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Paying for Science – Annual Lecture 1989

Speech by the Rt. Hon. Michael Heseltine MP to Save British Science, Cavendish Conference Centre, 20 Duchess Mews, W1.

“I would not pretend to be a scientist. But there are very few ministerial positions in government in which one is not brought face to face with the government’s role in research and development.

I have been fortunate in having held several such positions. At the Department of the Environment in the early 1970’s, I saw something of the work of the Road Research Laboratory in the furtherance of safety measures. As Minister of Aerospace I took over responsibility for the crisis surrounding Rolls Royce, the last development phase of Concorde, and I initiated the fusion of ELDO and ESRO into the European Space Agency.

I was responsible for Britain’s part in the European Airbus and had the task of setting up many of the Industrial Requirements Boards designed to give effect to the Rothschild principle of customer-contractor relationships. As Secretary of State for the Environment in the 1980’s and then as Secretary of State for Defence, I was responsible for the research programmes in a variety of different fields: in nuclear waste, disposal of toxic wastes, the construction industry and many others. As for Britain’s contribution to research and development in the defence field, that is a major source of controversy, perceived as pre-empting a disproportionately large share of our available scientific and technological resources.

Although I have never held responsibilities directly for the university or educational world, it is, I think, reasonable to claim that I have seen, both at home and abroad many of the complex issues which fall to Ministers to address. And I recognise that, for all the brave words, the range of government support and the means by which it is administered look markedly similar today to those that I first encountered.

I would like to thank you for inviting me to make this speech because it has provided me with an opportunity to think back over those earlier experience and to address, in the light of them, the implication behind your invitation: that British science needs saving.

Saving British Science?

The first question that occurs to me is, why should we be pre-occupied to save British science? If in the market place, people move into non-scientific activities, if people choose to pursue their careers in the arts, literature, or languages, if people are content to gravitate increasingly to the service industries – using other people’s scientific abilities, purchased in the market place – why should we be concerned about that?

There are, I believe, ready answers to these questions. First of all, because of the value of increasing knowledge and understanding for their own sake: mankind is inherently driven by curiosity and must be free to explore the limits of his mind and experience

Secondly, there is wider social purpose. An ever-widening base of knowledge is the hallmark of a civilised and civilising society in a very practical sense – diseases, disasters help for the disabled, safeguards for the environment, a whole raft of ever-emerging problems – require scientific knowledge. And I would say to our young people, reluctant – as it seems – to persevere with science at school or university, the pursuit of science and scientific research is not just the foundation of our future wealth as a nation but is the source of the safety of the planet at large.

In the final analysis, the advanced nations of the world are more than ever dependent on science-based industry. Investment in science, the training of their most talented young people in science, and the enhancement of the technological base of industry, are to all of them national priorities of the first order. To be part of the technological revolution sweeping through the modern world necessitates a strong science base.

So, if the arguments are conclusive and we come to the same conclusions as all other similar, advanced nations that we will compete in this arena, where should the emphasis of policy lie? There is, of course, a chicken and egg situation. If you have not got facilities of the first order, if you cannot demonstrate achievements at the exciting frontiers of knowledge, you will not attract new generations of young people by example. And it follows, if you do not attract the talented new generations, you will not develop a scientific base from which excellence can emerge.

The international context

We have to cut into this circular arrangement. It is obvious that, if we do not educate and train our young people to the standards of our competitors, the likelihood of decline is greatly increased. There can be no argument that the British are incapable of scientific excellence. For over a hundred years we have been at the forefront of the scientific revolution that has transformed peoples lives. Only the United States surpasses us in the number of Nobel prizes. Where we have been less successful is in the exploitation of our knowledge. There is no substitute but that we educate and train on the scale that will enable us to remain in the race.

Sadly, of all the OECD nations, the numbers in the UK involved in research have for some years been in decline. Not enough of our best brains pursue science at school or in higher education. Applications for science and engineering places are falling, with a serious knock-on effect on the pool for top rate post-graduates. The latest official forecast of science and engineering graduates and post-graduates contained in the January 1989 public expenditure White Paper projects an increase of only 2,000 to 46,000 by 1991-92. Thereafter, numbers are expected to level off before rising again towards the end of the 1990’s. Clearly there will be intense competition for this limited pool of talent.

After twenty years of debate, Britain is at last adopting a core national curriculum. The significance of this reform should not be underestimated in providing a deeper grounding in science and technology for all young people. But at the route of the problem must surely be the shortage of inspiring science teachers who could pass on their enthusiasm to future generations. We shall need to recognise the market value of such people. We shall have to consider what salaries will be needed if we are to ever to address this problem seriously. Too many who can teach science can rapidly move into more lucrative areas of business.

Sir Monty Finniston vividly identified a mare basic failing in his Royal Commission Report, “Engineering:  All our Future”, that there has been in this country, for many generations, a cultural hang-up about all things technical. But I also suspect that a basic distrust of science is engendered from an early age. There has long been a British prejudice in favour of the arts, grounded in the early traditions of classical education. In Japan, Germany and France technologists assume a more significant role in business and government.

It must follow that for us to devote resources to achieving the highest standard of skills is not with the philanthropic intention that Britain shall export our talent to other nations’ industries or universities with our talent. We are doing it, not just four our citizens as young people, but because we believe that by investing in them in their formative years, they will deliver the wealth and stimulus from which we can all benefit.

Spending and infrastructure

So the next step follows: that in a free society, the market place will buy the talent. And the talent will be attracted by both the financial rewards on offer, but also by the quality of scientific opportunity on offer. You simply will not keep top-class scientists by doubling their money and halving their research budgets.

You will not attract the best academic minds to work in the worst scientific conditions. So the facilities matter and we therefore need to ask whether, in both the public and private sector, the opportunities for young British people, hopefully educated and trained to the highest standards are such as to persuade them to fulfil themselves in our laboratories, universities and companies. And how best can we direct public and private resources to that end, for staying on the frontiers of research cannot be done on  the cheap.

A growth economy needs to invest in its intellectual assets. Though from the mid-1970’s we went through a period when university laboratories were, in large measure, living off the 10% annual growth of the 1960’s, the government has now given new importance to the funding of basic and strategic science. The Science Budget over the next three years is now planned to increase by £178m more than in previous projections. By 1990/91 it will be 27% higher in real terms than it was in 1988/89.

The turn-around is dramatic when one considers that in 1987 the forecast was for a 4% annual reduction up to 1991. Sixteen government departments, other than the Ministry of Defence, contribute £1.1bn directly to the nation’s research effort; the MOD’s expenditure is over £2.25bn; the five Research Councils pay out £641m in addition to the contribution of the University Funding Council. This is by any standard a major and influential commitment by the British government.

I draw a conclusion from all of this. It is that common sense prevails. The larger the pool of scientific resources you create, the larger the fish that will swim in that pool. There is, of course, a caveat. It is no use simply throwing money at the problem.

What should be the disciplines? Indeed, are there practical disciplines which can apply to the frontiers of scientific knowledge? Is not blue-sky research desirable of itself: the right to know, the right to explore, the right to pursue the unknown? You cannot put a price tag on so amorphous an objective. You cannot measure the returns in terms of dividends or wealth-increase. In many cases there is more gamble than risk. There may be no returns at all.

But the pool, of course, is not infinite. The government must define the scale of the public’s contribution to it, while companies are limited by the scope of their balance sheets. Judgements are unavoidable. Priorities have to be established.

And there is yet another dimension. For we do not live or trade on a desert island. But the closer one examines the realities, the more one discovers the relationships between mighty companies and the public procurement programmes of the governments behind them. Competition there certainly is. But the idea that it is competition on the level playing fields of the corporate sector is unrealistic, as it is foolish to behave as though it is the case.

Slowly, by patience – as the European Commission is attempting to do – we may change the rules. But we must be very clear that we do not in the meantime put our industry where, by the time the rules have been brought to common form, the strength of our industry has been eroded

We need to understand the scale of British expenditure.

UK research investment

The first fact is that gross expenditure on research and development has risen by over £1bn since 1981. The latest figures available to me show that in 1987 we spent £8,703m compared with £7,677m in the earlier year.

Can it be argued that by international comparison this is too low? In 1987, the last year for which I have complete statistics, Britain spent the same proportion of her GDP on research as France at 2.29% and considerably more than Italy at 1.19%. We do not, however, match the Americans at 2.71%, the Germans at 2.81% or the Japanese at 2.87%.

But of course these figures do not reveal the full picture. They ignore the critical factor: the size of the respective gross national products. Then the investment gap becomes evident.

OECD figures reveal that in 1987 Britain and France spent virtually the same at £9.4 and £9.5 billion. Germany spent £13.3bn, Japan £26.7bn and the United States £70.3bn.

Whereas in the case of our competitors, the percentage of GDP devoted to research has steadily risen (for example, in France from 1.97 in 1981 to 2.29, and in Germany from 2.42 to 2.81) the UK percentage has fallen from 2.42% to 2.29%.

As a result – as you know only too well – half of the “alpha” research proposals submitted to most of the Research Councils in 1987 and 1988 were underfunded. Britain’s output of scientific achievement remains outstanding, but the truth is that others are catching up.

There is, of course, the question  of why we have not been very effective at moving research results into product development, but it is no solution to that problem to reduce the level of fundamental research.

Industrial R&D

Higher profits in recent years have been reflected in higher R&D spending in the private sector in the last two years but there is a sizable leeway to make up.

These figures throw out their own questions.

  • What philosophy should the government adopt to the money it does spend?
  • Has the government got the balance right between military and civil expenditure?
  • How do medium-size countries such as ours give the sort of support to their industries as is available to our overseas competitors?

I do not see how it is possible to argue that the government’s withdrawal from near market research and the transfer of responsibility for this to the private sector can be questioned in theory. That is not to say that industry should not be encouraged to sub-contracting to our universities and polytechnics. The private sector will be more disciplined in the use of resources, will cut off false trails more quickly and exploit new developments more effectively. And quite frankly they are more likely to exploit them in their own plants and laboratories than public research organisations who can be more orientated to the publication and dissemination of ideas than their exploitation.

I do not say this as a matter of doctrine because I know enough of the workings of government to know that in practice most governments are deeply involved in making judgements every day about the use of public funds in support of specific projects, though certainly automatic grants are today the creatures of the past.

The requirement for government support is now invariably a large private sector commitment, and preferably collaborative projects.

‘Industrial strategies’

Across the world this trend to “privatise” the research and development programmes in the new market is discernible. But no one should confuse privatised research and development with a genuine market place. The United States, with far and away the largest commitment, operates a protected market for its hi-tech industries, offering generous partnerships for co-operation where an overseas partner has the technological lead but rigidly imposing the technology transfer provisions of national legislation in all other circumstances.

Japan has transferred much of the former government funding of MITI to its private sector but just look for examples of where any overseas company is allowed to gain access to the ownership of one of those companies and you will see a protected market at work.

It is within this real world of industrial politics that any British government must assess its priorities. But the real world contains another dynamic. The decade ahead is going to see the completion of the regional market of Western Europe. Its precise form or scale is secondary to the consequence for industry and our research programmes. The consequence will be mergers on a European scale. They may be driven by American partnerships pr they may be furthered by Japanese investment but ten years from now Europe will not think of national research programmes, for the simple reason that such programmes will not be able to match in scale or sophistication the American or Japanese challenges.

The more we continue to duplicate or triplicate our invention of the wheel in the nation states of Europe, the less competitive we will be with the two giants.

So company merger in Europe will bring together the research resources of the European countries. Competition for scarce national scientific resources will lead to collaborating but also specialisation at the academic level across the universities and research laboratories of Europe. Governments will be forced by the logic of the market place to follow this pattern.

I have set out my support for the view that industry is best trusted with the application and exploitation of research. It is the servant of the market place and its disciplines.

Government as a customer

But what of the circumstances where governments are themselves the market? The scientific and technological consequences in such cases can be profound. It is not so much a case of the jobs involved, rather the attainment of a technological base and the ability to set standards that flow from the availability of public procurement funds.

It is here that governments cannot avoid decisions about their role in support of their industry. And none of them, in practice, do.

Let me give five examples where in the pursuit of public policy, the government – as customer or in the discharge of its own responsibilities – has opportunities to enhance the technological base of our industry:

1) Euro-control for the management of our airspace. An area in which British industry has a direct stake in the British Government taking a lead is in the creation of a Europe-wide air traffic control system. As the largest single source and destination of all flights in Europe this is a major national interest. It won’t be easy, as the system must go wider than the twelve and countries over which planes fly have different priorities from those like us where they begin and end their flights – which is why only governments can create the necessary frame work.

But the prize is great. And not just in terms of quicker flights and less delays. A whole new market at the leading edge of technology, in the telecommunications, computer and other equipment industries would be opened up. The potential fillip to European industry is enormous. The Americans and japans will certainly challenge for the contracts. The French, Italians and Dutch, with the support of their governments, are gearing up. If the British Government plays its hand skilfully, British companies could have a major role as well.

2) The European Space Agency. There has been much questioning of Britain’s role in space.

I believe we are wrong to remain apparently detached as our competitors commit growing resources. There is an unquantifiable but inescapable message in such a policy. Younger generations need not just the prospect of financial reward in their choice of career, they also need intellectual stimulus and vision. If we want them to see the broad field of engineering and scientific research as the outlet for their energies, the exploration and conquest of space offers a unequalled challenge for the enquiring mind.

But Britain cannot afford such a journey alone. Indeed, it would be a massive waster of our resources to explore what others already know. The European Space Agency was a British initiative. We secured, from its creation, a European lead in communications satellites. We achieved in partnership what, alone, the limitations of our resources would have denied us.

3) The management systems of government. I have long been one of those pre-occupied to improve the efficiency and effectiveness of management in government. In a recent report, published by P.A. Management, we argued how far there is to go in converting Whitehall’s paper-based management information systems into the state of the art technology. Better value for money and improved public accountability are now on offer, but only following an investment in the latest equipment and programmes. As a parliamentarian, I am interested in how we use the taxpayers’ resources and account for them. Pace-setting contracts to equip Whitehall with the sophistication that a major multi-national company would take for granted, could present industry with a turn-key to world markets.

4) The relocation of civil servants. Decisions about the siting of head offices, the location of staff, where they are to live and work affect the distribution of wealth. We should disperse the civil servants from the South-East, not in a mean and penny-pinching way to the backstreets of provincial Britain, but to offices built as models, as exemplars of what dispersed and decentralised offices can be like – equipped for the space age rather than the steam age.

5) The relocation of our public sector research laboratories. There are no government research laboratories in the North West, yet the growth potential that centres around research laboratories is enormous. In March the government announced its plans to move the MOD Quality Assurance Division from Woolwich to Teeside by 1995. The Division is going north before companies it monitors move south. Some 1500 jobs are involved, of which 650 would be scientific and engineering post and 250 would be apprentices. But is had taken five years just to get the decision announced. And it is taking another five years to implement it.

I would like to see the use of the proceeds of the sale of expensive land in the south to build centres of excellence in the North. North West is the heart today of Britain’s booming aerospace industry. The heart, that is, of Britain’s private sector aerospace industry. But think what we could do to build on that. Why does Farnborough have to be in the road-congested, air-congested South East? Why not use that site for activities that have to be in the South and move Farnborough to the North West? Why not encourage local universities and polytechnics to direct more of their courses towards the pursuit of such technical excellence? Industry-sponsored science parks located near to universities would benefit enormously from the academic input. Why not, indeed, go further? Britain could encourage its space industries to locate around a Space Centre in the North West. Far and away the most important contribution to all this would be a dynamic private sector. But the concept and its initiation would have to involve a partnership in which the government, as the most important customer, recognised an enabling and sponsoring role.


In each of the examples I have given the government’s interest is an improved service or a more effective economy.

In each case the private sector has a massive role to play.

In each case government can improve our competitive ability and achieve better value for money.

Our scientific values would be enriched, our citizens better served, our industry strengthened.”