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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 Annex A.

Annex A

SCIENCE AND TECHNOLOGY FACILITIES COUNCIL: ANNUAL REPORT AND ACCOUNTS 2008-09—STFC'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 the changes?

  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 by EB.

  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 laboratories—www.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 2009-10?

  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 Innovations Ltd."

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 in 2008-09.

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:
£m
EYF 1 April 200825.785
2008-09 published allocation693.457
2008-09 provisional outturn689.337
2008-09 under/(over)spend4.120
EYF 1 April 200929.905


Science and Technology Facilities Council

October 2009





 
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