Various Documents considered by the Committee - European Scrutiny Committee Contents

8 Innovation Union



COM(10) 546

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Commission Communication: Europe 2020 Flagship Initiative — Innovation Union

Commission staff working document: A rationale for action

Legal base
Document originated6 October 2010
Deposited in Parliament11 October 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 25 October 2010
Previous Committee ReportNone
To be discussed in Council25-26 November 2010
Committee's assessmentPolitically important
Committee's decisionCleared


8.1 In June, the European Council agreed a new European Strategy for Jobs and Growth — the Europe 2020 Strategy — which included the following "EU headline target":

" — improving the conditions for research and development, in particular with the aim of raising combined public and private investment levels in this sector to 3% of GDP".

Innovation Union is one of seven "flagship initiatives" proposed by the Commission to implement the Europe 2020 Strategy. According to the Commission, R&D spending in Europe is below 2%, compared with 2.6% in the US and 3.4% in Japan, mainly because levels of private investment in Europe are lower. Knowledge and innovation are the essential drivers of future growth, but depend on high quality education, a strong research base, optimal use of new information and communication technologies and a more business-friendly environment that encourages innovation.[20]

Commission Communication on Innovation Union

8.2 The Commission's Communication seeks to place innovation — in products, services, business and social models — at the heart of the Europe 2020 Strategy. The Commission says that innovation "is our best means of successfully tackling major societal challenges, such as climate change, energy and resource scarcity, health and ageing" while also strengthening the EU's international competitiveness and capacity to create new jobs at a time when public expenditure is significantly constrained. The Communication promotes a "strategic approach to innovation … where all policy instruments, measures and funding are designed to contribute to innovation, where EU and national/regional policies are closely aligned and mutually reinforcing and … where the highest political level sets a strategic agenda, regularly monitors progress and tackles delays".[21]

8.3 The Commission identifies ten strategic goals for establishing a genuine Innovation Union by 2020. These are:

  • more investment in education and R&D;
  • reform of existing EU and national research and innovation systems to improve performance and value for money and avoid fragmentation;
  • reform of education systems, especially universities, to attract world-class talent;
  • greater mobility for researchers and innovators within the EU by establishing a European Research Area by the end of 2014;
  • simplifying access to EU funding for research and innovation and making better use of public funding to lever private sector investment;
  • enhancing co-operation between the scientific research community and business;
  • removing barriers which make it harder for innovative ideas to be brought to the market;
  • developing European Innovation Partnerships which bring together a variety of stakeholders (covering, for example, R&D, finance, business and marketing) to pool resources to tackle a specific major societal challenge, such as energy security, climate change, or active and healthy ageing;
    • exploiting areas of existing strength, such as design and the creative industries; and
  • engaging more with international partners by, for example, opening up R&D programmes to highly qualified third country academics, researchers and innovators.

The Commission estimates that meeting the target of spending 3% of EU GDP on R&D by 2020 could create 3.7 million jobs and increase annual GDP by close to €800 billion by 2025.

8.4 In addition to the ten strategic goals, the Commission identifies 34 "Innovation Union commitments" to be undertaken by the Commission and/or Member States which are designed to:

  • strengthen the knowledge base and create a unified European Research Area;
  • get good ideas to market;
  • ensure that the Innovation Union encompasses all of the EU's regions;
  • pool resources through the creation of European Innovation Partnerships; and
  • put in place strong monitoring mechanisms to make the Innovation Union a reality.

8.5 Specific initiatives proposed include:

  • a Commission Communication in 2011 on the reform and modernisation of higher education, to include proposals for an independent international ranking system to benchmark university performance and the creation of "knowledge alliances" to enhance business-academia collaboration;
  • Commission proposals in 2012 to remove obstacles to cross-border mobility and co-operation for researchers;
  • Commission proposals to improve access to finance, including closer collaboration with the European Investment Bank to encourage private finance and fill gaps in funding for research and innovation, as well as possible legislative measures to enable venture capital funds to operate and invest freely within the EU;
  • a mid-term review in 2011 of the framework for state aid for R&D to clarify which forms of innovation may be supported;
  • legislative proposals in 2011 to ensure that the procedures for setting standards keep pace with, and foster, innovation and interoperability;
  • the creation of public procurement markets across the EU for innovative products and services which improve the quality and efficiency of public services, with Member States setting aside dedicated budgets for this purpose from 2011;
  • presentation in 2011 of an "eco-innovation action plan" to use innovation to tackle environmental challenges;
  • establishment of a European Design Leadership Board and a European Design Excellence Label in 2011 to enhance the role of design in innovation policy;
  • adoption of an EU patent and the development of proposals in 2011 for creating a European knowledge market for patents and licensing to bring innovative ideas to the market;
  • better targeting of structural funds to focus on innovation;
  • the launch, in 2011, of a major research programme on public sector and social innovation, accompanied by a pilot European Public Sector Innovation Scoreboard to benchmark public sector innovation;
  • better use of the European Social Fund to promote social innovation, including the launch of a European Social Innovation pilot to enable innovators in the social sector to network and exchange expertise;
  • the launch in 2011 of a pilot European Innovation Partnership on active and healthy ageing which will seek, by 2020, to extend by an average of two years the number of healthy years lived; and
    • the establishment of a European Research and Innovation Performance Scoreboard to record the progress made by Member States against a range of innovation indicators.

The Government's view

8.6 In his Explanatory Memorandum of 25 October, the Minister for Universities and Science (Mr David Willetts) says that:

"The Government broadly welcomes the scope, analysis and level of ambition within Innovation Union, notably the focus on private-sector led innovation to spur sustainable growth while addressing major societal challenges. The Communication correctly identifies the fundamental importance of innovation — in its broadest sense — in driving sustainable growth. While research features prominently as an essential building block for innovation, it makes a persuasive case for the importance of non-technological innovation, for example new business models, design, services and social innovation".[22]

8.7 The Government considers that EU-level action could "add value" in a number of areas, notably by helping to leverage more private sector finance and scaling up investment funds available to innovative SMEs, as well as by encouraging the public procurement of innovative products. The Government supports the Commission's proposed pilot European Innovation Partnership on active ageing but emphasises the need for clear governance arrangements and simple, flexible and efficient mechanisms to ensure the proper co-ordination of supply-side and demand-side measures.

8.8 The Minister says that UK structural funding programmes already focus on research and innovation but Member States should retain the freedom to ensure that future funding programmes "support Member States' own policies and are aligned with their own delivery mechanisms".[23] He notes that the Commission may propose legislative measures to implement some of the ideas contained in the Innovation Union Communication and that these must be subject to a rigorous impact assessment, conform to better regulation requirements and "think small" principles. Legislative proposals will be considered "on their merits", and the Government will seek to ensure that they do not infringe national competence in areas such as training, tax and research policy. The Minister indicates that proposals to develop a new knowledge market for patents and licensing will require a full cost/benefit assessment and adds that the Government does not consider the development of a new global ranking system for universities to be a priority.

8.9 While the Minister notes that the main focus of the Commission Communication is to establish a framework to encourage and support innovation through the realignment of existing schemes and mechanisms, he adds that some of the ideas may involve commitments from the EU budget and/or future legislation. He says that the November Competitiveness Council is likely to adopt Conclusions on the Communication and will have an important role to play in promoting sustainable economic growth and monitoring the implementation of the ideas contained in the Innovation Union Communication, but that "this should not be at the expense of a more strategic monitoring of Europe 2020 as a whole".


8.10 We note that Innovation Union is one of seven "flagship initiatives" proposed by the Commission to implement the Europe 2020 Strategy for Jobs and Growth. It contains some ambitious ideas which, if realised, could provide an important stimulus for sustainable economic growth within the internal market and, for that reason, we think it merits a Report to the House. However, as we observed in our Report on another flagship initiative — Youth on the Move — the broad scope and generality of the Commission's Communication make it difficult to discern where the boundary between EU and national action lies.[24] While we are content to clear the Communication from scrutiny, we shall seek to ensure that any future legislative proposals resulting from it do not encroach on areas of national competence and are a necessary and proportionate means of achieving their stated goals. We will also subject to careful scrutiny any proposals that involve additional expenditure by Member States or from the EU budget.

20   See Commission Communication on Europe 2020: A Strategy for smart, sustainable and inclusive growth, COM(10) 2020. Back

21   See Executive Summary, p.2 of the Commission's Communication. Back

22   See Minister's Explanatory Memorandum, paragraph 19. Back

23   See paragraph 23 of the Minister's Explanatory Memorandum.  Back

24   See HC 428-iv (2010-11), chapter 8 (20 October 2010). Back

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