Examination of Witnesses (Questions 220-229)
18 MAY 2004
PROFESSOR STEVE
FOTHERGILL, DR
PETER TYLER
AND MR
JOHN ADAMS
Q220 Mr Beard: The German research institutes,
such as the Fraunhofer, seem to have a good record of links with
business which focus very much on the commercialisation of research.
They are also spread throughout the country and are an established
part of the industrial scene. We had something proposed that was
similar, the Faraday Institutes, which seem to have disappeared
into the wind. What is happening in this respect, in deliberate
attempts to provide a bridge between universities and business?
Dr Tyler: The research I mentioned
that comparative with the US and here has highlighted these intermediaries
as being an important difference between the States and our performance
here. It is quite a difficult picture because in some cases there
are examples of private sector companies that facilitate the same
sort of assistance. In Cambridge, for instance, there is a very
high level of knowledge based consultancies that can mediate and
help in some way. There is evidence that these intermediaries
are quite important in facilitating the process and we have things
to learn from them. The RDAs, the Scottish Development Agency
for instance, at the moment are developing these sorts of instruments.
Q221 Mr Beard: Why is there no pressure?
We are not seeing any pressure either coming from academia, which
you represent, or elsewhere to ensure that you have got the equivalent
of a Faraday Institute in every region that at present has low
productivity. Would that not follow?
Dr Tyler: There are moves afoot.
Q222 Mr Beard: They have been afoot for
a long time.
Dr Tyler: I think many of the
RDAs, ONE North East and others, would feel they are doing a heck
of a lot to broker this and I would say all the RDAs feel they
are doing something. Whether or not we have learned all the lessons
we can at the moment from the United States I doubt, although
you can oversimplify the processes. There is quite a lot going
on. I am not as negative as one might feel, it is quite strong.
Q223 Mr Beard: The Government are currently
consulting on a framework for a 10 year investment strategy in
science and engineering. What changes would you like to see if
this framework is to make a meaningful contribution to narrowing
the productivity gap between regions?
Dr Tyler: It has got to get spatial.
Q224 Mr Beard: What does that mean?
Dr Tyler: It has got to have meaning
in individual regions and be thought about what it means for those
reasons. I think that is a central message I would try and convey.
If we are serious about our regions and we want to enhance their
development then we have to regional-proof what we talk about.
We do not do that enough in our rather centralised state.
Q225 Mr Beard: If you are going to regionalise
like that, how would you divide up the research and development
budget because you cannot have it just in an area where nobody
can receive it?
Dr Tyler: I do not have an answer
directly to that. There are ways of doing that. I do not think
it is beyond our wit to do that.
Q226 Mr Beard: Lastly, I mentioned Michael
Porter and one of the things he has talked about in relation to
developing countries, and there is no reason why it should be
different for regions, is this business of promoting clusters
for industry and he quotes the chemical industry, the pharmaceutical
industry and various other things. Would that be a solution to
helping some of the regions, that you try to promote industrial
clusters or operational clusters in each area?
Dr Tyler: Firstly, there are a
lot of interesting clusters but we ought to remember that clusters
are a market driven phenomenon in any case. If there is a desire
for the market to want them, they will have them. The role for
Government in that is often difficult to directly work out. There
are some exceptions and I believe the extent to which you embrace
the cluster concept depends on who you put into the framework.
For instance, when we are talking about the knowledge based clusters
undoubtedly we are talking about public sector institutions that
can do things that will enhance the wellbeing of a cluster. There
is scope for policy there. You have to be very careful with taking
the cluster concept and using it in very generalised ways, and
I know my colleagues feel the same. There is many a dead and dying
cluster about, so we have to be a bit careful. The problem is
knowing quite what Government can do in relation to clusters because
if the benefits are so powerful, which they are undoubtedly are—I
am convinced about the glue of the cluster—the market will
seek to incorporate them but the process can be enhanced, particularly
when we are talking about accommodating the land use patterns
that emerge.
Q227 Mr Beard: What are the cautionary
stories? There are some successful ones and you have just said
there are some disasters; what are the disasters?
Dr Tyler: I am not saying they
are disasters, many of our big clusters have gradually begun to
die because they have lost competitive power worldwide. Take the
automotive industry, for example, which is going through something
of a renaissance at the moment, many of these areas had very powerful
clusters. My experience is that it is very difficult to extinguish
a cluster, it has got a very strong imprint in the local area
and if there is any chance of reviving it, it will come back almost
by itself. In the knowledge based examples there is a huge role
for what the public sector does and this is where we can do a
lot.
Q228 Mr Beard: Professor Fothergill or
Mr Adams, have you got differing views on this?
Mr Adams: I agree with a lot of
what Dr Tyler said. One of the problems is cause and effect. Clusters
happen when markets want them, the role of the state in creating
them is much, much more difficult.
Professor Fothergill: I have got
to say the whole idea of clusters seems to be the fad of the moment.
There is merit in the idea. Cluster effects do work but it is
a sobering thought to remember that in the first half of the 20th
century Britain had a good half a dozen really big world class
clusters around industries like shipbuilding or cotton textiles,
footwear in Northamptonshire, hosiery in Leicestershire, and one
by one most of those clusters have fallen by the wayside. Clustering
by itself does not seem to me to be a guarantee of economic success.
Mr Beard: It is not a guarantee of immortality,
it may be economic success for a while.
Q229 Chairman: I have a final question
for you. In the context of this inquiry, what would you be looking
for from the Chancellor's Spending Review this summer? No money
at all?
Mr Adams: Personally, I think
the areas of innovation and enterprise policy are very confused
at the moment and if he could bring some clarity to those areas,
and in particular try to focus on those areas which are more effective
and produce more value for money, that would be very useful. As
I said before in answer to questions from Ms Eagle, the fundamental
issue on regional economic policy is not productivity, it is demand
side employment issues.
Dr Tyler: I feel we have got some
good instruments. I believe Smart is a good instrument but I believe
the amount of resources available for it are being reduced and
that I find very hard because it is a successful instrument. In
papers and other things we have argued that some of RSA is a successful
instrument but its real value has been reduced progressively over
many years and I find that odd.
Professor Fothergill: My answer
would be not a million miles from Peter Tyler's. We have got a
regional policy which is strong on aspirations at the moment but
still rather weak on delivery. For it to really deliver it will
require money put behind it, serious money. It will also require
the powers to be available to the central state and, indeed, to
the regions to deliver. If we had more time I would have wanted
to say a little bit more on that. The tools need to be strengthened,
in short.
Chairman: Okay. Can I thank you for your
attendance this morning, it has been very helpful to us in this,
our second evidence session on productivity. Thank you
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