Volume 2: Science
Part 1: How research was commissioned and funded
Before 1986 - background
The 'arm's-length' principle - the Research Councils
The 'customer/contractor' principle
'Near-market research'
Overseeing the system (1): the machinery
Overseeing the system (2): the role of the Government's Chief Scientific Adviser (CSA)
Overseeing the system (3): the role of departmental Chief Scientists

The 'arm's-length' principle - the Research Councils

6.7 The idea that civilian Government Departments needed scientific support for their work dated back many years. A Medical Research Committee, the direct ancestor of the present Medical Research Council, and an Advisory Council for Research were established in 1913. These and the Research Councils established later remained outside and at arm's-length from Departments. As the Dainton Report of 1971 ¹ put it:

For many years past it has been evident that Government departments need scientific knowledge . . . and in some cases large scientific establishments to enable them to carry out their functions. But departments also need to be able to obtain help and independent advice from those who are engaged in strategic and basic science which underpins the work of several departments. It is essential that the advice and information from this source should be free from considerations of administrative and political convenience; but it does not mean that policies for strategic and basic science should be devised without proper regard for public policy. ²

6.8 In 1965, the existing Research Councils were reconstituted and new ones were set up, making a total of five. ³ Established by Royal Charter, their purpose was 'to foster research and training in the fields specified in their Charters'. ⁴

6.9 The Research Councils were 'non-departmental public bodies' and their staff (ie, scientific administrators and scientists employed by them at their headquarters and in the research units and institutes which they supported) were therefore civil servants. They developed research programmes in two main ways:

1. 'Response-mode' support - proposals, usually but not always short-term, were invited from scientists and universities and similar institutions on any topic within the Research Council's remit. These were subjected to peer review and supported, in descending order of merit, until the available funds had been deployed. The resulting portfolio of research projects was analysed against regular assessments of the needs of the stakeholder and of emerging research opportunities. This could lead to adjustments in the proportion of the budget allocated to different areas of science.
2. Specific initiatives might be taken to try to develop work in a particular area - for example where a new need had to be addressed early. These would normally be worked up by committees of scientists with relevant expertise, attended by officials from other relevant agencies (eg, other Research Councils and Government Departments).

6.10 Until 1972 the Research Councils were funded almost entirely from the Science Vote held by what was then the Department of Education and Science (DES) and were autonomous in respect of their research programmes - in other words, they decided what work to do without formal involvement or direction by government.

The 'customer/contractor' principle

6.11 Significant changes to this system were introduced from 1972, following the Rothschild Report. ⁵ Lord Rothschild was critical of the autonomy of the Research Councils in respect of 'applied' research, ⁶ concluding that:

This is wrong. However distinguished, intelligent and practical scientists may be, they cannot be so well qualified to decide what the needs of the nation are, and their priorities, as those responsible for ensuring that those needs are met. This is why applied R&D must have a customer. ⁷

6.12 He proposed that such research 'must be done on a customer/contractor basis', whereby:

The customer says what he wants; the contractor does it (if he can); and the customer pays. ⁸

A customer department might commission research for its own purposes, ⁹ or on behalf of others whose interests it represented or sponsored (eg, a particular industry, or particular groups in society, or the public generally). ¹⁰ The customer would be responsible for determining:

1. that research was needed to achieve a specified objective;
2. how much should be spent on that research; and
3. the relative priorities of different research programmes.

6.13 For such a system to work, Government Departments had to be capable of acting as 'intelligent customers' when commissioning research:

Subject to certain reservations . . . the executive departments should themselves ensure that they get what they want from the Research Councils. ¹¹

To do this, they needed to ensure that they had access to specialist advice and to set up internal systems for identifying and assessing needs, determining relative priorities, allocating funds, and monitoring expenditure and outcomes. The Rothschild Report envisaged that Chief Scientists would advise and support units within their Departments in fulfilling their function as customers, while Departments would have Controllers of Research and Development (R&D) who acted as 'the chief executive of the R&D function, the contractor providing an R&D service for the customer'. ¹²

6.14 Lord Rothschild recommended that the customer/contractor principle should be reflected in the funding system: ie, that a significant proportion of the Science Vote should be transferred from the DES to the relevant Departments to enhance their ability to commission research from wherever they wished. ¹³ This recommendation was accepted by the Government. ¹⁴ Funds were transferred to, among others, MAFF ¹⁵ (around 50 per cent of the Agricultural Research Council's budget), and to the then Department of Health and Social Security (DHSS) and the Scottish Home and Health Department (SHHD) (around 25 per cent of the Medical Research Council's budget).

6.15 However, as a result of:

. . . strict constraints on administrative and staff costs, [DHSS] has not felt justified in . . . developing expertise for a full commissioning role in the biomedical area. ¹⁶

6.16 The original transfer of funds from MRC to the Department of Health (DH) was therefore reversed in 1981. ¹⁷ DH did not undertake or commission basic biomedical research itself - the customer/contractor relationship with the MRC envisaged by the Rothschild Report was replaced by less formal arrangements set out in a Concordat, which was updated as appropriate. ¹⁸ The terms of the Concordat are described later in this chapter.

6.17 Lord Rothschild's other recommendations were also endorsed, and differing structures for commissioning and funding research evolved across Whitehall. Those in place in MAFF and DH between 1986 and 1996 are described below. There were equivalent arrangements in the Scottish Office and the Department of Agriculture for Northern Ireland (DANI); these are outlined briefly in vol. 9: Wales, Scotland and Northern Ireland, but played no part in the BSE/vCJD story.

'Near-market research'

6.18 Chapter 6 of vol. 15: Government and Public Administration describes how the 1980s and 1990s witnessed an increasing emphasis on value-for-money in the use of resources by Government Departments. Activities were scrutinised to determine whether they needed to be done at all and, if so, whether they should continue to be done by government. In relation to scientific research, the Government concluded that:

. . . the balance of existing policies should be changed in order to move away from near-market R&D support. ¹⁹

In other words, it withdrew from commissioning and funding research from which industry gained direct benefit.

6.19 The impact of this policy change was particularly significant in the field of agricultural and food research, an issue described below in paragraphs 6.43ff of this chapter.

Overseeing the system (1): the machinery

6.20 The Government's endorsement of Lord Rothschild's recommendations brought with it greater scrutiny of the activities of scientists and a need for them to justify more clearly their demands on public resources, within a generally tougher financial environment. ²⁰ Existing machinery within Departments and across government was developed to manage and control the system, in three respects:

1. oversight of the Research Councils:
2. liaison between Government Departments, the Research Councils and other organisations involved in research and development; and
3. scientific advice to and support for the Government.

6.21 During the period with which the Inquiry is concerned, these functions were exercised by, respectively:

1. from 1986 to 1994, the Advisory Board for the Research Councils (ABRC), ²¹ and thereafter by the Director-General of the Research Councils (DGRC);
2. from 1976 to 1987, the Advisory Council for Applied Research and Development (ACARD); from 1987 to 1993, the Advisory Council on Science and Technology (ACOST); and from 1993 the Council for Science and Technology; and
3. the Government's Chief Scientific Adviser (CSA), supported initially by a Science and Technology Group in the Cabinet Office, and from 1992 by a new Office of Science and Technology (OST).

6.22 Initially, the 'arm's-length' principle was retained, in that the overseeing bodies included independent members from academic institutions and industry as well as representatives from Government Departments and public sector research bodies. However, as described below, this began to change in 1993/94.

6.23 Advice on the allocation of the Science Vote among the Research Councils and other bodies and on the structure of the Research Council system was provided by the ABRC.

6.24 From 1982 to 1987, ACARD ²² coordinated all applied R&D and basic research in collaboration with the ABRC. ²³ Then, ACARD was absorbed into a new body, ACOST. This had an independent chairman and its role was to advise the Government on the priorities for and the application of science and technology (S&T), ²⁴ the coordination of S&T activities in collaboration with departmental advisory bodies, ²⁵ and the nature and extent of UK participation in international collaboration in S&T. ²⁶ ACOST's secretariat reported to the CSA, who was a member of ACOST.

6.25 This system was changed significantly in the early 1990s. Firstly, in 1992, responsibility for S&T was moved from the Department of Education and Science (DES) to a Cabinet Minister, the Chancellor of the Duchy of Lancaster, who headed the Office of Public Service and Science (OPSS) within the Cabinet Office. Within the OPSS, a new Office of Science and Technology (OST) was formed, headed by the Chief Scientific Adviser to the Government. The OST's role was to:

1. advise the Government on all aspects of S&T;
2. promote the effective use of S&T resources;
3. develop and coordinate S&T policy;
4. maximise the contribution of government S&T expenditure on national quality of life and economic performance;
5. assist with taking of decisions on S&T priorities in the Public Expenditure Survey (PES) and the Ministerial Committee on S&T; ²⁷ and
6. enable the resolution of cross-departmental S&T issues.

6.26 The OST also became responsible for the Science Budget and for the work of the Research Councils. In 1995 it was transferred from the Cabinet Office to the Department of Trade and Industry, whose Cabinet Minister, the President of the Board of Trade, assumed responsibility for science. ²⁸

6.27 Secondly, in the autumn of 1993, ACOST was replaced by a Council for Science and Technology (CST). ²⁹ Chaired by the CSA, the CST was seen as a development of ACOST, drawing on the Technology Foresight programme (a joint exercise between industry and the science and engineering communities) and seeking to ensure that government research spending priorities were informed by outside independent and expert advice. ³⁰ In his oral evidence to the Inquiry, Professor Roy Anderson, who had been a member of ACOST, expressed the view that the CST:

. . . much to the horror of the scientific community, is less independent of Government [than its predecessor, ACOST]. ³¹

6.28 A further significant change was made from January 1994, when oversight of the Research Councils was brought within central government. The ABRC was replaced by a Director-General of the Research Councils (DGRC) located within the OST. ³² The DGRC's role was to support and advise the Minister responsible for science on 'securing the successful operation of the seven Research Councils in pursuit of their missions'. This included advising on the allocation of the Science Budget and setting out a broad framework reflecting government and other priorities, within which the Research Councils could decide what science to fund and how. ³³

6.29 At ministerial level, scientific issues were discussed by the Cabinet Committee on Economic Affairs. This was supported by a committee of officials, including the Chief Scientists of Departments, chaired by the CSA and with a joint Cabinet Office and OST secretariat. ³⁴ The committee of officials provided the main forum for the discussion of S&T issues of cross-government interest. ³⁵

Overseeing the system (2): the role of the Government's Chief Scientific Adviser (CSA)

6.30 There had been a Chief Scientific Adviser (CSA) to the Government since 1964. ³⁶ In 1976 he operated with his own team from the Cabinet Office and from 1992 as Head of the OST. ³⁷ Apart from being responsible for interdepartmental coordination, the CSA was also expected to advise on the way in which the customer/contractor arrangements were working. ³⁸

6.31 By 1987 the CSA was stated to be:

. . . responsible for providing, or organising the provision of, advice to the Prime Minister and the Cabinet Office on scientific and technological matters, or scientific and technological aspects of other issues . . . [was] concerned to influence positively the economic contribution from Government spending [on] science and technology . . . [and sat] on the principal interdepartmental committees which [dealt] with the scientific and technological issues that [came] before Government. ³⁹

6.32 The CSA chaired the committee of officials providing S&T advice and support to the Cabinet Committee on Economic Affairs, and was a member of ACOST, of ABRC, and of other UK scientific advisory bodies. The post also carried international responsibilities. ⁴⁰ As head of the OST, the CSA was responsible for:

1. advising the Science Minister and other Ministers on government S&T expenditure and programmes; and
2. coordinating the Government's S&T strategy, its use of S&T in policy-making, and S&T input to key policy issues. ⁴¹

Overseeing the system (3): the role of departmental Chief Scientists

6.33 The proper functioning of the customer/contractor system in government depended upon Departments being able to act as 'intelligent customers'. The 1972 White Paper recognised that:

. . . each Department must also have its own central scientific staff, who are responsible for advice on scientific aspects of departmental policy. They will participate fully in the discussions [with contractors] and ensure that the customer is able to take all ideas into account in stating his needs. ⁴²

6.34 Some Departments already had Chief Scientists, but DH and MAFF did not. The White Paper announced their intention to create such posts, which were to be supported by 'small' staffs. How this developed is described later in this chapter.

6.35 In 1988 the Government's Chief Scientific Adviser issued 'Criteria for judging the adequacy of arrangements for providing scientific advice'. ⁴³ These described the role and functions of departmental Chief Scientists, ⁴⁴ which were perceived as threefold:

1. to act as a focus for their Department's requirements for scientific and technological advice and take a strategic view of the content and balance of its research and development programmes to meet those needs;
2. to ensure effective strategic research to support the Department's future policy, and normally to hold or have discretion over a budget to fund strategic research; and
3. to oversee policy divisions' role as 'intelligent customers', to maintain the quality and consistency with which that function was performed, and to input specialist advice as appropriate.

6.36 The Criteria also stated that departmental Chief Scientists should hold the highest possible professional credentials, have access to Ministers and the Permanent Secretary, and be an integral part of the Department's top management. However, they added that Departments should have access to independent advice of the highest calibre in order to complement internal advice, balance internally generated views, and introduce a wider perspective, especially where the Chief Scientist was a career civil servant.