House of Commons - Science and Technology

Select Committee on Science and Technology Third Report

2 Background

4. The UK has a strong and highly productive research base, recognised as excellent in its production of "pure" research outputs such as publications and citations. This has been recently confirmed by a DTI study into the outputs and outcomes from UK science, which showed that the UK produces 9 per cent of the world's scientific papers and has a 12 per cent share of world citations.[2] However, historically, the UK has had difficulty in converting this established strength in basic science into commercial success.[3] The Government has acknowledged this stating that "the UK is strong in research but needs to be more effective at translating the products of research into economic and social benefits".[4]

5. Difficulties in converting the UK established strength in basic science into commercial success have been attributed, primarily, to a decrease in overall spending on research and development (R&D) in the UK. However, measurement of success in innovation is complex, since innovation in the academic sector must include consideration of factors such as numbers of spin-out companies formed and income generated from patents and licences. Statistics and international comparisons are to be treated with care, for example, although UK institutions create more spin-out companies than the US, more of these spin-outs fail.[5] It has also been shown that UK institutions perform less well than the US in obtaining patents and that, although UK institutions attain more licences when compared to the US, they have far fewer licences which actually yield income.[6] The UK also lags behind many of its European Union neighbours in the more robust innovation performance indexes compiled by the EU Community Innovation Survey.[7]

Government action

6. The Government has placed a major emphasis on research as a driver of economic growth and, through successive spending reviews, has more than doubled the science budget to £3.4 billion by 2007/8 (since 1997). The Government has also recognised the importance of innovation (the successful exploitation of new ideas) and rightly asserted that, to thrive in the competitive global economy, successful nations will be those that can "compete on high technology and intellectual strength, attracting the highest-skilled people and the companies which have the potential to innovate and to turn innovation into commercial opportunity".[8]

7. Knowledge transfer is an essential component of innovation. It is defined by the Government as "about transferring good ideas, research results and skills between universities, other research organisations, business and the wider community to enable innovative new products and services to be developed"[9] The Government's aim is to "promote the transfer of knowledge generated and held in Higher Education Institutions (HEIs) and Public Sector Research Establishments (PSREs) to the wider economy to enhance economic growth"[10] It has allocated approximately 3 per cent of the science budget (over £111 million for the period 2006-07) to knowledge transfer as a contribution toward achieving this goal. The Government has also, in recent years, undertaken a series of reviews, reports and policy initiatives to support the competitiveness of the UK as a knowledge-based, innovation-driven economy and to determine how its knowledge transfer agenda could be best achieved. These include:

i. The Lambert Review of Business-University Collaboration:[11]in 2002-03 the Government commissioned Richard Lambert, former editor of the Financial Times, to undertake an independent review of business-university collaboration. Lambert published his final report in December 2003 and the Government responded in 2004 as part of the ten year Science and Innovation Investment Framework;

ii. The DTI Innovation Report: in December 2003, the Government also published the DTI Innovation Report, Competing in the global economy: the innovation challenge;[12]

iii. Science and Innovation Investment Framework 2004-2014:[13] In July 2004, the Government published for the first time a ten year investment framework for science and innovation. The Framework reiterated the commitment made in the Innovation Report to develop knowledge transfer plans and targets for each Council and to peer review Research Council support for knowledge transfer.[14]In March 2006, the Treasury announced, with the budget, a consultation: Science and Innovation Investment Framework 2004-2014: The Next Steps, the conclusions of which are expected in late 2006; and

iv. Gowers Review of Intellectual Property: In December 2005, the Government commissioned former Financial Times editor, Andrew Gowers to conduct this review which is aimed at finding the right balance between protecting Intellectual Property rights and encouraging innovation. The report is due in Autumn 2006.

8. To allow measurement of UK success in science and innovation on an international level, the Department of Trade and Industry (DTI) has set down a series of Public Service Agreement Targets (outputs) for the Science Budget:[15]

● Output 1: to maximise the impact of the investment of the Science Budget on maintaining and improving the UK's research base; and

● Output 2: to increase the contribution made to improving exploitation of the research base to meet national economic and public service objectives.

These new targets will become an integral part of the performance management system for the Research Councils and performance against targets will inform future Spending Reviews.[16]

The Research Councils

9. The eight UK Research Councils are independent public bodies responsible to the Department of Trade and Industry's Office of Science and Innovation. The Councils are funded through the Government's Science Budget and, together, currently manage a research budget of over £2.5 billion a year, rising to £2.8 billion in the period 2007-08,[17] in support of research and research training in universities and research centres throughout the UK. Through RCUK, a strategic partnership between the Councils, they work together to "champion the research, training and innovation they support"[18] The Government awarded over £7.5 million of the science budget knowledge transfer allocation (£111 million, 2006-07) for supporting Research Councils' knowledge transfer activities.[19]

10. The Research Councils each have specific knowledge transfer responsibility within their missions.[20] Whilst there are sector specific differences between the Research Councils, and additional responsibilities for CCLRC, ESRC and MRC, the basic remit is to: "advance knowledge and technology (including the promotion and support of the exploitation of research outcomes), and provide trained scientists and engineers, which have potential to contribute to the economic competitiveness of Our United Kingdom and the quality of life, through meeting the needs of users and beneficiaries (specified industrial sectors)" .[21]

The External Challenge Panel

11. RCUK stated, in its Delivery Plan of May 2005, that it would "develop common processes for each Council's plans and KT [knowledge transfer] activities to be subject to external peer review through 'External Challenge'"[22] It appointed a panel to conduct this review towards the end of 2005. The panel consisted primarily of industrialists and members were put forward by each Research Council. RCUK appointed the Panel Chair and commissioned Partnerships UK to write an independent report. Partnerships UK is a Public Private Partnership with the public sector mission: to support and accelerate the delivery of infrastructure renewal, high quality public services and the efficient use of public assets through better and stronger partnerships between the public and private sectors.[23] Panel Chair and Members offered their time and services to this review on an unpaid, voluntary basis.

12. The aim of the External Challenge was to provide the Research Councils and OST with an external assessment of each Council's portfolio of knowledge transfer activities and future plans in this area. The panel was, therefore, directed to take account of the breadth of research undertaken by each Council, the characteristics of their user communities and the resources available. The Panel was also asked to look into the level of Research Council interaction with business and to identify examples of good practice in knowledge transfer and areas for further development. The Panel reported on the results of the External Challenge in May 2006.[24] We are grateful to RCUK for providing us with the External Challenge report prior to publication.

2 Department of Trade and Industry (DTI), Office of Science and Technology (OST), PSA target metrics for the UK research base, December 2005 Back

3 Richard Lambert, Lambert Review of Business-University Collaboration, December 2003, chapter 2, para 2.1 Back

4 Ev 49 Back

5 UK University Commercialisation Survey: Financial Year 2002, p 7, www.auril.org.uk/publications/ Back

6 As above Back

7 European Commission, Commission Staff Working Paper, European Innovation Scoreboard 2004: Comparative analysis of innovation performance, November 2004, SEC(2004) 1475 Back

8 HM Treasury, Department of Trade and Industry and Department for Education and Skills, Science and Innovation Investment Framework 2004-2014, July 2005, p 1 Back

9 "DTI definition of knowledge transfer", www.dti.gov.uk/science/knowledge-transfer Back

10 As above Back

11 Richard Lambert, Lambert Review of Business-University Collaboration, December 2003 Back

12 DTI, Competing in the global economy: the innovation challenge, December 2003 Back

13 HM Treasury, Department of Trade and Industry and Department for Education and Skills, Science and innovation investment framework 2004-2014, July 2005 Back