Examination of Witnesses (Questions 20-39)
IAIN GRAY,
DAVID BOTT
AND DAVID
GOLDING
1 APRIL 2009
Q20 Dr Harris: I was attracted by
what you wrote in your strategy for business innovation where
on UK innovation trends you said it is very hard to tell what
impact you have had on that because measuring your impact is so
long-term and the very nature of innovation makes it difficult
to do that, it will take time for you to be able to measure that.
I think you were forced to say that anyway because it is true,
and I thought that was quite honest, but very few organisations
can just say, "No, we can't really tell and I am not going
to sit here in front of you and cite some business survey that
purports to do that because we have to develop the metrics, establish
the baseline and then check on a long-term basis". Can you
see why I am a little disappointed that you leapt straight in
somewhat defensively with your view "we are having an impact"
instead of sticking to your guns and what you wrote here?
Mr Gray: That is a good bit of
counselling.
Dr Harris: You cannot win obviously!
Dr Gibson: Whatever you say you are dead!
Q21 Dr Harris: Do you feel under
pressure to say you have already made an impact? Some people who
want you to be long-term, or at least medium-term, are disappointed
two years from your founding that you are already thinking about
your short-term impacts.
Mr Bott: We need to show progress.
If you are starting on a journey you might not have reached your
goal, but if you have gone in the wrong direction you should definitely
rethink what you are doing. We are confident that we are moving
in the right direction. Some of these programmes where we have
acted as the focal point for other government activity, for RDA
activity, and for increased business involvement I suggest tells
people we are doing the right things.
Q22 Dr Harris: A couple of quickies
off that subject. Mr Gray, I think you were at the speech that
John Denham gave at the Royal Academy of Engineering about the
new regime, the new Government proposals. Without commenting on
the merits of the proposals, because I think that is going to
come in a different question, do you think the debate is how we
do this picking areas of strength and concentrating public funding
in those, or are we debating how to do it? Is that now the Government's
approach in your view and is the debate about how we do it or
is it whether we are going to do it?
Mr Gray: My belief is it is how
we are going to do it. It is about focus, identifying areas that
we are going to make a big difference in.
Q23 Dr Harris: So the decision has
been made that we are going to go down that path?
Mr Gray: Just to be very clear,
I was not at the Denham Royal Academy speech. I am familiar with
the Denham speech. For me, from a Technology Strategy Board point
of view, laying down the priority areas—
Q24 Dr Harris: I do not want you
to go into that because someone else is going to ask you about
that. You have answered my question which is it does look like
we are going to do this but the question is how. My last question
is about venture capital specifically. I do not want you to think
in terms of the recession necessarily, because you are going to
be asked about that, but in 2008 NESTA called for there to be
a fund to provide VC to these businesses and that was some months
ago now. Has anything happened? Are you envisaging something happening
in that respect?
Mr Gray: I cannot answer the specific
question. As an organisation, we have lent our support to the
concept of the fund. It is not something the Technology Strategy
Board is directly involved in.
Q25 Chairman: Just before I pass
on to Tim, I was interested in your earlier comment and in the
background information you gave us that you were morphed out of
the DTI. I know you are a different organisation from the one
that left the DTI, but you did say that you inherited a lot of
their programmes. If you are really independent, as you claim,
why do you not just ditch those and say, "Right, these are
going to be our programmes"? It is a bit of a cop-out, is
it not, to say, "Well, we have not been able to make as much
progress because we inherited these programmes and they are not
very good really"? That is the implication.
Mr Gray: I did not say they were
not very good. I said we inherited a significant number of the
DTI's programmes.
Q26 Chairman: That sounded like a
bit of a whinge.
Mr Gray: It was not a whinge,
it was a recognition of the fact that investment in R&D programmes
and collaborative R&D programmes by definition is a long-term
game and, therefore, inheriting a series of programmes provided
some constraints to me in terms of the amount of headroom I had
to do new things.
Q27 Chairman: What I was hoping you
would say is that it restricted you even more and as an organisation
you have got to be very real in terms of saying to people, "No,
we aren't going to do that, this is what we are going to do".
When I last met you, you were quite clear about that, that you
were going to have to be really blunt to some companies and organisations
and say, "Sorry, that is not our priority, this is".
Mr Gray: In terms of new decisions
moving forward that is clearly the case. I think what we are touching
on is how you handle programmes for which there are contractual
commitments.
Q28 Chairman: How you close them
down.
Mr Gray: We, as an organisation,
are being much more hardnosed in terms of looking at those previous
commitments. I do see it as a constraint.
Q29 Mr Boswell: Perhaps I can ask
my question and then apologise for having to leave, but it will
not be a consequence of the answers you are about to give me.
In the interests of time, I take it as axiomatic that you see
the TSB as having a significant role in responding to and recovering
from the recessionary climate we are now in. Can I ask you about
a number of relationships. The first one is with the private sector
and its investment. Are you finding that there is a significant
impact of the recession in terms of the venture capital investment,
private sector investment, which is available, and is it in fact
leading either to some retrenchment or the need for reshaping
of your existing collaborative research projects?
Mr Gray: The general answer has
got to be yes, it is having an impact. I would not say it is having
the same impact on every sector and I would not say it is having
the same impact on every type of business.
Q30 Mr Boswell: And it is not the
end of the world.
Mr Gray: The good news from our
perspective is in some of our recent competitions that we have
laid forward there is a good level of interest still coming from
the private sector and, more than that, the willingness of the
private sector to provide matched funding to programmes going
forward. That is a very clear recognition.
Q31 Mr Boswell: They can still do
it.
Mr Gray: Whilst some are in difficulties
they still (a) want to do it and (b) can still do it.
Q32 Mr Boswell: That is helpful.
Alongside that, let us look at the Government's role obviously
taking up Dr Harris' line of questioning. Government policy making
strategic choices about the overall balance of research funding,
how is that going to impact on your work when you too want to
make strategic choices? Will they be common objectives? Will they
sometimes subvert things that you might prefer to do or can you
work that relationship out?
Mr Gray: To use your words, I
think we can work that relationship out. In terms of our own priorities,
we have determined over the next 12 months what our particular
priorities are going to be and it is no surprise to hear they
are around the low carbon agenda, vehicles, buildings, retrofit,
energy generation, healthcare, stem cell regenerative medicine,
and it is around the digital economy. Those are the priority areas
for us in the next 12 months. In terms of getting focus from the
Research Councils, my personal belief is there is still a very
strong need for a broad research and science base, but in those
areas where we are working closely with the Research Councils
I think we will achieve a strong level of alignment. So in the
priority areas we have identified I am looking for very close
relationships with the science base and the research base.
Q33 Mr Boswell: You did mention stem
cell research and other areas of bioscience, there is now to be
an Office of Life Sciences. Can you say a little bit about your
relationship with them? Is that going to be something you have
to manage? How will you work that? I do not think you have published
your own strategies in the area of bioscience yet, but how do
you see that coming out? Perhaps another way of putting this question
would be convince me that you are not merely interested in engineering
and, as it were, the conventional mechanical approach to these
areas of innovation and technology.
Mr Gray: As a person who has a
strong engineering background and strong industry background,
I am constantly challenged to prove that I have a broader interest
than that. Hopefully, the actions the Technology Strategy Board
has taken in the creative industries and very, very different
areas have shown that we are moving in a quite different direction.
On the bioscience area, just to be quite specific, the Department
for Life Sciences is a new department. We have already made contact
and are looking at how we establish a close working relationship.
Maybe I could ask David to say quite specifically where we are
on the strategy documents in that area.
Mr Bott: The strategy will be
published within the next couple of months, it is in its final
stages of internal editorialising and such. Regenerative medicine
came out very strongly through that. We have been working with
the BBSRC and MRC on that. We have recently had a series of workshops
and it plays to Ian Stewart's point that there are about 25-30
very good, small companies in the regenerative medicine area that
are sitting around at the moment and the venture capitalists have
gone walkabout because, sensibly from their point of view, they
are waiting to see what the recession will do to weed those out
and they will end up with one or two companies. We are looking
to how we can support that sector so that we still have options
in that area going forward because we do believe it is an integral
part of the future of medicine and treatment.
Q34 Mr Boswell: Presumably you are
implying you have an interest in a critical mass of independent
players.
Mr Bott: Yes.
Q35 Mr Boswell: And if it just fell
down to three or four that were snapped up?
Mr Bott: We would lose that as
an option for this country in the future. We are after both supporting
the individual companies but also binding them together into a
community. We have a competition aimed for the back end of this
year and we are working very strongly with those companies and
Research Councils and anyone else who will work with us.
Q36 Dr Iddon: You have mentioned
a number of programmes and some were inherited. Perhaps you could
just give us a little more detail on how you select the programmes,
particularly into the future, and whether you take any external
advice? What are the selection criteria for the programmes and
do you seek advice in the way that peer review works?
Mr Gray: In terms of the selection
of broad themes, our governing board approves a 12 month look-ahead
in terms of broad themes that we are going to address. The input
to those comes from a number of different sources. Some of it
is from the different government departments, some of it is from
business trade bodies, some of it is as a result of recommendations
that come from the Innovation Growth Teams, some of it comes from
the Science and Industry Council members from around the regions
and devolved administrations. The input to the board to help determine
the broad themes comes from a variety of different sources. Once
we have chosen a broad theme, the detailed topic areas, they are
derived very much from the detailed strategy documents. We have
just talked about the life science one. Again, those strategy
documents have been developed in consultation with business using
what we call the Knowledge Transfer Network mechanisms to engage
a broader community. The key decisions are what are the themes
that we are going to pursue, which come from a number of different
sources, the detail once we have established a theme comes from
business itself through either the strategy document or, coming
back to the challenge-led approach, we bring business together
and say, "That's the challenge, what are your ideas for specific
topics that would fit underneath that?"
Q37 Dr Iddon: What are the selection
criteria?
Mr Gray: David, could I ask you
to run through the four selection criteria?
Mr Golding: In terms of the four
selection criteria used which really cover everything that we
invest in, the key ones are is there a particular UK strength
that we can build on, so both capability in terms of the research
base but also in terms of business to exploit what we are investing
in, is there a large global market. We are not interested in investing
in areas where it is a sunset industry, we are looking for is
there growth in a particular area. We are then looking at is it
timely, so it is something where the Technology Strategy Board
has a particular role to invest in, it is not an area where the
Research Councils will invest and not something which businesses
naturally invest in themselves and take it through to market.
It is an area where the Technology Strategy Board has a role to
invest.
Q38 Dr Iddon: When you have chosen
those programmes do you go for external advice anywhere, even
abroad, and say, "We have chosen these programmes, do you
agree that they are the right programmes?"
Mr Golding: All the programmes
we select are through working with business, with Government,
taking on a whole range of different inputs to say, "These
are the areas we have selected, are they the right ones?"
Q39 Dr Iddon: That is not peer review,
is it? I am looking for some independent advice, not the people
who want the money to develop something.
Mr Gray: We have a different process
from the Research Councils in terms of selection of projects,
but we do have a process that involves independent assessors.
It is not the internal operation team of the Technology Strategy
Board that ranks projects, they are independent assessors.
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