House of Commons - European Scrutiny

Select Committee on European Scrutiny First Report

21 EC and Euratom research and development programmes from 2007

(a)

(26503)

8156/05

COM(05) 118

(b)

(26581)

8087/05

COM(05) 119

+ ADDs 1 and 2

Commission Communication: Building the European Research Area for growth

Draft Decision on the 7^th Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013)

Draft Decision on the 7^th Framework Programme of the European Atomic Energy Community for nuclear research and training activities (2007-2011)

Commission staff working paper: impact assessment of the proposals for the 7^th Framework Programmes

Commission staff working paper: simplification of the European Community's 7^th Framework Programme

Legal base (a) — ; (b)(i) Article 166 EC; co-decision; QMV; (b)(ii) Article 7 Euratom; — ; unanimity

Document originated 6 April 2005

Deposited in Parliament 17 May 2005

Department Trade and Industry

Basis of consideration EMs of 23 May 2005

Previous Committee Report None

Discussed in Council 18 April 2005

Committee's assessment Politically important

Committee's decision Not cleared; further information and the opinion of the Science and Technology Committee requested

Background

Section 1.208 21.1 Until the late 1970s, European research policy was concerned mainly with nuclear energy, coal and steel and agriculture. The first EC Framework Programme was adopted in 1984. In 1986, the Single European Act gave research and technological development (R&D) its own, specific legal base.

Section 1.209 21.2 The current (6^th) EC Framework Programme runs for four years, expiring at the end of 2006. The 6^th Euratom Programme also expires at the end of 2006.

Section 1.210 21.3 In March 2000, the Lisbon European Council endorsed the establishment of a European Research Area.[79] It also set the strategic goal for the European Union to become, by 2010, the most competitive and dynamic knowledge-based economy in the world, capable of sustained economic growth with more and better jobs and greater social cohesion.[80]

Section 1.211 21.4 In 2002, the Barcelona European Council agreed that:

"overall spending on R&D and innovation in the Union should be increased with the aim of approaching 3% of GDP by 2010. Two-thirds of this new investment should come from the private sector."[81]

Section 1.212 21.5 In February 2004, our predecessors scrutinised a Communication by the Commission on the importance of basic research, including a comparison of basic research in the USA and Europe and ideas for dealing with perceived weaknesses in the European arrangements.[82]

Section 1.213 21.6 In July of that year, the previous Committee considered a Communication on the Commission's proposals for the main objectives for the EC's 7^th R&D Framework Programme (FP).[83] Between April and July, the Government held consultations about the 7^th FP and commissioned an evaluation of the impact in the UK of the current and previous FPs. The Parliamentary Under-Secretary of State for Science and Innovation (Lord Sainsbury) told our predecessors that the clear messages from the consultations and the evidence it had commissioned were that:

· there was positive support for EU research from interested organisations in the UK, but a sharper focus is needed on the delivery of outputs in basic research, on competitiveness and on support for EU policy aims;

· the financial instruments used in the 6^th FP were "not delivering for business";

· the Commission's grant procedures were an obstacle to getting stakeholders to participate in EU projects; and

· there was support for new funding for basic research, delivered through an independent European Research Council.[84]

The Minister also provided a summary of the key findings of the evaluation; it is reproduced below.

TREATY PROVISIONS

Section 1.214 21.7 Title XVIII of the Treaty establishing the European Community (the EC Treaty) is concerned with research and technological development:

· Article 163 provides that it is the Community's objective to strengthen the scientific and technological bases of European industry and encourage it to become more competitive, as well as to promote research that is necessary for the purposes of other chapters of the Treaty. The Community should encourage companies, research centres and universities in their R&D activities and support their efforts to cooperate with each other.

· Article 165 requires the Community and Member States to coordinate their R&D so as to ensure that national and Community policies are consistent.

· Article 166 requires the Council to adopt multiannual framework programmes for the Community's R&D activities.

Section 1.215 21.8 Article 5 of the EC Treaty is concerned with "susidiarity" and "proportionality". It provides that:

"In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community.

"Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty."

Section 1.216 21.9 Article 5 of the Treaty establishing the European Atomic Energy Community (the Euratom Treaty) provides that the Commission is to be responsible for promoting and facilitating nuclear research in the Member States and for complementing it by carrying out a Community research and training programme. Article 7 provides for the Council to determine Euratom research and training programmes, which should normally cover five years. Article 8 requires the Commission to establish a Joint Nuclear Research Centre to ensure that the research programmes are carried out and to do other tasks assigned to it.

The documents

Section 1.217 21.10 Document (a) is a Communication summarising the Commission's proposals for the EC's R&D programme from the beginning of 2007 to the end of 2013 (the EC's 7^th FP); relating the proposals to the conclusions of the Lisbon and Barcelona European Councils (see above); and explaining why the Commission considers that the EC's investment in R&D between 2007-13 should be doubled to €72.726 billion.

Section 1.218 21.11 Document (b) comprises:

· a draft Decision to establish the EC's 7^th FP;

· a draft Decision to establish the Euratom 7^th FP;

· a staff working paper (ADD 1) setting out in great detail the Commission's assessment of the likely economic, environmental and social impact of the FPs; and

· a staff working paper (ADD 2) explaining the Commission's proposals for simplifying the arrangements for evaluating, selecting and making EC financial contributions to R&D projects.

Section 1.219 21.12 The Commission says that knowledge underpins all elements of the Lisbon strategy:

"Investing in knowledge is certainly the best, and may be the only, way for the EU to foster economic growth and create more and better jobs, while at the same time ensuring social progress and environmental sustainability. … In its proposals for the mid-term review of the Lisbon strategy, the Commission highlighted knowledge and innovation as the beating heart of European growth. … At the March 2005 European Council, European heads of state and government declared their aim of increasing the potential for economic growth and of strengthening European competitiveness by investing above all in knowledge, innovation and human capital."[85]

Section 1.220 21.13 The Commission considers that R&D in the EU has a number of weaknesses:

· compared with competitors such as the USA and Japan, the EU invests substantially less, despite the emergence of new fields of science and the rising cost of R&D;

· the EU has too few researchers;

· the EU needs to become better at translating the results of research into commercially valuable innovations and at exploiting science and technology to improve its competitiveness; and

· the European research area is not sufficiently well organised, resulting in net outflows of R&D investment, students and researchers.

In order to deal with these weaknesses, the EU needs to invest a lot more in research and to do so more effectively. It needs to encourage a greater pooling of knowledge and resources across frontiers, stimulate the mobility of researchers and coordinate national research activities more effectively.[86]

Section 1.221 21.14 The Commission has evaluated three policy options for the EC's 7^th FP:

i) "do nothing" — there would be no EU intervention or financial contribution to R&D; or

ii) "business as usual" — continue 6^th FP during 2007-13, with the same budget, objectives and priorities; or

iii) restructure the programme and reinvigorate European research by doubling the budget and design the 7^th FP to achieve the aims set by the European Council at Lisbon and Barcelona.

Section 1.222 21.15 The Commission estimates that the third option would:

· by 2030, increase the EU's GDP by between 0.5% and 1% (the higher figure appears to assume that the EC budget for R&D would continue to increase substantially after 2013);[87]

· by 2030, create 418,000 additional jobs compared with the "business as usual" option;[88]

· generate extra R&D investment by the private sector ( a recent study estimated that every additional €1 in public R&D investment induced an additional €0.93 of R&D investment by the private sector);[89]

· by 2030, increase exports from the EU by about 0.6% and reduce imports by about 0.3% compared with the "business as usual" option 2;[90] and

· give rise to specific benefits for health, safety, energy, the environment and so on.

Accordingly, the Commission rejects the first and second options and believes that the adoption of the third is justified.

Section 1.223 21.16 The Commission says that its proposals for the EC's 7^th FP are consistent with the principles of subsidiarity and proportionality. Some of the proposed research activities are on such a scale that no single Member State could provide the necessary resources and expertise. In such cases, EU projects would allow the project to achieve "critical mass", while reducing the commercial risk and levering in private investment. EU action can also play an important part in transferring skills and knowledge across frontiers, and in improving the expertise and mobility of researchers. Moreover, increased funding is needed in order to launch new initiatives while maintaining existing ones, to recognise the high level of over-subscription to existing actions and to meet the new challenges of science and technology. The Commission considers, therefore, that the proposed doubling of the R&D budget is justified and that the proposed budget is proportionate to the scale of the economic, social and environmental issues facing the EU.

Section 1.224 21.17 The Commission notes that the 7^th R&D FP is not the only programme which will help achieve the Lisbon strategy for building the "knowledge economy". Others include:

· The Structural and Cohesion Funds (with a proposed total budget of €336 billion between 2007-13). R&D, innovation and the transition to a knowledge economy are among the top priorities of the proposed Structural and Cohesion programmes.[91]

· The Competitiveness and Innovation Framework Programme (with a proposed budget of €4.2 billion between 2007-13).[92]

· The proposed Education and Training Programmes for 2007-13.[93]

DRAFT DECISION ON THE EC'S 7^TH FRAMEWORK PROGRAMME FOR R&D

Section 1.225 21.18 The Commission proposes that the FP should have the following four programmes:

· Cooperation;

· Ideas;

· People; and

· Capacities.

In addition the 7^th FP would support non-nuclear work by the EC's Joint Research Centre on: prosperity in a knowledge-intensive society; the management of resources; security and freedom; and Europe as a world partner.

Section 1.226 21.19 The aim of the Cooperation programme would be to "gain leadership in key scientific and technology areas by supporting cooperation between universities, industry, research centres and public authorities across the European Union as well as with the rest of the world."[94] The programme would have the following nine themes:

· Health;

· Food, agriculture and biotechnology;

· Information and communication technologies;

· Nanosciences, nanotechnologies, materials and new production technologies;

· Energy;

· Environment (including climate change);

· Transport (including aeronautics);

· Socio-economic sciences and the humanities; and

· Security and space.

Section 1.227 21.20 The Ideas programme would support basic (or "frontier") research projects proposed by research teams, who would be in competition with each other for funding. The Commission proposes that a European Research Council should be established, among other things, to oversee decisions on the type of research to be funded and to monitor the scientific quality of the work produced. The members of the Research Council would be eminent scientists, appointed by the Commission; they would act in a personal capacity and with complete independence.[95]

Section 1.228 21.21 The purpose of the People programme would be to develop and strengthen the human potential of European research through financial support for training and the mobility of researchers. The aim would be to stimulate suitable people to become researchers, encourage researchers to remain in the EU and attract researchers from elsewhere to move to Europe.[96]

Section 1.229 21.22 The aim of the Capacities programme would be to strengthen research and innovation capacities throughout the EU by:

· optimising the development and use of research infrastructures (such as highly specialised measuring facilities required for nanotechnology);

· supporting research by, and for the benefit of, small and medium-sized enterprises (SMEs);

· supporting the development of "research-driven clusters" within regions;

· unlocking the research potential of the EU's convergence and outermost regions;

· supporting research on "science in society";

· supporting international cooperation in R&D.

Activities under this programme would also support the development of the EU's science and other policies.[97]

Section 1.230 21.23 Annex 1 of the draft Decision sets out the proposed objectives of, and rationale for, each of the four programmes; and the R&D activities which would be supported under each theme within a programme.

Section 1.231 21.24 For example, the Annex says that the objective of the Security theme would be:

"To develop the technologies and knowledge for building capabilities needed to ensure the security of citizens from threats such as terrorism and crime, while respecting fundamental human rights; to ensure the optimal and concerted use of available technologies to the benefit if European security, and to stimulate the cooperation of providers and users for security applications." [98]

Section 1.232 21.25 Annex 1 also explains the Commission's rationale for the security theme. Among other things, it says that security-related research provides important support to the Common Foreign and Security Policy. Moreover, it is necessary so as to achieve a high level of security within the EU and protection for vital transport, energy and other infrastructure. The Commission asserts that:

"Existing security related research activities in Europe suffer from fragmentation of efforts, the lack of a critical mass of scale and scope and the lack of connections and interoperability. Europe needs to improve the coherence of its efforts by developing efficient institutional arrangements and by instigating the various national and international actors to cooperate and coordinate in order to avoid duplication and to explore synergies .… Security research at Community level will focus on activities of clear added value to the national level. As a consequence, security research at Community level will reinforce the competitiveness of the European security industry."

Section 1.233 21.26 Annex 1 says that the Security theme would support the following R&D activities:

· protection against terrorism and crime (for example, developing technology to prevent, detect, and contain threats);

· the security of critical infrastructure and utilities;

· border security;

· restoring security in the event of a crisis;

· the integration and interoperability of security systems;

· security and society (for example, socio-economic research on the public's perception of security; ethics; and ways to protect privacy and liberty);

· the coordination of European and international security research and the development of synergies between civil, security and defence research.

Section 1.234 21.27 The draft Decision proposes that the total budget for the EC 7^th FP should be €72.726 billion, distributed between the programmes as follows:

· the Cooperation programme — €44.432 billion;

· the Ideas programme — €11.862 billion;

· the People programme — €7.189 billion;

· the Capacities programme — €7.486 billion; and

· the non-nuclear activities of the Joint Research Centre — €1.817 billion.

THE EURATOM 7^TH FRAMEWORK PROGRAMME FOR NUCLEAR RESEARCH AND TRAINING

Section 1.235 21.28 The Commission proposes that this programme should begin in January 2007 and end in December 2011, with a total budget of €3.092 billion. The budget would be allocated between three programmes:

· Fusion energy research (€2.159 billion);

· Nuclear fission and radiation protection (€394 million);

· Nuclear activities of the Joint Research Centre (€539 million).

Section 1.236 21.29 The main activities to be supported under the Fusion energy research programme would be:

· R&D for, and work on the establishment of, the international energy research project (ITER) — this is a project for the creation of prototype reactors for nuclear fusion power stations.

· Development of fusion materials and technologies and preparations for the construction of the International Fusion Materials Irradiation Facility.

· Longer-term R&D on nuclear fusion.

· Development of initiatives to ensure that there are enough suitably qualified, trained and experienced staff to work on ITER and other nuclear fusion projects.

Section 1.237 21.30 The activities to be supported by the Nuclear fission and radiation protection programme would be:

· Management of nuclear waste.

· Reactor systems (for example, R&D on the continued safe operation of existing reactors).

· Radiation protection (including research on the risks from low doses, medical uses, management of accidents and minimisation of the threat posed by nuclear and radiological terrorism.

· Infrastructures (work to support the availability of research infrastructures such as underground research laboratories and radiobiology facilities).

· Human resources and training ( to support the recruitment, retention and training of enough researchers and employees).

Section 1.238 21.31 Support for the Joint Research Centre would include work on nuclear waste management and its environmental impact; nuclear safety; and nuclear security.

The Government's view

Section 1.239 21.32 The Parliamentary-Under Secretary of State for Science and Innovation at the Department of Trade and Industry (Lord Sainsbury) has provided us with separate Explanatory Memoranda on documents (a) and (b). He tells us that the proposals for the EC's 7^th R&D Framework Programme have the potential to make an important contribution to achieving the Lisbon strategy by increasing the EU's capacity to conduct excellent research, to innovate and to compete successfully with the rest of the world. The Government broadly welcomes the proposals. It will, however, want to examine the details of the proposed programmes when the Commission publishes them.

Section 1.240 21.33 In particular, the Government welcomes the intention to improve the quality of basic research through the establishment of a European Research Council and to improve the mobility of researchers. In his Explanatory Memorandum on document (b), the Minister says that:

"The Government is particularly pleased to see the proposal to judge basic research proposals by peer review under the sole criterion of excellence, but will examine later detailed proposals carefully to ensure that the detail matches these laudable principles."

Section 1.241 21.34 The Government also welcomes the proposal to continue a "bottom up" programme to get the most out of European research infrastructures. It believes that priority for EU funding should be towards making infrastructures more readily available to researchers.

Section 1.242 21.35 The Minister says that more information is needed from the Commission about how the R&D Programme, the Structural Funds and the proposed Competitiveness and Innovation Programme might complement each other without unnecessary overlapping and duplication.

Section 1.243 21.36 As regards the financial implications of the proposals, the Minister's Explanatory Memorandum on document (a) says that:

"The UK's position is that whilst we recognise an a priori case for an increased focus on R and D this must be within an overall EU budget of no more that 1% of GNI and consistent with the Commission's capacity to manage and absorb such funds."

It will not be possible to settle the amount of expenditure on R&D until the negotiations on the EU's total budget for 2007-13 have been completed.

Section 1.244 21.37 As for the proposals for the Euratom Programme, the Minister tells us that the Government will keep "under close review" the extent to which the proposed work on nuclear security affects and is compatible with the provisions on safeguards in the Euratom Treaty. Otherwise, the Government is generally content with the proposals.

Section 1.245 21.38 Finally, the Minister tells us that the Commission's proposals were broadly welcomed by all Member States when they were presented at the Competitiveness Council on 18 April.

Conclusion

Section 1.246 21.39 We recognise the important contribution that research and development can make to maintaining and improving the competitiveness and well-being of the United Kingdom. We also recognise that a prosperous and competitive European Union is in the UK's national interest. It seems to us, however, that increasing scientific knowledge through international cooperation in research need not, and sometimes should not, be confined to cooperation within Europe. We should be grateful, therefore, for the Minister's views on whether the United Kingdom's contribution to doubling the EU's budget for R&D would be likely to be at the expense of research in this country, or of the UK's participation in collaborative projects elsewhere in the world, which might be of greater benefit to the UK.

Section 1.247 21.40 Security is one of the themes of the proposed Cooperation programme. We ask the Minister to tell us how much the Commission has it in mind to allocate for the security theme and whether the Government considers that this would be likely to be good value for money. Moreover, we doubt whether all the activities proposed under the security heading comply with the requirements of subsidiarity and proportionality; we should be grateful for the Minister's comments on this question.

Section 1.248 21.41 The negotiations on the details of the 7^th EC and Euratom Framework Programmes are still at an early stage. We ask the Minister to keep us informed of the progress of the negotiations.

Section 1.249 21.42 In accordance with paragraph (11) of our order of reference, we request the opinion of the Science and Technology Committee on the proposed programmes by the end of this year.

Section 1.250 21.43 Pending receipt of that Committee's opinion and the Minister's response to our requests for further information, we shall keep the documents under scrutiny.

Annex

Summary by the Department of Trade and Industry of selected findings of an evaluation, commissioned by the Government, of previous Framework Programmes

ADDED VALUE

· 73% of UK participants in FP4 and FP5 believe that international collaboration in R&D is becoming more important to their organisation, whilst only 5% believe it is becoming less relevant.

· There is widespread support for substantial EU research funding to support European industrial competitiveness and policy, though not at the expense of national funding. Augmenting national funds is the central feature of Framework from the perspective of UK researchers, public and private, and it is an important aspect for policy makers too — 30% of respondents said accessing research funding was their principal motive for involvement in the Framework Programme.

· Other important factors cited by participants as their primary motivation for undertaking collaborative research are tackling problems with a European or international dimension and accessing capabilities that do not exist in the UK.

UK PERFORMANCE

· Participation levels by UK organisations in both FP4 and FP5 were very strong. UK organisations were involved in more FP4 and FP5 projects than any other country — 47% of all FP4 projects and 41% of all FP5 projects included at least one UK partner. The UK secured in excess of €2 billion from FP5. UK organisations coordinated around a quarter of FP4 projects and around a fifth of FP5 projects.

· UK universities won 25% of all FP5 funding allocated to EU HEIs whilst UK industry secured 12.5% of the funding allocated to business enterprises. But this participation is concentrated — 20% of organisations account for 80% of UK activity. Industry participation is concentrated on only a few sectors with a large variation in engagement among businesses within each sector.

· Data on participation levels show a number of worrying trends. Around one third of UK participants stated that their involvement in Framework is in decline despite the fact that the relevance of international collaboration to their organisation is level or increasing. Almost 80% of businesses in FP4 did not participate in FP5 and over half of the large companies surveyed said their organisation's involvement with Framework is in decline. Large companies and SMEs are more likely than public sector researchers to be reducing their involvement.

· Two main factors were cited as reducing the utility and relevance of Framework: (i) three quarters of participants said the bureaucracy associated with applying for and managing projects was getting worse; and (ii) around half said the relevance of the Programme and its instruments was decreasing.

IMPACTS

· The survey results show that Framework projects produce on average 25 outputs through, for example, publications, patents or improved tools, methods or techniques. Around 10% of projects produce 100 outputs or more. Nearly one third of projects lead to new or improved products or services. Over three-quarters of respondents were confident their projects results were exploited.

· 50% of participants whose objectives were improved products, services, industrial or scientific processes said that they had realised high levels of achievement. The survey results showed an even higher rate of achievement — 73% or more — where the objectives were access to funding, new relationships or networks, answering scientific questions, and developing internal knowledge and capabilities. But only 22% of those participants who aimed to produce new regulations or policies reported high achievement of these aims.

· Over two thirds of UK participants stated that the benefits gained from their involvement in FP4 and FP5 projects outweighed the costs incurred. Private companies report less favourable cost/benefit ratios than do universities or public research institutes, with the situation being especially bad for private research institutes and SMEs. Just 51% of private research institutes and 55% of SMEs were able to state that the benefits they had derived from Framework were greater than the costs incurred. In comparison with the UK collaborative research programme LINK, Framework cost-benefit ratios are better for business and worse for universities.

· Participants report high levels of satisfaction with the results of Framework Programmes 4 and 5, citing the primary direct benefits as being linked to the production of new knowledge and competencies, and the strengthening and extension of international networks. Most industrial participants reported high levels of impact on their organisation's competitive position, both nationally and internationally, though only a small minority Identified improved turnover and profitability.

PROGRAMME DESIGN

· Nearly half of participants support an increase in the absolute volume of funding allocated to the Framework Programme, but only 13% few would support such an increase if it came at the expense of national S&T support.

· 64% of participants opposed the idea that Framework might focus its resources more heavily on fewer subject areas or topics, with nearly three-quarters arguing that Framework should be more open and flexible as to the areas supported.

· 61% of participants say that Integrated Projects and Networks of Excellence will make it harder to participate in the Programme in the future, despite around 45% of participants supporting them in principle. Many respondents say that the final scale of the IPs commissioned under FP6 and the size of the partnerships involved mean that these new instruments will burden the research community with high administrative and management complexity. Over half say that IPs and NoEs' share of the funding is too high.

PROGRAMME MANAGEMENT

· Participants argue strongly for simplified application procedures — 43% report difficulties with the volume and legibility of the information that has to be digested. Many participants would welcome more widespread use of a two-stage process to cut down on abortive bidding costs. Participants would like the peer review system strengthened to eradicate perceived biases and to improve the quality of the decisions — less than a quarter believe the system is fair and results in good decisions.

· The principal barriers to progress and exploitation of projects cited by participants are bureaucratic Commission processes, with over a third of projects affected, insufficient levels of funding and human resource issues. These barriers are more sharply felt by the SME community.

· Participants were evenly divided on the question of whether the EC's contract negotiation procedure was reasonable but 49% of participants believe the time the Commission takes to make payments is unreasonable.

79 Lisbon European Council, 23 and 24 March 2000, Conclusions 12 and 13. Back

80 Conclusion 5. Back

81 Barcelona European Council, 15 and 16 March 2002, Conclusion 47. Back

82 See (25289) 5598/04: HC 42-xi (2003-04), para 18 (25 February 2004). Back

83 See (25768) 10740/04: HC 42-xxix (2003-04), para 10 (21 July 2004). Back

84 Minister's letter of 2 December 2004 to the Chairman of the Committee. Back

85 Document (a), pages 2 and 3. Back

86 See ADD 1, page 2. Back

87 See ADD 1, page 57. Back

88 See ADD 1, page 58. Back

89 See ADD 1, pages 21 and 22. Back

90 See ADD 1, pages 58 and 59. Back