My Lords, the Advanced Research and Invention Agency Bill creates a new funding agency, ARIA. ARIA will support ambitious programmes of research and innovation, seeking the scientific and technological breakthroughs that transform the lives of people across the UK and around the world. It will further diversify and strengthen our UK funding landscape, which is appropriate at a time when public investment in R&D is increasing to £20 billion in 2024-25 and concerted action is being taken across Government to reinforce the position of the UK as a science superpower.
Our science system already benefits from a variety of funding streams: government spending through UKRI programmes such as the Strategic Priorities Fund, investment from businesses small and large, and charitable sources such as the new Wellcome Leap. That plurality is a strength that we are seeking to build on with ARIA. I therefore emphasise at the start that the motivation for ARIA’s creation is to innovate how research is funded, rather than any specific topics or areas which need investment. It is about enabling a new programme-led approach to public R&D funding, optimised for high-risk research—new for the UK, that is, as we have learned from the tremendous successes of this funding model around the world, mostly from the United States, which many noble Lords will of course be familiar with.
I emphasise the two core features of this approach: first, the expectation that the full benefits will be felt only over the long term, which therefore requires patience; and secondly, that for every programme that produces transformational benefits many will not, which requires a fairly unique attitude towards failure. The research community has been clear, in providing evidence and through engagement, that it wants to see these realities of the research process reflected in the new funding body. I hope that these issues similarly resonate with many noble Lords who are concerned with research and its funding. These features are central to the approach that we are seeking to take with ARIA.
Before expanding further on the role that ARIA will play, I must emphasise the existing excellence of the UK’s R&D system. Although the Government have engaged with and sought to learn from similar agencies in other countries, ARIA must be designed sensitively to the UK’s unique context. That means not copying wholesale from elsewhere, or blindly replicating features that might in some places be successful, without carefully considering the fit with the UK system. It also means remaining conscious of the scale of this new agency. ARIA’s £800 million budget is significantly less than 2% of overall UK R&D spending.
Looking at that total spending, ARIA represents a small addition at the high-risk end of the spectrum and is equipped to take a unique approach to supporting that type of research and development. Viewed through that lens, one important point should be clear: ARIA will complement rather than compete with the system-wide responsibilities of UKRI—the steward of our overall research landscape. Indeed, those responsibilities remaining firmly outside of ARIA’s remit goes hand in hand with the autonomy and freedom that we expect it to have.
ARIA is not an institution for responding to the day-to-day priorities of government, whether specific strategic challenges, or the Government’s desired balance of research, development and commercialisation activities. ARIA’s clear remit will be to pursue programmes of research focused on realising specific objectives that have the potential to produce transformative, long-term benefits. These objectives must be set by programme managers with deep technical expertise and brilliant ideas, who are empowered to pursue those objectives with a variety of tools and a single-minded focus and to fund research and innovation projects through contracting and granting in businesses, universities and elsewhere, drawing those contributors and their outputs together to realise their objectives. They must be free to do so, in the expectation that a small proportion of projects will in time lead to things that are truly extraordinary.
Taking this approach requires trust in the good that comes from investment in this type of R&D—the high-risk, long-term and difficult to measure, which we have clearly and repeatedly heard could be better provided for. But it is not only a matter of trust; the evidence for this R&D investment and its spillover benefits is compelling. Research suggests that while the annual private rate of return from R&D and innovation averages 20% to 30%, the social returns are two to three times higher.
Although ARIA will be specialised and—by taking a new approach—something of an experiment in how we fund UK R&D, it should be one that the whole system learns from. Aspects of ARIA’s unique approach might successfully be applied to other UK R&D funders, and I expect the potential benefits of that to act as an incentive for close integration with the wider research system, which will be so advantageous both for ARIA and other actors.
This Bill—and the creation of ARIA—aligns us with many other countries using the funding model that I have outlined. From the US to Japan and Germany, this programmatic approach to supporting the most ambitious research goals has been deployed, in some cases with extraordinary success, and it is entirely appropriate that at this point we seek to apply it through ARIA to benefit UK science, research and innovation.
I will now move on to the specific provisions of the Bill and set out how the key clauses relate to the ambition and approach that I have just described. I will first address ARIA’s functions, as detailed in Clause 2. ARIA is expected to primarily operate as a funder of others, which is reflected in its functions to
“do, or commission or support others to do”.
It is not restricted to operate at a particular point on the technology readiness level spectrum; indeed, individual programmes may require a mixture of projects that seek to solve fundamental science challenges alongside work to develop and apply existing knowledge in new contexts. This is reflected in Clause 2(1), which places development and exploitation alongside the conducting of scientific research. The range of financial support that ARIA can provide is expressly broad. This equips programme managers to tailor the funding that they provide so that it is appropriate to the specific recipient and project. This is essential in supporting a broad—even unexpected—coalition of researchers and organisations, and ensuring the diverse input that is known to be so beneficial in solving difficult scientific problems. The unexpected collaborations and high degree of interdisciplinary work that we expect this to support is one of the most compelling features of the programme-led ARIA model.
Clause 3 gets to the very heart of ARIA’s approach. Implicit in pursuing high-risk research and ambitious programme goals must be recognition that many projects and programmes will not fulfil their stated aims. The risk of failure is high, and that must be accepted from the outset if ARIA is truly to be equipped to tackle the most difficult challenges, with ground-breaking implications. Clause 3 states that ARIA may give particular weight to those ground-breaking benefits when supporting R&D activities which, almost by definition, carry a high risk of failure.
This is a valuable approach for two reasons: first, because of the transformational benefits of success in this arena—the scale of impact of technologies such as the internet, GPS or mRNA vaccines, all supported by the US DARPA, is difficult to overstate; and secondly, because of the spillover benefits that can accrue even from unsuccessful projects, such as collaborations and approaches that would not otherwise have existed, or progress that later proves vital for fields or problems unrelated to the original programme.
I turn now to the role of the Secretary of State, which is addressed in Clauses 4 and 5 and in Schedule 1. It is also notable by the provisions that the Bill does not contain. I have already spoken about ARIA’s need for autonomy, and on that basis, the role for the Government in its ongoing affairs must be limited. The provisions in Clauses 4 and 5 of the Bill represent a baseline to ensure ARIA’s operation, allowing funding to be provided and issues of national security to be addressed. The public money provided to ARIA requires an appropriate level of oversight and, accordingly, there are provisions to ensure core tenets of good governance in Schedule 1. This includes the Secretary of State’s power to appoint non-executive directors and the reserve power to introduce conflict of interest procedures should it prove necessary in future. However, there is no power for the Secretary of State to require a strategy, no specific power of direction over ARIA’s allocation of expenditure, and the Secretary of State’s information rights are deliberately limited to the exercise of their functions with respect to ARIA.
In these matters we have sought to strike a balance between protecting ARIA’s strategic and operational autonomy, which is essential to its remit, and providing sufficient assurances for the important role with which it is to be entrusted. This difficult-to-strike balance has been a theme of much debate on the Bill so far, and I have no doubt that that will continue to be the case in our House.
Continuing this theme, I will speak briefly on the exemptions the Bill affords ARIA from standard public sector obligations around procurement and freedom of information. There are practical and operational reasons for both. Exempting ARIA from the Public Contracts Regulations’ contracting authority obligations is a result of its fundamentally different way of operating compared to our other core public R&D funders. We expect ARIA not only to give grants but to commission and contract others to carry out research. The exemption ensures that ARIA can procure services, goods and works related to its research goals at speed in a similar way to a private sector organisation. This mirrors the successful approach taken by DARPA, which benefits from other transactions authority, giving it the flexibility to operate outside US government contracting standards.
On FoI, the pertinent question to me is where we want ARIA’s staff to direct their focus. Earlier, I spoke about people with deep technical expertise and brilliant ideas who are empowered to pursue their objectives. I believe that of course that should apply to all ARIA staff and that this ambition is the last thing we should move away from if we want this organisation to succeed. In this unique case, I do not think those people should be employed to administrate FoI requests. This approach should be viewed in the light of ARIA’s other statutory commitments to transparency through its reporting and accounts, subject to scrutiny by the NAO, and with the natural incentives towards openness of having an identity to build and collaborators to attract.
Returning finally to the purpose of the Bill before us, it is right that we recognise the existing excellence of our R&D system and that we add to it only in a considered way. However, I believe we should also allow ourselves to consider the possibilities in doing so and challenge ourselves on whether we could do more,
or better, in the ways we support UK science and innovation. The creation of ARIA, through this Bill, is an exciting addition to our research landscape, but it is also a judicious one, rooted in historic successes, drawing on international best practice and responding to the current needs of UK researchers. I beg to move.
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