Select Committee on Science and Technology Written Evidence


APPENDIX 1

Memorandum from the Office of Science and Technology, Department of Trade and Industry

RESEARCH COUNCIL SUPPORT FOR KNOWLEDGE TRANSFER

  "Following the DTI Innovation Report recommendation, Research Councils UK (RCUK) is developing an overarching knowledge transfer strategy and each individual Research Council will agree with the Director General of the Research Councils (DGRC) plans and goals for increasing the rate of knowledge transfer and level of interaction with business. These new targets will become an integral part of the OST performance management system for the Research Councils and performance against targets will inform future spending reviews."

  Science and Innovation Investment Framework 2004-14, July 2004

EXECUTIVE SUMMARY

  Knowledge transfer is an important component of the Government's ten year Science and Innovation Investment Framework: the UK is strong in research but needs to be more effective at translating the products of research into economic and social benefits. As part of this framework, each Research Council has submitted a knowledge transfer plan, the key elements of which are now incorporated in the Delivery Plans as part of their high level objective on better exploitation of research results. Knowledge transfer is a wide term and encompasses a wide range of activities from commercialisation of research through collaborative research and people exchange. Certain funds have been specifically earmarked for knowledge transfer in Research Councils, although these do not reflect the fact much knowledge transfer takes place as an integral part of research. Research Council activity needs to be seen in the wider context of a range of Government support for innovation including HEIF, R&D tax credits and the Technology Strategy. The Research Councils' plans for knowledge transfer are evolving—they have recently been subject to external challenge and the Director General of the Research Councils is currently looking at how Research Councils could deliver a major increase in the economic impact of their investments.

INTRODUCTION

  1.  The Government's efforts to increase knowledge transfer are based on a recognition that science and innovation are key to ensuring the UK's long-term competitiveness in an increasingly knowledge driven global economy. In all countries, economic activity is shifting toward innovation and knowledge driven industries. We rely more than ever on generation of knowledge and effective access to knowledge. The UK has a historic strength in scientific research but needs to build on this to exploit new technology-driven and high value added areas and secure its long-term prosperity in the face of global competition.

  2.  The current Government has placed a major emphasis on science and research as a driver for economic growth and have delivered a major increase in funding through the science budget. In 1997-98, the science budget was £1.3 billion. As a result of substantial increases in a number of spending reviews, the science budget will have more than doubled in real terms to £3.4 billion by 2007-08.

  3.  In July 2004, the Government published a ten year Science and Innovation Investment Framework setting out the Government's ambition for UK science and innovation over the coming decade, in particular their contribution to economic growth and public services, and the attributes and funding arrangements of a research system capable of delivering this. The Framework put a particular emphasis on increasing knowledge transfer between the research base and business. There are a number of different ways in which such knowledge transfer is supported—the Research Councils play an important role, but certainly not the only one.

Why is Knowledge Transfer Important?

  4.  Knowledge transfer is one aspect of the ten year plan which seeks to increase the responsiveness of the UK science base to the needs of the economy. This is in line with the recommendations of the 2003 Lambert review of business-university collaboration.

  5.  The Lambert review concluded that the UK was strong in research, but less effective at translating the products of research into social and economic benefits, though he highlighted the rapid change taking place. The ten year science and innovation investment framework 2004-2014 set out to encourage greater responsiveness of the public funded research base to the needs of the economy and public services, focussing especially on two targets:

    —  continue to improve UK performance in knowledge transfer and commercialisation for universities and public laboratories to world leading bench marks; and

    —  Research Council's programmes to be more strongly influenced by, and delivered in partnership with, end users of research.

DEVELOPMENT OF KNOWLEDGE TRANSFER IN RESEARCH COUNCILS

  6.  The DTI Strategy published in September 2003 identified as one of five key priorities the need to strengthen knowledge transfer from business to business and between business and academic communities and other knowledge creators and providers. Following on from this, the DTI Innovation Report, published in December 2003, set out how the Director General Research Councils would agree with each of the Research Councils plans and goals for increasing the rate of knowledge transfer and the level of interaction with business, and that these plans would be subject to external challenge.

  7.  Each Council was invited to submit a plan including targets in five key areas: interaction with business/public service, collaborative research, user involvement in education and training, people and knowledge flow and commercialisation of R&D. Councils submitted their knowledge transfer plans at the end of 2004. This marked the first time that the Councils had explicitly codified their vision and goals for knowledge transfer. At the same time as these plans were being developed, the Research Council were moving to a new system of performance management. As part of this, the key elements of the knowledge transfer plans were incorporated into the overall Delivery Plans that were published in May 2005. These Delivery Plans clearly set out that the Councils are working to two high level objectives—the first, excellence of the research base, the second improving the exploitation of the research. Each Council has also agreed a measurement framework—and the Output Two framework sets out indicators of knowledge transfer and business interaction.

  8.  Knowledge transfer is very much an evolving area and the plans are not set in stone. We fully expect Councils to adapt the plans and raise their sights as they become more adept at knowledge transfer.

KNOWLEDGE TRANSFER—A WIDE TERM

  9.  The term knowledge transfer is used to cover a wide, loosely defined range of activities that aim to increase the impact of research institutions beyond the academic research community.

  10.  It can encompass the classic "technology transfer" or "commercialisation" role where intellectual property from research is protected and then developed into a new business (spinouts) or the rights sold to existing firms (licensing). But it also goes much wider, including secondments of staff to business and other users, support for collaborative research, supporting student placements in business, promoting entrepreneurship among research communities through business plan competitions, providing advice on UK research strengths to potentially interested parties. The whole field of KT is still evolving and excellence is not well defined and benefits appear in many different ways.

  11.  The Government's policy is that the aim of knowledge transfer should be to benefit the UK economy as a whole—and not necessarily the host institution. Knowledge transfer is not merely a new or substitute source of funding for institutions—it is an attempt to ensure the benefits of the research can be more fully realised by economic factors.

  12.  Knowledge transfer should not be seen as simply a one way process. Academic researchers should also be able to benefit from greater interaction with business and users—as they learn from business, broaden their knowledge base and get opportunities to tackle more relevant problems (and some commentators prefer the term "knowledge exchange" to more clearly capture this feature). A knowledge transfer mission and a research excellence mission are not mutually exclusive: stronger KT and consideration of use can mean a deeper/wider research excellence.

KNOWLEDGE TRANSFER FUNDING

  13.  The form of support for knowledge transfer reflects the diversity of goals. In the Research Councils there are earmarked lines of funding available: £2.5 million has been set aside to increase the management capacity relating to knowledge transfer in Research Councils and RDAs; £15 million was set aside to give a special boost to knowledge transfer activities, and the Public Sector Research Establishment Fund has recently allocated £25 million to a range of knowledge transfer projects, many of which were in Research Council Institutes. But simply adding up earmarked funding would be to downplay the importance of KT. The science budget allocation shows some 3% of budget has been earmarked for knowledge transfer, but a much wider range of knowledge transfer activity takes place as an integral and seamless part of research. Effective knowledge transfer is woven into the fabric of research rather than taking place separately. Knowledge transfer may translate established, rather than new, research results into economic benefit, for example in companies that do not operate at the cutting edge of technology.

  14.  The increasing support for knowledge transfer in the Research Councils needs to be seen in the wider context of increasing Government support for knowledge transfer from the research base. In particular, the Government has already made major investments in improving university business interaction: the University Challenge (£60 million over two rounds) programme provided universities with seed corn funds to improve their ability to commercialise research; funding for Science Enterprise Centres (£43 million over two rounds) provided access to entrepreneurial skills to science and engineering undergraduates and graduates and the Higher Education Innovation Fund (which is rising to £110 million per year by 2007-08) provides incentives for universities to transfer knowledge to the economy across a broad range of activities. In addition, the Government has been supporting commercialisation from other public sector research establishments (PSREs) through a dedicated funding stream for those PSREs (£25 million over 2006-07 and 2007-08).

  15.  This support is already paying dividends. An evaluation of Government schemes show they are leading to real culture change within Higher Education. And we are seeing a significant rise in key metrics of University business interaction—as demonstrated in the table below:
  1995-06 2002-03
Contract research income from business £170 million£262 million
New patents granted 45 371
Licences granted 139 758
Income from licences £12 million £37 million


  16.  Furthermore, it is notable that the combined value of university spinouts floated on stock markets in the last two years is over £1 billion—larger than the cumulative funding for knowledge transfer since 1997.

  17.  And in addition to the direct support for knowledge transfer from the research base, the Government is also supporting a range of measures to promote innovation, consistent with the ten year framework:

    —  RDAs growing engagement in supporting business innovation as part of their Regional Economic Strategies, as reflected in rising total investment in science and technology activities (some £360 million in total over 2005-06) and in the RDAs new tasking framework, with specific targets for increasing business interaction with the UK knowledge base.

    —  DTI Technology Strategy, which is funding an array of business-relevant collaborative R&D programmes and knowledge transfer networks, with the potential for universities to become part of these networks.

    —  R&D tax credits for large and small businesses, under which R&D contracted out to universities is eligible for tax credit, thus reducing the net cost to businesses.

    —  Science Research Infrastructure Fund SRIF3, under which research capital funding is given on condition that HEIs develop greater access to facilities for business.

    —  A range of Innovation support schemes, such as Knowledge Transfer Partnerships, Grant for R&D and Global Watch.

    —  The development of the Science Cities concept in Manchester, York, Newcastle, Bristol, Birmingham and Nottingham, involving close partnership between HEIs, city authorities and RDAs with the aim of enhancing the impact of HEIs on the economic growth of city-regions.

    —  Government-supported venture capital measures, in particular the new Enterprise Capital Funds, which received state aid clearance from European Commission this week.

  18.  It should be noted that in many cases Research Councils activity is integrated with this wider support. For example the Research Councils are represented on the Technology Strategy Board, to help take account of research base strengths and weaknesses in deciding on technology strategy priorities, and to ensure that Councils are able to react to these priorities. Further information is attached as an Annex.

  19.  Historically, Research Councils have voluntarily contributed to the Small Business Research Initiative—designed to help small and medium enterprises (SMEs) gain greater access to publicly funded R&D contracts. Following the announcement in the Budget by the Chancellor of the Exchequer that the SBRI scheme will now be mandatory, the Research Councils will promote a Small Business Research scheme (similar to but distinct from SBRI). They are committed to spending at least 2.5% of a baseline of £815 million in 2005-06 on university/SME collaborations and directly with SMEs.

Looking Ahead

  20.  As envisaged in the Ten Year Framework, the Research Councils agreed that their knowledge transfer plans should be subject to an external challenge from a group of relevant stakeholders, including business public sector and former Council staff. An External Challenge panel was appointed by Research Councils UK on behalf of the Councils, and this panel benefited from presentations by each of the Councils. At the time of writing this submission, the panel were finalising their report to the RCUK Joint Strategy Group.

  21.  All of the Councils have made progress in putting in place plans to increase the amount of knowledge transfer and business interaction. But the Government believes there is a need for a further improvement.

  22.  The Director General of the Research Councils has asked a small ad hoc group of experts to advise him over the coming months on how Research Councils could deliver —and demonstrate that they are delivering—a major increase in the economic impact of their investments.

February 2006

Annex A

RESEARCH COUNCIL INVOLVEMENT IN WIDER INNOVATION SUPPORT SCHEMES

KNOWLEDGE TRANSFER NETWORKS

  1.  Knowledge Transfer Networks (KTNs) help to facilitate business access and investment in science, engineering and technology.

  2.  Research councils are beginning to engage with KTNs at a strategic level, for example PPARC, supported by CCLRC, the UK Atomic Energy Authority and the current network partners (National Physical Laboratory and Sira) has formulated an Advanced Instrumentation work package that extends the current remit of the Sensors KTN. The work package provides specific focus on `high end' scientific instrumentation for industry and academic research and it's percolation into the broader markets of analytical, process, test & measurement and quality assurance / control. The Research focuses on the engagement of industry with the scientific research infrastructure in terms of access, knowledge transfer and supply opportunities. KTNs also have access to EPSRC Industrial Cooperative Awards in Science and Engineering (CASE) Awards, which are studentships allocated to companies participating in EPSRC funded research.

Knowledge Transfer Partnerships (KTPs—formerly known as the Teaching Company Scheme)

  3.  KTPs enable high calibre, recently qualified graduates or `Associates' to work in a company on a project that is core to the strategic development of the business.

  4.  KTPs is truly a cross-Government initiative with six out of eight of the Research Councils providing around £3.5 million funding per annum. KTPs work alongside AHRC, BBSRC, EPSRC, ESRC, NERC and PPARC with the aim of offering a holistic package of business support.

Collaborative Research and Development

  5.  Collaborative Research & Development (CRD) seeks to produce successful new products, processes and services to help drive forward innovation and create prosperity for the UK economy. The latest round of the Government's £370 million Technology Programme dedicated £63 million to UK businesses in six priority areas.

  6.  Research Councils have made significant efforts to engage with the Technology Programme and have contributed both to the development of the Technology Strategy and its implementation, for example, by providing evidence of strengths in the UK science base and RCUK technology priorities. Research Councils are important partners offering support for academic participation in research projects, increased levels of co-funding and the development of joint application and assessment procedures for future Technology Programme Calls.

  7.  EPSRC has committed funding to date of around £1 million and will continue to commit around £7 million per annum for the next three years. BBSRC has allocated £2 million for 2006-07 and MRC is to commit future funding on a case-by-case basis.

European Framework programme

  8.  The European Union's Sixth Framework Programme is the EU's primary funding mechanism for supporting and encouraging collaborative research and innovation in science, engineering and technology in the European Community.

  9.  The Research Councils consider the scale of funding and the focus of research support within the EU Framework Programmes to be of significant importance to the UK science and engineering base. The Research Councils have been involved in negotiations governing the development of Framework Programmes and their management, and in raising awareness of EU opportunities in research and education programmes.

  Information on specific activity can be found in the following publication:

    www.ukro.ac.uk/public/pub/uk-research-councils—20-years-in-europe.pdf

GLOBAL WATCH SERVICE

  10.  DTI's Global Watch Service helps to improve the competitiveness of UK businesses by identifying and accessing innovative technologies and practices from overseas.

  11.  The majority of the Research Councils are involved in the Global Watch Programme and regularly attend the `Missions' dissemination events. Research Councils also interact with the Global Watch International Technology Promoters on a regular basis. For example, MRC was a member of an Oncology Mission to Scandinavia and PPARC was part of a group taken to CERN.

Glossary and Web Links

AHRC—Arts and Humanities Research Council

   http://www.ahrc.ac.uk/

BBSRC—Biotechnology and Biological Sciences Research Council

   http://www.bbsrc.ac.uk/

CRD—Collaborative Research and Development

   http://www.dti.gov.uk/crd/

CCLRC—Council for the Central Laboratory of the Research Councils

   http://www.cclrc.ac.uk/

EPSRC—Engineering and Physical Science Research Council

   http://www.epsrc.ac.uk/

ESRC—Economic and Social Research Council

   http://www.esrc.ac.uk/

FP6—European Framework Programme

   www.ukro.ac.uk

KTN—Knowledge Transfer Network

   http://www.dti.gov.uk/ktn/

KTP—Knowledge Transfer Partnerships

   http://www.dti.gov.uk/ktp/

MRC—Medical Research Council

   http://www.mrc.ac.uk/

NERC—Natural and Environment Research Council

   http://www.nerc.ac.uk/

PPARC—Particle Physics and Astronomy Research Council

   http://www.pparc.ac.uk/

RCUK—Research Councils UK

   www.rcuk.ac.uk





 
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