APPENDIX 1
MEMORANDUM FROM THE OFFICE OF SCIENCE AND TECHNOLOGY
PROGRESS ON RECOMMENDATIONS BY THE HOUSE OF COMMONS
SCIENCE AND TECHNOLOGY COMMITTEE IN VARIOUS REPORTS DURING THIS
PARLIAMENT
The Office of Science and Technology is pleased to
provide the following statement on the present situation concerning
some of the recommendations made by the Committee in a number
of its reports during this Parliament.
2. For ease of reference in the following, the titles
of these particular reports are shown in bold and the italicised
text indicates the questions about these particular recommendations
which are raised in a letter of 18 October 2000 from the Committee's
clerk.
First Report 1997- 98: Implications of the Dearing
Report for the Structure and Funding of University Research, HC
799, 2 April 1998
Regarding recommendations (g), (h) and (i) about
Research Council funding for the indirect costs of university
research, the Government's reply stated that consideration would
be given to the suggestion that the Councils should meet the full
indirect costs of the research that they fund in universities
as part of the then (1998) Comprehensive Spending Review. Has
any further consideration been given to this issue and if so,
with what results?
3. The Government is still considering the resource
implications of these recommendations, and will not be in a position
to accurately quantify them until the autumn of 2001. By that
time the most research intensive universities, accounting for
some 75% of publicly funded research, will have reported fully
transparent costing data following implementation of the Transparency
Review. This review is covered more fully in paragraphs 10-16
below.
Regarding recommendations (j), (k) and (l) about
the full economic costs of university research being met in cash
or kind by all funders outside the dual support arrangements,
the Government's original reply announced a three year strategy
to support institutions in adopting good practice in costing and
pricing for research, with funding of £2.8 million to facilitate
the integration of financial and academic planning and to provide
training for managers. What progress has been made against the
three year strategy and what are the plans for the future in this
regard?
4. During the past 18 months the Higher Education
Funding Council for England (HEFCE) has conducted a fundamental
review of its research policy and funding. The review addressed
the nature and role of the Research Assessment Exercise, but it
did so in terms of whether there were currently, or could be developed,
better approaches to support the allocation of the block grant
that the Funding Council provides to HEIs rather than to directly
explore the point in the Committee's recommendation (j) - whether
it should be amended to reward institutions which attract grants
or commissions for research on terms which provide for meeting
the full economic costs either in cash or in kind. The Funding
Council believes that this issue is better addressed through the
funding model which HEFCE operates and into which RAE scores feed.
5. One of the central issues that the Review
addressed was how to ensure that a sustainable project infrastructure
funding balance was created and maintained for the long term in
order that appropriate research infrastructure was provided within
HEIs in order for them to carry out to a high quality work funded
by research grants or other commissions. The review did not conclude
that HEFCE should only reward institutions which attract grants
or commissions for research on terms which provide for meeting
the full economic costs either in cash or in kind. It is the HEFCE's
role under the dual support system to provide for the infrastructure
costs that are not included in grants provided by the Research
Councils.
6. However, it was concerned to ensure that project
activity in general was properly supported and made a number of
significant recommendations in this respect:
Recommendation 25: The
HEFCE should consider ways of modifying its funding method to
remove incentives to recruit research staff and students at the
expense of appropriate investment in research infrastructure.
Recommendation 26: The
HEFCE should no longer include an element which recognises income
from charities in calculating the total funding for each subject,
but should instead agree an explicit basis of support that reflects
the contribution by charities to the direct costs associated with
projects.
Recommendation 27: The
HEFCE should consider whether it is necessary to amend the funding
model to explicitly recognise that funding provided as EU grants
and contracts currently does not cover all the costs associated
with the project.
Recommendation 28: In
general, institutions should charge prices which cover at least
the full cost of research which they carry out under contract.
In these recommendations the Review distinguished
between collaborative research, where the institution deemed that
there was an inherent benefit in undertaking the work and therefore
the sum sought from the sponsor would not necessarily be expected
to equal cost, and "Contract Research" where the HEI
was simply providing a service and in which circumstances the
full cost should be charged.
7. This distinction is important as much intellectually
valuable work, which ultimately adds to the public knowledge base
and contributes to the public good is sponsored by users on a
collaborative basis and in such circumstances they should not
be expected to meet the full costs of research in purely cash
terms. The level of contribution in a given case should be a matter
of discretion for the institution, based on the particular circumstances
and a good understanding of its cost base, such as that provided
by the Transparency Review. The Funding Council's concern would
be to ensure that in general there was a level of investment in
infrastructure such that public and private funders alike could
expect researchers to be able to access appropriate infrastructure
within institutions in order for work to be carried out to a high
standard.
8. These recommendations are currently the subject
of a wide-ranging consultation exercise including HEIs, private
and public sector funders of research, research users and other
stakeholders, which will run until 8th December 2000.
Responses to this consultation will be placed before the HEFCE
Board for consideration when it meets on 29th January
2001.
9. The £2.8m to support institutions in
adopting good practice in costing and pricing for research has
been made available through the Joint Costing and Pricing Steering
Group (JCPSG) which was established by the sector representative
bodies and the higher education funding councils in July 1997
to support the general development, and promote the adoption,
of good practice in costing and pricing.
10. Following the 1998 Comprehensive Spending
Review, additional funding for higher education was made conditional
on improved transparency concerning the way public funds are spent
in universities. A Government initiative, known as the 'Transparency
Review' was initiated by OST, working closely together with the
Education Departments, Research Councils and Funding Councils.
11. Considerable complementarity and joint working
has been established between JCPSG and the Transparency review
secretariat. A large of number HEIs have applied for funding under
the JCPSG initiative (representing 60 per cent of the sector to
date) and the remainder are expected to apply during the coming
year. Two National Co-ordinators have been appointed who are in
close contact with all institutions to promote the benefits of
costing and pricing in informing decision-making, to support the
development and delivery of training materials, and help institutions
meet the Transparency Review requirements.
12. Progress to date includes
- Increased level of commitment by governing bodies,
institutional heads and senior managers to view costing and pricing
as mainstream within institutions' overall strategies.
- Wider adoption of a more standardised approach
to the identification and allocation of costs.
- Increased awareness of the financial implications,
including opportunity costs, of academic decisions, both locally
and across disciplines.
- Better-informed pricing decisions leading to
improved net contributions with no loss of markets or quality.
- Increased understanding of costs and cost drivers,
initially on a pilot basis, but increasingly rolled out consistently
across institutions.
- Increased appreciation of the need to tackle
cultural issues while recognising the time and resources necessary
to achieve real progress.
13. In addition, 14 regional groups have been
established across the UK to help institutions develop their costing
and pricing systems and to facilitate discussion of issues relating
to the implementation of the Transparency Review, the dissemination
of good practice and to provide an opportunity for the benchmarking
of results. A number of examples of institutional costing and
pricing intranets have been established, and these have been made
available through the JCPSG web-site (http://www.bris.ac.uk/JCPSG/).
14. The JCPSG is securing the acceptance by government
departments of the principles enshrined in the "Transparent
Approach to Costing (TRAC)" document as the basis for pricing
government contracts.
15. The priority areas will be:
a. Securing the implementation of the TRAC across
all research intensive institutions by July 2001 to allow for reporting
in January 2002.
b. Securing the adoption of TRAC as the basis
for pricing government contracts.
c. Delivering improved awareness and understanding
of pricing issues to secure improved net contributions from activities.
d. Addressing the 'low price' culture that has
developed across the sector.
16. The Government's timetable requires the whole
sector to implement the Transparency Review by 2002; to achieve
this the UK higher education funding councils have provided the
JCPSG with additional resources to July 2002. These will allow
JCPSG to continue to provide support at an appropriate level for
the whole sector throughout the implementation period.
What progress has been made since the Government
accepted recommendation (m) concerning the introduction of some
flexibility, to allow funding of indirect costs beyond 20% where
appropriate, into the European Commission's Framework Programme?
17. In Framework Programme 4, organisations with
analytical accounting systems received funding at a rate of 50%
of the full cost of the project under the Full Cost Model. Most
universities did not at that time operate an analytical accounting
system and so the Additional Cost Model was introduced. (See below
for details.) Universities continued to have concerns about funding.
18. During the negotiations for Framework Programme
5, officials addressed the issue of funding models. There are
now 3 funding models:
Full Cost, actual overhead rate:
as in FP4, total eligible costs using a real rate of overheads—for
organisations with analytical accounting systems. Commission contribution
= 50%.
Additional Cost: as in
FP4, 100% funding of the additional direct costs of the
research (eg temporary staff hired for the project, consumables,
computer usage etc) plus a sum totalling 20% of these additional
direct costs to contribute to the indirect costs ("overheads")—for
organisations operating only a basic level of accountancy.
NEW. Full Cost,
flat overhead rate: total eligible costs
using, in respect of overheads, a lump sum amounting to 80% of
the eligible personnel costs—for organisations whose accounting
system enables identification of the direct costs relating to
research, including that of its permanent personnel, but which
cannot identify overheads with a sufficient degree of precision.
Commission contribution = 50% of all eligible costs.
19. The Full Cost, flat overhead rate model is
designed to address some of the concerns of the Additional Cost
Model and to ease the transition between the Additional Cost model
and the Full Cost, actual overhead rate model . However, UK universities
are not generally able to fulfil the criteria for using the Full
Cost, flat overhead rate model, due to an inability to identify
the direct costs of research.
20. Paragraphs 10-16 above set out the work currently
underway to improve the transparency of costing of research in
universities and the Government's timetable for this work with
full implementation by 2002. FP6 is expected to start in 2003
by when UK universities should be able to identify accurately
all the costs of their research, and so be well placed to seek
funding on the Full Cost, actual overhead rate model, assuming
that the funding mechanisms remain the same as in FP5.
The Government accepted the Committee's recommendations
(x), (y), and (z), on the quality of training for post-graduate
research students. What progress has been made on the introduction
of the code of practice and what is the involvement of the Quality
Assurance Agency?
21. The Quality Assurance Agency drew up a code
of practice for the assurance of academic quality and standards
in postgraduate research programmes, which was published in January
1999. This provided guidance and precepts on a number of factors,
including the research environment, promotional information, the
selection, admission, enrolment and registration of students,
student information and induction, the approval of research projects,
skills training, supervision, assessment, feedback, complaints,
appeals and evaluation. It has not been chosen by QAA as one of
those against which institutions will be routinely audited.
22. The HEFCE Fundamental Review report mentioned
above was in line with the Committee's recommendations on this
issue. It concluded that more did need to be done to improve the
training of post-graduate research students. The relevant recommendations
were:
Recommendation 33: Research
training should be the subject of a separate, but linked, assessment
process to the RAE.
Recommendation 34: Funding
provided by the HEFCE for the training of research students should
be calculated and allocated separately from the funding provided
for research.
Recommendation 35: The
HEFCE, together with the Research Councils and other stakeholders
such as industry and charities, should develop minimum requirements
which departments would need to satisfy in order to be eligible
for HEFCE funding for postgraduate research student training.
The research assessment process should be extended to establish
whether departments comply with these minimum standards.
Recommendation 36: Collaborative
arrangements should be established to enable units to meet all
aspects of the postgraduate research training requirements, which
might not be able to do so alone. The HEFCE should separately
work up the practical arrangements to implement this recommendation.
23. As mentioned above, these recommendations
are currently the subject of a consultation exercise, which will
run until 8th December 2000. And discussions have already
taken place between the Funding Councils and other partners, including
commercial organisations and other stakeholders, to prepare a
draft minimum standard that will be the subject of consultation
in early 2001.
What progress has been made on the implementation
of the ( Research Careers) Concordat and what is being done to
monitor improvements in research careers, as the Government indicated
in its response to recommendation( aa) in relation to staff on
short term contracts?
24. Progress and monitoring arrangements are
detailed fully in the Research Careers Initiative reports and
supporting documentation available on the CVCP website at http://www.cvcp.ac.uk/AboutUs/partnershipactivities/
. Hard copies of the reports (only) are enclosed with this reply
for ease of reference.
25. The Government's recent Science and Innovation
White Paper (paragraph 2.34) encourages the university employers
and the Funding and Research Councils to take forward the latest
RCI report's main recommendations.
Sixth Report 1997-98: Science and the Comprehensive
Spending Review, HC 1040, 1 December 1998
26. Please refer to paragraphs 3 to 16 above
in relation to recommendations (d) and (g) of this report concerning
the Transparency Review, Research Council funding of indirect
costs and the provision of £2.8m by the Funding Councils
to support higher education institutions in adopting good practice
in costing and pricing for research.
First Report 1998-99: Scientific Advisory System:
Genetically Modified Foods, HC 286, May 1999
What progress has been made on recommendation
(e) about reducing the risk of fraudulent use of GM free labels
by obliging retailers not to claim GM free status unless a full
audit trail from seen to supermarket shelf is in place?
27. The EU Commission has indicated in its White
Paper on Food Safety that it intends to bring forward a proposed
Commission Regulation on the labelling of GMO-free foods. The
Food Standards Agency Board has endorsed the current GM labelling
rules but has also recognised that there may be a need for further
legislation
28. The ability to detect the presence of GM
ingredients in food reliably is at the limit of current detection
methodologies. A proficiency scheme was launched by the Food Standards
Agency to look at the ability of labs to detect the presence of
GM material at the single ingredient level, the results of which
will be published in December. Similar studies have also been
carried out with more complex foods. The Agency will launch a
pilot study in the first instance to determine the ability of
laboratories to detect the presence of GM material in commercial
samples before launching a full surveillance programme to monitor
the GM labelling position on the high street.
What progress has been made on recommendation
(aa) towards creating a health surveillance system for monitoring
any long term impact on health of consuming GM Food?
29. The Food Standards Agency has commissioned
the feasibility study on the post market monitoring of novel foods
referred to in the original Government response. The aim of the
study is to determine if there are differences in food purchasing
and consumption patterns at the district level and whether such
differences could be linked to differences in health outcomes.
This study started in July 2000 and will take 21 months to complete.
Second Report 1999-2000: Engineering and Physical
Sciences based Innovation, HC 195, 31 January 2001
In its response to recommendation (q) concerning
1998 and 1999 changes to the Capital Gains Tax regime, the Government
stated that the impact of the changes would be monitored. What
has this monitoring shown?
Capital Gains Tax
30. The new system of taper relief was first
introduced in 1998. It reduces the amount of Capital Gains Tax
the longer an asset has been held, with a more generous rate of
taper relief for business assets than for nonbusiness assets.
31. In 1999, the Government consulted a range
of interests, including "business angel" investors and
venture capitalists, on possible changes to taper relief in the
light of experience so far. This consultation showed that a more
generous, shorter business assets taper would fit better with
entrepreneurial investment patterns. Secondly, the entitlement
to the business assets taper excluded a number of areas vital
to promoting entrepreneurial behaviour. The subsequent changes
were announced in the Spring 2000 Budget and implemented in the
Finance Act 2000.
32. The maximum rate of taper relief for business
assets is now reached after four years, rather than ten. With
full business assets taper relief, the effective rate of CGT for
a higher rate taxpayer is only 10%. The Government has also
broadened the entitlement to the business assets taper. In addition
to assets used for a person's trade, business assets taper relief
is now available on:
- All shares and securities in unlisted trading
companies;
- All shares and securities owned by employees
and officers in the trading companies where they work; and
- Shares and securities in listed trading companies
if the shareholder is able to exercise at least 5% of the
votes.
33. These changes have been widely welcomed and
will boost investment, in particular investment in small high
tech companies, and will encourage employee share ownership, thus
furthering the productivity agenda. As before, the effects will
be monitored.
34. In the November 2000 PreBudget Report,
the Government announced that, subject to consultation, business
assets taper relief would be extended to employees' shares in
a range of nontrading companies, including companies in
the venture capital industry. This measure will further encourage
employee share ownership. It will also simplify the administration
of companies who will no longer have to consider whether they
are "trading" for the purpose of taper relief.
Employee Share Schemes
35. In addition to the Capital Gains Tax measures
outlined above, the Enterprise Management Incentives and the new
All Employee Share Plan were also introduced by Finance Act 2000,
after a successful period of consultation. Knowledge and experience
of an advisory group drawn from private practice, companies, an
academic and trade union representation helped to ensure that
the new measures would be attractive for businesses to operate
in practice.
36. These are new measures, so it is too early
to say what effects they have had on recruitment, retention and
the reward for entrepreneurial endeavour. The Inland Revenue has
mechanisms in place to collect data that will enable them to keep
the policy under review and ultimately evaluate its effects.
37. The Pre-Budget report of November 2000 includes
details of the initial take-up of these two new measures since
their introduction in July 2000:
- Over 160 companies have applied to set up an
All Employee Share Ownership Plan and more than 20 company plans
have already been approved (covering over 30,000 employees); and
- Over 100 companies have notified the Inland Revenue
that they have granted options to a total of more than 500 employees
under EMI.
38. The Government also announced in the November
2000 Pre-Budget Report that it would consult on expanding the
Enterprise Management Incentives, so that smaller businesses can
make more flexible use of these benefits in a way best suited
to their needs.
Regarding recommendation (t) about reviewing the
legislation on bankruptcy and insolvency law, what has been the
outcome of the consultation exercise and what further action is
proposed and on what time scale?
39. The closing date for the receipt of responses
to the consultation "Bankruptcy—A Fresh Start"
was 30 June 2000. From an analysis of the 124 written responses
to this paper, along with the information obtained from the numerous
consultation meetings that were held, it is clear that there is
broad-based support for most of the reforms suggested. Consideration
is now being given to conducting a further consultation on more
detailed matters towards the end of this year and early next.
Regarding recommendation (jj) about Regional Development
Agencies, the Committee would welcome further details on the operation
of £50 million regional innovation fund and the £50 million capital fund, as well as information
on other activity in this area.
40. In the March 2000 Budget, the Chancellor
announced £50 million from the Capital Modernisation Fund
to support cluster development, including business incubation,
in the English regions. This funding is being channelled through
a new fund - the Innovative Clusters Fund (ICF) - and is going
to the Regional Development Agencies (RDAs), including the London
Development Agency, to enable them to invest in projects which
will assist in the development of clusters in their regions (in
line with their Regional Economic Strategies). The money is spread
over two years, £15 million in this Financial Year (2000-2001)
and £35 million in the next FY (2001-2002). The RDAs have
moved quickly to put forward positive proposals for using the
new funding via individual Business Plans.
41. The Spending Review 2000 announced a strengthened
role for the RDAs, with a new focus on economic development, together
with significant additional funding to take forward this agenda.
The RDAs will be given greater flexibility to use their budgets
to support regional priorities through a single funding stream
under which the RDAs will be managed through outcome and outputs
agreed in the corporate planning round. This new "single
pot" will operate from 2002-03.
42. This new Regional Innovation Funding (RIF)
is worth £115 million over three years from 2001-2002 (£15
million in 2001-2002 and £50 million in each of the following
two years 2002-2003/2003-2004). Together with the ICF, this will
provide RDAs with £50 million a year (2001-02 through 2003-04)
to spend on additional activities, which they identify as priorities,
to support competitiveness, innovation and economic development
within their regions. These priorities will support the aim of
the Department (shared with DETR) to improve economic performance
of all regions, measured by the trend in growth of each region's
GDP per capita.
43. The RIF will support new activities, and
complement current ones supported by the ICF, to promote innovation
and enterprise and to support clusters and networks of businesses
in their regions, delivered through agreed business/corporate
plans. It will:
- support innovative sectoral/ geographical networks
(including clusters);
- provide business incubator facilities;
- promote access to, and application of, new technologies
by SMEs; and
- establish innovation centres and other centres
of excellence in response to business needs.
44. The RIF will subsume the ICF in 2001-02 to
provide RDAs with a single DTI programme funding stream and will,
itself, be part of the RDAs' single budget in 2002-03 and 2003-04.
Regarding recommendations (kk) and (ll) concerning
the importance of clusters and changes to promote their development,
the Committee would welcome a review of its activities to date
and an indication of whether or not it has undertaken work that
might address recommendation (ll).
45. The Clusters Policy Steering Group (CPSG)
has now met three times and has discussed a number of themes.
Foremost amongst these have been the role of incubation in cluster
development; the impact of the planning system on clusters; and
the role of Regional Development Agencies (RDAs). Work on all
three areas is on-going. The next formal agenda item will be the
role of Higher Education Institutions. Whilst the work of the
CPSG is not limited to high technology or new economy clusters,
the need to foster innovation has a high priority in each of the
areas considered to date and will continue to do so.
Third Report 1999-2000: Scientific Advisory System:
Diabetes and Driving Licences, HC 206, 7 March 2000
The Government accepted the Committee's recommendation
(a) and stated that the Honorary Advisory Panel, at the invitation
of the Department, was willing to re-examine its advice and the
Government was seeking to establish a clearer picture of practices
across the EU. Has the panel yet reconsidered this matter and
with what outcome ?
46. The Driver and Vehicle Licensing Agency (DVLA)
has obtained information from Belgium, Sweden, Denmark, Spain,
Germany, and Norway. This was presented to the Honorary Medical
Advisory Panel at its meeting on 4 October.
47. In light of this and other available information,
the Panel reconsidered its previous advice and recommended that
individual assessment should be introduced for category C1 (3.5-7.5
tonnes) applicants. They recommended that those with good diabetic
control and no significant complications can be treated as "exceptional
cases".
48. The Panel met to finalise the details for
those new to insulin treatment on 8 November. It is expected that
public consultation will begin shortly with a view to having the
legislative changes in place by Spring 2001. As far as categories
D1 (minibuses), C (lorries over 7.5 tonnes) and D (large buses)
the Panel felt unable to change its long held view that driving
should not be allowed. Their view was that further hard data was
needed before any changes could be recommended.
49. Once the results of a recently initiated
programme of research into diabetes and driving become available
in two to three years time, the Panel will review the situation
again.
The Government accepted the Committee's comments
in recommendation (b) about regularising the rules concerning
insulin treated drivers and medium sized vehicles in consultation
with the voluntary sector. Has this consultation yet taken place
and with what results? What changes have been made following that
consultation?
50. Progress on consultation with the voluntary
sector has been put on hold pending the Panel's reconsideration
of category D1 minibus entitlement for drivers with insulin treated
diabetes. The Panel re-affirmed on 8 November that this entitlement
should be withheld. Work will now begin on addressing the voluntary
minibus driver anomaly.
The Government accepted recommendation (g) about
appointing a road traffic accident statistics to the Honorary
Advisory Panel on Driving and Diabetes Mellitus and considering
similar appointments to the other Honorary Medical Advisory Panels.
Has this yet been done in regard to the Honorary Advisory Panel
on Driving and Diabetes Mellitus or any of the other Honorary
Medical Advisory Panels?
51. Each of the Panels has considered how the
expertise of a statistician or epidemiologist might be used. The
Advisory Panel on Diabetes has reservations about the usefulness
of such an expert in view of the current absence of data. However
an epidemiologist is to be involved in the diabetes research project
which is currently out to tender. The other Advisory Panels intend
to invite relevant expertise when needed.
What progress has been made by the Government
in considering how best to give effect to recommendation (i) about
identifying jointly with the British Diabetic Association an insulin-treated
diabetic to attend and participate in meetings of the Honorary
Advisory Panel as a non-voting member?
52. Diabetes UK has been asked to identify suitable
persons for appointment to the Honorary Medical Advisory Panel.
It is expected that appointments would be made by the time of
the next Panel meeting in April 2001.
Are there now plans for the Honorary Panel to
publish an annual report and/or hold such a meeting with interested
organisations, following the Government acceptance of the suggestions
in recommendation (k) that the Honorary Panel publishes an annual
report and, shortly afterwards, holds an annual meeting with the
British Diabetic Association and other interested parties to discuss
matters of common interest and to explain any complex recommendations
made?
53. Plans are in hand for the publication of
an annual report on Panel proceedings. It is anticipated that
the report will be published on the Internet in January 2001.
Comments will be invited and meetings held with Diabetes UK, DVLA
officials and/or the Panel, as necessary.
Regarding recommendation (l), is the Honorary
Advisory Panel now publishing its agendas in advance of meetings
and minutes shortly after meetings, with the privacy of any individuals
discussed protected?
54. The agendas of all the Panel meetings held
this Autumn have been posted on the Internet. The minutes of the
meetings will be posted when finalised (excluding details of individual
cases discussed).
OST
November 2000
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