APPENDIX 2
Supplementary evidence from the Department
of Trade and Industry
1. What is the
rationale behind the reduction in the number of DTI grants for
R&D?
The Grant for Research and Development has proved
just as popular as its predecessor, Smart. In the 2001-02 financial
year we offered 615 Smart grants worth some £33 million,
but by 2003-04 this had climbed to 919 Smart and R&D grants
worth £59 million.
While the DTI has been able to re-prioritise
spending and fund more grants than initially budgeted, this rate
of increase was clearly unsustainable and action was needed to
keep expenditure under control.
Of the options that were available, the introduction
of regional competitions was seen as the fairest and most effective
way of continuing to support innovative businesses in England.
Competitions will help DTI to manage expenditure and also ensure
that those projects which best meet the selection criteria are
supported.
How will the new grants for R&D affect small
projects that need smaller amounts of funding?
The maximum grant for a Micro Project under
the Grant for Research and Development is £20,000, which
is double the maximum that was available under Smart. The maximum
Research Project grant, available only to small businesses, is
now £75,000 compared to a maximum £45,000 that was available
for the equivalent Smart grant.
We expect the higher grants will make this new
business support product attractive to an even greater number
of smaller projects. It will now help bring to fruition those
projects which could not be afforded with the smaller grants.
2. What evidence is there to suggest that
companies invest the money recovered through R&D tax credits
in R&D? What methods are being used to monitor the effectiveness
of R&D tax credits as an incentive to invest in R&D?
Academic research indicates that tax incentives
can increase companies' spending on R&D. [Work by the Institute
of Fiscal Studies, for example, estimates that a 10% reduction
in the cost to businesses performing R&D stimulates a one
per cent rise in the aggregate level of R&D, rising to a 10%
increase in the long-run.]
However, it is too early to early to judge what
the actual effects of the R&D tax credit have been on UK business
spending on R&D. R&D decisions are long-term in nature.
The desired policy outcomes, such as boosting innovation and productivity,
typically emerge some years after the initial investment.
The Government is committed to a thorough evaluation
of the R&D tax credits to tackle questions such as this. Work
has begun on that evaluation and a detailed strategy is in place.
The evaluation comprises a number of elements
to examine different aspects of the tax credit—for example,
the level of awareness and take-up of the tax credits, the operation
of the claims process, the impact on R&D spending and the
effects on innovation and productivity. The evaluation will be
a long-term project reporting over a number of years, with the
earliest findings likely to be available in the middle of 2005.
3. The Investment Framework identifies the
availability of proof of concept funding as an area of continuing
concern. What new measures are the Government and Research Councils
taking to address this issue at both the supply and demand ends?
(Q 118)
Awards have been made this year under the second
rounds of HEIF and PSRE for proof of concept activity. This funding
covers 2004-06. Discussions on the third rounds of HEIF and PSRE
are still at an early stage and we will be consulting extensively
with stakeholders on the development of these funds.
4. Is it envisaged that Research Councils
will have to reduce the number of projects that they fund in order
to meet the full economic costs of research? What measures will
be taken to ensure that the volume of research does not fall?
(Q 131)
No. Research Councils will not have to reduce
the number of projects they fund. The percentage of full economic
costs to be paid, taking account of the additional funding provided,
will be calculated so as to preserve the existing volume of research.
An additional £120 million per year from
2005-06 was allocated in the 2002 Spending Review, with a further
£80 million per year from 2007-08, allocated in the latest
Review.
5. The Spending Review states that the Research
Councils will need to undertake an ongoing programme of monitoring,
benchmarking and dipstick testing to avoid price inflation in
grant applications as a result of the system for recovering the
full economic costs of research. Will the Research Councils be
given extra resources to carry out this work (and if so, how much),
or is it envisaged that they will still be able to meet the target
of reducing their administrative spend by 10% by 2007-08? (Q 134)
OST does not provide a separate funding stream
for Research Council administration. Such costs are met from their
overall resource and capital budgets which are rising as a result
of the latest and previous Spending Reviews.
Whilst Research Councils will incur some initial
costs in implementing changes to their systems, these are expected
to be modest and will not affect the undertaking to reduce the
proportion of total Research Council spend devoted to administration
over the Spending Review period.
6. What incentives will be provided to UK
researchers to compete for Framework Programme funding whilst
FP funding does not pay full economic costs? Is the Government
considering providing match funding for those who obtain Framework
Programme grants in order to cover overheads? (Q 139)
The Government is raising awareness in Europe
of the importance of funding research sustainably and will continue
to monitor the consequences of the EU regime falling short of
the ideal for the UK.
The Government believes that University Vice-Chancellors
should retain maximum flexibility and discretion as to how QR
grant funding is used and that this view is shared by Vice-Chancellors
generally. The Government does not therefore propose to provide
a separate hypothecated element within the QR funding stream to
support EU-funded projects, which would reduce such flexibility.
However, the substantial increases in funding to enable Research
Councils to pay a higher percentage of the Full Economic Costs,
and the commitment to further increases in future, will increasingly
release QR resource previously required to underpin such projects.
Together with increases in DfES funding for research this will
allow universities greater opportunity to co-fund research projects,
from whichever source, which align most closely with their strategies.
7. Who decides which research departments
are of sufficient regional and national importance to be kept
open and what criteria will be used in making such decisions?
What will be the role of Sector Skills Councils, the Technology
Strategy Board and the Research Councils in this process? (Q 142)
Ultimately any decisions taken on individual
research departments will rest with the individual HEI concerned.
However, before that decision is taken Government wants to ensure
that due consideration is given to both regional and national
capacity in particular subject areas. That is why we have asked
HEFCE to explore with HEIs and other bodies, the possibility of
agreed notice periods and possible additional funding for particular
Departments where there is evidence that their closure would lead
to a weakening of either regional or national provision. HEFCE
will also set up an expert group, including business and scientific
leaders, to review how falling Science, Engineering and Technology
(SET) provision will affect long-term regional and national economic
development and whether there is a greater role to be played by
business, funding councils, HEIs and other stakeholders in securing
future SET provision.
8. What impact will the regionalisation of
research have on the Research Councils? How will Government ensure
that the drive to support regional projects does not compromise
the Research Councils' policy of supporting excellence wherever
it occurs?
The Government and Research Councils remain
committed to fostering excellent research wherever it is to be
found in the UK.
The Framework document sets out a number of
actions to improve the capability of local business and regional
bodies to engage effectively with the science base. These include;
the sharing of best practice between RDAs, Research Councils,
local business and HEIs through the setting up of science councils
in every region, secondments from the science base to RDAs and
support for business focused research. Such activities, and wider
engagement with the science base, complement rather than conflict
with the activities of Research Councils.
9. What impact have "Golden Hellos"
had so far on the number of new science teachers?
DfES' records show that since Golden Hellos
were introduced in 2000 the number of entrants to teacher training
courses in science has risen by 21%, a very encouraging increase
indeed. The average degree class of graduate entrants has also
risen, as has the proportion of trainees who successfully complete
their courses and take up teaching careers. The proportion of
science trainees gaining Qualified Teacher Status that go into
teaching in the maintained sector has risen from 78% in 1999-2000
to over 83% in 2002-03 (Source: TTA Performance Profiles, excluding
trainees with unknown destinations).
The year-on-year figures are:
What consideration has been given within DTI to
the possibility of DTI providing funds for this newly-expanded
scheme?
It is right that funding is provided by DfES.
However my Department is very concerned that young people should
be encouraged to take up careers in science and technology.
It is essential that teachers are equipped to
generate enthusiasm and confidence among their pupils and to ensure
that their pupils understand the benefits of pursuing science
careers. We work closely with DfES on issues relating to activities
to inspire children and in supporting teachers. We work closely
too with other organisations that are keen to encourage young
people to see the relationship between the sciences, technology
and maths (STEM) curricula and the world of work. In particular,
this Department provides funding for SETNET and the UK-wide network
of SETPoints which act to channel into schools the schemes, awards,
competitions and curriculum resources provided by industry. They
also operate the Science and Engineering Ambassadors Programme
which provides a framework within which people who use STEM skills
in their employment can assist teachers to enhance the curricula.
As a measure of the importance we attach to
this sort of work the Government has decided to reaffirm its commitment
to continue funding SETNET at the current level of just under
£3 million a year and to provide additional funding of up
to £1.8 million over three years to support the introduction
of 10 regional SETNET coordinators. This investment was announced
in the recently published Science and Innovation Investment Framework
(2004-14)
10. Please could you set out the timetable
by which Government intends to formulate its policy on nuclear
energy?
The Government's policy on nuclear energy is
set out in its Energy White paper. It recognizes that nuclear
power is currently an important source of carbon free electricity,
but its economics make it an unattractive generation option and
there are important issues for nuclear waste to be resolved.
It states the Governments belief that ambitious
progress on renewables and energy efficiency is achievable, while
at the same time recognising that there inevitably must be a degree
of uncertainty. For this reason it does not ruling out the possibility
that new nuclear build might be necessary in future to meet carbon
targets and includes measures that might in the longer term benefit
nuclear; a commitment to speedier and more effective planning
inquiries for major energy infrastructure projects, and the introduction
of the European Emission Trading Scheme.
It makes clear any future decision to proceed
with the building of new nuclear power stations will need to be
based on the fullest public consultation and the publication of
a white paper setting out the Government's proposals.
In the mean time the Government's skills and
research initiatives will help maintain nuclear power as an option
into the future and equally importantly, benefit current generation,
decommissioning and waste issues.
11. What progress has been on the establishment
of a Sector Skills Council for the nuclear industry?
The Cogent Sector Skills Council was licensed
on 2 March 2004. It will take a strategic view of the nuclear
sector to ensure that the education and training base can meet
the nuclear employers current and future needs.
Cogent has established a Nuclear Advisory Council
to ensure that it gathers the views of employers and their supply
chain. This will enable it to better estimate demand and to scope
teaching-education supply issues. Cogent also represents the Chemical,
Oil and Gas, Petroleum and Polymer sectors and there are many
synergies with the nuclear sector. Cogent will work with the Nuclear
Decommissioning Authority (NDA), once established, and its contractors
to ensure that necessary skills are available and sustained. Cogent
operates through a mix of Sector Skills Development Agency and
industry funding although funding for projects is mainly sought
from the joint awarding bodies for National Occupational Standards,
Regional Development Agencies and Local Skills Councils.
The Nuclear Skills Group report and the prospect
of the NDA have spurred other skills initiatives funded by a number
of authorities and with which Cogent has been engaged. Examples
include:
— The North West Development Agency
is funding a Nuclear Skills Project to support the siting of the
NDA in the North West.
— Project Dalton—A nuclear teaching
& research centre in the new University of Manchester, merging
Victoria Manchester University and the Manchester Institute of
Technology.
— The "NTEC" consortium of
11 universities coordinated by the Dalton is planning to provide
an MSc level programme in nuclear technology and related subjects
and is preparing a proposal to EPSRC. Cogent has been asked to
endorse the proposal.
— Foresight is working to develop educational
material and teacher training aids for use in the new schools
science curriculum starting 2005.
— The University of Highlands and Islands
and UKAEA have signed an MOU with the French Nuclear Energy Agency
and the University of Grenoble to collaborate on nuclear skills
issues.
Industry and academic institutions are working
together to further the skills and research initiatives, for example,
BNFL University Research Alliances include:
— Radiochemistry with Manchester University;
— Particle technology with Leeds University;
— Waste immobilisation with Sheffield
University; and
— Materials performance with UMIST
and Manchester University.
The alliances involve over 140 scientists, including
about 12 new lectureship posts and four BNFL chairs.
What incentives are there in place for people
to enter the nuclear industry?
All involved in the nuclear industry recognise
the challenge of presenting the opportunities that are on offer
and attracting young people into the industry. Nuclear clean-up
and decommissioning, in particular, needs to be presented as offering
new and exciting challenges.
The industry's commitment to training, skills
enhancement and staff development covers a full range of training
and accreditation programmes in both technical and general management
areas. Highlights include:
— British Energy remains committed
to recruiting young people onto its apprentice and graduate training
programmes and despite the Company's recent difficulties, 33 apprentices
and 21 graduates joined British Energy in 2003-04—in line
with previous years.
— UKAEA has recruited more than 1,000
people during the course of the last five years, most of whom
have come from outside the nuclear industry. Its graduate training
scheme, which is recognised by the senior professional engineering
institutions and involves a combination of both technical and
personal skills development, benefits about 15-20 graduates a
year. It is also committed to recruiting and developing young
school leavers onto its apprentice schemes at Dounreay for engineering
craftsmen, scientific assistants and administration trainees.
These schemes, allied to accreditation for appropriate S/NVQs
from the local technical college, provide good quality training
for some 20-30 school leavers each year.
— British Nuclear Group is among The
Times Top 100 graduate employers—70 new graduates per year.
It spent around £15 million on training in 2003-03. BNFL's
University Research Alliances, already mentioned above, has added
to the supply of graduates with specific grounding in nuclear
curriculum at undergraduate level.
Would the Government be prepared to outsource
its energy provision to countries with better nuclear capacities
than the UK?
The UK currently imports some electricity via
the French interconnector, which is able both to import and export
electricity. The level of imports and exports is constrained by
the capacity of the interconnector (2GW), and is determined by
the market in response to price differentials between the UK and
French markets, not by the Government. In 2003 net imports represented
less than 1% of electricity supplied in the UK. Decisions on the
construction of new interconnectors are a commercial matter for
investors. Though the interconnector links directly with France,
where around 75-80% of electricity is generated in nuclear power
stations, the French market is itself interconnected with other
European countries, and it is not possible to tell the origins
of the electricity supplied to the UK, or the fuel from which
it has been generated. Imported electricity contributes to the
diversity of UK supplies, and as such is beneficial to security,
but it should be seen as complementary to, rather than a replacement
for, electricity generated in the UK.
In common with all generation options, the initiative
for bringing forward proposals to construct new plant lies with
the market and the generating companies. The UK's nuclear power
reactors are not solely UK designs, the UK's newest nuclear power
plant, Sizewell B, was based on a US Pressurised Water Reactor
design. The Government expects nuclear operators to meet the highest
safety and environmental standards. Any generator wishing to build
a new nuclear station in the UK would be subject to a number of
approvals processes under various European Community environmental
and safety directives and domestic (UK level and devolved) legislation.
What steps are being taken in the context of the
Science in Society programme to promote public engagement in the
debate on the role of nuclear power in meeting the UK's target
for reducing carbon dioxide emissions?
The Government's consultation on the Energy
White Paper represented the most significant consultation on energy
policy ever undertaken in the UK. We wish to encourage sustained
debate about UK energy policy generally, including the respective
roles of all individual energy sources in meeting the UK's long
term carbon dioxide emissions reduction targets. This is why energy
and climate change are two of the priority themes in the DTI's
`Sciencewise' public engagement grant scheme. This scheme aims
to maximise coherence and collaboration between parties in the
debate, thus seeking maximum impact and value for money.
The Sciencewise scheme will build on past and
ongoing work by the Tyndall Centre and others in this area, such
as: the joint Tyndall Centre-Royal Institution debate and report
on "Nuclear power—global warming escape or unnecessary
risk?"; and the Tyndall Centre project into geological carbon
capture and storage which is carrying out public focus groups
and surveys and asking the public about nuclear power in a climate
change context.
One of the objectives of the UK Energy Research
Centre, which is being set up as part of the joint ESRC, NERC
and EPSRC Programme "Towards a Sustainable Energy Economy",
will be to bring together key stakeholders and act as a focus
for knowledge transfer and public engagement activities in the
field.
As we said in the Energy White Paper, any proposal
for nuclear build in the future would be preceded by a White Paper
and a full public consultation.
12. What will be the composition of the Technology
Strategy Board, how will it be determined and how will it operate
in establishing future priority areas?
The creation of a Technology Strategy Board
was announced in the Innovation Report "Competing in the
Global Economy", published in December 2003. The Board will
consist of:
— six business people, one of whom
will Chair the Board;
— two venture capitalists (with technology
interest);
— one regional representative with
business background; and
— one Research Council Chief Executive
to represent the interests of all the Research Councils.
Board members representing the business sector
(including the Chair) and venture capital community will be identified
by an interview panel through open competition in full compliance
with guidance from the Office of the Commissioner of Public Appointments.
The panel will also select a representative from the regional
business community drawn from nominations by the Regional Development
Agencies. The Research Council representative will be nominated
by the Research Councils. Appointments will be confirmed by the
Minister for Science and Innovation.
The following Government officials will also
sit on the Technology Strategy Board:
— Director General Innovation Group,
DTI.
— Director General Business Group,
DTI.
— Chief Economic Advisor and Director
General Economics, DTI.
— Director General Research Councils.
— One representative of other Government
departments.
The Chair of DTI's Investment Committee (an
external appointee) will attend ex-officio, as will several DTI
officials.
The Technology Strategy Board will provide business-led
advice to Government on a three to 10 year technology strategy
in support of the UK's long term economic development, drawing
on a wide range of inputs from stakeholder groups. These stakeholder
groups include the industry-led sector Innovation and Growth Teams,
business organisations, such as the CBI and EEF, academic bodies
(including the Research Councils), the Regional Development Agencies
and Devolved Administrations and other Government departments.
The Board's aim is to match business needs with what science and
technology could offer, and help align Government funding to encourage
businesses to exploit new technologies.
The Board will make specific recommendations
on technology priorities, the allocation of funding across these
priorities and the most appropriate form of intervention to support
them. It will be supported by a secretariat and will be able to
call upon the resources of the DTI's Technology Assessment Unit
to gather evidence and assess options for technology priorities
using criteria set out in the Innovation Report (paragraph 3.25)
and a process agreed by the Board.
The detailed operation of the Board will be
for the Chair and members to decide in discussion with the DTI
on appointment. The Board is classified as an Advisory Non-Departmental
Public Body and will report to the Minister for Science &
Innovation.
September 2004
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