Examination of Witnesses (Question Numbers
320-339)
DEPARTMENT FOR
BUSINESS, INNOVATION
AND SKILLS
26 JANUARY 2010
Q320 Chairman: On the question of
co-ordination, there is a risk here because all the RDAs involved
in it, and the sector, obviously want their fair share of the
cake, and the North West is very strong, the East Midlands is
very strong, the South West is very strong and the South East
is very strong. There is an issue here about making sure that
a national industry is properly tended to at a national level.
Ian Lucas: Yes, and I think that
the RDAs have to be conscious of the national priority that this
industry has and bear in mind the overall picture in their dealings
with the industry as a whole.
Q321 Chairman: On that subject, before
Julie goes on to another area of questioning, the new centres
of excellence, these institutes that have been set up, one is
coming to near Coventry on advanced manufacturing, which I welcome
and is very good. We must make sure that that network is properly
co-ordinated but lightly co-ordinated; it must not become a huge
bureaucracy. That was the concern that Rolls-Royce had, who have
been very much driving the establishment of these various centres
of excellence. How are you planning to co-ordinate these various
bodies to make sure they do not duplicate each other?
Ian Lucas: We have a close relationship
with RDAs and try to ensure that they are aware of the role that
the centres are going to be providing. We need to get that relationship
right. It is a question of balance about the RDAs using their
local connections to assist on the ground but, also, being conscious
of the strategic role that will be left to the specialist centres
to deliver. As you say, that is quite a sensitive balance to get
right, and we will be monitoring it very, very closely.
Chairman: The network has grown by happy
accident, really, but we now need to make sure it works effectively
for the national interest.
Q322 Miss Kirkbride: An idea crossed
my mind while the Chairman was asking you about that. Are you
fully satisfied that the RDAs have co-operated over a national
industry rather than competed with one another to grab stuff?
Ian Lucas: I think there is always
a desire for any organisation, including RDAs, to try and attract
as much resource as possible to its particular area. That is natural
and one would expect that to happen. What I think is very important
is that we recognise that these will be national centres and that
the mere fact that they are geographically situated in one place
should not exclude a business which is clearly allied with that
national centre from benefiting from its existence. That is why
they are national centres. I think RDAs have to be attuned to
that in their day-to-day operations.
Q323 Miss Kirkbride: There is nothing
about the structure of the way they are set up that would allow
that to happen, is there, in terms of the cost access to the centres?
What kind of propriety do the RDAs have over the centres in their
region which might prevent companies from other regions accessing
the facility?
Ian Lucas: I am not aware of any
restrictions at all in accessing.
Q324 Miss Kirkbride: Or cost differentials?
Ian Lucas: I am not aware of those
at all. I think the geographical situation will not affect the
accessing by other geographically situated companies or businesses.
Q325 Miss Kirkbride: I am sure you
will be aware that the cuts in science and research funding in
your department have agitated people rather a lot. I wonder if
you could tell us exactly which areas will bear the brunt of the
£600 million cuts that were announced.
Ian Lucas: Can you help me?
Mr Walters: In terms of aerospace,
there has been a lot of investment over the last four years which
is round about £270 million, I think, that has gone into
projects that are part of the National Aerospace Technology Strategy,
and that is the sort of blueprint that government and industry
has agreed as to how the funding is chunked up, to make sure that
we are heading the most important programmes. I can only speak
for the aerospace side. The way it operates, at the moment, is
that aerospace companies put projects into the TSB for funding,
and it is a competitive process, at the moment, so we do not know
what the outcome of that process will be for aerospace companies.
All we can say is that because we have got this National Aerospace
Technology Strategy we are in quite a good position for aerospace
because we can demonstrate how those things flow through into
future products and affect the UK's position on future aircraft.
Q326 Miss Kirkbride: Can you help
the Committee by giving us some perspective as to what this might
mean? You said that aerospace has had £270 million over the
last four years. That is out of a global pot of how much? How
much were they getting as a share of the pot that was available
into which they were bidding? How much is that pot worth now?
So we can get some perspective as to how serious (or not serious,
perhaps) these cuts are for that sector.
Mr Walters: I am afraid I cannot
give you the detailed numbers, at the moment.
Q327 Miss Kirkbride: You could give
me the back numbers, though, could you not? What was the global
pot? What was their share?
Mr Walters: In terms, actually,
of how aerospace has done, it has probably done better than most
of the other sectors, I think, in terms of the proportion of funds
that have gone into the aerospace programme industry.
Q328 Miss Kirkbride: Did they get
10% of the pot that was available or 20% or 50%?
Mr Walters: We think it is round
about a quarter, roughly.
Q329 Chairman: Can we confirm that
subsequently?
Mr Walters: Yes, we can.*
Q330 Miss Kirkbride: The new pot
is worth how much then? The new pot that will go with the TSB
that can be bid for by aerospace. How much is that pot now worth,
given the £600 million? Or is there not one any more?
Ian Lucas: For what period?
Q331 Miss Kirkbride: For the next
year; for the year that the £600 million cut is announced.
What financial year does that cover? Does it cover 2010-2011?
How much is the TSB pot, into which companies bid, now worth?
How much money is in that pot?
Ian Lucas: I cannot give you that
figure now, I am afraid. So I will have to come back to you with
that figure and the representation of the proportions for you.
Q332 Miss Kirkbride: We might not
know the proportions until the bid has been successful, I suppose,
will we?
Ian Lucas: No, because the TSB
is an independent organisation that will make its assessments
on the basis of the bids that are made to it.
Q333 Miss Kirkbride: You are, presumably,
intending to give them some kind of grant this year?
Ian Lucas: Yes.
Q334 Miss Kirkbride: However, you
cannot tell me what that grant is?
Ian Lucas: I cannot tell you,
at this moment, what that will be, but I can provide you with
the information.* I am sorry I cannot.
Q335 Miss Kirkbride: When this was
announced, did you talk to your colleagues across government (wherever
that might be) about the impact this might have on the higher
value added sector?
Ian Lucas: The overall position
was discussed in government before the announcement was made.
Q336 Chairman: The Secretary of State
was very honest with us last week about how the figures are arrived
at.
Ian Lucas: Good.
Chairman: He lost to the Treasury!
Q337 Miss Kirkbride: The PBR also
announced £200 million investment from the Strategic Investment
Fund to support innovation industrial projects. What projects
will this be used to support? Or is that subject to bids that
we do not know yet?
Ian Lucas: I think the projects
will be assessed as they come forward and it will then be determined
how the money is applied. So I cannot give you an example because
we need to see what the bids are before we can say how the money
is going to be spent.
Q338 Miss Kirkbride: What is the
difference between the TSB and the Strategic Investment Fund,
just so that I understand? There seems to be an awful lot of stuff
around.
Ian Lucas: The Strategic Investment
Fund is there not just to use to lever in public money but, also,
to lever in private investment to support that as part of a larger
fund that business can access for large-scale projects.
Q339 Miss Kirkbride: Is it match-funding,
50/50?
Ian Lucas: We are hopeful that
it will actually—
| 
