Monday 28 March 2016

House Magazine Article - March 2016

Science is absolutely vital to our future in every sense. Not only does research and development lay the foundations for economic success, allowing us to compete and prosper in an increasingly competitive world, but it also promises us greater health and wellbeing through medical breakthroughs, such as cures for cancer and heart disease.

Science is an investment in the future, which is why I was so gratified when just two weeks’ ago I took part in a Parliamentary Q&A session for Voice of the Future 2016.

The audience was made up of young scientists and engineers and their penetrating questions to me – on issues ranging from dealing with outbreaks of infectious diseases to whether there should a sugar tax to combat obesity to increasing the participation of women in STEM subjects – spoke of an enthusiasm for science among young people which was infectious and inspiring.    

Of course, we have long punched above our weight in science. The fact is that the UK is very good at research. With only 0.9% of the global population and 3.2% of global R&D expenditure, the UK still has 4.1% of global researchers, and 15.9% of the world’s most highly cited research articles.
This standing is also reflected in our ability to secure research funding from the EU. According to a recent ONS report, the UK contributed €5.4 billion to EU research and development over the period 2007 – 2013 while receiving €8.8 billion in direct EU funding for research, development and innovation activities.

The EU helps UK universities to pursue cutting edge research. New figures show that nearly 1,000 projects at 78 UK universities and research centres receive funds from the ERC and would be put at risk if the UK were to leave the European Union.

We gain in other ways too. The EU makes working across borders easier for UK and European researchers, who are able to pool their knowledge, infrastructure, data and resources.
But for all the prestige of British science, and for all their success in leveraging European funding, everything in the garden is far from rosy. The fact is that we are falling further and further behind our competitors when it comes to investing in research and development.

Ministers in BIS spoke out about protecting the £4.7 billion science budget in the Comprehensive Spending Review, in the face of cuts elsewhere. But this disguises the reality which is that this is only 0.49% of GDP, and it palls in comparison with our competitor nations.  For example, UK government spending on R&D is the lowest among the G8 countries.

This is why The Royal Society has called for it to be raised to 0.67%, which will match the OECD average.  The CBI has gone further and argue that it should be doubled.

It is not just a problem of public money, of course. British industry spends less on research as a share of GDP than France, Germany, the US and China, all of whom are increasing their commitment to science and technology.

In their recent report, the Science and Technology Select Committee warned of the risk to competitiveness, productivity and high value jobs of low level investment and have proposed that combined public and private R&D investment should rise from around 1.6% to 3% of GDP.

The Government has a role in leveraging such private funding as it knows all too well. BIS Minsters have rightly quoted the fact that for every £1 spent by Government secures £1.36 of private investment and raises productivity by 20%. But so far they have been silent on the need to raise investment.

In their response to the Science and Technology Committee’s report, the Government point to Innovate UK, which encourages research-industry partnerships. This is a good idea, but turning £165m of grants into loans the Government has simply created additional risks for researchers which will be counter-productive. It is not surprising that both the CBI and the Federation of Small Businesses have raised concerns.

What is missing from the picture is a roadmap. We cannot simply rely on the historic prestige of British science anymore. We need a real plan that recognises the need to secure the kind of funding already enjoyed by our economic competitors, one which entwines both public and private investment. Without such a roadmap we will lose our cutting edge.

Tuesday 15 March 2016

Rent To Own is an expensive way to buy goods

It is not difficult to see why Rent to Own is popular with many low income families. Stores like BrightHouse are attractive and they provide customers with many of the essentials of modern living, such as washing machines, sofas and televisions.

These are things that many of us take for granted, but for those on low incomes they can seem frustratingly out of reach most of the time.

But as the All Party Parliamentary Group of Debt and Personal Finance which I Chair found in its inquiry into the Rent to Own Market there are downsides to this, and for the most part it comes down to money.

Rent to Own is an expensive way to buy goods – so expensive that many customers never even get to own the goods they pay for, but see them repossessed for non-payment as their arrears build up.

Not only are the prices of Rent to Own goods inflated, but customers are also often required to pay an additional premium for a bundle of services which they almost certainly don’t want or need, such as extended warranties and insurance. With a high interest rate added to that, customers of Rent to Own can easily find themselves paying three times as much for goods and services than they would from more conventional retail outlets, whether on the High Street or online.

But all too often the customer has no real choice but to take the Rent to Own route, despite the eye watering prices. The APPG has been pressing the regulator, the FCA, to curb the worst excesses of the market, including the compulsory bundling of services, the lack of transparency over prices, and the absence of effective forbearance policies. We are waiting to hear what the new requirements on the sector will be, and we hope they will be stringent. However, whatever happens the customers of Rent to Own will continue to pay inflated prices for the goods they buy and receive poor value for money. That is, until they can find a viable alternative.

Which is why I am so pleased to see this report from the Financial Inclusion Centre. In many ways it picks up from where our inquiry left off, looking at some of the alternatives to Rent to Own provided by social enterprises. Some of these are fledgling enterprises, yet to fully establish themselves in the retail landscape. They are not all the same and there is a real sense that the way they operate – how they raise capital, form partnerships or attract customers – reflects local experiences and needs. But they do have one thing in common, they want to break the stranglehold of these firms, by helping people on low incomes to buy the goods they want and need without paying a poverty premium.

This report is very much a starting point on developing viable alternatives to Rent to Own and I am the first to concede that there is no magic bullet. So we need to work together – MPs, local authorities, social landlords, voluntary organisations, social lenders - to ensure that people have access to essential goods at a price they can truly afford.