Conclusions and recommendations
Making the best use of existing capabilities
1. We
are reassured that both the Government and the Technology Strategy
Board (TSB) appear to have drawn on history to identify the problems
with previous initiatives, such as the Faraday Partnerships. (Paragraph
13)
2. We expect that
some existing research centres that are part funded by the Regional
Development Agencies (RDAs) may become a part of new Technology
and Innovation Centres (TICs), but many will not. There is a risk
of losing much of the expertise built up with public resources
over recent years. The Government should have, by now, set out
further details of what will be done to support existing centres
that are losing RDA money in March 2011. The Government should
ensure that in the short-term any changes do not reduce the overall
research and development spend in the regions. In the long-term
it should be the Government's objective to increase the overall
research and development spend at both the regional and national
level. (Paragraph 19)
3. It is imperative
that TICs build on existing centres and expertise. We found a
lack of knowledge in the business world regarding existing UK
capabilities. In assessing potential TICs, the TSB has already
identified a list of nearly 100 centres operating in the UK. We
recommend that the TSB maintain a public list in the form of an
online catalogue of centres that are ready and willing to work
with business, in particular SMEs (small and medium enterprises),
in specific technology areas. (Paragraph 24)
The role and operation of Technology and Innovation
Centres
4. We
welcome the assurance from the TSB that SMEs are at the very heart
of TSB deliberations on TICs in terms of how to provide facilities
with equipment and skills that SMEs can access. (Paragraph 28)
5. We expect the method
of operation of each TIC will adapt to, and therefore vary, to
meet the needs of the sector it is supporting. For example, TICs
operating in sectors which focus on service provision for a particular
industry may operate at higher Technology Readiness Levels than
others. The key issue is that each TIC will need to make the best
use of existing resources in the sector. It follows that the work
carried out in a TIC should reflect both the history of research
in the sector it serves as well as an assessment of future demand
within that sector. (Paragraph 41)
6. We welcome the
list of activities and objectives the TSB has set for TICs in
its prospectus. However, it is not reasonable to expect all TICs
to carry out the full range of activities. Each TIC should adapt
to the needs of the sector it is supporting—by setting a
clear vision, defining its objectives and outlining its method
of operation—quickly and responsively. This should be developed
in conjunction with business and academia. Furthermore, for the
purpose of clarity, each TIC should set out the specific activities
it will, and indeed will not, engage in. (Paragraph 42)
7. We appreciate that
in locating the TICs the TSB and the Government must be careful
not to compromise economic objectives. In an ideal world, there
would be a good regional spread of centres, but this may not happen.
The primary objective—when the TSB identifies which existing
centres in the UK will become TICs—must be the quality of
the science and the economic benefit to the UK. We consider that
a hub and spoke model is useful in connecting existing centres
working on similar areas, across the country. This model will
be a good way to spread the economic benefit of TICs throughout
the UK. Where the hub and spoke model is used, we would like the
TSB to put into place a mechanism by which the hubs are clearly
recognised and empowered so that they can provide leadership to
the spokes. Where existing capabilities do not exist and new centres
are required, it may be more appropriate for the TSB to consider
regional strengths as set out in the regional innovation priorities
table (see Annex 2). (Paragraph 52)
8. We do not comment
on the candidate areas identified by the TSB, nor has the Government.
We simply encourage the TSB to consult widely and transparently
with industry and academia to ensure that the chosen candidate
areas are the correct priorities. (Paragraph 60)
Long-term public sector funding
9. In
the light of the current economic climate the £200 million
over four years for TICs is welcome and provides an acceptable
foundation for this new initiative. It is important that the money
is not spread too thinly and we consider that an initial target
of six to eight centres seems to be sensible. Given the potential
for these centres to stimulate economic growth, we also recommend
that the funding for TICs be reviewed regularly, in order to increase
investment in areas where the results justify it as well as in
areas of emerging technologies in which the UK has developed strengths.
In the longer term, when compared with the level of investment
in Germany, there is a strong case for widening the network of
TICs and substantially increasing funding. (Paragraph 65)
10. The dangers of
centres suffering from a lack of core public funding and becoming
too dependent on commercial income are exemplified by the Faraday
Partnerships. We recommend that the Government provide permanent
core public funding to keep the centres innovative and to give
business the ongoing confidence to invest. If the centres become
self-funded, we fear that the research priorities would be set
by those providing the funding, rather than aligning with strategic
national priorities. Whilst we acknowledge the difficulties in
committing to funding beyond the next election, we consider that
the Government should further investigate whether an innovation
endowment would prove a practical solution to this problem. The
Government should seek a cross-party commitment that gives confidence
to the TICs. (Paragraph 78)
Access to competitive funding
11. There
is already an imbalance in public funding between research and
innovation. We are concerned by the prospect of further reductions
in the core funding of TSB activities. We consider that, when
it comes to innovation, the Government should not expect "more
for less" from the TSB. While it is inevitable that TSB competitive
grants will be in line with the priorities of TICs, it is important
that limited funds for innovation are not monopolised by the TICs.
The Government's and the TSB's funds for innovation have to be
available to those outside TICs, as their work may be the basis
of the TICs of the future. (Paragraph 84)
12. There is a huge
opportunity for TICs to obtain European funding for themselves
and to assist businesses trying to access this money. We conclude
that, from the outset, TICs must have mechanisms in place to enable
this to happen. We agree with the Minister that there should be
a central team in either the TSB or BIS that provides, at the
least, general guidance and assistance to the network of TICs.
We consider that the TSB should ensure that there is a named individual
within each TIC who understands the international funding opportunities
within his or her area, and takes responsibility for liaising
with the central team. (Paragraph 87)
Private sector funding
13. We
conclude that there should be a cap on the amount of private sector
funding each TIC can access in a given year. This will promote
a more creative approach to innovation. TICs should have a clear
objective to follow the "one third, one third, one third"
funding model. We recommend that when a TIC earns the majority
of its income from the private sector it cease being a TIC and
no longer receive core public funding. (Paragraph 92)
14. Like the Minister,
we hope that SMEs' involvement with TICs will strengthen their
financial base and increase lenders' and financiers' confidence
in their commercial prospects. We are pleased that the TSB is
already working with Capital for Enterprise on the TICs initiative.
We encourage the TSB to consult more widely with financial organisations,
including venture capital providers and banks, to ensure that
there are no barriers to SMEs engaging with TICs. We also expect
lenders to engage with TICs to help develop a better understanding
of the economic potential of technologies that SMEs are involved
with. (Paragraph 99)
The operational model
15. The
TSB should coordinate the oversight of the network of TICs. We
conclude that the Oversight Committee should consist of major
players—with expertise in technology commercialisation and
innovation—in business, academia, and from the public sector.
(Paragraph 103)
16. We agree with
the Minister that each TIC must have a very strong business element.
While we understand his reluctance to specify the balance of the
composition of the board, we recommend that, to ensure the interests
of SMEs are fully taken into account, at least one board member
represent small businesses. (Paragraph 108)
17. The successful
launch and operation of TICs will require individuals at the top
of the organisation who are not only talented managers but can
build bridges between business and academia. While it may be going
too far to require chief executives of TICs to be active academics,
we encourage the TSB to help centres find suitable individuals
who are well connected to the relevant research base. (Paragraph
111)
18. We recommend that
the TSB set out details of a preferred business model, including
legal structure, for TICs. This model should draw on the experiences
of existing centres and be capable of amendment as time goes on.
(Paragraph 117)
19. The management
of intellectual property rights will be crucial to an effective
working relationship between TICs, academia and business. We ask
the TSB to set out principles for IP management, including an
outline of current best practice, in its TIC implementation plan
but we reject the need for prescription. (Paragraph 123)
Assessing performance
20. Progress
towards the "one third, one third, one third" funding
model may be slow, especially where new centres are established
that need to build a reputation with business. However, attaining
and maintaining this funding model is a good measure of the performance
of individual TICs in the medium to long term. The "one third"
of funding that is drawn in from the private sector, in particular
from repeat business, will be key. (Paragraph 127)
21. There are a number
of potential short to medium term measures that can be used to
show whether TICs are working satisfactorily. The framework used
by Rolls-Royce to assess its own centres is typical of how a business
will judge TICs. Businesses will want TICs to prove that they
are meeting their needs. The best judge of this will be demand
from businesses for TICs' services, in particular, if they offer
repeat business to TICs. In the longer-term, innovation is notoriously
difficult to measure. As the Minister suggested, the Government
and the TSB must be patient in attempting to assess the success
of TICs. In the light of the long-term importance of this initiative
and of the need to make a convincing case to the Treasury for
increasing investment, we recommend that the Minister regularly
report progress to the House. (Paragraph 132)
Branding and reputation
22. We
recommend that the network of TICs be called "Turing Centres",
after the founder of computer science, Alan Turing. We consider
that this country owes him a debt of obligation for the way in
which he was treated. It is important, however, to remember that
it will take time for TICs to build a reputation. The TSB must
ensure that the brand and the reputation are well managed. If
the centres are effective at doing their work, they will be recognised
across the world by business as being the place to go to innovate
in the UK. (Paragraph 137)
General conclusions
23. The
TICs initiative has been broadly welcomed by all who contributed
written and oral evidence to this inquiry. The promise of £200
million over the next four years from the Government shows a commitment
to working towards a knowledge economy through investment in innovation
and we hope it will command cross-party support. (Paragraph 138)
24. The TSB has made
a good start in outlining the concept of TICs in its prospectus.
We have made a number of recommendations based on the evidence
we have received, which we hope will prove useful to the TSB as
it produces a detailed strategy and implementation plan. (Paragraph
139)
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