Examination of Witnesses (Questions 1-19)
IAIN GRAY,
DAVID BOTT
AND DAVID
GOLDING
1 APRIL 2009
Chairman: Welcome to our second panel
of distinguished witnesses this morning, David Bott, Iain Gray
and David Golding. Thank you very much for coming this morning.
Iain Gray is the Chief Executive of the Technology Strategy Board,
David Bott is the Director of Innovation Programmes and David
Golding is the Head of Strategy. We are very grateful to you.
I am sure it will be far less controversial than our last session.
I am going to start with Graham Stringer.
Q1 Graham Stringer: Can you explain
to the Committee what role Government has when you set your priorities,
and can you give us some examples?
Mr Gray: Thank you very much for
the opportunity to be here this morning. As you are aware, the
Technology Strategy Board is a relatively new organisation. Indeed,
a lot of the programmes that we are currently running are programmes
that we inherited through previous DTI or collaborative R&D
programmes. It is only over the last 18 months that we have been
able to set an agenda out which is a new direction for the Technology
Strategy Board. Probably one of the biggest changes the Technology
Strategy Board has made is the introduction of what we have called
the challenge-led approach. The challenge-led approach plays directly
into a government framework in terms of societal changes, low
carbon industrial strategies, ageing populations and sustainability
issues. I think the way I would see the Government role panning
out is very much setting a policy framework within which we operate.
The Technology Strategy Board is an independent arm's length body
that is determining the appropriate projects to move forward within
that policy framework. I can use an example like the low carbon
vehicle programme where we have launched what we have called an
innovation platform, we have pulled business and other government
departments together, the regions together, and created a framework
underneath which we hang collaborative R&D programmes, we
look at regulatory frameworks and move it forward in that regard.
For me, the Government sets a policy framework and the Technology
Strategy Board is putting in place a series of programmes underneath
it.
Q2 Graham Stringer: That is very
clear. How would you compare your independence to a Research Council?
Are you more or less independent than a Research Council?
Mr Gray: I would say we are a
very different organisation from a Research Council. We operate
in a different space in terms of the technology exploitation.
We have an independent governing board chaired by Graham Spittle
who, unfortunately, could not be here today, he has a family bereavement.
We work very closely with the Research Councils in terms of an
alignment of the translational research, but I would say our priorities
are being set very much by what we are hearing from business.
I would come back very much to this challenge-led societal and
market-led pull through and that creates a completely different
type of model from the Research Councils.
Q3 Graham Stringer: I understand
it is a different model, I am trying to look for some way for
you to explain to the Committee your independence and I thought
Research Councils were a good comparator. Do you think you are
as independent as a Research Council or not?
Mr Gray: In that context I think
the Technology Strategy Board is a very independent body. It is
operating within a policy framework. Our governing board is made
up of representatives from academia, somebody from the Research
Council, from the regions, from business. I do not see a direct
analogy to the governance of ourselves and the Research Councils,
but I would say as an organisation we have a very independent
approach and the real added value of the governing board that
we have is the business outlook that is brought to the decision-making
process.
Q4 Graham Stringer: How do you deal
with that advice to Government? How do they ask for advice and
how do you give it? How do you monitor whether that advice has
been taken up and used effectively?
Mr Gray: It is an interesting
question for us as an organisation. Whilst we are an independent
NDPB and our sponsoring department is quite clearly DIUS, we have
a remit that sits very much across government departments. It
was interesting listening to the previous debate and some of the
scientific advisor type committees. One of the key relationships
is with the Chief Scientific Adviser community right across different
government departments and the heads of innovation across different
government departments, and our advice is being sought all the
time on specific issues in the innovation, technology exploitation
area, and there is very strong evidence of that advice being taken
on board by other government departments. Again, as an example
I would come back to the low carbon vehicle innovation platform
that we launched where we are working very closely with the Department
for Transport, with their innovation department and with their
CSA to make sure the programmes we are putting in place line up
with the overall direction of that particular department as well.
Q5 Graham Stringer: This Committee
has found the Government policy either opaque or contradictory
when it comes to regional policy. The Government tell us that
they do not have a regional scientific policy and then they tell
us they specifically support projects in the regions because they
are in the regions. Can you explain to the Committee how you interact
with Regional Development Agencies, how important they are, and
whether you have a regional policy, whether or not it matters
that you are putting cash into Newcastle as opposed to Oxford?
Mr Gray: Again, the regions are
very important to us in two regards. One is deployment of a national
strategy through the regions, and the other is the listening in
the other direction back, which is local needs of regions and
how they play back into national policies. As the Technology Strategy
Board we have been given a leadership role across the regions
and quite specifically an accountability for delivering £180
million worth of aligned projects with the English regions. We
work with the regions in a number of different ways. We have a
governance arrangement with the regions. I chair a meeting with
the chairs of the Science and Industry Councils which have been
set up in each of the regions, which again pulls on business input.
We have an operational group with the regions where we are liaising
with the officials inside the RDAs to ensure alignment of their
strategies with national strategies and to ensure their requirements
are being played back and we have bilateral relationships with
each of the regions. My view would be this is a journey that we
are on as a relatively new organisation. In the last three to
six months we have made very significant progress for the first
time from what I can see in actually having an alignment map which
shows what the priorities are within the regions and how those
priorities line up with national priorities. The processes that
are being put in place are now starting to work very well.
Q6 Graham Stringer: Just a final
question. That answer is very much a structural process, and I
understand that. The example I am going to give you never really
happens in the real world but it is a good way of exploring the
situation. If as part of your expenditure of £180 million
there were equivalent projects in London and Newcastle and all
the assessment was the same, would you spend that money in Newcastle
because it was in the regions and had all sorts of social priorities,
or would that not be a factor?
Mr Gray: To be specific about
the £180 million that I quoted, that £180 million is
an alignment target for the regions working with us, it is not
the Technology Strategy Board's money in its own right. As far
as the Technology Strategy Board is concerned, we evaluate projects
on their own merits regardless of the particular region that they
come from. In terms of a hypothetical situation where two identical
projects in every regard came in, the implication of that is probably
there are two centres of excellence in the UK and from a Technology
Strategy Board point of view we would not be looking to choose
one over the other. Our preference is always to be looking for
the right projects for UK economic benefit rather than looking
at it from a geographical basis.
Q7 Chairman: Can I just pick you
up on that because you said UK-wide, so not simply the regions
of England but also Wales, Scotland and Northern Ireland.
Mr Gray: Yes. If I could be quite
specific on the issue, from an alignment point of view we have
a very specific remit which looks across the English regions,
which is the £180 million, but we have a UK national responsibility
and we work very closely with the devolved administrations. The
alignment project that I talk about actually covers the whole
of the UK, but the £180 million is quite specific to the
English regions.
Q8 Chairman: I thought it was important
we put that into context. Just picking up from that, you have
mentioned twice in your responses so far the issue of low carbon
vehicles as being a major priority, yet when the car companies
came to the UK Government during the current recession and said,
"Woe is us, we need billions spending on us", if we
take Chrysler at the moment and the impact that President Obama's
decision might have on part of the UK car industry, why did they
not come to you and say, "You are our Technology Strategy
Board, everything comes through the TSB"? Why does that money
not come through you to drive these new low carbon vehicles which
post-recession may have a huge economic impact? You were not involved.
Mr Gray: In that regard we need
to clearly separate out what are industrial business support issues
from what are technology, R&D development issues. We need
to separate out what are clearly product development issues from
what are R&D technology exploitation type issues. In fact,
the automotive business through SMMT and the industry representatives
on what is called the Automotive Innovation Growth Team are working
very closely with us to develop a technology roadmap to determine
what the priorities for investment are in terms of technology.
In the domain of technology development and technology exploitation,
the industry itself is working very closely with us and, indeed,
is coming directly to us working hand-in-hand with the automotive
unit in BERR. We do need to separate out the billions of pounds
that people talk about in terms of industry support vis-a"-vis
the low carbon technology itself.
Q9 Chairman: I ask the question,
Iain, because clearly the Government made clear, and indeed Lord
Mandelson and the Prime Minister made clear, that in terms of
this investment in the motor industry it was really to drive the
new technologies, but you were never mentioned in that chain,
yet it seems to me your remit is very much at the heart of that
R&D for new innovative technologies, new disruptive technologies
to get into that space. Were you not very frustrated?
Mr Gray: I think if you asked
the question today you would find we would be mentioned. That
is maybe symptomatic of the journey that we have been on. The
Technology Strategy Board has been in existence for about 18 months.
We have proved our credentials and have delivered what we said
what we were going to do. To realise the real benefit of a Technology
Strategy Board it now needs a step change in how people use us.
From a governmental point of view, I refer to some recent speeches
that have been made, speeches David Smith of Jaguar Land Rover
made at the CBI manufacturing dinner up in Birmingham, and Peter
Mandelson was at the same dinner. Both of their speeches referred
quite strongly to the Technology Strategy Board's role in the
low carbon vehicle technology programme. The change from the Technology
Strategy Board developing programmes and delivering programmes
on a smaller scale to positioning itself into an organisation
that now has the potential to deliver large-scale benefits, we
are positioning ourselves to be able to make that difference.
I think that is something we have seen probably only in the last
three to six months, that big change in terms of our recognition.
I would hope if you asked the question today you would get a recognition
of the role that the Technology Strategy Board plays in this agenda.
Q10 Ian Stewart: In relation to the
answer you gave relating to the automotive industry coming for
billions and so on, it is a fact that some small innovative groups
or individuals can come up with some really impressive new developments.
For example, take the situation in my constituency. I have got
two constituents who, with a boffin friend, have developed a new
design for anaerobic waste digestion. They are past the research
and development stage, which is your area, and you pointed out
that you are restricted to that, and are at the point where they
want to develop it commercially. They are terrified of going to
the banks because they believe in three or four years' time the
venture capitalists will own their business. Do you not accept
that as a Government we are not good yet at helping at the implementation
stage, particularly for that group which is small or even individuals?
Mr Gray: I would respond by saying
the very fundamental reason for the Technology Strategy Board
is quite specifically to help in that area, it is the translational
area, getting through the valley of death, taking small companies
who have got through the fundamental science and moving it into
tomorrow's businesses of the future. The Technology Strategy Board's
role is to do that. I cited the low carbon vehicle example because
it is a very important issue for us and it is one that is a very
high profile issue at the moment. The importance of supporting
small businesses, initiatives that we manage through SBRI, for
example, which is a procurement-led type agenda to try and stimulate
R&D in small businesses, is one other example of how I think
the Technology Strategy Board can support.
Q11 Ian Stewart: I was very impressed.
I worked for six years in the DTI with the Secretary of State
and I am very impressed with our assistance for research and development,
but it is that grey area where you get a new innovative idea,
it has been researched, developed, it is at the commercial implementation
stage, that I am really worried about. I know of two instances
where we have lost world-beating technologies to America because
they have just left the UK and taken their package to America.
One was a nitrogen engine that the automotive industry in America
snapped up and we have never heard of it since because they have
not screwed as much out of fossil fuels as they think they can.
There are real downsides to this, Iain, do you not accept that,
that you are restricted to the areas that you are restricted to?
Mr Gray: I do not see it so much
as a restriction, but I do think there is an important issue about
the resources that are available to us to be able to achieve what
I see as the end goal. I do not feel constricted in that context.
I see that the Technology Strategy Board has a role to play very
much in identifying and supporting the types of businesses you
have described, Mr Stewart.
Q12 Dr Gibson: I just wondered about
the word "innovation". It is a word we never used to
use a few years ago, it was "entrepreneurial". Suddenly,
"innovation", like "going forward" is heard
incessantly in speeches and so on. What do you mean by "innovation"?
I notice in your strategy you have got challenge-led innovation,
technology inspired innovation, the innovative climate, and 25
per cent of funding and 50 per cent of funding. Who the hell thought
that up and what was the purpose of it? You probably!
Mr Gray: I think the use of the
word "innovation" is interesting and there are probably
as many definitions of innovation as there are people who are
involved in the subject. For me, innovation is just about the
ideas, conversion of ideas into UK economic benefit, and that
is what we are about. It is taking ideas from business, from Government,
and converting those ideas into real economic benefit.
Q13 Dr Gibson: That is the challenge,
as Ian Stewart said, getting those ideas into the product and
by trying to define it in this very specific way does that really
help you create a climate where people who are doing things get
on and do them and you encourage them?
Mr Gray: If you would allow me
to give a little bit of background to the terminology there. That
really is just a language for us to use. I would say one of the
big issues we have had in terms of the exploitation of technology
in the past has been too often it has been technology in search
of an application. That is not to say there are not good blue-sky
ideas that subsequently become the great businesses of the future,
but we need to have different mechanisms to just technology push.
We coined the phrases, "technology inspired innovation, challenge-led
innovation and innovation climate", to do three quite different
things. Technology inspired innovation is that underpinning technology.
Q14 Dr Gibson: Iain, is that for
your benefit or for the benefit of the punters out there to know
how to address the problems to bring what you want to fruition?
Does this really help them?
Mr Gray: I believe it does. The
reason I was explaining what we were doing is technology inspired
innovation is probably the bit that the DTI programmes were previously
best known for. I would say challenge-led innovation is the biggest
step forward that we as an organisation have made. What I think
is really interesting for me is how much that term, "challenge-led
innovation", is now being used by third parties. We are seeing
overseas governments coming across to understand what we are doing
in this area of challenge-led innovation. It is the market challenge,
the societal challenge, and it is a language.
Q15 Dr Gibson: I suggest to you it
is a conference language that is used in big speeches all the
time but it does not get down to the people at the grassroots,
at the bench, who are trying things out, your inventors and so
on. They do not really know what it means and they can access
that type of support because they do not think of their work as
challenge inspired innovation, it is just getting up in the morning
and doing something and then going to bed at night.
Mr Gray: I think it is more than
conference speech. You are right to say it is the next level of
detail down that is more meaningful to people. I could ask David
to describe challenge-led innovation.
Q16 Dr Gibson: Give us an example,
David.
Mr Bott: It comes from the fact
that most of us come from industry so we think about what you
want to sell as a product or service. If you are in industry what
you want to know is where the market is going and what the challenge
to the market is. It came from that. Because we had already started
working on the concept of using government policy and we understood
they do change markets we put a generic phrase in as a challenge,
and it is something people need or want but cannot get yet. That
is what drives researchers, the ability to make something they
cannot do at the moment. That is what we mean by "challenge-led".
It is giving people a personal challenge to deliver a piece of
science, a piece of technology, to reduce it to a product or service
that at the moment cannot be got.
Mr Gray: If we take low impact
buildings, the challenge is how do we get net zero carbon housing
in 2016, that is the challenge. Get business together and say,
"That is now a regulation. That presents the challenge. You
are the guys who know what the potential solutions to that challenge
are, what are they and how can we help you achieve those challenges,
and as a consequence of that how can you create business benefit
by doing that?" It is a high level challenge that engages
business in terms of identifying solutions but then helps to create
UK economic benefit.
Chairman: I do not think we have any
doubt that you, as a trio, know exactly what you are talking about.
The point that Ian Gibson and Ian Stewart have made is we find
we are struggling with it and if we are struggling with it therefore
some of the people Ian Stewart mentioned, who are these new, small
innovative businesses may also be struggling with it. Could we
perhaps implore you to have a translator who makes this into what
we call ordinary speak because we are just ordinary, simple Members
of Parliament.
Q17 Dr Harris: As an archetype of
that, I would like to ask you have you been successful, in your
view, in terms of what you have done. Have you had an impact compared
to someone else spending the hundreds of millions of pounds you
have been given or you have attracted?
Mr Gray: Yes, I would unambiguously
say for me this is about impact in business and it is what businesses
are saying back to us that counts. There are a number of different
measures that we would use. We recently had a survey that has
come back from businesses that we deal with about what the impact
has been and we can quantify it in measurable terms: four times
return in respect of costs that they have incurred. There are
a number of different metrics and it is a very difficult subject.
Are we having an impact? The businesses that we deal with say
we are and the businesses that we are not currently supporting
say they want to work with us.
Dr Harris: What is the comparator? What
is the control group in that? If it was not for you those businesses
would not disappear, the money would not disappear, it would be
put through another way. Do you recognise that asking people who
are receiving money from you whether they are pleased to receive
money from you is not actually a controlled comparator.
Q18 Dr Gibson: The control is where
they have not got the money, you have to ask them.
Mr Gray: The people who have not
got the money are a check and balance. Just to be clear, it is
not us who have asked these questions. I just cite that as an
example of information.
Q19 Dr Harris: Do you feel that you
need to demonstrate that you have had an impact already?
Mr Gray: Yes, because I believe
that as an organisation we can do so much more. To do so much
more we need to be able to get messages across quite quickly.
The problem and challenge, not for us but for every country involved
in innovation, is it is a long-term game.
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