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


Examination of Witnesses (Questions 520-539)

TECHNOLOGY STRATEGY BOARD

20 NOVEMBER 2008

  Q520  Mr Binley: So the EEF is wrong in its assumption in that respect then. They are talking specifically about you, not about a wider sector, not about wider operation; they were talking specifically about your operation. Are they wrong?

  Mr Gray: I do not know the facts.

  Q521  Mr Binley: I have just read it out to you.

  Mr Gray: I would be very happy to provide a written response to the question. Nobody has said that to me from that organisation. I am very happy to provide a specific response. We are talking to all the trade bodies; we are talking to the CBI, we talk to a lot of organisations and I have never had that feedback before.

  Chairman: It does not quite say that.

  Mr Binley: I am sorry, I have just read it out.

  Chairman: It actually says, "We welcome the recommendations"; the question is really about delivery. They are backing the idea.

  Q522  Mr Binley: I will not allow my question to be taken over and I repeat the words that I used directly from their evidence to us: "There have been many changes and fine words on reforming public procurement and departmental research expenditure to get the most out of innovative business yet there has been little progress outside the MoD". That is what they said. Tell me that is wrong or prove to me that it is wrong.

  Mr Gray: In regards to ourselves, we are a new organisation; it takes a long time to demonstrate the impact of what we are doing out there. I do think they are actually very supportive of the concept of what we are about. I believe that very strongly.

  Q523  Mr Binley: You look at it and come back to me later. You have not answered my question and I would like an answer.

  Mr Gray: I will come back to you with a very specific written response.

  Mr Binley: I am most grateful to you.

  Q524  Chairman: We will pass you the detailed evidence that EEF have submitted and I think it is important that you do look at that. To be fair, I think that that sentence that Brian read out may refer to the history in this area as much as to Technology Strategy Board. Their evidence was given to us in October, a year ago, when you were only three months old. I suspect it refers to the history. The EEF are very valuable witnesses to this Committee and I would not want them to be misrepresented. They are very concerned about your ability to deliver. Being based in Swindon was actually one of their major concerns.

  Mr Gray: I can understand them raising concerns from a historical perspective. In terms of the spirit of the relationship we have with organisations like that, it seems very strong.

  Q525  Chairman: I was asking questions about the entrepreneurial spirit of the organisation and I think what they are saying is that there is a history of failure in this area. This Committee has reported on a number of occasions in the past and the question is if another group of civil servants can deliver on this it is really important because public procurement (which is the specific concern they are expressing) is central to driving up our technological performance in the UK and we are very bad at this still.

  Mr Gray: The whole agenda of procurement I see as a very, very significant thing for us to address. I know your Committee has looked at SBRI—or SBIR as I think it is referred to in the States—which are very specific examples of things that our organisation is taking on board.

  Q526  Chairman: Do you think you can act as a catalyst to persuade the OGC to do more work in this area?

  Mr Gray: In the area of SBRI yes, I think we can do something. It is very much a target objective for us. In terms of the overall procurement agenda, the fact that we spend some £150 billion a year or £170 billion (I am not sure which is the exact number) it is very significant number. From the Technology Strategy Board point of view I think there are some roles we can play. We can identify areas where we can make a very significant influence in terms of how procurement can simulate innovation. SBRI is a very specific initiative and I have a very specific objective against the SBRI.

  Q527  Chairman: What is your objective?

  Mr Gray: The objective I have is to re-launch SBRI. I have a very specific objective which is to run two pilots with the MoD and the Department of Health through to April 2009 and from April 2009 to see a step increase in the amount of SBRI projects in the UK leading up to something of the order of £100 million worth of SBRI projects in future years.

  Q528  Chairman: Do you think more generally that procuring more government services and products from the small business sector would actually do more to encourage innovation?

  Mr Gray: I do, yes. It is one of the resounding messages I have had in the conversations I have had with small businesses and some very good examples of where it has actually worked as well. There is a track record of how it has worked and where it has worked.

  Q529  Chairman: You will be aware of the fact that there was a joint report from the Federation of Small Businesses, CBI and the British Private Equity and Venture Capital Association on procurement from SMEs. It recommended that government should aim for a 30% target for overall procurement. Do you think that is a realistic target?

  Mr Gray: I cannot comment on the specific number itself. I think there is a very real opportunity and 30% is a big number. I cannot comment beyond that. The key message is that it is a step change and that is what is important.

  Q530  Chairman: You talked briefly about regulation in your introductory remarks as a driver of innovation which we have seen it can be. The classic example is probably low carbon vehicles. What opportunities do you think there are for regulation driving innovation at EU level or UK level?

  Mr Gray: Again it is one of the key messages of the organisation. Let me just choose a specific example and ask David to provide a specific comment, and that is the whole issue around low impact buildings and the impact that regulation is having in that area.

  Mr Bott: That is where the Communities and Local Government code for sustainable homes kicks in because they have set an escalator for effective building regulations between now and 2017. People know how to deliver the 2010 target but it is a price point thing. They do not know really how to deliver the 2013 target so they will have to deliver new technologies and then get them into the supply chain. To deliver the full value of the 2017 recommendations is actually technically quite demanding and so people are starting on that work now. That rising escalator of regulations has been well-communicated to the various parts of the construction supply chain which is probably one of the most complicated ones in the country, it moves very quickly to very small companies. The nice thing about that is that the government effectively procures about a third of the building stock in this country a year so actually for those houses to be built under the housing associations that escalator is advanced so by 2010 you have to answer the 2013 requirements and by 2013 the 2017. That is actually producing a government driven increase in innovation in the construction industry. So it is about well-considered regulation, well-communicated to the markets and the companies that supply those markets.

  Q531  Chairman: Would you also be advising government sometimes to slow down regulatory initiatives because it might otherwise benefit our competitors and overseas markets for products that are ready, for example. In the building sector in particular sometimes there have been some very short notice changes to regulation which have made life difficult for domestic producers.

  Mr Bott: It is about well-communicated and predictable regulation. Having spent all that time in industry I know that the most important thing to know is where your market is going and what products or services you will be able to sell because it takes time to deliver them. Precipitous or ill-considered regulation can be harmful but I would hold up the code for sustainable homes as a very good example of what can be done well.

  Q532  Miss Kirkbride: Listening to your evidence I do not deny the potential good for a body such as yours, but I do have very grave reservations as to whether or not it is achievable just because of the complexity of the bureaucracies that you are dealing with. You are interfacing with so many organisations and ones which are particularly opaque, including government departments which are not normally open to people's advice other than that which is sitting around the cabinet minister's table. Can you give me an example where you can demonstrate to us that actually you were listened to and you made a difference? Otherwise the feeling may be that this is just another bureaucratic organisation taking its tuppence worth and deciding how it is going to spend its own money. Is it making a difference?

  Mr Gray: Let me give a couple of examples, one in the space perhaps of the relationship with the regions. We have put in place a very formal process which we have called a strategic advisory group which has pulled together the science and industry councils. The science and industry councils are feeding into our user needs, coming back to the question about deciding what projects we move forward on. The whole issue of the challenges approach and the engagement of the regions is very much fed through the strategic advisory group, the kind of formal relationships and structure we are putting in with bodies like that. That has clearly influenced where we are investing our money. It is taking local needs, feeding them up into a national agenda and then cascading programmes back down.

  Q533  Miss Kirkbride: If we can have all these RDAs then we will not have any need for your body to feed into all the RDAs, coordinate their effort and the bureaucratic hydra that gives you a purpose in which you can extol at our Select Committee. If we did not have all these organisations, if we had one person for the whole country (including Scotland, Mike) who actually worried about these important issues, we could do that on your salaries. Can you give me another example.

  Mr Gray: I chose that specific example because no matter how you are organised you need to deploy things down right across the country.

  Q534  Miss Kirkbride: Do we need you and the RDAs to do that? Ten years ago we did not have you; do we really need you to do that? Could it not be done better by one organisation? It could be you as the organisation, fantastic.

  Mr Gray: I believe we are playing a very strong leadership role in doing that. Maybe if I could give another example.

  Q535  Miss Kirkbride: Yes, give me another one.

  Mr Gray: What I would like to pick is one of the innovation platforms and again I am going to look to David to draw in on this. We have just launched a new innovation platform on the detection and identification of infectious agents which I believe has a real big opportunity. David, could you describe how we have linked in with other government departments on that example?

  Mr Bott: It is a bit of a mouthful as a title but the idea is to take the technology that enables you to identify the fact that an infectious agent—that could be a virus or a bacterium or whatever—is there and identify it very, very accurately so you know what disease vector it is carrying. At the moment many of the detection technologies take 10 days to two weeks to actually come back with the answer. We have seen some of the implications of that over recent epidemics and things. It is technologically or scientifically feasible to reduce that to a couple of hours or probably even more by applying nanotechnology and various other sensor technologies. We have started working with the Department of Health because they realised that if they can apply that technology and get it developed they can actually radically change the care model they use for some of the more infectious diseases. They can intercept the spread of diseases very much more quickly, particularly HIV Aids, tuberculosis and sexually transmitted infections. We started talking to Defra as well. We might think that the disease vectors are unique to the human being but actually just about all the animals and all the crop vectors are very similar. We have drawn Defra into that and they are actually providing us with examples that we can develop the technologies against as we go out to the industry so that they can, for example, intercept foot and mouth disease or blue tongue more accurately and know exactly where it is rather than having to wait two weeks for the feedback. It is a matter of starting with the Department of Health, understanding their current business practice and how it could change with the application of the technologies, and then moving on to the other examples of how that same technology can change other people's business.

  Q536  Miss Kirkbride: Does it really take that long to detect foot and mouth and blue-tongue? Two weeks?

  Mr Bott: Everybody was talking about the H5N1 vector of SARS, for example; that is a very specific genetic type and you have to do a full DNA analysis to be able to actually say that it is that disease. That is why it took all that time when people were getting infected.

  Mr Gray: What we are trying to illustrate is where the Technology Strategy Board is working across government with other government departments. In that specific example—Department of Health and Defra—you could go through each and every one of the challenge-led application areas and you can see where we have worked with the Department of Transport and influenced their approach on low carbon vehicles, for example, working with the chief scientific advisors; you can see how we are working with the Department of Health in our assisted living challenge. Each of the challenge-led application areas actually has been a very, very good framework for drawing in other government departments; there are some really good examples.

  Q537  Miss Kirkbride: On your infectious diseases example, when you have identified the two departments interested in doing this a bit faster, what then happens? What do you do as a result of that?

  Mr Bott: We have gathered together some of the obvious candidates in industry, we have gone out to some of the start-ups that work on nanotechnology and pointed out that if they apply their microfluidics and nanotechnology skills to PCR or DNA analysis then they can actually end up with new business opportunities. We will be launching in the New Year a competition probably worth about £5 million or £6 million. We write the specification for what the Department of Health wants in terms of machine or system and ask people to come up with the way that they would develop those technologies. We started off looking at the DNA analysis which is the gold standard at the moment but it turns out that there are other ways by using biomarkers where you have chemicals which attach to specific parts of known diseases so that you can then detect them by spectrometry. You can look at downsizing mass spectrometry to the micro scale. There is a whole slue of technologies. We are not focussed on one technology; we are focussed on the problem and explaining the problem as coherently and as cogently as we can to the communities so that they can come up with their potential answers to it. Then we pay them or give them a grant to develop that technology and then we test it against the Department of Health's success criteria.

  Q538  Miss Kirkbride: So you actually give them a grant to do that then?

  Mr Gray: Yes.

  Q539  Miss Kirkbride: What kind of money might there be available?

  Mr Gray: Our grants across the board could go from £30,000 to, in some instances, £100 million type projects. There is a very, very broad range of grant type offers. Typically on big projects our grant size is somewhere around about £500,000. In small businesses, SBRIs, small business type solutions, £50,000 can make a very, very big difference. On some of the bigger things then you are talking about much bigger sizes of money. The objective of the organisation is to be very flexible and offer different types of mechanisms to suit different types of businesses and different types of business situations.


 
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