Engineering: turning ideas into reality: Government Response to the Committee's Fourth Report - Innovation, Universities, Science and Skills Committee Contents

Plastic electronics engineering: innovation and commercialisation

8. The UK is well placed to capitalise on the economic potential of the growing plastic electronics industry. However, we are concerned that without a clear understanding of how best to build on and market the UK's strengths in this sector this opportunity might not be fully realised. We urge BERR to engage with the Technology Strategy Board, UK Trade and Investment, UK Displays and Lighting Knowledge Transfer Network and the plastic electronics community to develop a technology roadmap. In constructing this roadmap it is essential that stakeholders across the sector be consulted, from spin-out companies to multinationals. (Paragraph 72)

We welcome the Committee's recognition of the UK's position to develop new products and capitalise on the potential of this emerging industry, which is in part the product of past investments by the former Department of Trade and Industry (DTI), the Technology Strategy Board, the Engineering and Physical Sciences Research Council (EPSRC), the Regional Development Agencies of England and the Devolved Administrations of Northern Ireland, Scotland and Wales.

The recently published strategic policy statement, 'Building Britain's Future: New Industry, New Jobs', outlined that Government can and must be intelligent about ensuring its actions deliver a high value, high skilled economy able to respond to long-term opportunity. It highlighted the need for concerted action to back businesses in markets and sectors, such as plastic electronics, where Britain has strength and Government can make a difference by clearing obstacles or correcting market failure.

In this context, BIS officials, Technology Strategy Board staff and KTN staff will work alongside key players from within the UK's plastic electronics sector to develop a UK Strategy for Plastic Electronics that will identify the UK's main strengths and how businesses throughout the supply chain can best take advantage of future commercial opportunities. Due for publication in the autumn of 2009, the strategy will also define the role for Government in unlocking competitive potential of this emerging industry.

A draft for consultation is planned for Summer 2009 with the formal launch of the strategy in Autumn 2009.

9. We welcome the support for plastic electronics research and development provided by EPSRC and the Technology Strategy Board, and believe sustained support by these organisations is vital to the growth of the industry. (Paragraph 80)

Plastic Electronics remains a central theme within the Technology Strategy Board's technology strategy and significant levels of support have already been delivered through direct support from the Technology Strategy Board, the Research Councils, the RDAs and the National Measurement System.

The Engineering and Physical Sciences Research Council is currently funding over £73m of research of direct relevance to plastic electronics and the Technology Strategy Board has committed a further £9.6m investment in projects in the field of Plastic and Printed Electronics, in the last 18 months, including funding a £12m project (£6m grant) to develop full colour flexible displays.

10. We do not believe that the Technology Strategy Board's grant schemes and the Managed Programme proposed by UKDL KTN and the former-DTI are mutually exclusive forms of support. UKDL KTN champions the needs of the plastic electronic community, and as such we urge BERR and the Technology Strategy Board to engage with it, and to reconsider the deployment of a Managed Programme in this area. (Paragraph 89)

As noted above, Plastic Electronics remains a central theme within the Technology Strategy Board's technology strategy and as part of its programme to stimulate innovation in the field of Plastic and Printed Electronics it will hold a 'sandpit' in January 2010 with an £8m Challenge—"To exploit the UK wealth potential of plastic and printed electronics". The sandpit will aim to identify unique UK capability in plastic electronics and that will result in end-use applications and also produce demonstrators by engaging new players, end-users, business leaders and creative designers.

The Technology Strategy Board is also working with the Regional Development Agencies and Research Councils to co-ordinate investments that are informed by the work of the KTN and BIS, which will help define the needs of business.

11. The future success of the UK plastic electronics industry not only lies in its ability to lever public and private finance, but also in the co-ordination of funding sources. We recommend that BERR, the Technology Strategy Board and UKDL KTN take immediate steps to increase the understanding of technological risk in the private sector, and to review the funding landscape. (Paragraph 95)

Following Lord Sainsbury's 2007 Review of Science and Innovation, the Technology Strategy Board has made good progress in working with other funding partners to address fragmented technology and innovation landscape, and create critical mass and coherence to the support provided to improve the technology and innovation capability of UK business.

Furthermore, the Government recently announced Solutions for Business (a simplified framework for business support), which is now in place to offer real help to companies with common issues such as accessing finance, support for research and development, skills and training, exporting and overseas trade.

Finally, in the context of securing access to Venture Capital, there are now 10 Enterprise Capital Funds providing venture capital investment in amounts of up to £2 million and a number of these Funds have a strong technology focus. Further measures have also been taken to support businesses during the downturn including Enterprise Finance Guarantee and the Capital for Enterprise Fund. The Government's recently published strategic policy statement, 'Building Britain's Future: New Industry, New Jobs', outlined a commitment to consider whether, and in what form, further intervention could help increase the supply of long term growth capital to small and medium sized businesses. This will include options for a Public-Private Partnership similar to the predecessor of 3i, the Industrial and Commercial Finance Corporation, leveraging private sector capital to address gaps in growth finance and risk capital.

We also recognise the important role that the Technology Strategy Board and KTNs have in increasing the understanding of this emerging industry amongst private investors. The KTNs in particular bring together a variety of organisations, such as businesses (suppliers and customers), universities, research and technology organisations, with the finance community and other intermediaries to provide a range of activities and initiatives to enable the exchange of knowledge, which can help address any information deficiency that could hinder private investment in the sector.

12. PETeC's location is a function of the fact that it was established as a regional initiative. It is an open question whether PETeC would have been sited elsewhere had it been founded as a national resource, something that it undeniably is. However, we do not see further discussion on this issue as constructive or worthwhile, and wish to see a line drawn under the debate. (Paragraph 100)

We welcome the Committee's support for this important initiative and agree with its conclusion.

13. We are sympathetic to PETeC's need to generate income in order both to assure its future survival and to allow it to participate in UK grant competitions. The Technology Strategy Board and OneNorthEast should review whether the requirement for self-sustainability within five years is realistic. (Paragraph 104)

It is important that PETeC works towards independence from regional development funding as befits its status as a technology and innovation facility for a national and international audience.

However, there is no restriction on PETeC participating in industry led projects seeking grant funding from the Technology Strategy Board. Furthermore, the role and value of PETeC will be considered in the context of the UK Plastic Electronics strategy highlighted above

14. We urge PETeC to continue developing its relationships with other Research Centres, and to liaise with these Centres to ensure national capability in facilitating R&D across the spectrum of plastic electronic technologies. (Paragraph 106)

We agree with the Committee's recommendation that tying PeTEC into world class research centres will be critical to its success. The Displays and Lighting KTN is coordinating links with other centres so that they provide a national, complementary, capability addressing a broad range of issues across key areas. Furthermore, the Technology Strategy Board and BIS staff sit on PETeC's advisory board, with a view to ensuring such links are developed and maintained.

15. The plastic electronics industry is likely to grow substantially over the next few years. Although the UK's research base puts it in a unique position to capitalise on this growth, we must not be complacent as countries such as Germany and the USA are becoming increasingly competitive. We recommend that the Research Centres supporting UK plastic electronics R&D engage with the academic research base to ensure state-of-the-art facilities are accessible to the academic community. (Paragraph 112)

PETeC expertise is available to academic institutions, and there is scope for academics to utilise the facility in the context of specific industry led projects funded by the Technology Strategy Board.

Furthermore, the Research Councils provide support for Innovative Manufacturing Research Centres (IMRC) such as the Innovative electronics Manufacturing Research Centre (IeMRC) with a 'hub' at the University of Loughborough and partners from a number of Universities across the UK. IMRCs provide the UK's leading manufacturing researchers with a base of stable yet flexible funding to pursue strategic research themes that are responsive to the needs of UK industry.

16. The UK academic research base should be applauded for its strong record in 'spinning out' start-up companies. Focused support, however, is needed to ensure these businesses grow into world-class enterprises. We recommend that the Technology Strategy Board, BERR and UKTI consult with UK business, from start-ups to multinationals, to identify how best to support the growth of innovative businesses in emerging industries. (Paragraph 120)

Following the recommendations of Lord Sainsbury's review, the Technology Strategy Board has established an Emerging Technologies Steering Group to bring together various agencies involved to drive a competitive position and significant value creation for the UK in new high growth markets or industries based on emerging technologies.

The Technology Strategy Board will publish a final strategy highlighting its approach to supporting emerging industries this year.

UKTI will continue to use the Regional Challenge Fund to promote UK plastic electronics capability internationally.

17. We encourage the Technology Strategy Board to engage with multinational companies across Europe to determine whether pan-European consortia could be established to progress the development of emerging industries with the potential for high economic returns. (Paragraph 128)

We agree with the Committee's assessment that there are benefits to be had from closer collaboration with companies across Europe.

UK businesses and researchers have to date benefited from funding and collaboration provided in the European Framework Programme 6, and BIS have successfully influenced the European Commission to include plastic electronics as a key theme in Framework 7.

The Technology Strategy Board has also, since its establishment as an NDPB, taken over support for the EUREKA programme, and the offer of advice and guidance on Framework Programme 7 to encourage more UK businesses to take advantage of significant opportunities for collaboration with European partners through EU funding programmes.

Furthermore, the Technology Strategy Board will also increase the support its KTNs give to international activities, recognising the increasingly global nature of innovation and business in general.

More details on the Technology Strategy Board's international strategy will be published shortly.

18. The manufacture of plastic electronics devices is not destined to occur outside of the UK. However, we are extremely concerned that without urgent action by the Government this will be the reality. As in our previous recommendation (Paragraph 72), we urge the Government to engage with the plastic electronics community, and to articulate a strategic vision for the development of this innovative industry. (Paragraph 130)

We agree with the Committee, and the UK Plastic Electronics strategy currently under development will consider the role of manufacturing and the role of wider Government in securing high value-added activities here in the UK.

19. Support for innovative businesses as they transition from being primarily R&D focused to launching pilot manufacturing lines is imperative. We recommend that the Government consider whether there is merit in establishing an open access fabrication facility for the manufacture of Plastics Electronic devices by UK SMEs. (Paragraph 133)

We agree with the Committee and believe this is a role fulfilled by PETeC.

20. The economic opportunities provided by this growing industry do not only lie in the manufacture of devices, but also in the development of enabling technologies. It is imperative that any national strategy for this industry must embrace the materials supply chain, particularly as this sector holds huge potential for UK industry participation. (Paragraph 138)

We agree that in order for the sector to be successful we need to consider the entire value chain and engage in areas where UK can have the most impact. This will form part of the UK Plastic Electronics strategy that is currently being developed.

21. Public procurement has the potential to be a valuable tool in driving innovation. We welcome the Government's efforts to develop innovative procurement mechanisms, and recommend it supports pilot projects in the area of plastic electronics in order to stimulate product development and manufacture. (Paragraph 148)

We agree with the Committee's assessment of the role of public procurement, and believe that the commitment that during 2009, all Government Departments must publish Innovation Procurement Plans, will embed a clear obligation to procure goods and services in a way that drives innovation, and to identify clearly the areas in which they are seeking to procure innovative solutions to help deliver their objectives.

Expansion of the Small Business Research Initiative (SBRI) will help reinforce this by using the chance to compete for Government procurement contracts to incentivise early-stage, high-technology businesses and support these companies through a critical stage in their development.

However, we do not believe that procurement should be designed with a view to supporting a platform technology such as Plastic Electronics, but believe that a clearly articulated need or application by a Government Department could provide opportunities to support the growth of UK companies in this area.

22. The Small Business Research Initiative (SBRI) is potentially a valuable source of funding for innovative companies in the UK. Our concern is that unless this support mechanism is re-launched in a format accessible to SMEs developing future technologies, UK companies will refocus their business models to engage with the lucrative procurement opportunities offered by the US under its Small Business Innovation Research programme. We ask that DIUS keep us updated on progress made in rolling-out the revised SBRI. (Paragraph 155)

Following Lord Sainsbury's Review and the Innovation Nation White Paper, the SBRI programme has been reformed with a view to:

  • Help with development of leading-edge technologies and innovative products to meet the Government's future needs ahead of commercial procurement.
  • Increase access and opportunity by high-tech SMEs to Government R&D contracts which develop hard technologies and innovative products.
  • Drive an increase in demand for R&D services from early-stage—high-tech SMEs, and to support them through a critical stage in their development and thus establish future industry in the UK.
  • Ensure that the SBRI programme complements and where appropriate enhances the Government's other business support products for SMEs.

Building on the successful pilot competitions run by the Department of Health and the Ministry of Defence in 2008-09, the reformed SBRI programme will be implemented by the Technology Strategy Board and extended in 2009 to involve a wider range of departments and an increased number and value of competitions.

The revised structure is well-structured, focused on technology development and demonstration (£300k to £1m per project), phased to reduce risk, and attractive and accessible to industry. As an example, the pilot competition in Health is seeking technologies for hand hygiene and rapid pathogen detection in hospitals—two essential tools for conquering healthcare-associated infections—which will save cost and lives compared with what is available today.

The Technology Strategy Board has recently used the mechanism to help develop sustainable construction technologies suitable for retrofitting into social housing, and we will keep the Committee informed of developments in rolling out SBRI more widely.

The programme will also be annually monitored and evaluated by the Technology Strategy Board in order to ensure its effective performance and impact on both the buying Departments and suppliers. The annual performance results will be published on BIS and TSB websites.

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Prepared 26 June 2009