Risk and Reward: sustaining a higher value-added economy - Business and Enterprise Committee Contents

Memorandum submitted by the University of Hertfordshire

  The University of Hertfordshire is pioneering a "business-facing" mission and is committed to being at the forefront of both the high-level skills and the innovation agendas. We believe these are closely inter-linked.

The University is focused on supporting wealth-creating companies in R&D, innovation and high-level skills development activities. Located within one of the highest concentrations of knowledge-based industries in the country, the University is well-placed to support and influence the development of value-added sectors of the economy.

  In essence, this is about focusing on how we serve the needs of business and our students, both in the UK and internationally. From equipping world-class graduates with the right mix of academic and practical skills, to providing support and innovative solutions to businesses, Hertfordshire concentrates on empowering its stakeholders to meet the demands of the regional, national and global skills economies.

  To this end, the Vice-Chancellor has been involved in the Sainsbury Review of Science and Innovation Policies, leading to the University of Hertfordshire being highlighted as a model example of a business-facing university. Hertfordshire is also one of the six universities, chosen by HEFCE to take forward a new business-facing model of HEI.

  It is our partnership with business that provides us with a valuable insight into the five areas of discussion addressed below, which we would like the Select Committee to consider as part of its Inquiry into: "Creating a higher value-added economy."

Q1  What is meant by a high value-added economy? What business activities qualify as such?

  The University of Hertfordshire would endorse the CBI's view that R&D is only one input into innovation.

"Knowledge investment" is made in many ways, including investments in human capital, building organisational capability, incremental innovation, process improvement and reputation / branding. It is critically important that innovation does not become understood in a narrow scientific/technological R&D sense.

  It follows from this that universities can support innovation in different ways. While a corporation may wish to commission exploratory investigative work from a research-intensive university, the same company may also want to work with a business-facing institution on exploitation, business processes or other aspects of innovation. Business-facing universities will also play a critical role in supporting innovation with the SME community, who can access the problem-solving capability of a university focused on and able to respond to business need across a wide range of issues. The University of Hertfordshire model of engagement with SMEs, which includes ownership of its local BusinessLink, as well as provision of incubation space and extensive KTP involvement, is one we would be pleased to explore with the Committee.

Q7  The progress that has been made on university-business co-operation and knowledge transfer since the publication of the Lambert Review in December 2003

  The University of Hertfordshire's Vice-Chancellor was a key contributor to the working group on this topic that reported to the DIUS Funders' Forum in September. The group concluded that while in the main the system is working well, there were some important issues around the (over-)valuation of IP, clarity of messages from Government and the negotiating processes engaged in prior to collaboration. We would urge the Committee to consider the findings of the report, based on expert evidence and analysis from academic and industry stakeholders.

Progress has been made since the Lambert Review, and certainly the emergence of business-facing universities is evidence of a significant degree of culture change within part of the HE sector. Funding streams have provided a level of incentive for institutions with an appropriate mission and focus to pursue employer engagement, knowledge transfer (although we would prefer "knowledge exchange" as an explicit acknowledgement of the two-way nature of the process) and innovation-related activities. The extent of sector-wide change is demonstrated by HEFCE-produced statistics on university-business interaction.

  However, both QA and funding systems have inhibited the agility and responsiveness of universities and are a particular concern to those institutions taking a clear business-facing mission. A challenge in creating a higher value-added economy will be to create an operational framework that allows creative and entrepreneurial universities to be responsive to the business needs of innovative companies.

Q8  Whether business and government interpret innovation too narrowly

  We would argue that, historically, the emphasis on research has not allowed the UK to develop its commercialisation capacity—that is, our capacity to translate new and existing knowledge and technology into new and better solutions.

A new focus on "innovation" has the potential to address this issue. The CBI submission uses the term "servicisation of technology"—transforming technology into a workable service offering. We see a key role for business-facing universities in supporting businesses to apply and optimise knowledge and technology. Incremental innovation can take businesses of all sizes forward and should not be undervalued compared to more radical steps.

Q9  What the government can do to promote higher value-added business activities and innovative thinking among UK businesses

  Universities, and particularly those focused on the needs of business, will be key agents in any knowledge economy. While certain sectors and certain types of business will be well linked in to universities, there remains a pervasive lack of awareness among UK companies of the breadth of what HE can offer (9% of UK businesses are linked to a university). Any means by which contact can be encouraged by Government is to be welcomed, and we would support the CBI's call for a "first engagement voucher", as a pilot initially.

We would again point to the Funders' Forum report and the importance of clear messages on the purpose of collaborative activities for universities. A steer from Government that generating institutional income from research exploitation is not the highest priority for universities may help to encourage greater openness to collaborations with industry.

Q11  The effectiveness of machinery of government arrangements in encouraging innovation and creativity

  The creation of DIUS is a positive development and should help to release more of the potential of universities to contribute to innovation and growth. Universities have a broader role to play than the generation of new knowledge through "breakthrough science"; HEIs' support of process improvement, incremental innovation, training and development will bring significant benefits to economy and society.

The Technology Strategy Board has a key role. Its location adjacent to the Research Councils should help to develop synergies with their work, for example in knowledge transfer, but its mission and purpose are distinct. Clear messages from Government on this will help to prevent mission drift.

  There is a tension inherent in RDAs between their economic development and regeneration remits. Differential funding supports those regions with the greatest regeneration needs at the expense of those that generate wealth through innovation and creativity. Yet the regions of the Greater South East exhibit the greatest levels of innovation and research—the lifeblood of knowledge-based industries. This system does not allow these regions—the only net contributors to the national balance sheet—to give their Science and Industry Councils access to a pool of money appropriate to the scale of potential regional investments in high value-added activities. Continued under-investment in wealth-creating regions and their innovation activities will have a detrimental effect on the capacity of the UK economy to support vital regeneration work.

  Regional structures can also inhibit the cross-border working and collaboration that business needs. Business, and perhaps especially innovative companies, do not and cannot recognise administrative boundaries; regional borders must not inhibit the formation of the kind of partnerships that drive innovation.

  Coherence between regional and national approaches will be a priority and the Sainsbury Review has addressed this issue to some extent. The current configuration of RDAs does not incentivise them to think in terms of competition rather than complementarity. The CBI submission proposes that each region may take the lead on a specific aspect of innovation/technology, others supporting. A mechanism would be needed whereby regional and national government could establish priority areas for regional leadership and which region had the best fit each area in terms of its own needs and strengths.

  We would support in principle a plan to bring coherence to the innovation agendas at national and regional level; such an approach would help to boost innovation and excellence by focusing resources, both financial and intellectual, and remove the potentially detrimental element of competition between regions.

October 2007

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 25 September 2009