Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science.
An alliance between William Hague and Tony Blair is one of the more unexpected developments in British politics. They came together last week to endorse a new report from Tony Blair’s Global Institute. It was boldly entitled “A New National Purpose: Innovation can power the future of Britain”. It is an excellent piece of work full of great proposals for improving the performance of our research system.
All of us who have worked to develop it have become frustrated that something already very good is missing the opportunity to be even better. That frustration comes through on every page of the report. The Treasury usually gets the blame and it does in this report. But the Treasury is just reflecting what was the conventional wisdom in British politics.
We used to be terrified of what was called “picking winners” when we thought it meant subsidising British Leyland. Somehow our nightmare memories of Red Robbo came to mean we could not countenance support for new technologies even though they are so disruptive that they are a threat to established old companies not a soft subsidy to them.
Tony Blair expressed the old doctrine very clearly back in 1996: “government has neither the duty nor the desire to choose new technologies. We know our role is not to pick winners but to create the competitive framework within which companies can compete”. And after the Coalition had successfully identified and backed key technologies Sajid Javid as Business Secretary dismantled the whole programme as part of his attack on what he saw as an “industrial strategy”.
That hostility has now collapsed. The main reason is that the sceptics have been outgunned by security experts. One Cambridge tech entrepreneur put the point to me very vividly: “The security agencies are so convinced of the significance of my technology that they won’t let the Chinese near it so why are the Treasury and the Business Department so convinced that we cannot possibly know if it has any value that they refuse to back it themselves?” That very good question has led to the collapse of the old doctrine.
But even as the sceptics have retreated there are still barriers to actually doing anything. The paper identifies many of them. The micro-management of our public labs makes it harder to operate them in a competitive way. Freedoms I negotiated with George Osborne were removed by the Treasury when UKRI was created in 2017: they should be reinstated.
The creation of the excellent new department of Science Innovation and Technology is the opportunity to remove another barrier referred to in the report. Any new research or innovation proposal has to be assessed by Whitehall in a cumbersome business case process. It was originally developed as a kind of cost-benefit analysis plus an assessment of management capabilities before building a new bypass or procuring a new computer.
But now it is applied to innovation – for which it was not originally intended. Often the main reason for the Government to back innovation is that it is too risky for commercial investors: early-stage support can de-risk it and make it investable. That is what they do in the US. But the clunky business case process does not really recognise this.
Often it comes along after Ministers have considered and agreed on the policy and a budget allocation has been agreed upon by the Treasury. It could have been painfully negotiated in the public spending review. But after all that then the Business Case process starts. It involves whole teams of officials and can last a year or more. It is so slow it makes it unlikely any decisions taken by Michelle Donelan and the Chancellor to support new technologies can actually be implemented before the Election.
The real test of any ministerial announcement of new spending on innovation is if there is a footnote in tiny print stating “subject to business case”. Roughly translated that means “after a report of about a hundred pages has been prepared and been assessed by five different teams of officials and it has then worked its way up through the spending department and the Treasury you may possibly see some spending in a year’s time if you are lucky.” The creation of the new department is an opportunity for radical reform of that process.
The report is full of useful suggestions for tackling problems like this. But that is only half the story. Those of us who are excited by science and tech and want to promote it are often carried away by what it can do and work out what we can do to help it. That is the approach taken in this report.
But as well as What the other half of the story is Why. We cannot assume that everyone just automatically assumes it is a good thing. They may fear it means they lose their job just so someone else becomes a millionaire or gets a Nobel prize. New research on public attitudes out today from the Campaign for Science and Engineering shows how much scepticism there is amongst the public about the benefits of R&D. The Chancellor and the Prime Minister may value it but the public need to be won over.
One great place to start is using new technologies to improve public service. This is not about creating some tech utopia in the future but practical steps which can yield real benefits to hard-pressed public services now. Better tech for better public services should be the message. That is a great way to back technology too – harnessing the power of public procurement. We mustn’t just support new technologies, we should ensure they are used to make public services and people’s lives better.