Memorandum 66
Supplementary submission from the Royal
Society of Edinburgh (RSE)
PICKING WINNERS OR RESPONDING TO DEMAND:
SUPPLEMENTARY EVIDENCE FOR SCIENCE AND ENGINEERING AT THE HEART
OF GOVERNMENT POLICY
1. The Royal Society of Edinburgh (RSE),
as Scotland's National Academy, has been heavily involved in the
development of science strategy in the UK and Scotland, and therefore
welcomes the supplementary call for evidence from the Innovation,
Universities, Science & Skills (IUSS) Committee relating to
Lord Drayson's recent proposals on strategic science funding.
2. "Has the time come for the UK—as
part of a clear economic strategy—to make choices about
the balance of investment in science and innovation to favour
those areas in which the UK has clear competitive advantage?"
was the question posed by Lord Drayson in a speech on 4 February
2009. Its thrust has subsequently been supported in speeches by
the Secretaries of State for Innovation, Universities and Science
and of Business Enterprise and Regulatory Reform and the Prime
Minister.
A. Is such a policy desirable or necessary
3. Fundamental scientific understanding,
derived from basic research has been over the last hundred years
the ultimate driver of much of the dramatic, but unpredictable
technological progress that has changed, and will continue to
change the way we live. However, notwithstanding two decades of
highly competitive processes in the UK that have fostered an ethos
of competitive excellence that has made our science base the best
structured, most productive and cost-effective in Europe and,
globally, second only to that of the USA in its scope and impact,
the dilemma remains, that the science base is less effectively
exploited for social and economic benefit than we would wish.
4. Given this dilemma, Lord Drayson's question
is highly appropriate, but it is vital to avoid too easy an answer
that risks undermining rather than enhancing the science base's
potential to deliver benefit. If the question's implication is
that we should concentrate more resource in particular areas of
science, we are highly sceptical that a simple shift of, say 20%
of funding from earth science to life science, or mathematics
to communications, or a massive part of humanities and social
science funding to STEM research would have the desired effect.
Such an approach ignores the underlying structural problem.
5. Over the last decade, the push from the
science base has been greatly increased as universities and institutes
have adopted a contribution to innovation as part of their mission,
increasing the rate at which spin-out and start-up companies have
been formed and being highly creative in forming links with business.[202]
Important though these processes are, they are highly unlikely
to contribute significantly to growth of the magnitude required
unless this science base "push" is reciprocated by business
"pull". It is our view that the sub-optimal translation
from the science base into utility is a deep-seated structural
problem that results from a deficiency of "pull" from
industry on the science base. It is reflected in relatively low
levels of R&D investment, a problem that is magnified in Scotland,
where industry is dominated by low research intensity sectors.
6. We believe that Government has tools
in its hands that could stimulate business demand "pull",
and that this should be the focus of Government policy rather
than yet another supply-side initiative to pick winners. We go
on to suggest what this stimulation should be in section B.
7. First however, it is important to be
clear about the function of that part of the science base concerned
with fundamental research. One of the most important properties
of the science base is to act as an insurance against an unknown
future, a source of ideas of potential and of skill able to respond
to unpredictable challenges and opportunities. New opportunities
may be offered by the science itself, or by new market demands
or opportunities. Not only should the science base be able to
address current demands and opportunities, but be sufficiently
diverse in areas not currently in vogue to respond to the unexpected.
8. It is crucial therefore that the UK maintains
a strong, balanced portfolio of science, especially given that
new developments often emerge from interdisciplinary and multidisciplinary
approaches, whilst assessments of technological potential have
invariably missed the mark, with a lamentable record of anticipating
future developments only a few years away.[203]
9. Furthermore, picking "winners"
also picks "losers", creating weaknesses that could
undermine our capacity and capability to respond to opportunity.
The UK has a strong, broad research base compared to the rest
of Europe, and which makes a significant contribution to the world
scientific endeavour. It does not need to prioritise, unlike for
example Singapore, which is so much smaller.
B. What the potential implications of such
a policy are for UK science and engineering, higher education,
industry and the economy as a whole?
10. Notwithstanding these provisos, understanding
how best to ensure "translation" of fundamental research
into utility is a crucial challenge. We believe that the question
of adjusting the balance of investment in science and innovation
to favour areas in which the UK has clear competitive advantage
should be answered in a different way to that implied by Lord
Drayson's question, and which addresses the structural deficit
described above.
11. Examples from elsewhere (eg the USA, Taiwan)
suggest that sustained commitment to technology areas where there
are large actual or emerging markets creates a more effective
mechanism for making choices. Such commitment should not have
the short term horizons of many initiatives that hope for quick
wins, but should have a timeframe of decades at least. The Council
for Science and Technology recently suggested[204]
a process through which such technology areas should be identified.
They should be areas where the UK has world-leading capacity;
which have large actual or potential growing global markets (in
excess of £100 billion); where UK has the businesses, structures
and people able to take developments to market; where there are
strong, positive societal benefits; where technology risks are
low and where Government is able to intervene, not merely or necessarily
through funding, but also through regulation. For example, the
Government's recent proposals in favour of low carbon vehicles
could, if developed through regulation and the provision of infrastructure,
promote major growth in this sector. Mission driven research which
focuses on particular areas leads to a "derived" demand
for certain kinds of fundamental research linked through knowledge
exchange and translation possibilities into mission related applications.
12. Such initiatives send strong signals
to relevant industry that encourages long term and external investment.
Business R&D in such areas also stimulates a response from
the science and technology base, and from Research Councils and
others who support research. Moreover, the history of science
is full of examples of fundamental research being driven by the
need to explain phenomena that emerged in applications. We believe
that such an approach is a natural, more powerful means of exploiting
the strength of the science base rather than top-down prior selection
of research areas in the hope that the choice will prove to be
correct. For such an approach it is important to maintain the
diversity of the science base, as the demands of market driven
technological development on the science base may prove to be
more diverse and unexpected than could be predicted by early choice
of research winners. In this scenario, the diversity of the science
base is a strength and not a weakness.
13. Whilst the "Haldane Principle",
that the science community, rather than government or administrators
should decide on prioritisation of research directions, has created
one of the world's most efficient and powerful science bases,
another aspect of Haldane's recommendations has been neglected,
that of the importance of mission driven research. We strongly
advocate such a dual approach. It is the solution that emerged
post-war in the United States and that has been so successful.
It has created a diverse and adaptable basic research enterprise,
coupled with sustained, long term investment in "platform"
technologies that ultimately provide perennial spin-off that can
be exploited by companies that pull strongly on the research base
for technological solutions, and has been further stimulated in
recent decades by the power of public procurement through the
SBIR scheme. For example, a mission-driven component of national
strategy might have been more effective, ten years ago, in ensuring
that the UK exploited its early lead in stem-cell technologies
in the period when stem-cell research in the USA was restricted.
We need to see initiatives actively designed to create new global
winners in the UK economy. This should involve initiatives from
the NHS, MOD, Local and National Government, HMRC etc. It should
also involve bodies from the wider public sector such as OfCom.
All public agencies should expect congratulation if they help
one or more British companies to build commercial success.
14. Although there have been attempts to
use public procurement in the UK as a stimulus for R&D based
innovation, it has not as yet developed into a powerful mechanism.
We strongly advocate a more decisive and coherent effort from
government in this domain. The unique form of our National Health
Service, for example, could be a powerful driver of technological
and business development, and should be promoted as such with
greater urgency.
15. The development of such a twin-track
approach will require appropriate institutional responsibilities.
The Cabinet Sub-Committee on Science and Innovation should play
a key role in developing a national strategy, providing leadership
in terms of objectives, processes and bodies, that is agreed and
supported at Cabinet level, and should ensure cross-government
implementation and integration of relevant activity. The Technology
Strategy Board should have the role of identifying key long-term
opportunities and stimulating the intermediary bodies (such as
the Research Councils, University Funding Councils and Regional
Development Agencies) with the aim of commercialising valuable
technology-based intellectual assets.
C. Were such a policy pursued, which research
sectors are most likely to benefit and which are most likely to
lose?
16. We have argued above that prior shifting
of the balance of research funding by picking winners is not a
wise strategy. We should rather develop a mission-driven approach
with sustained Government support, resulting in selection in response
to demand. It avoids serious errors from mistaken choices.
D. What form a debate or consultation about
the question should take and who should lead it?
17. It is important that any consultation
on such a major strategic change in research and innovation policy
is well conceived through prior consultation and meeting with
those with deep understanding of the research base and of innovation
processes. A meeting with representatives of the academies (Royal
Society, Royal Society of Edinburgh, Royal Academy of Engineering,
Academy of Medical Sciences) with the Technology Strategy Board
and Director General of Research Councils, could be a means of
creating a well-developed concept before consulting the wider
community.
April 2009
202 On this note, we are very concerned that the collapse
of investment finance over the last 9 months threatens the survival
of the many early stage technology companies that have been created
from the science base in recent years, and in which Britain has
led Europe. These should in principle be the seed corn for future
industrial growth. They could be destroyed within the year. Moreover,
the University/VC deals designed to build on these successes have
also collapsed. A source of risk capital to support these enterprises
over the period of the recession is vital. The banks are not fulfilling
this role. Government should. Back
203
For example, US President Roosevelt, in 1937, set up a Commission
to advise on the most likely innovations of the succeeding 30
years. They not only identified many unrealised technologies,
but missed nuclear energy, lasers, computers, xerox, jet engines,
radar, sonar, antibiotics, pharmaceuticals, the genetic code and
many more. Back
204
Strategic decision making for technology policy. Council
for Science and Technology, November 2007. Back
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