Memorandum submitted by the Science and
Technology Facilities Council
SCIENCE AND TECHNOLOGY FACILITIES COUNCIL:
ANNUAL REPORT AND ACCOUNTS 2008-09
Thank you for the letter of 20 October 2009
from Phil Willis, Chair of the Science and Technology Select Committee
on STFC's latest Annual Report.
STFC's responses to the questions are set out in
SCIENCE AND TECHNOLOGY FACILITIES COUNCIL:
ANNUAL REPORT AND ACCOUNTS 2008-09STFC's RESPONSES
1. On page 41 of its Annual Report STFC stated
that changes had been made following the Organisational Review,
including a restructuring of the senior management team, a stronger
focus on improved leadership and teamwork and better administrative
practices together with a clear commitment to open and timely
engagement with its staff. Can STFC please provide a note setting
out the changes made and the evaluation of the effectiveness of
STFC initiated the Blueprint change programme
at the end of 2008 to address residual post-merger issues and
drive change to support the evolving strategy. It has been working
to deliver strong and clear leadership, new performance measures
to reflect the new strategy, a new financial model for allocating
resources to priorities, a new organisational structure, effective
core processes, service oriented support infrastructure in estates
and IT, a positive and collaborative culture, and capability to
deliver successful change.
The programme is led by the CEO, and the Executive
Board is the Programme Board, with the Operations Board involved
in design and implementation of changes. A Change Director has
been appointed to provide change management expertise and leadership
to the programme. STFC's Audit Committee endorsed the approach
adopted and progress made at its meeting on 20 October.
The senior management team was restructured in the
first half of 2009. STFC's Board structure has been rationalised
and the terms of reference for Council and Executive Board have
been redefined to provide greater clarity of their respective
roles. The Executive Board (EB) has been reconstituted, with a
smaller group of Directors representing all the core functions
supporting the CEO, and the role of Operations Board (OB) has
been redefined to take responsibility for activities delegated
These changes are creating greater clarity of
decision-making. The EB have overseen the development, publication
and communication of STFC's new Vision in July, and is supporting
development of a new strategy framework, which has been communicated
to STFC staff.
Administrative processes are being streamlined
through the migration to the RCUK Shared Services Centre. STFC
Human Resources migrated at the end of October and Finance is
scheduled to migrate in December.
A range of activities are being undertaken to
ensure open and timely engagement with staff: regular cascades
through department line management, weekly "in brief"
communication, monthly staff forums at each site, six monthly
senior staff conferences to communicate and obtain input and feedback,
Blueprint cascade events in each Department in May/June to communicate
"to be" designs.
Departmental Implementation Managers have been
appointed to ensure that staff are involved in detailed implementation.
Feedback on the effectiveness of the changes was obtained at the
Senior Staff Conference in September and methods of obtaining
wider and evaluation are being considered.
2. On page 42 STFC stated that it had reorganised
its communications function "to better focus on providing
clear and compelling information, particularly to external stakeholders
and staff". What evaluation of the changes has been carried
out and what were the results?
STFC's communications function is subject to
regular internal management review, as well as external formal
and informal assessment. Regular interaction with representatives
of the research community has provided positive reinforcement
for the proactive approach adopted in relation to provision of
information to the communities, particularly in relation to timely
access to material on the STFC website in relation to the current
science prioritisation exercise. We have also received positive
feedback from Learned Societies for our efforts to improve communications
and engagement through them with their communities.
In terms of external formal assessment, RCIAS commenced
in June a thorough audit of the communications function across
STFC, covering management interactions, web, media liaison and
risk management, and internal and external communications. A final
report is expected in early November, but preliminary advice from
the auditors has identified significant improvement as well as
areas for further focus including non-central externally-visible
web sites. The report is expected to confirm the improvements
noted in the Investors in People report of December 2008 in relation
to internal communications.
A contract has recently been agreed with an
external provider to undertake a comprehensive staff survey to
measure the effectiveness of internal communications processes
and channels. The results are expected before the end of this
calendar year, and will be used to design further improvement
in internal communications. In addition to the audit, the InterActions
group (a formal international association of global particle physics
laboratorieswww.interactions.org) has agreed to undertake
an external assessment of our communications activities. This
is expected in late January/early February 2010.
3. How is the return from long term investments
mentioned on page 43 measured?
Exploiting long-term investments in national
and international facilities is one of STFC's highest priorities.
This helped set a framework for, and is being supported by, the
emerging conclusions of the current prioritisation of STFC's programme
which our scientific advisory panels and committees are undertaking
and we expect to finalise in the New Year.
STFC evaluates returns from investment in its facilities,
ISIS, Diamond and Central Lasers regularly; for example, number
of users, papers published, percentage of budget spent on UK scientific
capabilities, user satisfaction, and international usage. The
international standing of STFC's facilities is also assessed through
periodic benchmarking with comparable facilities overseas.
The effectiveness of STFC's long term investments
is demonstrated by Airbus, the aircraft manufacturer which has
since 2006 used ISIS to research the integrity of welds in aluminium
alloys, and to test their suitability for future aircraft programmes.
Other work has been carried out at ISIS to analyse novel joining
methods, surface treatments, composite reinforcements, and fatigue
of welded aerospace components, and to look at residual stress
in wing ribs to solve a manufacturing issue.
The long term return from STFC's investments
in international facilities such as CERN, ESO and ESA is proven
by UK's scientific world ranking; ranked second in the world in
astronomy in numbers of academic publications and number of citations,
and third in particle physics in number of academic publications
(and as evidenced in the Wakeham Review of Physics, 2008).
4. STFC's accounts show an increase of £32
million in the costs of international subscriptions in 2008-09.
How much of this increase has been due to the exchange rates between
the Euro and the pound? What is the change in the first six months
of 2009-10? How will any increase be financed? Accounting to note
20 to the accounts "STFC is compensated for variances from
a base position" by the Government. Can STFC provide note
setting out how this mechanism has worked in 2008-09 and the first
half of 2009-10?
£20 million of the increase in 2008-09
was due to changes in the exchange rate between the Euro and the
pound. The change for first six months of 2009-10 is an increase
of £16 million compared to the same period in 2008-09.
The exchange rate impact is financed by exchange
rate compensation, up to a maximum, funded by BIS.
Additional costs caused by adverse foreign exchange
movements are calculated using 2007-08 as the baseline. The first
£3 million (per annum) of this is borne by STFC. Compensation
for the balance is provided by BIS. The compensation for 2008-09
was £16 million and using current data is anticipated to
be £29 million for 2009-10. This compensation is provided
as an adjustment to the Allocation for the year.
5. CLIK was relaunched on 9 July 2009. What
was closing deficit of the "old" company at 9 July 2009?
What is the projected deficit or surplus for the new company in
CLIK is organisationally part of STFC's "Innovations"
Directorate which was launched in July 2009. As part of this activity
it was proposed that "CLIK Ltd." be re-named "STFC
The name change from CLIK to STFC Innovations Ltd
was for the purposes of re-branding CLIK and to remove the now
defunct reference to the former CCLRC (now part of STFC). STFC
Innovations Ltd retains the same company registration number,
articles and memorandum of association as CLIK had. No closing
accounts were prepared at the name change date as there was no
change in the reality of the activities of the company.
Within STFC, "STFC Innovations Ltd."
is responsible for the commercialisation of STFC-owned IP and
assists STFC with a number of other functions, including IP management,
operating the new Daresbury laboratory incubator and managing
the "embedded" business development manager team.
The forecast deficit for STFC Innovations Ltd.
for 2009-10 is £1.04 million.
6. At what percentage of its full capacity
is the Diamond source being used? If it were operating at full
capacity, what would be its revenue budget? How much revenue support
does STFC provide to Diamond?
The capacity of Diamond is determined by the
number of operational beamlines. Diamond currently has 13 operational
beamlines, and plans that 32 will become operational by 2018,
ie 40% of the beamlines are now operational.
The original Phase I build included seven beamlines,
all of which are now operational. The capital expenditure for
Phase II was approved to build an additional 15 beamlines, of
which six are now operational and the balance becoming operational
progressively through to 2012. BIS has earmarked funding for Phase
III consisting of a further 10 beamlines to be completed 2017-18.
The recurring cost base of Diamond inevitably increases as each
new beamline becomes operational.
Diamond's requested operating budget in 2009-10
was £34.2 million (excluding VAT) but was allocated £30.2
million with 86% being funded by STFC and 14% by The Wellcome
Trust. STFC also pay all the irrecoverable VAT costs.
Diamond's operating budget is estimated to rise
to the region of £50 million (excluding VAT and inflation)
by 2018 once the 32 beamlines are operational. This would represent
almost a 150% increase in the capacity over the period 2009-18
for a 60% increase in budget.
7. What proportion of invoices in September
was paid within 10 days?
94% of valid invoices in September 2009 were
paid within 10 days.
8. How will collaboration and communication
between the campuses at Daresbury Campus work? Will the S&T
Gateway Centres (see page 48) facilitate the links?
As was always intended, the two campuses at Daresbury
and Harwell are operated as a "campus dipole" in which
the STFC-supported activities at the two sites are carefully planned
so as to be coherent and as complementary as possible in order
to maximise the use of public-sector funding to optimise the science
and innovation benefit to the UK.
The present and future activities of the two campuses
are overseen by an STFC Campus Project Board which is chaired
by the STFC Director of Campus Strategy and also includes the
STFC Chief Executive, all other members of the STFC Executive
Board and other key STFC science and technology Directors. The
Chief Executive of EPSRC also attends the Board meetings, along
with the Harwell Science and Innovation Campus (HSIC) private
sector partner, Goodman International.
Recent examples which indicate the success of
this operating model include the further concentration of accelerator
science and technology research activities at Daresbury, based
around the very successful Cockcroft Institute and ALICE, the
proposed major strengthening of the high-performance computing
activities via the planned new world-class "Hartree Technology
Gateway Centre", and the proposed new "Detector Systems
Technology Gateway Centre" the latter Centre being a split-site
activity with significant complementary research activities at
both campuses. The Government has already ear-marked funding for
both of these Gateway Centres via the Large Facilities Capital
Fund (LFCF) and the bids have now gained STFC Council and RCUK
Executive Group authorisation to proceed to the next stages of
the Government's Gateway Approval process. Similarly, the Harwell
Campus is currently focusing on very important ongoing large facilities
activities relating to DIAMOND, ISIS and the Central Laser Facility,
as well as the specialist capabilities housed in the Micro-Nano
Technology Centre (MNTC). Considerable effort also continues to
be applied to establishing the new ESA Space Centre which was
launched formally by Lord Drayson in July 2009 and also a directly-related
new International Space Innovation Centre (ISIC), for which various
funding streams are currently being investigated.
In addition to the STFC strategic oversight
of both campuses, very regular network meetings are held at both
sites with numerous internal and external public-and private sector
agencies in which updates are provided regarding the progress
and offerings of both campuses. As a result, there have already
been several examples of added-value collaborative activities
involving both campuses and external collaborators, for example
relating to the development of advanced miniaturised mass spectrometer
systems in the MNTC at Harwell in support of important applications
identified at Daresbury.
9. What is the view of staff at STFC on the
steps taken to improve employee relations and communications set
out at page 75 of the Annual Report?
We draw the attention of the Committee to the
comments in the Investors in People report of December
2008 (previously supplied). In addition, a contract has recently
been agreed with an external provider to undertake a comprehensive
staff survey to measure the effectiveness of internal communications
processes and channels. The results are expected before the end
of this calendar year, and will be used to design further improvement
in internal communications.
10. Why have services (at page 89) increased
from £45 million in 2007-08 to £53 million in 2008-09?
The £8 million increase in services is split
between STFC (£6 million) and DLS (£2 million) as STFC
consolidates 86% of the DLS financial results in its annual accounts.
The main reason for the increase in the STFC service expenditure
is due to SSC service level agreement payments in respect of procurement,
IT services and management fee, approximately £4.4 million
11. What is STFC's estimate of the total
costs of decommissioning the Synchrotron Radiation Source?
STFC's 2008-09 accounts give a figure of £27.6
million for SRS closure, including the costs of decommissioning.
The current estimate of the decommissioning costs is £7.6
million, of which £4.2 million will have been spent by the
end of 2009-10. We have recently decided not to proceed with the
demolition of the SR buildings, for which the estimated costs
was £2.5 million, to leave open the possibility of these
being used as part of DSIC developments.
12. The Committee requests a note setting
out the level of End Year Flexibility the Council could call upon
at the start of the year 2008-09, the amount drawn down during
the year and the balance carried forward at the end of the year
STFC's EYF (near cash, non cash and capital) figures
for 2008-09 were:
| EYF 1 April 2008||25.785
|2008-09 published allocation||693.457
|2008-09 provisional outturn||689.337
|EYF 1 April 2009||29.905
Science and Technology Facilities Council