the development of practical applications from that. If ARIA has the bold, independent, innovative culture that the Minister emphasised throughout Committee, then it must be the ideal vehicle for this research, and we should spell it out. We should make ARIA an essential component of the net-zero strategy.

My Lords, I am grateful to the noble Lord, Lord Ravensdale, for bringing back his amendment on these important issues. It has been a real pleasure working with him and hearing from him throughout the debates on this Bill. In Grand Committee, Labour proposed making addressing climate change a core purpose for the first two years of ARIA’s existence. It is, after all, one of the greatest challenges, if not the greatest, that we face, and it is science and technology that we look to for new tools and solutions. We were disappointed by the Minister’s response to that suggestion and to the proposals put forward by other noble Lords. We feel this is of critical importance, so we would be prepared to support Amendment 4—depending, of course, on what the Minister has to say.

The noble Baroness, Lady Bennett of Manor Castle, has tabled Amendment 5, which seeks to promote three of the UN sustainable development goals, which Labour supports. My noble friend Lord Collins of Highbury looks for any opportunity to press the Government to secure progress on them, domestically and overseas. Without wanting to soften the Minister’s cough—as I think we say where we are both from—I am sure he will say that the Bill is not the correct vehicle. However, whether or not there is a vote, the Government should understand that amendments such as this, which embed climate as a golden thread in legislation, will be put forward by noble Lords and Members in the other place at every opportunity.

My Lords, I thank the noble Lord, Lord Ravensdale, for his productive engagement on the amendments in his name, as well as others for contributing to this important debate. Clearly, this issue matters to us all. I will start by exploring the intention behind the amendment. If it is to signal the importance of climate action, of course there is no disagreement between us on that. It is clearly an issue of the utmost strategic importance to this country, and that is reflected in the Climate Change Act, which marks the UK as the first major economy to pass laws to end our contribution to global warming by 2050. Our statutory obligations and ambition on this issue could not be clearer, and they do not need to be marked elsewhere. I do not believe that we should add to this legislation to signal our general intent. It is not appropriate for any provision to be added to a Bill unless it has an actual effect.

The alternative is a statutory duty that seeks to influence—and therefore constrain—ARIA’s activity in some way and, as drafted, the amendment would do so in a very sharp sense. I am grateful to the noble Lord, Lord Ravensdale, for his willingness to engage with the concerns that I put to him and explore alternative ways to achieve his objectives. I have raised these points with him directly, so for the benefit of others I will outline my position—with apologies to the noble Lord, who has heard all this before.

There are well-rehearsed arguments that I have put forward against a defined climate mission. I remind noble Lords that UKRI, through which the overwhelming majority of our public R&D funding is delivered, funds a full portfolio of projects focused on tackling climate change. Where there are specific research and innovation needs to support the Government’s strategic priorities in this area, UKRI delivers across: adaptation and resilience; clean energy; and sustainable industry, agriculture and transport. I think we are all aligned behind the idea that ARIA should complement, not duplicate, our existing capabilities. That is why this amendment is rightly presented now as a more general obligation. The excitement and support that ARIA has generated within the research community has been based on its different model of funding, with agility and risk appetite absolutely central to all the recommendations of how and why ARIA should be created.

ARIA should not be focusing on the scale-up and exploitation of known technologies, for climate change or indeed any other government priorities; noble Lords with expertise in this area will know well that the extent of its funding, at £800 million over five years, makes it completely unsuitable to play such a role. ARIA will contribute by focusing its programmes on the most ambitious objectives, and funding high-risk research and innovation to achieve them. When ARIA finds solutions to these hard problems or gathers learnings along the way, they will be adapted and applied to other fields in different contexts: that is where the benefits to our climate ambitions are likely to be felt.

Breakthroughs in materials science led to huge progress in what is possible in terms of battery storage or fusion. Those technologies are now critical to the energy transition, but much of the original research was not done with that goal in mind. Being prescriptive limits the scope to take completely novel approaches, as we hope and expect ARIA will do. Placing this obligation on ARIA requires us to answer the question: who will assess whether the radical breakthrough targeted by an ARIA programme might—in future, in some way—contribute to our climate goals?

The National Audit Office will assess the regularity of ARIA’s spending each year, which would include this addition to its funding. Is it well placed to make this assessment? That is not intended as any slight at all on the NAO—I am sure the noble Lord, Lord Morse, will be glad to hear that. However, I submit that even the researchers and innovators steeped in a technology cannot predict how it might evolve or be applied in the years to come. That is the nature of innovation and high-risk research. Essentially, it is unknowable. Adding this provision to the Bill asks us to make that essential assessment not only knowable but justiciable. Whoever performed the assessment of whether ARIA’s activities fell within the scope of this obligation would have their judgment subject to judicial review.

I strongly suggest that the actual effect of this amendment would be to push ARIA towards objectives where the assessment would be clear cut. It would disincentivise risk-taking, new approaches or exploring the application of technologies in unusual or unprecedented contexts. I submit that it would work against the grain of everything we are seeking to achieve with this organisation—

Is it not a fact that, although the Minister believes that we cannot make concrete commitments on method, we now have some very concrete commitments on outcomes? Glasgow is the best example of medium-term commitments. Unless we monitor those against the metric—the Minister will know that he used that word some months ago—how do we get around the following dilemma? We have concrete commitments on outcomes in a lot of areas but are now putting quite serious dilemmas—I am not saying it is nit-picking—before ourselves as to how we can make sure that we are on track to go where we are trying to get to.

I thank the noble Lord for his contribution. I am not 100% sure of the point that he is making. I agree with him that we have concrete commitments, but we have a well-defined track of a number of strategies heading towards those commitments. In the Bill we are talking about funnelling one small part of our R&D funding into a separate agency, while seeking to take novel, innovative approaches to research and development.

I have cautioned against placing this obligation in the Bill but that does not mean that it is unimportant for ARIA to have an awareness of these issues, as the noble Lord, Lord Ravensdale, articulated so forcefully. I am pleased that many noble Lords attended the briefing we held where my colleague George Freeman, the Minister for Science, Research and Innovation, discussed this. It is not plausible that any appropriate CEO candidate for ARIA would be ignorant of the opportunities connected to net zero within research and innovation. There is a similar situation with regard to Amendment 5 and the sustainable development goals, raised by the noble Baroness, Lady Bennett of Manor Castle.

As a result of the ongoing discussions that we have had on this issue during the passage of the Bill, I am able to commit now that, as an alternative, ARIA will evaluate itself against the pillar of the 2021-25 greening government commitments most relevant to this amendment on mitigating climate change by working towards achieving our net-zero environmental goal. This would be included within the framework document; ARIA would therefore be required to consider this objective from its very first cycle of reporting and evaluation.

I also agree that it is through its projects, and its funding, that ARIA’s greatest contribution to our net-zero objectives will be made. I can therefore also commit that ARIA would have regard to its projects contributing to our climate change targets and environmental goals. This is distinct from the sustainability reporting framework and should sit alongside it as a broader obligation, rather than being part of that evaluation process. That consideration would again be included in ARIA’s framework document. In my view, that is the appropriate place for such requirements, which relate to the effective governance of the organisation and its alignment to wider public sector objectives, as it can be more readily updated to reflect changing circumstances or priorities.

The existing reporting requirements, as set out in Her Majesty’s Treasury’s sustainability reporting guidance, mean that environmental and social considerations are well catered for within existing public sector authority obligations. I hope that will reassure noble Lords that the statutory requirement for a specific ESG strategy, as introduced by Amendment 19 in the name of the noble Lord, Lord Ravensdale, is unnecessary.

There are a huge number of possibilities here that I would be happy to discuss further, but I strongly believe that the effect of this amendment would not be productive for ARIA or our climate ambitions. I am grateful to all noble Lords for their contributions and thank the noble Lord, Lord Ravensdale, in particular for his engagement and correspondence on the subject and for acknowledging in a reasonable and productive way the concerns I have set out and the alternative I have proposed. I hope this outcome is productive and acceptable to all and that it will enable noble Lords to withdraw or not move their amendments.

I apologise; the procedure is a little different and more complicated because I put down an amendment to an amendment. It is not my intention to respond substantively to the Minister’s response to Amendment 4. The noble Lord, Lord Ravensdale, has consistently championed Amendment 4 and variations of it, so it is most appropriate that he responds on that one. I should just say that I failed to declare earlier that I am a member of the committee for Peers for the Planet. On Amendment 5 and my side of this, I do not think the Minister responded to my question about defining quality of life. I realise this may be a legally complicated matter, so will he commit to write to me about this and lay a copy of the correspondence in the Library?

Regarding the noble Baroness’s question on the definition of the quality of life—we are getting into a very esoteric debate for this time of night—I do not think there is a technical definition specific to her suggestions that I can point towards. It is not in such common usage but, if I can find an appropriate definition, I will of course send it to her.

I thank the Minister for his answer. I want to make one other point very quickly. He talked a lot about the hard sciences. It is interesting that, when we had a private discussion with a number of his colleagues, there was also a lot of focus on what might be described as the softer biological sciences and issues such as plant health and the human microbiome. I hope those will be considered within ARIA’s remit. I beg leave to withdraw my amendment.

Amendment 5 (to Amendment 4) withdrawn.

My Lords, I am most grateful to the Minister for his proposal and for ensuring that ARIA will be asked to demonstrate through integrated reporting how sustainability is an essential characteristic within its strategic objectives, operations and policy-making. I believe that this proposal meets the intent of my original amendments through implementation in the framework document. It will ensure that ARIA has regard to the areas set out in my original amendment; it will be asked to consider and demonstrate how it has met them. In particular, as he said, it will ensure that ARIA has regard to its projects contributing to our climate change targets and environmental goals. Through working together with the Government, we have reached a good compromise on this issue. I again thank the Minister, his team and my supporters and beg leave to withdraw my amendment.

Amendment 4 withdrawn.

Amendment 6

Moved by

6: Clause 2, page 2, line 18, at end insert—

“(7) ARIA is a public authority within the meaning of section 3 of the Freedom of Information Act 2000, and Schedule 1 to that Act is amended accordingly.”Member’s explanatory statement

This amendment would subject ARIA to Freedom of Information requests.

My Lords, Amendment 6 is in my name and that of my noble friend Lord Fox, the noble Baroness, Lady Chapman, and the noble Viscount, Lord Stansgate. As my noble friend said in Committee, without the FOI amendments, ARIA would follow in the footsteps of a very small number of institutions that currently do not have Freedom of Information Act obligations. I will not extensively rehearse all the arguments, but suggest that the organisations involved, which include the Royal Family and security and intelligence bodies, are not natural bedfellows to ARIA. The Minister complained about the burdens for ARIA of responding to FOI requests but nowhere, not even in Dominic Cummings’s evidence to the Commons Science and Technology Committee last February, was the FoIA identified as an obstacle to ARIA’s success.

The Minister has continually highlighted that ARIA is modelled on DARPA. ARPA was subject to the US Freedom of Information Act and DARPA is subject to it as well. This has not prevented them achieving the successes which the Government wish ARIA to emulate. We talked in Committee about the equivalent number of requests received before the restructuring of the research bodies, which were exactly equivalent to those of DARPA. The argument that DARPA charges fees falls away too. The main classes of requester—the news media and educational staff—and requests in the public interest are not charged. In practice, only commercial requesters have to pay.

As I said in Committee, there is no question that, under the FoIA, ARIA’s research programme could be prejudiced, given the clear exemptions under the Act for research interests. In Committee, the Minister gave away the real reason for the Government’s refusal to include ARIA under the FoIA. He illustrated his general contempt for freedom of information legislation, saying:

“From my point of view, it is a truly malign piece of legislation”,

and that

“there must be many hundreds of civil servants engaged in doing nothing other than responding to these fishing expeditions”.

It looks like this is personal—or is the truth that the Government find the daylight shed on them by the FoIA truly inconvenient, and ARIA is just the start of an erosion of FoIA rights?

Transparency is crucial for all our public institutions. ARIA will be in receipt of a substantial amount of public funding—£500 million over the next three years—so there are compelling grounds for its inclusion. Coming under the FoIA is an essential part of retaining public trust.

As regards Amendment 7, which relates to procurement, the Minister said in Committee that:

“When ARIA is commissioning and contracting others to do research for it, it will be operating in a fundamentally different way from traditional R&D grant-making where procurement rules do not apply.

In my view, it is therefore appropriate for ARIA to be given freedom from procurement rules to ensure that the agency has greater flexibility in its contractual arrangements.”—[Official Report, 22/11/21; cols. GC 147-49.]

If ever I heard a circular argument, that was it.

Why are the Government having to perform drafting contortions to exclude ARIA from these procurement requirements in the Bill? Why on earth should ARIA not be subject to exactly the same procurement regime as other public bodies? UKRI is subject to rules and procures and commissions services, including research services. What makes ARIA so different? I beg to move.

My Lords, I rise to speak to Amendment 6, to which I added my name. This is a subject I raised at Second Reading, but I reassure the noble Baroness acting as the Whip that, on this occasion, she can relax; there is unlikely to be any need to interrupt me on the grounds that I have gone on too long, because I want to be very brief.

There are two reasons why ARIA should be subject to the Freedom of Information Act. The first is one of principle. Public bodies set up in statute should be subjected to the same FOI requirements as apply elsewhere. In this country, I submit that FOI legislation is an essential safeguard in the political world in which we now live. To reject this amendment will send a bad signal and set a bad precedent. I even suggest to the Minister that he may reconsider his view as and when he sits on these Benches in the future.

The second reason is practical. We do not want to allow ARIA to come to be viewed with public suspicion and distrust, especially as it has the right to fail, so being open about its work will be beneficial. If it turns out that it is not easy to discover what it is doing, public support for ARIA might be damaged, to the detriment of its wider role. It is not difficult to imagine circumstances in which a campaign is waged against ARIA for excessive secrecy, possibly utilising inaccurate information about it, and for public support to be damaged; nor, in my judgment, would making ARIA subject to freedom of information turn out to be an excessive practical burden. Moreover, if there are aspects of ARIA’s future work that turn out to be sensitive, the Government already have powers elsewhere in the Bill for the Secretary of State to intervene on grounds of national security.

I will leave my remarks there, but I strongly urge the acceptance of Amendment 6.

My Lords, I spoke about the freedom of information aspects of these two amendments in Committee, and I repeat that I think it is reasonable to exclude ARIA from the freedom of information requirements.

I do not regard the Freedom of Information Act as malign, and I am sure my noble friend does not either. It is appropriate in many cases that our public bodies are opened up, but it is true that it is burdensome. That has been a constant complaint, and certain kinds of organisations attract lots of fishing expeditions which increase the burden, and this goes beyond what would be regarded as being reasonable.

In Committee, I quoted both Tony Blair—who, having introduced the Freedom of Information Act, had a Damascene conversion and did not regard it as a helpful thing in the end—and Professor Philip Bond, the Professor of Creativity and Innovation at the University of Manchester. Both of them highlighted the fundamental reason why ARIA should be free from the Freedom of Information Act: because the last thing our scientists need when looking at the next internet, or whatever it is, is to be overcome with excessive caution because they are worried about what would happen if their conversations had to be revealed through Freedom of Information Act requests. Creativity thrives in an environment where it is not subject to ex-post analysis.

The other reason why I wanted to speak this evening is that I do not understand why Amendments 6 and 7 have been positioned as they are in Clause 2. They seem to set up a conflict with the provisions of Schedule 3, which is introduced by Clause 9. I have not followed through the detailed drafting in respect of freedom of information, but I have followed it through in respect of the Public Contracts Regulations. Basically, Amendment 7 says that the regulations will apply to ARIA, while paragraph 17 of Schedule 3 says that the requirements do not apply to ARIA.

So, the effect of these amendments—and I believe the same is true of the freedom of information amendment, but I have not completely followed that through—is that one part of the Bill would say that the requirements do not apply, but the next part would say that they do apply. That does not seem to me a very clever way to write amendments or legislation, so I suggest that the amendments themselves are defective. Also, I think they are defective in drafting terms—in particular, the public contracts amendment does not mention the separate Scottish regulations, which are included in paragraph 17 of Schedule 3. Paragraphs 13 to 15 are much more complex than Amendment 6, so that may well not be as effective as noble Lords seem to suggest.

My Lords, Labour tabled a combined version of Amendments 6 and 7 in Committee, and we welcome the re-tabling of the text by the noble Lord, Lord Clement-Jones. We debated FoI extensively at Second Reading, in Grand Committee and in private meetings with the Minister and his officials. Despite the strong feelings expressed, the Government have offered us absolutely nothing—not just on FoI but on transparency more generally.

The Government’s determination to keep ARIA’s projects and decision-making secret is worrying. This is a matter of principle: do they believe in transparency, or not? If they do, such a measure should be put in the Bill. If they do not, they have not really given us a sufficiently good explanation for their reluctance to do this. We believe that it is in ARIA’s best interests to have the benefit of engagement of the public through the use of FoI. Failing to do that is not going to stop ARIA’s activities becoming known; it will just happen in a less controlled manner and create more suspicion.

Previous arguments about the huge burden of FoI—in the Minister’s terms—appear to be somewhat disingenuous. We appreciate the Government’s desire for ARIA to be a small and agile body, but they have produced no evidence at all that such a body would be overwhelmed by requests. Indeed, at earlier stages, there was an extensive discussion about DARPA, which receives an average of just under one FoI request per week.

In Committee, the Minister said that this comparison was not appropriate as DARPA charges fees for such requests and this keeps the numbers manageable, but he must accept that that statement was not a full reflection of what happens with DARPA. Other than a small bill for a large photocopying job, for example, fees are not payable by the news media, educational staff or non-commercial scientific researchers, and waivers are granted if requests are in the public interest.

We remain concerned about the issues with the Public Contracts Regulations. The Minister knows we are not happy about his approach to that, but our priority on this group is the issue of FoI, and we will support that amendment if it is put to a vote.

I thank noble Lords who have contributed on this group of amendments. Turning to Amendment 6 in the names of the noble Lords, Lord Clement-Jones and Lord Fox, the noble Baroness, Lady Chapman, and the noble Viscount, Lord Stansgate, I start by thanking my noble friends Lady Noakes and Lord Patten for their supportive statements in general as the Bill has progressed through this House.

ARIA will be a lean, streamlined agency which we expect to employ people in the tens. It will recruit a small team of exceptional individuals with both technical expertise and scientific vision. I contend that it is appropriate that we consider how their time, focus and energy is best applied.

We have designed this new, unique agency to operate and behave in a way we do not usually see in the public sector—with leanness, agility and efficiency being core to its function. We have also tasked it with embracing risk and failure. As noted by my noble friend Lady Noakes during consideration in Grand Committee and again this evening, these exceptional scientists should not be fearful of or driven to risk-aversion by the prospect of FoI disclosures, nor should they be distracted or bogged down by the bureaucracy of fulfilling such requests.

The issue of the volume of FoI requests we expect ARIA to be subject to has been raised throughout the passage of this Bill, and comparisons have been drawn between the number of requests received by smaller public bodies such as parish councils, and other research organisations such as UKRI. Pursuing this exemption reflects our expectation that, given ARIA’s profile, its focus on high-risk research and the speculation on its activity so far, it would indeed be subject to a disproportionately high number of FoI requests. It is not accurate to suggest that ARIA would get the same number as a single UKRI research council or other small organisations. It is already clear that its activities will generate a much higher degree of interest and, therefore, corresponding requests.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests to DARPA. Let me remind the noble Lord that when making an FoI request in the US, requesters are required to consider paying applicable fees up to $25. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, it is not a like-for-like comparison to the FoI process in the UK. Therefore, in my view it is not right to assume that ARIA will receive a similar number of FoI requests to DARPA.

I also reassure noble Lords that our reasons for placing ARIA outside FoI legislation are specific and do not extend to other new public bodies, which will not have the same requirement for flexibility and agility and therefore will not require the same exemption.

However, to suggest that the agency will therefore be operating under a veil of secrecy is, in my view, not accurate. We expect ARIA to be an outward-facing and transparent body, which will proactively provide information about its activities to encourage collaboration around its programme goals, increase public understanding of its work and build public trust. Alongside this, it will be held to account by robust transparency arrangements. Let me remind noble Lords about them. It will publish its annual report and a statement of accounts, which will be laid before Parliament. It will be subject to annual audits by the National Audit Office. It will appear before and be accountable to Parliament through its chief executive officer and it will remain, of course, an arm’s-length body of my department in BEIS.

That said, I have also taken into account the opinions of noble Lords on this matter. To reflect the considered debate in Grand Committee on the balance of ARIA’s transparency and accountability arrangements with this unique freedom, I am happy to provide further assurances to noble Lords on ARIA’s reporting requirements. Annually, ARIA will proactively publish information on its regional funding and will make information publicly available on all delivery partners supported through the full range of its funding mechanisms. Taken alongside and together with ARIA’s annual report and accounts, these are significant and robust transparency arrangements which will ensure Parliament and the general public are informed of ARIA’s activities, the projects it funds and where it funds them.

I hope that, given these reassurances, noble Lords are satisfied that the FoI exemption serves an important function for ARIA and that we have struck the right balance here. I thank them for their input.

Before the Minister moves on to the next amendment and off the FoI amendment, has he read the Department of Defense information handout? That makes it clear that the vast majority of those who request information from DARPA would not have to pay any fee at all. Can the Minister share—either now or at some point—with noble Lords the genesis of his belief, which he has now repeated a number of times, that everyone who asks for information from DARPA has to pay a fee in the United States? If that is not true, then the comparison that we all make is a relevant comparison and is the only data; the only other thing we have is the Minister’s animus against freedom of information requests. And is he aware of the provisions of Section 19 of the Freedom of Information Act?

I think the noble Lord will find, if he looks at my remarks, that I did not say that every applicant will pay fees but that there is a general expectation that a fee of $25 will be charged, or even more in some cases if more information is required. However, there are exemptions to that, which can be exercised. If the noble Lord looks back at Hansard, he will see that I did not say that everyone would be charged a fee. In most cases, a fee would be applicable, but there are certain exemptions.

I turn to Amendment 7, in the names of the noble Lords, Lord Clement-Jones and Lord Fox, and the noble Baroness, Lady Chapman, which relates to procurement regulations. I note that the noble Lords did not address this, but it is worth while setting out the Government’s position on that amendment. I believe there are clear reasons why this exemption is beneficial to ARIA and why it will be integral to the agency’s effective operation. First, unlike other R&D funders, ARIA will be commissioning and contracting others to do research for it in pursuit of its own technological visions or research goals. The process of contracting and commissioning means ARIA will be operating in fundamentally different ways from traditional R&D grant making, where procurement rules already do not apply. Placing ARIA outside the existing public procurement rules will mean that the agency can freely procure expert investment and consultancy advice, which will be important given the highly varied and technical nature of the agency’s work.

While we imagine that the bulk of ARIA’s research activities will be carried out by its partners and funders, it remains possible that ARIA may wish to procure and own a piece of research equipment to crowd-in interest from other research partners, or to accelerate the progress of a project. Freedom from traditional procurement rules will facilitate ARIA making those investments quickly and with ease. In my view, it is appropriate for ARIA to have greater flexibility than the R&D exemption would afford it so that it can design and tailor its contractual arrangements to precisely suit its research endeavour.

Secondly, in designing ARIA, we have put a premium on the agency investing and acting quickly. In our view, this agility would be incompatible with the public tendering process mandated in the Public Contracts Regulations 2015, which can require contracting authorities to put contracts out to open tender for up to two to three months. Such a delay could prevent critical investments being made with sufficient speed or, indeed, at all. In choosing to exempt ARIA from standard procurement rules, we have learnt from the successful approach taken by DARPA, which benefits from “other transactions” authority, giving the agency the flexibility to operate outside traditional US government contracting standards. It is our belief that ARIA should benefit from similar flexibilities.

I also dispute the notion that taking ARIA outside traditional procurement rules will leave the agency vulnerable to cronyism. I think this was a point made by the noble Baroness, Lady Chapman, in Committee. This exemption will ensure ARIA’s leadership and programme managers—who have been recruited for their technical expertise and scientific vision—can take decisions on ARIA’s procurement with autonomy, as they will have the freedom to procure at arm’s length from government and Ministers.

As I have already detailed, ARIA has clear lines of accountability, transparency and scrutiny in the preparation of its an annual report, scrutiny by the NAO and an annual independent audit to report on its procurement activities. As I have already alluded to, to reflect the constructive and considered debate in Grand Committee, ARIA will publish information on its delivery partners, and this expectation will be detailed in ARIA’s framework document. I thank the noble Baroness, Lady Chapman of Darlington, for tabling an amendment to that effect previously. I hope she and other noble Lords welcome this principled commitment to transparency, which would extend to delivery partners supported through the full range of ARIA’s funding mechanism.

In conclusion, I hope noble Lords have been assured that exempting ARIA from traditional procurement rules will be integral to the agency’s effective operation. The package of accountability, conflict of interest procedures and governance provisions that sit within this Bill are an appropriate counterbalance to that. Taken in the round, this represents an essential, proportionate and balanced freedom, placed in the hands of ARIA’s incoming leadership and programme managers. Taken together, I hope that the assurances and explanations I have been able to provide for noble Lords will allow the noble Lord to withdraw his amendment.

My Lords, I thank the Minister for his response and thank noble Lords who have taken part in this debate. There is clearly an argument to be had on our Amendment 7 and the whole procurement regime. The one argument that the Minister has is that DARPA is not subject to procurement rules.

However, the position is quite other on Amendment 6, as the noble Baroness, Lady Chapman, has said. This is a matter of principle. The Minister keeps coming up with some quite colourful phrases. This evening he said that scientists should not have to be fearful at the prospect of FoI disclosure. That is quite an interesting phrase—those scientists quivering in their labs, waiting for freedom of information disclosure. I must say it is quite a colourful way of looking at the situation, but, clearly, we have a matter of principle to decide on here, and I would like to test the opinion of the House.

Amendment 7 not moved.

Clause 4: Grants to ARIA from the Secretary of State

Amendment 8 not moved.

Clause 8: Power to dissolve ARIA

Moved by

9: Clause 8, leave out Clause 8

My Lords, in Committee the Minister explained that he accepted the DPRRC’s recommendations regarding Clause 10, and indeed was taking it out of the Bill, but added:

“Clause 8 is, I believe, an important part of the Bill. Although the DPRRC also raised concerns about this power, there is a strong policy rationale and a clear precedent for this particular delegation of power.”

He was then able to cite one solitary example, the Administrative Justice and Tribunals Council, which was dissolved by the super-affirmative procedure, but he admitted that that was in the context of widespread public body reform. He continued:

“In contrast, the power in Clause 8 is narrow, such that ARIA can only be dissolved. It cannot be merged or have its functions or governance changed in any way, as set out in my response to the DPRRC last week.”—[Official Report, 22/11/21; cols. GC 162-63.]

I still believe that the objection from the DPRRC stands. It said it was not necessary legally, politically or practically for something created by primary legislation to be dissolved by secondary legislation. On the contrary, if Parliament creates ARIA, the right to dissolve it should naturally belong to Parliament.

This is all reinforced by the recent report of the DPRRC, Democracy Denied? The Urgent Need to Rebalance Power between Parliament and the Executive. This kind of power assumed by the Government is what it objects to. I agree with the committee’s conclusions that we need to stop this accretion of Henry VIII powers by the Government, who are still proceeding willy-nilly in the face of the clear views and warnings of one of our own very well-respected committees.

The Minister said that these were narrow and limited powers, but what could be wider than abolishing the very subject of the Bill? That seems to be an extraordinarily wide power and a completely unjustified use of a Henry VIII power. So I look forward to the Minister’s reply but I very much hope that the Government will rethink their response to the DPRRC’s objections to the inclusion of Clause 8. I beg to move.

My Lords, I am disappointed that the noble Lord, Lord Fox, is not with us this evening because, following Committee—which I attended, sat through, listened to all the debates of and did not say a word in—he said he was surprised that I had not found something better to do with my time. I just wanted to explain that I am extremely interested in this subject, but I am interested not in the detailed implementation of this legislation but in what it says about how research should be conducted. I am also glad that we have been joined by the Whip, the noble Viscount, Lord Younger, because, in a previous debate on another subject, he cast me as a pessimist—and I have to own up to being a pessimist on this particular proposal as well.

However, I support the Bill because it provides an interesting scientific experiment from which we can learn. We have a very small sample size: we have the existing system and the new system, a sample of two. But, as scientists often do, we have to work with the material that we have. So I am pleased that we have this proposal. Let us see how it works—albeit that I am a pessimist.

So, in Amendment 10, I am proposing that the Government should commit themselves to a review of how this proposal affects the corpus of research that takes place in the United Kingdom. This is a helpful suggestion. If pushed, I might possibly accept that it is unnecessary, because it will be done anyway. People will look to see what happens, and I just hope that the Government will recognise this and build it into the legislation.

I support Amendment 9—clearly this is an overreach of power on the part of government. I also support my noble friend Lord Stansgate’s Amendment 11, which proposes a much more detailed and thorough review of how this proposal matches up against the specific objectives that the Government have set out.

My Lords, I will speak to Amendment 11, which is in my name. Of course, the idea behind it also applies to Amendment 10, as just outlined by my noble friend Lord Davies of Brixton, who has probably halved my speech because there is no need to repeat everything.

This amendment is very straightforward. It seeks to ensure that, at an appropriate time—I have suggested half way through its allotted 10 years—Parliament has the chance to be sure that ARIA is fulfilling its broad mission. After all, as we all agree, we are doing something new, and, while it is scheduled to receive only a small amount of funding compared with the wider scientific landscape, the fact is that we are still talking about £800 million of public money. So I ask the House: is it that unreasonable to want to ascertain how it is getting on after five years?

In looking ahead, Parliament will want to be sure that, for example, ARIA has not begun to duplicate work that can or could be done elsewhere—by UKRI, for example. Parliament will want to be satisfied that it has not been captured in some way by a scientific cabal or that it has not become involved in dealing with what you might call the “known unknowns”—because other parts of the scientific world are in charge of that—when we want it to focus on the “unknown unknowns”. We are all hoping—at least, I hope that we are—that ARIA will continue to focus on exciting and potentially disruptive new areas and inventions.

The purpose of this amendment is not—I repeat, not—to enable a future Government or Parliament to require a report into every single programme with which ARIA is engaged, or to burden ARIA with what we might call “excessive accountability”. We have already agreed to give the programme managers a huge degree of freedom, including the freedom to fail. However, we must remember that ARIA’s initial lifespan of 10 years will span at least one Parliament and maybe more, and it seems reasonable, without placing too great a burden on it, to enable a future Parliament to have the chance to satisfy itself that it is fulfilling its strategic mission. I look forward to the Minister’s reply and commend this amendment to the House.

My Lords, we remain disappointed that the Government failed to accept the Delegated Powers and Regulatory Reform Committee’s recommendation to omit Clause 8, which provides a very broad power to be carried out with minimal parliamentary scrutiny. I am not surprised that the noble Lord, Lord Clement-Jones, has retabled the amendment, although I suspect that the Government will not change their approach this evening.

I am grateful to my noble friends Lord Davies of Brixton and Lord Stansgate for tabling their Amendments 10 and 11, which would ensure that there is better understanding of ARIA’s work as it progresses toward the magic 10-year mark. We agree with the thrust of both those amendments. On Amendment 10, it is important that lessons can be learned and any required changes enacted to ensure that ARIA’s funds are continually put to the best possible use. Amendment 11 would give Parliament a loose oversight role, which feels incredibly important, given its almost complete lack of involvement once the body has been established. I noted that when he was in his place earlier, the Minister described the arrangements that the Government are proposing as “robust”. I gently say that they are anything but.

We hope that the Government see some merit in these proposals. It is not clear that the provision needs to be statutory—I accept that—but can the Minister give a clear commitment about interim or periodic reviews beyond the publication of annual reports, which are the absolute minimum that we should expect, and opportunities for Members of this House and the other place to discuss and debate them?

I want to start by addressing the comments on the Delegated Powers and Regulatory Reform Committee’s report on this Bill. As noble Lords will know, the Government made significant changes to the Bill in Committee to respond to the DPRRC’s recommendations. We have taken its report extremely seriously and shown that we are willing to engage with, and act on, its recommendations.

Regarding the committee’s other recent report, on the delegation of power more generally, we would submit that the changes we have made to this Bill are a clear demonstration of the relationship between the legislature and the Executive operating as it should and of legislative proposals submitted and amended in response to scrutiny. Certainly, what we are proposing for ARIA is a world away from some legislation made in the context of Brexit or the pandemic, which is the focus of the committee’s concern in its report.

We have carefully considered the committee’s recommendation with regard to Clause 8. In our view, the power to dissolve ARIA through regulations made under this clause, which would be omitted by Amendment 9 in the name of noble Lord, Lord Fox, remains an important part of the Bill. We have decided not to accept the recommendation in this instance because there is both a strong policy rationale and a clear precedent for this delegation of power.

As was said in Committee, the power can be exercised only 10 years after the Bill receives Royal Assent, and it is therefore an indication of the Government’s long-term commitment to ARIA. I think there is broad agreement that this patience will be essential if ARIA is to pursue successfully the most ambitious research and innovation. It goes to the heart of what ARIA is about. It must have the opportunity to prove itself before it is judged, and this has been recognised by many R&D stakeholders.

In Committee, my noble friend Lord Callanan referred to the precedent for this delegation of power. Under powers contained in the Public Bodies Act, several bodies established in primary legislation have been dissolved by statutory instrument. Again, if noble Lords will permit me, I will refer to the Administrative Justice and Tribunals Council, which was created by the Tribunals, Courts and Enforcement Act 2007 and was abolished using powers from the Public Bodies Act in 2013. The Public Bodies Act gave Ministers broad delegated powers not just to abolish bodies but also to merge them and change their governance structure and functions. That goes far beyond the power in Clause 8. As we do not know the context in 10 or more years’ time, when this power might be exercised, it is right that it is applicable in a range of scenarios.

On consultation, there is a broad requirement for the Secretary of State to consult those they think appropriate. I suggest that Parliament and Select Committees will be included among these stakeholders, and that the Secretary of State will think it appropriate and necessary to consult them. We do not believe that there is no opportunity for parliamentarians to be involved in those discussions. I hope I have managed to convince noble Lords of the seriousness with which we take the DPPRC’s recommendations, the careful consideration we have given to its view of Clause 8 and the very good reasons I think there are for departing from its recommendation in this instance, and retaining it. I hope noble Lords are convinced and that the noble Lord, Lord Clement-Jones, feels able to withdraw his amendment.

The power in Clause 8 shares with Amendments 10 and 11 a recognition of the experimental nature of ARIA, which has been highlighted by many in the R&D community. These amendments speak to our desire to extract the greatest possible benefit from our £800 million investment in this new agency. We hope those will be both direct benefits from the research and innovation it funds and indirect benefits in terms of learning that can be applied to R&D funding in the UK more generally. I hope that learning will be a dynamic process, and while I sympathise completely with the intent behind these amendments, I hope I can reassure noble Lords that there are already more than adequate arrangements in place for public bodies such as ARIA to be formally reviewed. I do not think anything further is necessary.

Amendment 11 in the name of the noble Viscount, Lord Stansgate, introduces a review of various aspects of ARIA’s operations, including whether it has fulfilled its functions and achieved value for money. Both of these are core considerations of the National Audit Office. The regularity of ARIA’s spending—whether it is in line with its functions—will be part of the annual assessment and certification of ARIA’s accounts, and the NAO will be able to conduct value-for-money examinations of ARIA as per the National Audit Act in the usual way. I hope the noble Viscount will agree that a further review mechanism on these points is not needed.

I turn to the second two elements of this amendment, which deal with the geographical spread of grants and ARIA’s transparency arrangements. I stand by my noble friend’s earlier commitment that ARIA will proactively publish information on its regional funding annually and, in the interests of transparency, make information publicly available on all delivery partners, supported through the full range of its funding mechanisms. I hope this reassures the noble Viscount, Lord Stansgate, that there are already arrangements in place to cover all these important points he has raised and that he does not feel it necessary to press his amendment further.

Amendment 10 is very specific to ARIA. As I have said before, I do not think a one-off formal report is the right way to envisage these lessons being learned. It should be a dynamic process: some important points may become apparent relatively quickly while some advantages or disadvantages of the ARIA model may not emerge even within the six years outlined in this amendment. We have discussed the need for patience, and I believe that means we must resist, as far as possible, the temptation to poke and prod and investigate this new organisation. Clearly, there is a balance to strike here, but it is my contention that the default position must be to let it be and gather these learnings in the most light-touch way we can.

In his amendment, the noble Lord, Lord Davies of Brixton, has allowed an entire year for the review to be conducted and published. That indicates a significant intervention in ARIA’s activities and a degree of close scrutiny that I do not think is a natural companion to risk-taking and high ambition. I note that the noble Baroness, Lady Chapman, also expressed concern about 10 years being a long time without scrutiny. There are a number of avenues for scrutiny—as a public body, ARIA will be subject to tailored reviews of its governance and effectiveness. It will need to bid for new funding in coming years and evidence its effectiveness and impact at that point. I hope the noble Lord will accept my assurances that it is absolutely our intention to learn from ARIA to the benefit of the wider R&D system, and that he will not press his amendment, on the grounds that such a structured and formalised obligation may not be the most appropriate way to do so.

My Lords, I thank the Minister for her reply, which, I am afraid, amounted to a very polite raspberry to the DPRRC. She used very polite phrases such as “carefully considered”, but the fact is that the Government are intent on ignoring one of the major recommendations of the committee—namely, that the powers in Clause 8 are inappropriate.

The Minister talked about a clear precedent, and I referred to the precedent that the Minister, the noble Lord, Lord Callanan, cited in Committee. But when the Administrative Justice and Tribunals Council was abolished, it was done by the super-affirmative procedure, and the Government have not even offered to use that in this case. This is rather different to that situation; this is effectively abolishing the whole substance of what the Bill is about: ARIA itself. I do not think there could be anything more radical than a Henry VIII power that does that.

I am afraid that I do not really regard what the Minister said as a full response to the DPRRC, and I am certainly not persuaded by the Government’s position. But this is part of a longer, long-running argument between the Executive and Parliament. Clearly, the DPRRC, which I support very strongly, wants much greater parliamentary involvement and oversight in decisions such as this. It believes that, where possible, primary legislation is the appropriate instrument, not secondary legislation. Does the Minister want me to give way?

Before the noble Lord sits down, perhaps I could come back on the specific point he made about the Public Bodies Act. This Act was developed in the context of widespread public body reform. It was therefore appropriate that the super-affirmative procedure was applied. In the context of much broader powers, it was right that their use was subject to this higher level of parliamentary scrutiny. In contrast, the power in Clause 8 is much more narrowly defined, such that ARIA can only be dissolved—it cannot be merged, or have its functions or governance changed. That is a significant difference between the two.

My Lords, that is a significant difference between us. Merging is one thing, but total abolition is another. Perhaps the Minister could have offered the super-affirmative procedure in those circumstances. As I say, this is part of a long-running argument. The Executive are determined to hang on to their Henry VIII powers. I hope that Parliament will continue to press for fewer Henry VIII powers, much greater use of primary legislation, where appropriate, less use of skeleton Bills, and so on. This is a very broad landscape that we are debating. In the meantime, I beg leave to withdraw my amendment.

Amendment 9 withdrawn.

Amendment 10 not moved.

Amendment 11

Tabled by

11: After Clause 8, insert the following new Clause—

“Interim review of ARIA

(1) Within five years of the date on which this Act is passed, the Secretary of State must undertake a review of ARIA and its operations.(2) The review under subsection (1) must include an assessment of—(a) the extent to which ARIA has, whether acting alone or jointly with others, fulfilled the functions listed in section 2(1),(b) whether projects undertaken or funded by ARIA are achieving value for money,(c) the geographical spread of grants awarded by ARIA, and(d) the operation of transparency measures and whether further measures are required.(3) Upon completion of the review, the Secretary of State must make arrangements for the contents of the review, including any recommendations arising from it, to be laid before and approved by both Houses of Parliament.”Member’s explanatory statement

To enable Parliament to review the work of ARIA after its initial five years.

I thank the Minister for her reply. I look forward to reading the National Audit Office reports over the next few years and taking part in such discussions as we may have in this House on how ARIA is developing.

As the noble Viscount has made a short speech, I must now put the Question. The Question is that the amendment be agreed.

I have just explained that, as the noble Viscount has made a short speech, it is not possible to withdraw, so I must put the Question. It is up to Members of the House how they vote.

Amendment 11 disagreed.

Clause 11: Interpretation

Amendment 12

Moved by

12: Clause 11, page 5, line 2, after “social” insert “and mathematical”

My Lords, I speak to Amendments 12 and 14 in the names of the noble Lords, Lord Browne of Ladyton and Lord Clement-Jones, the noble Viscount, Lord Stansgate, and myself. Noble Lords will be aware that a number of fields of modern technology and research are coming to rely more and more on mathematical sciences. When I gained my degree in pure maths at Oxford over 70 years ago, and for many years since, maths was seen largely as an adjunct to other fields of science and technology, but the world of digital—particularly of AI, machine learning, 5G and quantum computing—is now becoming mainstream. These diverse technologies rely very greatly on mathematics for help to find solutions and answers.

Mathematical sciences today are employed in many ways: from risk analysis of the use of driverless cars to the likelihood of collisions and how best to avoid them in space; from sifting with AI through large quantities of medical data to spot treatments for illness, to the best ways of introducing superfast broadband nationwide; contributing to security risk analyses, or delving into the more esoteric problems of known and unknown unknowns. Mathematical sciences feature in improvements that will benefit the lifestyle and health of wide cohorts of citizens and the esoteric work of astronomers unlocking the secrets of the cosmos. Analysing and predicting trends in the Covid-19 epidemic is another active field in which mathematical sciences play an important part.

The marginalisation and exclusion of mathematical sciences in government legislation prompts this amendment. For example, the 2004 guidelines on research and development limit the definition of mathematical contributions in research and development to the “physical and material universe”. Far from sticking to current definitions in this new legislation, is it not time to recognise the unique and growing contributions of mathematical sciences in the new digital age of AI, quantum computing and much, much more? The ARIA Bill is an ideal opportunity to do so and move on. The focus and capacity of the Bill’s provisions should explicitly embrace the mathematical sciences. These now include “blue skies” maths, which is sometimes referred to as a new form of “pure” maths.

My amendment is thus not a probing amendment; it is a simple and straightforward proposal to reflect the advances being made by mathematical sciences in the digital age. I challenge anyone to assert that this new agency will not be making use of mathematical sciences in its work. This Bill is an excellent opportunity to give the rightful recognition in statute to the key role of mathematical sciences in advanced research and inventions. I beg to move.

My Lords, I support the noble and gallant Lord’s amendments and have added my name to them. More broadly, I support the work of the London Mathematical Society and the Protect Pure Maths Campaign to emphasise the importance of mathematics alongside science and technology, not only to the whole STEM ecosystem but to the UK economy overall. The briefing that I have received from them estimates—I am sure this is correct—that mathematics adds more than £200 billion to the UK economy, which is nearly 10% of our GDP; and it is one of the top three subjects for graduate earnings. As the noble and gallant Lord explained, mathematics enables most of today’s exciting and urgent technological developments, including artificial intelligence, driverless cars, and the development of quantum computers and superfast broadband, as well as the modelling of the Covid-19 outbreak, underpinning national security, the finance sector and the rollout of vaccinations.

Mathematics is a British success story. If it gets recognition at this level from Parliament, I am certain that it will send a powerful and supportive message to young people across the country to consider mathematics as a career or for further study—and that can only be a good thing.

My Lords, my Amendment 13 does not differ greatly from the previous amendment. Indeed, it differs in only one word: “pure”. In proposing my amendment, I have been mindful that mathematics is in danger in universities from an attempt by administrators to reduce its presence. At the University of Leicester, where I am an emeritus professor, a considerable number of staff described either as “pure mathematicians” or “managerial sociologists” have been sacked. The so-called pure mathematicians have been sacked on account of the unpopularity of maths, as revealed in perennial student surveys. Mathematical subjects tend to be unpopular with students because they are challenging. Nevertheless, they are the backbone of degrees in science, engineering and other subjects. I suspect that the managerial sociologists have been sacked because administrators are loath to recognise the expertise of others in a subject in which they believe they have significant experience. Be that as it may, my present concern is with mathematics.

Very few mathematicians would call themselves “pure” mathematicians. They describe themselves as mathematicians without qualification. Pure maths is concerned with giving order and clarity to the subject of mathematics, of which the exposition stands in constant need of reform. Applied mathematics, as the name suggests, is concerned with applying mathematics to substantive issues. We cannot have the one without the other. Legislation that declares that mathematical advances are not science unless they are advances in representing the nature and behaviour of the physical and material universe speaks of a wrong-headed attitude on the part of administrators who may have little understanding of the nature of science. In derogating the role of mathematics, this attitude could have dire consequences. I hope that the acknowledgement of the importance of mathematics to science will serve to counteract the wave of intellectual vandalism occasioned by the insurgency of administrators that is sweeping through British universities. I beg to move the amendment standing in my name, but I propose that it should stand or fall with the other amendments in this group.

I think it may be helpful to your Lordships if I explain that only the first amendment in a group is moved. The noble Lord is speaking to his amendment, but it is moved or not moved only according to its place on the Marshalled List.

My Lords, I rise to speak in support of Amendments 12 and 14, to which I have added my name, and the other amendment in this group. I hope the House will appreciate that this is not a subject that was touched on in Committee—so it is fresh for consideration by the House today. It is nevertheless very important. The noble and gallant Lord, Lord Craig, and my noble friends Lord Browne and Lord Hanworth have set out the case in some detail, and I do not want to repeat some of the examples they gave, very good though they are. However, I emphasise that mathematical sciences are vital not just to the future of science but to the work of ARIA.

Amendments 12 and 14 are very simple. They would insert the words “and mathematical” in the definition of scientific knowledge and scientific research in Clause 11. These amendments arise because the mathematical community is unsure about whether mathematical sciences are sufficiently included in the definition in the Bill—and it is because the mathematics community is unsure that this debate is taking place. Sometimes people think of sciences as only, or mainly, the core sciences of biology, physics and chemistry, but this is not the case. Mathematics underpins all the other sciences —hence we now use the term STEM as a routine acronym.

Perhaps I could just briefly introduce into this debate the definition of mathematical sciences that is accepted in the community: it is a group of areas of study that includes, in addition to mathematics, those academic disciplines that are primarily mathematical in nature but may not be universally considered as sub-fields of mathematics proper, such as statistics, computer science, computational science, data science, quantitative biology, operations research, control theory, cryptology, econometrics, theoretical physics, continuum mechanics, mathematical chemistry and actuarial science.

Noble Lords will note that in the Bill as it stands, the wording reads

“any of the sciences (including the social sciences)”.

Noble Lords might be wondering why in this Bill the social sciences have been specifically included. I think it reflects something of a mistaken belief for many years that social sciences are somehow not proper science, but attitudes have changed over the years. Noble Lords might cast their minds back to how we dealt with the Ebola crisis: social sciences had a very big part to play in that, and they are also playing a part in how we deal with Covid. My point is that I fully support the reference to social sciences, but I am arguing that the Bill needs specifically to add the phrase “and mathematical sciences”, because the work that ARIA does will be bound to involve maths in one way or another.

As I said, the maths community itself is unsure about its position. I want to quote from something that appears today on the government website—the BEIS website—about the definition of science, to which the noble and gallant Lord, Lord Craig, referred. I shall quote it in more detail. It says:

“Mathematical advances in and of themselves are not science unless they are advances in representing the nature and behaviour of the physical and material universe.”

That is what is causing unease, because this is too narrow a definition of the mathematical sciences when applied to ARIA and its work. These mathematical sciences will contribute hugely across a broad spectrum, including security, computing, astronomy and economics, all of which will be impacted by ARIA. Mathematics is visibly at the core of a great deal of what is at stake here.

I have many more examples but, in view of the late hour, I shall not refer to them—but they all illustrate in one way or another the importance of mathematics. However, I shall just point out that the Heilbronn Institute for Mathematical Research, which is a strategic partnership between GCHQ and universities, within which academic mathematicians contribute to problems of national security, is going to be a very important part of the work that ARIA does. That is another reason for adding the words in the amendments that I mentioned.

I look forward to the Minister’s reply, because what she could do very quickly and easily is reassure the mathematical community that it is included in the definition under Clause 11 and that, to some extent, this whole debate may have been unnecessary, as long as it is made clear from the Dispatch Box that mathematics is valued and included.

My Lords, I have signed and I support Amendments 12, 13 and 14. As someone immersed in issues relating to AI, machine learning and the application of algorithms to decision-making over the years, I, too, support Protect Pure Maths in its campaign to protect pure maths and advance the mathematical sciences in the UK—and these amendments, tabled by the noble and gallant Lord, Lord Craig, reflect that.

The campaign points out that pure maths has been a great British success story, with Alan Turing, Andrew Wiles and Roger Penrose, the Nobel Prize winner—and, of course, more recently Hannah Fry has popularised mathematics. Stephen Hawking was a great exemplar, too. However, despite its value to society, maths does not always receive the funding and support that it warrants. Giving new funding to AI, for instance, risks overlooking the fundamental importance of maths to technology.

As Protect Pure Maths says, the 2004 BEIS guidelines on research and development, updated in 2010, currently limit the definition of science and research and development for tax purposes to the systematic study of the nature and behaviour of the physical and material universe. We should ensure that the ARIA Bill does not make the same mistake, and that the focus and capacity of the Bill’s provisions also explicitly include the mathematical sciences, including pure maths. Maths needs to be explicitly included as a part of scientific knowledge and research, and I very much hope that the Government accept these amendments.

I thank the noble and gallant Lord, Lord Craig of Radley, and the noble Viscount, Lord Hanworth, for tabling Amendments 12 to 14, and those who contributed to the debate. We recognise the fundamental importance of pure and applied maths to other sciences, and as the focus of scientific inquiry in its own right. It is right that we take the opportunity to note that importance here.

The noble and gallant Lord gave a number of potent examples of the importance of mathematical contributions to scientific innovation. Much like, we hope, the projects and advances that will be supported by ARIA, breakthroughs in mathematics can lead to unexpected leaps of progress in separate fields or find application in solving intractable and seemingly unrelated problems in other areas of science. As we just heard from the noble Lord, Lord Clement-Jones, who rightly reminded us, the UK has been home to many outstanding mathematicians of global significance, from Isaac Newton to Andrew Wiles.

However, I emphasise to the noble and gallant Lord, Lord Craig of Radley, and the noble Viscount, Lord Hanworth, that the drafting of the clause that they have sought to amend follows existing powers in the Science and Technology Act 1965, and the Higher Education and Research Act 2017. It is important that it does so. Research into mathematics, including pure mathematics, has been funded in the UK using those powers for over five decades. Maths research is funded by the Engineering and Physical Sciences Research Council—one of the research councils that make up UKRI. The EPSRC spends more than £200 million on this theme, which includes research into maths in areas from number theory to topology and artificial intelligence. It is clear that maths is included in the definition of sciences as currently included in the Bill.

The 2004 guidance referenced by the noble Viscount, Lord Stansgate, predates the Higher Education and Research Act, which makes it clear that maths is included in the definition of science as drafted in the Bill. There is no need to particularise the interpretation through these amendments. Indeed, it would clearly be undesirable to seek to list exhaustively every possible field of scientific inquiry within the Bill. Departing from the existing embedded way these powers to fund research, including in mathematics, are drawn would be unhelpful.

ARIA’s programme managers will set ambitious programme-level goals. Although we do not often expect programme-level goals to lie within pure mathematics, it is right to highlight that ARIA might need to draw on pure and applied maths to achieve those goals, given their importance within the new fields noble Lords highlighted. It is right that ARIA may fund research in those areas.

We are confident that any activities of this nature that ARIA will seek to pursue are covered by its functions, and that the results of scientific research will encompass the results of mathematical inquiry that might be needed by ARIA. ARIA’s supplementary powers provide further reassurance. When exercising its functions, such as funding a programme with a specific scientific objective, ARIA’s supplementary powers allow it to do whatever is necessary in support of that. It is therefore the case that any mathematical endeavours that ARIA needed to draw on for a programme—for example, in support of a particular objective for machine learning—could be funded under its supplementary powers as well.

On that basis, although the noble and gallant Lord and the noble Viscount have raised important points, I hope they will be satisfied that there is no need for their amendments and feel able not to press them.

My Lords, I thank the Minister and all those who spoke to this. Quite clearly, there is a difference of view between the Government and those of us who have spoken to them about how we should treat mathematical sciences in the present age. It is a pity that it has not been possible for the Government to agree to the amendment, but, in view of the late hour, I shall withdraw it.

Amendment 12 withdrawn.

Amendment 13

Moved by

13: Clause 11, page 5, line 3, at end insert “and pure and applied mathematics”

I fully accept that the Bill has adopted the same definition of science found in previous legislation. However, this is not a reason for continuing to accept an obtuse and damaging definition. I beg leave to withdraw the amendment.

Amendment 13 disagreed.

Amendment 14 not moved.

Schedule 1: The Advanced Research and Invention Agency

Amendment 15

Moved by

15: Schedule 1, page 6, line 18, leave out “five” and insert “four”

My Lords, in moving Amendment 15, I will also speak to my Amendments 16 and 18 in this group. With these amendments, I am returning to the issue of governance of ARIA. We debated these or similar amendments in Committee, and I thought I would give my noble friend the Minister another chance to answer the issues that I raised.

Amendment 15 is directed at the maximum size of the ARIA board. In Committee, I explained that large boards are subject to weaknesses such as passive free-riding, dislocation and groupthink. While it is true that there is no magic formula determining the size at which boards become ineffective, studies generally agree that, once they get to 13 or 14, they do not work well.

Schedule 1 has no overall size constraint but does require a majority of non-executive directors. One way to constrain the size of the board is therefore to limit the number of potential executive directors. My Amendment 15 would limit those executive members to six, which implies a board size of 13, assuming that non-executives are appointed simply to achieve a bare majority. The current Bill would allow a board size of 15 with a full complement of seven executives.

In Committee, the Minister said that the Government believed that a size of 15 was

“in line with standard practice”.—[Official Report, 17/11/21; col. GC 103.]

It might well be standard practice for public bodies that BEIS creates, but I am sure that it is not in line with any of the literature on effective boards. I would hope that BEIS, in particular, would want to be at the forefront of best practice in this area.

Amendment 18 is about the executive/non-executive balance on the board, and I full support a majority of non-executive directors. I am concerned, however, that by allowing a quorum of half the members, as paragraph 10(2) does, a quorum could be achieved with only one non-executive member. My amendment requires a majority of non-executives for all board meetings, in order to ensure that important decisions are not taken by a dominant executive cadre.

My final amendment in this group, Amendment 16, would delete a power to pay pensions or gratuities to non-executive members, which I believe is drafting from another era and which keeps being repeated merely because it follows precedent. My noble friend the Minister said that the Government had no intention of using the power, but curiously then said that the Government wanted to retain it in the Bill. On the basis that the Government do not want to use the power, I hope my noble friend will now agree with me that it is time to read it its last rites.

Lastly, I will offer a comment on Amendment 17 in this group, tabled by the noble Lord, Lord Morse. I completely understand the thinking behind this amendment, but I believe we should be very wary of imposing this kind of legal straitjacket. We need ARIA to be the kind of place where high-quality people come to work. The concept of employment, which places a considerable fetter on life beyond ARIA, could well end up with exactly the wrong kind of people being attracted to work in ARIA. I agree with the earlier remarks of the noble Lord, Lord Broers, on this. I beg to move.

My Lords, I just repeat a remark I made in Grand Committee in response to the noble Baroness’s speech: I think that she is expressing best practice, certainly as I understand it, on how boards should function. I reconfirm the supportive comment that I made before.

Amendment 17 stands in my name. I thank the noble Baroness, Lady Chapman of Darlington, and the noble Lord, Lord Browne of Ladyton, for their support. My amendment is intended to address potential abuse; I just put that clearly in people’s minds to start with. It sets out to do so in this way: it specifies that those who have been employed in a department that is either supervising or sponsoring ARIA and have been directly involved as part of the team doing so should not be employed by an entity that has benefited from ARIA funding within five years of leaving the department. It also, in proposed new paragraph 8A(2), applies the same five-year exclusion to persons who have been employed in ARIA itself and who might seek employment in an entity that has benefited from ARIA. Finally, in proposed new paragraph 8A(3), it provides that a person falling under either of the two new paragraphs I mentioned shall not acquire a proprietary interest, either directly or indirectly, in intellectual property or bodies owning intellectual property that have benefited from ARIA for a period of five years.

I will just explain the point. This is all about making sure that decisions are made independently of private interest. The amendment provides that officials in a department supervising ARIA who might make decisions and subsequently gain employment, or those working in ARIA making a funding decision to benefit a body applying for funding from it, need a gap—a cordon sanitaire—before they turn up working for that company or directly investing in it. That is ordinary protection of independent interest. It is important to understand.

I come from the world of scrutiny. Scrutiny has intensified a great deal over the past few years. The ARIA project will be scrutinised many times, not just by the National Audit Office; other scrutineers will feed from its work. That is our normal experience. This will be very closely examined, and if you find people popping up working for downstream companies, it may be viewed within the technology industry very tolerantly, but it will be viewed much less tolerantly in the journalistic or scrutiny community, if I may call it that, so putting strong protection in place now makes a lot of sense. That is what I seek to achieve in my amendment.

Would it be better, rather than having the amendment, to rely on a complex set of regulations that are supposed to govern these matters? Unfortunately, when you look at the record of success in such an approach, the results are extremely patchy and unconvincing. That is because, generally speaking, these codes are applied in quite a light way that understands people’s desire to have employment, rather than the importance of being seen to protect the taxpayer and the public interest.

In my view—this is the purpose of my amendment—it is better to go firmly in the direction of protecting the public interest now and prevent people making decisions that could be alleged to arise from conflict of interest.

I speak principally to support Amendment 17 in the name of the noble Lord, Lord Morse, to which I added my name, but having heard the noble Baroness, Lady Noakes, twice—in Committee and today—on Amendments 15, 16 and 18, I am persuaded by her simple, accessible and convincing explanation that changing the Bill in this way would be to its benefit. Hearing from the noble Lord, Lord Morse, that the amendments reflect current practice, I am even more convinced, so I have corroboration and I support them.

I have had the benefit of having had the noble Lord, Lord Morse, explain his amendment to me on a number of occasions. If I was going to be partisan about this, I could think of a lot of contemporary examples of behaviour which the existing ACOBA system has manifestly failed to deal with. Apart from anything else, recent history has damaged significantly the reputation of politics and politicians as a group, and it has bled into civil servants because of the apparent practice of senior civil servants taking positions in private industry while continuing to work in the Civil Service. I have no intention of going through all of them. I am just convinced by the argument made by the noble Lord, whom I have known for a long period, that if we do not recognise that this could become a problem, and if it does become a problem, it will seriously damage ARIA and we should protect it—at the very least by including these provisions in the Bill and indicating that Parliament decided that people who have had those experiences should not move to other positions where it looks as though they are exploiting the information that they had for their own personal gain, and therefore operating in a way that most people in the country would think unethical. If in these circumstances we do not have a narrative that says, “We in Parliament are concerned that this may happen and took the steps that we could to prevent it from happening”, we will be complicit in the damage that will inevitably be done not only to ARIA but, yet again, to those who work in the public service as officials, civil servants, Ministers or just politicians.

My Lords, I recognise the expertise of noble Baroness, Lady Noakes, on issues of corporate governance and, like my noble friend Lord Browne, I have enjoyed listening to her in Committee and again today. I will be interested to hear what assurances the Minister is able to give as a consequence of her amendments. I have learned a lot from her through this process and I look forward to learning more in the future.

I welcome Amendment 17 from the noble Lord, Lord Morse, whose case is no doubt bolstered by his experience over many years. It is a real joy to me that we have come to this House at more or less the same time. This is our first Bill together, and I am very pleased to add my name to his amendment.

There have long been concerns about “revolving doors” in politics—it is not something that started with this Government—but my noble friend Lord Browne was correct to observe that concern about issues such as those dealt with by Amendment 17 is growing, and frankly the Government have brought it on themselves. There is deep concern in the public mind about these issues and we shall see on Thursday what the people of North Shropshire make of it all.

I am struck by the fact that the Minister has taken the amendment from the noble Lord, Lord Morse—a very good amendment which we support—and has directed us to look at paragraph 11 of Schedule 1, which states:

“The Secretary of State may by regulations make provision about the procedures to be adopted for dealing with conflicts of interest.”

They may, but “may” is doing a lot of lifting there, and obviously they may not as well, so there is nothing to give us any assurance that the danger of which the noble Lord, Lord Morse, is correct to warn us could be averted by that provision. We are just not buying it. Although the Minister has, for illustrative purposes, provided a suggestion of how the regulations might look, that does not provide us any assurance whatever.

Given the Minister’s reluctance to accept any of the suggestions that we have made—none of the suggestions, from FoI to reporting, have been taken up by the Government—he is somewhat leaving ARIA exposed, in the way that the noble Lord, Lord Morse, explained so well. We want this organisation to succeed, but because of the Government’s rigidity on these issues, the fear is that we are setting it up with a weakness: this lack of transparency and ability to challenge.

The Minister is kidding himself if he thinks that these issues will not be scrutinised and that some of the problems that may emerge will not somehow get out. I am sure that the Public Accounts Committee will enjoy crawling all over this when it gets the opportunity to do so. We want this to work, but I am afraid that the Government’s approach is not doing ARIA any favours.

I want to hear what the Minister has to say and whether something can be done to provide us with the assurance we are looking for that ARIA will not be characterised—or mischaracterised, I hope—as some sort of secret agency. That would only cause this fascination and determination to probe into its activities to grow.

Before I start, I will deal directly with the comments of the noble Baroness, Lady Chapman, which I thought were a little unfair. We have responded to a number of the points she has made, and we have adopted some of her suggestions on transparency, delivery partners and regional funding. We obviously have not gone as far as she would like in some respects, but it is slightly unfair to say that we have not listened at all to many of the reasonable suggestions that have been put forward from all sides. I will come on to another suggestion that we will adopt shortly.

I start by responding to the amendments put forward my noble friend Lady Noakes. I thank her once again for her considered contributions, which, together, aim to ensure that ARIA is a well-governed and effective agency. I certainly echo the comments of the noble Baroness, Lady Chapman, about her great knowledge of corporate governance. My noble friend’s Amendment 16 would remove the Secretary of State’s power to determine a pension or gratuity for non-executive members. As I said in Committee, it is in fact not our intention to offer these for ARIA’s non-executive members. In consequence of the helpful suggestions and debates we had on that occasion, I have reflected further on the functions of ARIA and the duties and responsibilities we expect of its non-executive members, and I am pleased to be able to confirm to my noble friend that we do not see circumstances in which this power will be required. I am therefore able to say that the Government will support this amendment, and I thank my noble friend again for bringing it forward.

I turn to Amendment 15, also tabled by my noble friend Lady Noakes, who spoke about reducing the maximum possible number of executive members from five to four. The chair of the agency will have responsibility for appointing ARIA’s executive members. Following government guidance for corporate governance, we will set out the responsibilities for ARIA’s chair to review the performance of ARIA’s board and its members in the framework document. This will include evaluating the composition of the board and considering its size, diversity and balance of experience and skills. We expect that, in the initial phases of ARIA, this will tend towards a small board structure. However, I believe that it is important to retain at least some flexibility in the legislation to account for ARIA’s future needs as appropriate, and to allow for a slightly larger board if necessary.

As ARIA will be working across the public and private sectors, using a range of funding mechanisms and funding research at various stages of technological development, I do not think we should rule out a slightly larger arrangement so that ARIA can bring knowledge from a range of backgrounds and ensure that this is represented at board level. I thank my noble friend for her thoughtful remarks on groupthink; it is this diversity of thought and experience that would be the best antidote to such an outcome.

Again, it will be the chairman’s responsibility to consider the best overall balance and composition for an exemplary board to lead this new and unique agency. Clearly, having an experienced and effective chairman is crucial for the good governance of ARIA, as it is for any other organisation, and we will be running the recruitment campaign for such a candidate shortly.

Turning to Amendment 18, also from my noble friend Lady Noakes, I agree that the quorum for ARIA should ensure a majority non-executive presence, as far as is practicable. I believe it is most appropriate to follow the “Governance” section of the Treasury’s specimen framework document guidance and set this out in ARIA’s framework document, rather than on the face of the Bill. We will agree the right form of words with the new chairman when they are in post, so that this is implemented in a way that is practical for the organisation. For example, there may be four executive members and five non-executive members, and we will need to ensure that a quorum can be achieved if one non-executive member is absent because of illness, for example. This will allow the chairman some flexibility to determine how to deal with absences, such as making arrangements for proxy voting or duly authorised representatives, and this reflects back on the chairman’s duties to lead the board. I hope that my noble friend is therefore suitably reassured. We agree with the intention behind her Amendment 18, but believe it is best to implement this outside the Bill itself.

Amendment 17, tabled by the noble Lord, Lord Morse, sets restrictions for ARIA’s staff and its sponsorship team in BEIS in respect of working for any organisation that has received financial support from ARIA, for five years after terminating their contract. I know the noble Lord, Lord Morse, brings an extreme amount of expertise on this subject from his work as the Comptroller and Auditor-General at the National Audit Office, when he spread fear throughout civil servants—and Ministers, I might add—across Whitehall, he will no doubt be delighted to hear. I have carefully considered his 2015 report on conflicts of interest across government. The report discusses business appointments policy where individuals transferring from public to private sector roles may be associated with conflicts of interest.

Those working in ARIA’s sponsorship team will be civil servants and will therefore be required to comply with the Civil Service’s business appointments policy. For senior civil servants, rules apply until two years after leaving the Civil Service; for those below, they normally apply for one year after leaving. Before accepting new employment, individuals must consider whether an application to the Advisory Committee on Business Appointments, which provides advice to the Prime Minister, is required under the rules. There are several considerations, including whether civil servants have been involved in developing policy affecting their prospective employer.

As these rules do not consider non-civil servants, I can confirm that ARIA will be required to implement its own business appointments policy, which will be agreed with the new chairman once he or she is in post. I believe this is the appropriate mechanism for guarding against abuse of office, undue influence or profiteering. Alongside this, ARIA will be required to have a conflict of interest procedure, which, at a minimum, will require the declaration and evaluation of board members’ interests, so that anyone with a conflict of interest is therefore not involved in any financial or executive decision-making relating to that interest.

Noble Lords will also be aware that the Bill allows for the Secretary of State to set out ARIA’s conflict of interest procedures through regulations, as the noble Baroness, Lady Chapman, referred to, to give them a legislative footing if needed, and I shared draft regulations for illustrative purposes with Front-Bench colleagues and the Cross-Bench Convenor’s office last month. ARIA will also be required to set other necessary policies, including a whistleblowing policy and a gifts and hospitality policy. Those working for both ARIA and its sponsorship team in BEIS will be required to follow the procedures in place, so that decisions are not made with other or future interests or bias in their minds.

We should not indiscriminately deny talented people the chance to share their skills and experience where it can genuinely add value. It is not unlikely to expect those working in ARIA or its sponsorship team to have a passion for science and research. They may want to move on to interesting careers at a university, research institute or exciting tech start-up. I am concerned that such an amendment could deter talented people from applying for these positions, as it would limit their career prospects.

I thank the noble Lord, Lord Broers, for his earlier contribution to the discussion on the amendments in the first group. The noble Lord is right that we must keep and motivate brilliant people, to help to make a success of ARIA, rather than creating a culture of distrust among its employees right from the start. I also welcome the remarks from my noble friends Lord Bethell and Baroness Noakes in supporting that sentiment.

On a practical point, these employees’ future roles might be in an organisation that received funding from ARIA but in an entirely different department, role or project. Furthermore, ARIA’s sponsorship team will not be involved in assessing funding programmes. It is key to the model we are pursuing for ARIA that it will have the autonomy to make its own funding decisions. That will not be down to civil servants, the Government or Ministers.

With particular reference to proposed new sub-paragraph (3) of Amendment 17, even when ARIA’s staff wish to pursue future roles connected to the work that they did at ARIA, that could be extremely valuable for the outcomes that ARIA is being created to achieve, such as the generation of new technologies and businesses in the United Kingdom. For example, a programme manager will bring forward a proposal that they are passionate about developing at ARIA. At the end of the programme, they may develop a successful proof of concept, thanks to all the contractors involved. The programme manager is then keen to take the benefits of ARIA’s funding through to commercialisation with the company that was funded to develop the original work. Such an amendment would outright ban the collaborative and seamless funding of R&D that we should be encouraging between the public and private sectors.

Let us not forget that ARIA will be funding high-risk research, which may be in extremely niche fields, with very few people in the country working on it. We should capitalise on these networks, encourage them to work together and follow their ideas through to real outcomes, with processes in place to consider and act on any conflicts—but on a case-by-case basis.

I hope I have clearly illustrated the potentially damaging unintended consequences of placing such broad restrictions in legislation. I hope I have also assured noble Lords that ARIA will be required, as is any other arm’s-length body, to have clear and robust business appointments and conflict of interest policies in place. On the basis of the assurances that I have been able to provide, I request the noble Baroness to withdraw her amendment.

My Lords, I thank those noble Lords who supported the amendments that I spoke to in this group. There was a small, select bunch of us, but it was a high-quality debate.

I am grateful to my noble friend the Minister for the further helpful explanation that he has now given in relation to my Amendments 15 and 18. I should say that I am thrilled that the Government are accepting my Amendment 16. It remains only for me to say thank you and beg leave to withdraw Amendment 15.

Amendment 15 withdrawn.

Amendment 16

Moved by

16: Schedule 1, page 7, line 36, leave out paragraph (a)

Amendment 16 agreed.

Amendments 17 to 19 not moved.

Amendment 20

Moved by

20: Schedule 1, page 10, line 22, after “may” insert “with the agreement of the Secretary of State”

My Lords, we will all be relieved that we are on the final amendment of this Report stage.

Amendment 20 would have the effect of requiring the consent of the Secretary of State if ARIA seeks to use the powers in paragraph 17(2) of Schedule 1. These powers allow ARIA to borrow money, to acquire and dispose of land, to accept gifts, to form and participate in partnerships and joint ventures, and to form companies. I have no problem with these powers existing; they are useful techniques which are commonly used in research and development activities and scale-ups. I am, however, against public bodies taking on liabilities which are counted as public sector liabilities and which will end up being footed by taxpayers if they go wrong, without any controls. I am also wary of private sector counterparties, who may well be queuing up for a free ride on the public sector’s credit lines, knowing that they will be rewarded for success and may not have to pick up the tab for failure.

My noble friend the Minister replied to my amendment in Committee, saying that conditions would be attached to grant funding given under Clause 4 of the Bill, and that borrowing would have to meet stringent requirements set out in Managing Public Money. The Minister also said that any borrowing would have to be agreed with HM Treasury in advance. I accept that it is possible that this will work perfectly well, with ARIA agreeing to abide completely by whatever the Treasury and BEIS say. It is certainly likely to toe the line all the time that it is dependent on grant funding from BEIS.

My question to the Minister is based on a different scenario. Let us assume that BEIS has handed over the £500 million committed for this Parliament and that the Chancellor has said that there is no more money. We know that the power to wind up ARIA will kick in only after 10 years, so what does the Minister think will happen in the years between, say, 2024 and 2032, with no more grant money arriving? My guess is that borrowing money would become irresistible. Moreover, the value-for-money test in Managing Public Money will be very easy to satisfy, because the counterfactual of using public money will not exist. Complex structures that look like partnerships or joint ventures could actually be borrowing by another name—I have seen that all before.

That is why I believe it would be safer if this Bill embedded a consent requirement. A consent requirement might look rather heavy-handed at first sight, but it could easily be tempered by delegation arrangements which did not require all transactions to have to be sent to the Secretary of State for approval.

I look forward to hearing how the Government think they can keep control of an organisation which has unconstrained statutory powers once the Government have lost the lever of grant payments. If they are not certain that they can deal with all eventualities, I respectfully suggest to my noble friend that an amendment such as this one, or something similar, is needed. I beg to move.

My Lords, this is a very interesting discussion initiated by the noble Baroness, Lady Noakes. At first, I thought she was suddenly getting into big state interference, but that is obviously not the case. It is curious why ARIA would need to be able to borrow money when it is being given a budget from the Government. Presumably the intention is not to give it the Government’s credit card also, because we will be underwriting the borrowing that takes place—I think. I am not quite sure on this; perhaps the Minister could explain some circumstances in which the borrowing of money would be needed and how that would be beneficial to ARIA.

On gifts, we are not quite clear what that is about. If the noble Baroness wanted to test the will of the House—I suspect that she does not want to, this evening—we would be interested in supporting that.

We really need to get some assurance from the Government, particularly on this issue of borrowing money.

Once again, I thank my noble friend Lady Noakes for her thoughtful and constructive contributions throughout the progress of the Bill so far. However, she will be disappointed to know, I am sure, that on the substance of her Amendment 20, I am not convinced that adding a legislative requirement for the Secretary of State to approve how these supplementary powers are exercised would be beneficial to ARIA’s effective function or enhance its accountability measures that are already in place.

On ARIA’s ability to borrow money, I recognise that this has been consistently raised throughout the passage of the Bill by my noble friend. I thank her for her previous probing amendments on this matter, which prompted an important conversation on the balance between ARIA’s activities and the appropriate government oversight. As I outlined in correspondence with my noble friend, any borrowing would be contingent on ARIA complying with the rules of Managing Public Money and subject to approval by Her Majesty’s Treasury.

ARIA’s allocation and delegation letters, which the CEO of ARIA will be duty-bound to adhere to, will confirm that ARIA will be subject to, and comply with, all Managing Public Money rules that relate to borrowing. Managing Public Money sets robust conditions on borrowing, and states:

“Public sector organisations may borrow from private sector sources only if the transaction delivers better value for money for the Exchequer as a whole.”

Ensuring that ARIA’s expenditure is made in accordance with Managing Public Money guidance, except for in certain agreed circumstances, will be a condition of the budget ARIA receives from BEIS in its allocation and delegation letters from the BEIS Permanent Secretary to ARIA’s CEO.

There is an expectation of a level of faith between the Government and their arm’s-length bodies. This understanding of trust, and all of ARIA’s freedoms and powers, will be balanced with a number of core accountability principles. The CEO will be ARIA’s delegated accounting officer and will be personally accountable to Parliament for the stewardship of ARIA’s resources, decision-making and financial management. This includes the Public Accounts Select Committee, which will, I am sure, take an interest in such matters. The BEIS Permanent Secretary, as principal accounting officer, will retain an important oversight role, and has the power to make arrangements to ensure they are satisfied that ARIA’s systems are adequate and its finances soundly managed. The Permanent Secretary may intervene if ARIA is significantly off track, and in the unlikely scenario that serious concerns are raised, or there is financial mismanagement, the CEO’s delegated accounting officer authority can be revoked. I hope my noble friend is reassured that the mechanisms here are well established and robust and that they will be enforced.

Moving on to ARIA’s ability to form partnerships, I believe that adding a Secretary of State approval to ARIA’s activities in this area would significantly hinder its effective operations. In designing ARIA, we have put emphasis on the agency operating with significant autonomy from government, and with freedom from standard bureaucracy. Forming partnerships, such as providing grant funding to a project with a university or a business, will be an essential part of ARIA’s daily operations. We expect the agency to contract with, commission and collaborate with a range of different actors for each of its research projects—indeed, that will be one of its core functions.

We have designed this agency to be led and run by experts with technological vision. It is vital that these individuals are free from arduous processes so that they can act quickly, decisively, with autonomy and with clear authority. We should trust ARIA to have discretion over how it forms those partnerships, and I believe that requiring it to engage in a central government approval process for each partnership sits squarely contrary to its aims and purpose.

Moving to ARIA’s ability to form companies and to form and participate in joint ventures, my department is currently in negotiations with Her Majesty’s Treasury about the exact clearance processes ARIA will undertake for each of these transactions. The detail will be set out in ARIA’s allocation and delegation letters, the conditions of which the CEO, as accounting officer, will be duty-bound to comply with. However, I assure my noble friend that all iterations of this delegation letter will include sufficient assurances that ARIA’s internal assessment processes and capability are sufficiently robust. Given that these arrangements may need to evolve in the future, it would not be appropriate for this to be mandated at this stage in the Bill.

On ARIA’s ability to accept gifts, there are already stringent conditions on this in Her Majesty’s Treasury’s Managing Public Money that ARIA would need to comply with. ARIA would consult BEIS about gifts, and HMT’s approval is explicitly required for any gift over £300,000. Gifts made would be recorded in ARIA’s accounts and gifts received would be recorded in a register. These rules will also be confirmed in ARIA’s allocations and delegations letter from the BEIS Permanent Secretary.

ARIA’s power to acquire and sell land would be exercised only in compliance with the Managing Public Money guidance, which sets controls on the below-market sale of land, will compel ARIA to take professional advice when disposing of land and property assets, and will mandate ARIA to include land in its asset register.

Furthermore, introducing a blanket statutory requirement for Secretary of State approval would leave ARIA with less freedom than comparable arm’s-length bodies such as UKRI, which is able to exercise supplementary powers related to accepting gifts and the buying and selling of land without a legislated approval from the Secretary of State.

I appreciate that my noble friend has significant expertise and interest in the areas of financial management and propriety, and we welcome that. However, adding a statutory requirement here would not add value or challenge beyond what is already well established and enforced through Managing Public Money. Furthermore, as I have set out, adding the requirement to the forming of partnerships would, I believe, be genuinely detrimental to ARIA’s agile, autonomous operations, which I know my noble friend is keen not to prejudice.

Before I conclude on this final group of amendments, I once again thank all noble Lords who have taken an interest in this Bill for their excellent and constructive contributions throughout our scrutiny. ARIA provides us with enormous opportunities. I have been delighted to take the Bill through this House and engage with colleagues on all sides, who have focused on the task of providing appropriate scrutiny with enthusiasm, ability and great skill.

My Lords, I start by thanking again the noble Baroness, Lady Chapman of Darlington, for her support for my amendment. What the Minister has said in setting out in more detail how the various mechanisms work in the public sector to achieve de facto control over public bodies has been very useful. I hope he is right that this will work well in practice, and I completely accept his point that there has to be an element of trust and faith between BEIS and its public sector bodies. At the end of the day, this is a risk management decision on whether the balance has been set in the right place, given the particular circumstances of the public body.

I say to the Minister that I hope I shall never have to say, “I told you so”—I warn him that I have an elephantine memory. With that, it is late and time to withdraw my amendment.

Amendment 20 withdrawn.

Amendments 21 and 22 not moved.

My Lords, that concludes proceedings on Report of this Bill. As it has been referred to as the ARIA Bill, I am tempted to suggest that the noble Baroness, Lady Noakes, sees us out with a song.