Select Committee on Science and Technology Appendices to the Minutes of Evidence

Memorandum from the Office of Science and Technology



  1.  Please provide a note explaining the Spending Review process and timetable. For example, did each of the Research Councils submit separate bids to OST, or a combined bid? Did the OST submit a bid to DTI, or directly to the Treasury? At what level did negotiations take place? Was OST required to justify all expenditure or only bids for increased expenditure? And what is the process now, after the Spending Review announcements? When will the Science Budget allocations be made?


  Spending Reviews (SRs) are carried out every two years and set firm budgets for three years, the first year of each SR period being the third year of the previous SR. In the case of the Science Budget and the Dual Support system more generally, the last two SRs have been preceded by Cross-cutting reviews, held with HM Treasury, DfES and others. The Cross-cutting reviews have focused on issues such as the sustainability of the university research base and knowledge transfer from the Science and Engineering Base. The aspect of the SRs which covers the UK science research portfolio managed through the Research Councils has been managed by OST and the Councils as a separate process.

  The Cross-cutting review of Science and Research which preceded SR2002 began in July 2001. It was led by Lord Sainsbury and reported to the Chief Secretary to the Treasury at Easter 2002 having taken account of a wide body of evidence accumulated before and during the review. The spending decisions based on the outcome of the review were determined between Easter and summer in a series of discussions with HM Treasury involving Ministers and officials from the relevant spending Departments.

  With respect to the science research portfolio, OST invited the Research Councils to submit initial proposals for the SR2002 period in April 2001 and discussed these in detail with the Councils at a series of meetings at Chief Executive and Science and Research Director level over succeeding months. In coming to a view on their own priorities, the Councils sought input from their own research communities. This fact and the fact that the exercise was begun so early in the spending review cycle meant that this round was probably the most transparent and inclusive process that there has been to date.

  What was also notable this time was that the Councils worked together on their proposals to a far greater degree than ever before and most of the best proposals that were received by OST were of a multi-Council and cross-disciplinary nature.

  The Science Budget is ringfenced within DTI. The Science Budget proposals were submitted to HM Treasury as part of the DTI's Analysis of Resource in February 2002 and were therefore approved by the Secretary of State for Trade and Industry in the same way as all other aspects of the DTI proposals. The Secretary of State was invited to discuss all of her spending proposals at PSX.

  This SR took a largely (though not wholly) incremental approach to the level of resources. Ministers took the view that the Science Budget was on the right trajectory, but that the level of resources had not yet reached the desired level.

  The Science Budget settlement (2002) provided new money in six areas, as follows:

New science
Large facilities
Knowledge Transfer
Roberts implementation
University research sustainability
— RC indirect cost contribution
University research sustainability
—dedicated capital line

  The funds for new science and large facilities (this line includes money for Diamond and for Research Council Institutes) and some of the funds for Roberts implementation (increased PhD stipends and funding for improved PhD and postdoctoral training) will be allocated to Councils during the autumn and the outcome will be published by means of a written answer in mid-November, as usual. In this exercise, DGRC will advise the Secretary of State on the allocations she should make having himself been advised by the RCUK Strategy Group which will have met on three occasions expressly to consider this matter.

  Knowledge Transfer funds will be distributed in a separate exercise, which will take place over the next year, and will involve universities bidding for funding from the new HEIF scheme.

  The funding for the new dedicated capital line for university research infrastructure (which will amount to £500 million per year from 2004-05, including £300 million from the Science Budget and £200 million from DfES) will be allocated by formula in a similar manner to that used for SRIF. We expect the allocations to be announced very early in the New Year.

  Following publication of Investing in Innovation, the Government will shortly begin a programme of work, to be led by Lord Sainsbury, to ensure that the measures set out in that publication are implemented. The programme of work will include consideration of the most effective way to use the £120 million per year allocated to the Science Budget for increasing the Research Councils' contributions to universities research costs, in the light of the Dual Support System and the evidence from the Cross-cutting review. This work will also be used to determine the most effective means of disbursing the remaining money for Roberts implementation (for increasing post-doctoral salaries and for establishing 200 new academic fellowships per year).


  2.  (Q6) A three page resume of the cross-cutting review of science and research is published in chapter 25 of the Spending Review White Paper (Cm 5570). Has the full review been published? If not, why not? May the Committee have a copy?


  The Cross-Cutting Review of Science and Research was not originally envisaged as a document for publication—it was carried out to inform the development of the Government's science strategy. Most of the output from the Cross-Cutting Review was picked up in some detail in the Government's science strategy, Investing in Innovation, which was published on 23 July 2002. At your request, the Cross-Cutting Review will be published shortly and will be accessible via the HMT's web site: . Hard copies will be sent to the Committee and to the Parliament libraries.


  3.  Similarly, has the Transparency Review been published? If not, why not? May the Committee have a copy?


  The transparency review was initiated following discussions with, and analysis of the higher education sector which brought to light within Government that if substantial new funds were to be made available to universities for research, universities needed to improve their ability to account for how taxpayer's money was being used. It reflected the view that much of the sector did not have a clear idea of its true cost base.

  The review has never produced a final report as such and nor was it ever intended that it should. Instead, the steering group for the review (chaired by DGRC and reporting in turn to the Science and Engineering Base Co-ordinating Committee, chaired by the Government's Chief Scientific Adviser) accepted the recommendation of the Joint Costing and Pricing Steering Group (a HE sector group sponsored by HEFCE and UUK) that universities should adopt a simple but robust costing tool called TRAC (Transparent Approach to Costing). To the HE sector's great credit, TRAC was rolled out across the whole sector ahead of schedule. It allows each institution to put a figure to the total costs of research (publicly and non-publicly funded), teaching (ditto) and other activities (for example knowledge transfer) that it carries out each year. These figures are now reported annually to the Funding Councils who aggregate them up and publish them.

  The first and second sets of complete TRAC (published in July 2001 and January 2002) were important pieces of evidence for the Cross-cutting review of Science and Research (qv—section A). The work of the Transparency Review was subsumed therefore within the Cross-cutting review and reflected in the outcome of the spending review. One of the conclusions of the Cross-cutting review was that TRAC was an excellent start but that more now needed to be done to embed proper costing and pricing methodologies across the sector. This is one of the issues that will be covered in the work to implement the measures in Investing in Innovation described in the answer to question 1.


  4.  The CSA offered to provide figures for the seven priority areas in the Framework 6 budget (Q19) and mentioned information given to universities on getting best benefit from this (Q13). It would be helpful to have both of these, together with a note updating the Committee on any developments on Framework 6 and the European Research Area.


  (i)  The Council and Parliament formally adopted the main FP6 programme on 3 June 2002, meeting the target date set at the Barcelona Summit in March. The Rules of Participation, also co-decided by the Council and Parliament, are expected to be formally agreed in September. The UK secured its main priorities for the programme, including: i) focus on a limited number of key thematic priorities; ii) a substantial increase in funding schemes to promote the trans-national mobility of researchers; iii) the introduction of new funding instruments (Integrated projects and Networks of Excellence) as the main vehicles for maximising the overall impact of European collaborative research; and iv) a commitment to more efficient management of the programme by the Commission.

  (ii)  The budgets requested for the seven thematic priorities can be found at Annex C—at the end of this document.

  (iii)  The negotiations on implementing the Specific Programmes (SPs) have progressed relatively smoothly. The Danish Presidency hope to secure formal Council adoption of the SPs by the end of September. This will depend on agreement on the single outstanding issue, namely the provisions which will apply to the funding of research on human embryos and human embryonic stem cells.

Developments with the European Research Area (ERA)

  (iv)  In addition to focussing European efforts on a limited number of strategic priorities, FP6 will also aim to network national research activities, share best practice on engaging science with society, support the planning of research infrastructure etc. Funding for such activities is set out in the attached budget at Annex C.

  (v)  Other examples of ERA-related work include the benchmarking of Member States' research and development (R&D) policies and the pilot mapping of European excellence in specific fields. Also, the Barcelona Summit in March called for spending on R&D and innovation in the EU to reach 3 per cent of GDP by 2010, with two thirds coming from the private sector.

Information Given Out to Universities on Getting the Best Benefit from FP6

  (vi)  On 22 January 2002, OST hosted a major conference to help the UK research community prepare for participation in FP6. This high profile event provided over 500 delegates with information on the new funding instruments and generated interest among them in finding project partners in Europe. UK Universities were strongly represented at the conference.

  (vii)  The UK will have a network of National Contact Points in place for the launch of FP6. These will offer advice to potential participants, including universities.

  (viii)  OST also works closely with the United Kingdom Research Office (UKRO), located in Brussels, which provides advice to the UK research community, especially universities, on participation in Framework Programmes.

  (ix)  UK Research Councils are also actively promoting FP6 to their respective communities.

  (x)  The Commission will hold a major FP6 launch event in Brussels on 11-13 November.


  5.  (Q39) Where are lists of JIF grant recipients published?


  Lists of JIF award recipients were published in press notices after each of the five rounds of awards. There is no single list covering all the awards across the five rounds. OST will be placing a full list of awards on its website next month. We will send a copy to the Science & Technology Committee at the same time we post the list at:


  6.  (Q57ff) The Public Service Agreements 2003-06 were published with the Spending Review (in Cm 5571). Will this be followed by publication of a Service Delivery Agreement (SDA)? If so, when and in what form? (The last SDA was published with the DTI Annual Report 2001. Will the new SDA be published sooner than next April/May?)


  The Department's first SDA was published in November 2000 on its website and subsequently reproduced in the 2001Annual Report. It is currently planned to publish the new SDA on the DTI website by the end of October 2002. The new SDA will provide information on how the Department is intending to deliver its PSA targets, including those related to the Office of Science and Technology.

  7.  Does the OST have more detailed performance targets than those set out in the PSA and SDA? If so, can the Committee have a copy? Will these change in the light of the new PSA?


  The PSA target on science and the associated SDA targets form the basis on which the performance of the Science and Engineering Base Group within OST is measured. Those targets are cascaded down to all staff through the DTI's annual appraisal and business planning cycle.

  8.  Please explain when, and in what form, the OST will be publishing output and performance data.


  OST will be providing annual reports on the relative international performance of the Science and Engineering Base (SEB) for the new PSA target number 2. The form of the report is undecided at present, but is likely to involve a suite of indicators covering people, publications and patents.

  OST is reviewing the whole issue of strategic and performance management of the activities supported by the Science Budget (see next answer) and we expect to have something to say about this later this year.

  9.  Please explain the process by which objectives and targets are set for the OST's associated public bodies. It would be helpful to see these targets, or examples of these targets.


  Following the recommendations of the recent quinquennial reviews of the Research Councils, OST is currently reviewing the performance management framework between itself and the Research Councils (and other associated bodies). In undertaking this work OST is taking into account recent guidance from the Cabinet Office and Treasury concerning effective objective setting for NDPBs and Agencies.

  In the current system there are two main processes relating to objective setting:

  (i)  Alongside spending review allocations. At the time of allocations to the bodies from spending reviews a small number of objectives are set for expenditure of the new money allocated (above existing baseline funding). These objectives are included in the associated allocations booklet (see, for example, Science Budget 2001-02 to 2003-04).

  (ii)  As part of the annual planning and reporting cycle. Research Councils include in their annual Operating Plans more detailed objectives and targets relating to their expenditure plans. Typical targets in these areas are concerned with the timing, number and funding of investments in particular research programmes, training activities or other sponsored schemes. Operating Plans also cover efficiency and effectiveness of Research Council run operations and include targets for areas of performance such as service delivery and administration cost caps. Typical targets here are related to the turn round times for and costs of administering grants. All Research Councils also have a target linked directly to OST's SDA target limiting the proportion of the grant in aid they administer that can be spent on operating costs (currently set at a maximum of 4 per cent).

  Annual Operating Reports report the performance of Research Councils in meeting these objectives and targets. They also include a report against a standard set of output performance indicators (OPIs) in the four key objective areas of Research, Training, Industrial Competitiveness and Quality of Life, and Promotion of Science. Consideration of the existing set of OPIs is also part of the review of the performance management framework.


  10.  (Q58) What progress has been made with appointing a new Director General of the Innovation Group?


  The new Director General Innovation is David Hughes who takes up post on 3 October. Mr Hughes worked for BAe Systems as a Special Projects Director. The Innovation Group will have responsibility for the development and implementation of innovation policy, particularly in manufacturing.


  11.  (Qq 61-63) Mr McWalter asked for evidence that the OST had demonstrated concern about the skills base prior to the Roberts Review.


  The OST was responsible for implementing the postgraduate training, research career, and women-in-science policies in the 1993 White Paper "Realising Our Potential". Generally, OST has worked with and through the Research Councils and learned societies to implement and develop policy. It implemented the 1993 White Paper "MRes" proposals, advised on increases in the number of Royal Society University Research Fellows and level of Research Training Support Grant paid to Research Council PhDs. It encouraged and contributed funding to a 1997 Research Council career path survey of former postgraduates. It worked directly with the University of Sheffield to pilot a web-based survey of postgraduate study intentions for three years from 1999. As the Roberts' report notes, this shed light on the attitude of undergraduates to postgraduate study and appropriate stipend levels. The OST brokered the Research Careers Concordat between the funding agencies and university representative bodies in the mid 1990s, and went on to play a lead part alongside Universities UK in the Research Careers Initiative. In addition, the White Paper `Excellence and Opportunity' (July 2000) recognized that there needed to be better pay levels for post-graduates.

  The Promoting SET for Women unit has been part of OST since 1995, and was set up to tackle women's under-representation in the science, engineering and technology (SET) community. The unit's aim is to improve the recruitment, retention and progression of women throughout SET education and employment and to increase their involvement in shaping SET policy.


  12.  (Qq 65-67) It would be helpful to have figures on business start-ups from universities and their survival rates.


  The first survey of Higher Education Business Interaction carried out in 2001 showed that 199 companies were spun out from universities in the academic year 1999-2000, compared to an average of 70 each year for the previous five years. The Survey also showed that in 1999-2000, UK universities identified one spinout for every £8.6 million of research expenditure, compared with one spinout for every £13.9 million in Canadian Universities in 1999, and one spinout for every £53.1 million in the US. As regards survival rates, the survey also covered employment, turnover and equity value of spinouts established by universities but responses were incomplete and raised concerns about the burden associated with collecting this data. A modified second survey currently underway seeks to build on data previously collected to provide a more systematic overview of exploitation performance across the higher education sector.


  13.  (Qq 78-80) The DGRC offered to send details of the grant-in-aid to the Royal Society. It might be most helpful simply to update, with figures for 2002-03, the table provided in January 2002 (as printed in HC 459-1, Ev25-26). For completeness, it would be helpful to have a similar update for the Royal Academy of Engineering.


  See updated tables for:

    Royal Academy for Engineering at Annex B


  14.  (Qq 81-83) Following the publication of the Review of Arts and Humanities Funding, what is the timetable for decision-making on the future of the AHRB? Would a change in the status of the AHRB require primary legislation? If so, when might this be introduced?


  The Government is consulting the Devolved Administrations on the future of the AHRB and hopes to be able to announce a decision later this year. As set out in the report of the Review of Arts and Humanities Research Funding, it would require primary legislation to fully implement the report's recommendations. This would be bound to take some time to enact given the pressures on legislative time.


  15.  The Committee has noted the publication of the quinquennial review of the CCLRC. What difference will this make to the management of large resources? What is the significance of the change to funding directly from OST?


  Once implemented, the new arrangements contained in the QQR report and the new strategic ownership model, in which CCLRC's membership of Research Councils UK allows full stakeholder involvement in the strategic management of CCLRC, will contribute significantly to delivering a more strategic approach to the investment, management and operation of a major element of the UK's scientific infrastructure.

  Previously Science Budget funding of CCLRC was effected via service level agreements between CCLRC and the individual Research Councils renegotiated on an annual basis. The new arrangements mean that CCLRC will receive direct funding from the Office of Science and Technology for providing, operating, maintaining developing and upgrading its large facilities and their instrumentation on the basis of the medium term plans agreed by Research Councils UK. This will ensure that the CE of CCLRC as Accounting Officer is clearly and visibly accountable for the value for money of the delivery of all aspects of access, operation and development of these national facilities.


  16.  Please provide a note updating the Committee on the progress of the Diamond synchrotron project and the compensation package for the North West.


  The measures taken to underpin the science base in the North West have produced good results. The projects awarded funding by the North West Science Review are making steady progress under the supervision of the Research Councils and the North West Science Council. Management boards have been set up and many have succeeded in attracting further additional funding from other sources and the recruitment of key staff has been completed. One of the centers is due to open in spring 2003.

  The North West Science Council has been working on putting together a 10-15 year strategy for science and technology in the North West, setting up working parties to investigate different areas of science within the region. The working parties have reported back to the Council and a draft strategy has been sent out for consultation.

  On the Diamond project a number of key appointments such as the Chief Executive Officer, Science, Technical Directors and Head of Finance have been made. The Joint Venture Company, Diamond Light Source was launched in March 2002. Since then the project has passed Gate 2, the procurement phase, of the Office of Government Commerce Gateway Process. The team are now preparing for Gate 3, the building phase.

  Much work has taken place on fine-tuning the design and technical aspects; a tender is being issued for the building work. In addition Diamond Light Source are working on developing links with other organisations, a collaboration agreement has been signed with the European Synchrotron Radiation Facility (ESRF) in France. It is hoped that more such agreements will be signed in the near future.


  17.  Please provide a note explaining the rationale for OST expenditure on the Institute, the purpose to which it is being put, and how it is being evaluated.


  Rationale for OST expenditure on the Institute: The CMI strategic alliance was announced by the Chancellor, who agreed to make funding available for CMI to undertake joint educational and research initiatives. As CMI is an experiment in creating a new model for global higher education, which will help define the research university of the 21st century, funding is allocated via OST.

  The purpose to which it is being put: CMI's mission is to provide a catalyst to improve economic competitiveness and productivity whilst working with UK universities to encourage the entrepreneurial spirit in higher education. CMI will achieve this through funding and support for four key programmes: Integrated Research; Undergraduate Student Education; Professional Practice Programmes and National Competitiveness Network.

  How it is being evaluated: Ongoing evaluation is being undertaken by CMI, which is a limited company with a private sector led Board, and an Advisory Board with members from US and UK academe and industry.

  CMI are commissioning external consultants to assist them and are also being advised by DTI Performance and Evaluation Unit. OST will be commissioning an independent evaluation.


  18.  It would be helpful to have a brief guide to the annual Estimates and accounting process, explaining the various documents now produced, their timing and significance. (For example, what is the difference in purpose between the Main Supply Estimates and the Supplementary Budgetary Information?)


  Parliament approves expenditure on an annual basis. The mechanism for doing this is that the Treasury presents main Supply Estimates in the Spring of each year. Each department has a separate Estimate within the total volume. Parliament gives legislative approval. There can also be Supplementary Estimates, normally presented in the Summer, Winter and Spring, with similar approval mechanisms.

  The underlying process for the main Estimate is that during the Winter, the Treasury asks each department to submit information, to link the plans agreed in the Spending Review relating to that Estimate year (subject to any subsequent agreed changes) to the Estimate for the Science Budget (Request for Resources 2, RfR2), and Functions. Supplementary Estimates mainly record drawdown of underspends from previous years, and agreed inter-Departmental transfers of responsibility for Voted budgets.

  The detailed lines in "Part II subhead detail" result from technical classifications within resource budgeting.

  To date, each department has published supporting information in its Annual Report, for example DTI in "The Government's Expenditure Plans 2002-03 to 2003-04", the departmental report. Following a review of departmental reports, published in October 2001, it was agreed that the tabulated information in such reports should be reduced and that the more technical tables for all departments should be published in a Supplementary Budgetary Information volume.

  The Main Estimates, Expenditure Plans Report and Supplementary Budgetary Information are published simultaneously and there is full read-across between the documents.

  Departments are required under legislation to prepare annual Resource Accounts to set out their actual expenditure against the Estimates approved by Parliament, and these are audited by the National Audit Office. The target is to lay the resulting Accounts before the House with the C&AG's certificate, during the Autumn of each year.

  19.  What, in the OST's view, is the purpose of the Departmental Annual Report? Has OST considered publishing an annual report of its own?


  The Expenditure Plans Report for Trade and Industry, published by DTI is one of a series of reports which are published by Government annually in which Departments set out their expenditure plans for the future as well as setting out key achievements in the past year. These reports are a valuable document of record and an important part of the mechanism through which Departments may be held accountable to Parliament for their stewardship and effective use of taxpayers money. OST is not a Department in its own right and does not therefore publish its own annual report.

  20.  Please explain why (a) the Swindon Research Councils Pension Scheme and (b) Nuclear Fusion are identified as separate items in the Estimates.


  (a)  Six of the Research Councils participate in the Research Councils Pension Scheme (RCPS), which is closely analogous to the civil service scheme. For mainly historical reasons, the Medical Research Council has a separate and funded pension scheme. The RCPS incorporates separate schemes previously run by each Council. While the RCPS is managed on behalf of the Councils by BBSRC, given its cross-Council nature and the need for transparency and accountability, the scheme is shown as a separate line in Estimates.

  (b)  It was agreed within the department during 2001-02 that responsibility for Nuclear Fusion would transfer from the DTI's Nuclear Industries Directorate (shown in the Estimates RfR1) to the OST (Estimates RfR2), with EPSRC responsible for overall programme management. For timing reasons the budget for nuclear fusion could not be transferred to EPSRC for 2002-03 and so was retained as a discrete line within OST. From 2003-04, the funding for nuclear fusion research will be part of the grant-in-aid for EPSRC.

  21.  With reference to the Supplementary Budgetary Information 2002-03 (pages 145-146), please explain the apparent fall in the administration costs of (a) the Science and Engineering Base Group from £136,000 in 1999-2000 to £14,000 in 2001-02 and (b) the Transdepartmental Science and Technology Group from £276,000 in 1999-2000 to £36,000 in 2001-02. How do these figures relate to those on page 213 of the Main Estimates 2002-03?


  These figures refer to the net capital element of SEB and TDST Administration costs, shown in the Supplementary Budgetary Information volume. For SEB, £14,000 is the net capital cost for 2002-03 after allowing for non-operating appropriations-in-aid (similarly £36,000 for TDST). These net figures can be compared with the net figures above for previous years. One reason for the reductions is that the department outsourced the provision of IT equipment and this is now paid for from resource.

September 2002

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