Nerc research centres ‘safe from full privatisation’

The Natural Environment Research Council would not contemplate fully privatising its centres, its chief executive has pledged

January 21, 2014

The remark from Duncan Wingham came during a one-off evidence session held by the House of Lords Science and Technology Committee to examine Nerc’s proposal to change the ownership and governance of four of its research centres: the National Oceanography Centre, the British Geological Survey, the Centre for Ecology and Hydrology and the National Centre for Atmospheric Science.

Professor Wingham noted that it was common knowledge that the government’s unpublished triennial review of the research councils would recommend that all of them examine the ownership and governance of their centres. However, he said that Nerc had decided independently that it should examine the case for removing its centres from the constraints of public ownership.

He said the “fundamental question” related to the centres’ sustainability. Examination of funding they had received since 2008 and were likely to receive following the next spending review meant that by 2020 they would have incurred real-terms cuts of between per cent (if science received another flat-cash settlement) and 48 per cent (if the science ring fence were removed). 

He said Nerc did not want to “pursue a policy of decline” and wanted to maximise the centres’ opportunities to broaden their income streams. Public sector finance constraints, such as the prohibition on carrying money over from one financial year to another, made it very difficult for centres to plan and invest, while inflexible public sector pay scales meant that the top-end salaries they were able to offer were “falling behind”.

“The question is whether the present arrangements best equip them to move flexibly – for example, to judge what are appropriate promotion or salary criteria - to allow them to build up reserves that would allow them to take up opportunities as they arise,” he said.

He suggested it would not be right for Nerc to continue to bear – as owner - all of the financial risk of operating the centres if it became only a minority funder of them. Privatising the centres could also help it to cuts its administration budget, which it was likely to be under “considerable pressure” at the next spending round to do.

However, he said that if a “reference panel” of senior figures gathered by Nerc from across Whitehall was able to agree a relaxation of the finance rules then he personally did not see a case for privatising the centres. 

He also ruled out moving them into university ownership, since “their skills mix and range of activities don’t match the way universities think about and organise their staff”.

He was determined that the centres would continue to carry out “long-term, large-scale” research, and to “bring the best of the nation together” to solve particular problems, and Nerc would “not contemplate” any arrangement that undermined their role in ensuring national capacity, expertise and access to data.

Nor could Professor Wingham imagine Nerc adopting a “fully commercial” model for the centres because of the inappropriate emphasis this would bring on “finding customers and selling them things”.

“But I don’t wish to rule things out and there are many halfway houses between full public ownership and fully privatised,” he said. “We should not overlook that there may be parts of the activities of our centres that do lend themselves to a more aggressive commercial attitude.”

A Nerc spokeswoman said the future ownership and governance of the centres in question is expected to be resolved by July 2014 .

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