Written evidence submitted by University
College London (TIC 21)
1. What is the Fraunhofer model and would
it be applicable in the UK?
1.1. The Fraunhofer model refers to the organization
supporting application driven research (technology readiness level
4 - 6). There are 80 research units including 59 centres within
the Fraunhofer organization (http://www.fraunhofer.de/en/institutes-research-establishments/)
and these provide a service to industry, the service sector and
public administration.
They have a total of 17,000 employees and operate
with an annual budget of around €1.6 billion. In 2008 the
budget comprised approximately 35% core government/state funding;
23% public funding won from competitive bids, 34% of private sector
funding and 7% from licensing.
1.2 The Fraunhofer model has a strong governance
structure, which ensures a clear strategy in support of national
priorities, but also recognizes the importance of individual centres
having institutional autonomy.
1.3 They have 12 research topics into which the
institutes fit and 12 frontline themes which appear to have been
identified to help shape future priorities. There are 18 innovation
clusters, which are regional groupings of universities, Fraunhofer
Institutes, and private companies. The majority of groups are
based in Germany and there are some areas which have a fairly
high concentration of the institutes/groups (eg Dresden 12, Berlin
8). The centres are typically comprised a minimum of 100 staff,
although some are much larger and they have a minimum annual budget
of around €10 million. In the most recent annual report (2009)
it was noted that there were seven key themes into which a large
cluster of Fraunhofer institutes could be classified (Materials,
Microelectronics, ICT, Production, Life Sciences, Light &
Surfaces, Defense & Security).
1.4 The Fraunhofer also has several international
centres in order to support international collaboration, take
advantage of global markets and enhance the international competitiveness
of German businesses.
1.5 The Fraunhofer network also provides the
infrastructure required to stimulate and support innovation through
education and training of staff, providing a focal point for stimulation
of collaborative research and developing national and international
partnerships.
The benefits of the Fraunhofer structure are:
- Provides a governance structure at a national
level, which supports research at technology readiness level 4-6.
- Stimulates innovation and helps generate intellectual
property and routes to exploitation. In 2009 there were 675 invention
reports, 522 patent applications and 261 patents granted. In 2009
there were 74 spin-off companies on the balance sheet, 14 new
companies established and support for 32 spin-offs.
- Supports training of workforce.
- Promotes transfer of staff from academia to industry.
- Provides services to business in the form of
contract research.
- Creates a national network, identity and brand.
All of these are deemed essential in order to support
a knowledge-based economy.
1.6 Key comments for consideration:
1.6.1 Whilst there is a good case made for the
value of Fraunhofer institutes in terms of stimulating technology
innovation and provision of services, there are no clear metrics
to establish the direct economic impact of Fraunhofer Institutes
on the German economy. Hence it is unclear whether the Fraunhofer
institutes as configured represent good value for money.
1.6.2 The Fraunhofer funding model is heavily
reliant on sustained public funding either through baseline support
or from competitively awarded grants.
1.6.3 The income generated from exploitation
of intellectual property is low at 5-10% of budget.
1.6.4 The governance structure does help ensure
coordination at national level but is complex which may have a
negative impact on emerging areas.
1.6.5 TICs established using the Fraunhofer model
would never be financially independent of state support.
1.6.6 There is a critical need for a National
Network in support of TICs in the UK, but it must be designed
to build on the UK's research strength and maximize the UK's immediate,
medium and long-term economic health. It is unlikely that a simple
replication of the Fraunhofer model would be appropriate for the
UK.
1.6.7 Some of the structures and ideas contained
in the Fraunhofer model are worthy of incorporation into a national
network of TIC, for example regional clusters, thematic areas,
international collaboration.
2. Are there existing Fraunhofer-type research
centres within the UK and are they effective?
2.1 The majority of research centres within the
UK are clearly directed toward fundamental research (TRL 1-3).
These are run are individually or jointly by RCUK, Charities or
HEIs and it is widely acknowledged that the UK has an exceptional
basic research capability and impact in science and technology.
2.2 The Hauser Report (http://bit.ly/bbAlkD)
asserts that in 2008 the UK RDAs and devolved administrations
have committed £150 million to over 50 business-focused TICs
and makes mention of a selection of these including Printable
Electronics Technology Centre (http://bit.ly/dCB4PZ), MediaCityUK
(http://www.mediacityuk.co.uk/), Bioscience Campus Stevenage (http://bit.ly/LIzdW),
Advanced Manufacturing Research Park (http://www.ampuk.com/).
2.3 Despite the significant financial investment
there appears to be no national co-ordination of these and the
other 50 technology centres. There is no common brand, or clear
evidence for exchange of ideas, facilities or communication between
these centres.
2.4 The business model, plans for financial sustainability
and evidence for direct economic impact and effectiveness are
not easily accessible and therefore it is hard to assess the benefits
of these investments.
2.5 One example of a successful technology research
centre is the Medical Research Council Technology (MRCT), which
is the technology transfer arm of the MRC. It has been set up
to help exploit and translate the discoveries from MRC funded
research (currently £355 million per.annum.). Whilst small
in comparison with Fraunhofer institutes it is focused, plays
a national role and has had considerable commercial success with
>£400 million of licensing income. It also provides research
support to MRC scientists and arguably MRCT covers a wider spread
of TRL's than most Fraunhofer institutes might expect to do. However
its business model does not appear to focus on provision of services
for the UK private sector, but rather to develop intellectual
property assets further down the TRL scale and towards commercialization.
It is an excellent example of a successful technology transfer
organization and it differs from the models operating within UK
universities by virtue of having its own research capability.
It may be considered to be a cross between a TTO and a Fraunhofer
Institute.
3. What other models are there for research
centres oriented toward application and results?
3.1 In the UK, University technology transfer
organizations play an important role; however, such organizations
rarely have the staff or funds to carry out developmental research
to progress along the TLR scale from 4 onwards. Usually they work
with the inventors to secure further funding from public or private
organizations in the form of equity investment, proof-of-concept
funds, or translational research awards. RCUK, Charities, TSB,
industry and the VC sectors all play a role in providing finance
in support of this element of translation.
3.2 There is no doubt that there is merit in
developing research centres oriented toward application and results.
However the following key questions need to be considered before
determining the optimum structure of the proposed TICs.
3.2.1 What are the most important outcomes for
proposed Technology Centres?
This question drives the entire agenda of TICs and
needs to be assessed in the light of NESTA's ongoing work on Innovation
Index (http://bit.ly/9tEdKO). If for example the principal
role of the TIC is to develop technology that supports external
businesses and enhances their competitiveness then that suggests
a heavy bias toward a service provision for industry. If however
there is a strong desire to commercialise/exploit intellectual
property to generate new products then this would suggest a different
balance of developmental/translational research vs contract research
and service provision.
3.2.2 What is the business model for sustainability
of TICs?
There are many examples of TICs that enjoy very significant
levels of core public funding and the Fraunhofers have a funding
stream of 30% government funding. Moreover Fraunhofers generate
only 5-10% of their funds from licensing revenues, with the remainder
coming from contract research/service provision. It is notable
that in the absence of government funding these organizations
would be unlikely to be viable. The reliance of the Fraunhofer
Institutes on successfully bidding for government grants for translation
research funding through open competition might result inefficiencies.
Furthermore it would be preferable to see TICs develop ambitious
plans to become less reliant on government funding after an initial
10 year period.
3.2.3 Role of TICs in R & D/Business clusters
or hubs
One of the great opportunities for creation of TICs
is to promote interactions between the knowledge base and businesses
and strong consideration needs to be given to co-location of TICs
into clusters where there is clear research excellence. For example
location of TICs into innovation hubs could provide an excellent
mechanism for TICs to play a key role in promoting innovation
across a range of sectors in which the UK is competitive (Health,
Communication, Creative Industries, Manufacturing). This could
encourage the development of cross-sector collaboration, which
could enhance the global competitiveness of the UK.
4. Whose role should it be to coordinate research
in a UK-wide network of innovation centres?
4.1 This is very clearly a role that should be
overseen by the Technology Strategy Board who are ideally placed
to use existing resources and planning to determine the number,
scale, scope, mission and location of a UK national network of
TICs. The Technology Strategy Board will need to work closely
with UK HEI's, RCUK, Charities, NHS, NESTA, Work Foundation, HEFCE
and the existing TICs to ensure that the UK takes a genuinely
innovative and effective approach. It must be driven by a clearly
articulated vision of the outcomes on the UK economy in the immediate,
medium and long term.
5. What effect would the introduction of
Fraunhofer-type institutes have on the work of public sector research
establishments and other existing research centres that undertake
Government sponsored research?
5.1 This is highly dependent upon the mission
of the proposed TICs, but is likely to be beneficial to public
sector research establishments in that:
5.1.1 There is an opportunity for mission differentiation
between public funded research establishments and TICs. Existing
research establishments should be encouraged to develop close
collaborative links with the TICs and this could be encouraged
through staff exchange, events, specific TIC-delivered funding
schemes.
5.1.2 As long as there remains a clear commitment
to public funding of fundamental blue-sky research then TICs should
enhance the impact of existing research centres.
5.1.3 TICs may encourage interaction between
basic research and industry.
5.2 It will be important that TICs are not established
at the cost of the fundamental research base and careful consideration
will need to be given to the role of the research councils in
funding basic and applied research. It would be inefficient if
TICs and research centres were directly competing for the same
funds.
5.3 There may be competition for industrial research
funds between research centres and TICs, which may not be helpful.
6. Summary
6.1 In summary we are supportive of the concept
of a coordinated national network of Technology Innovation Centres
that support Technology development particularly at the TRL 4-6.
6.2 Careful consideration needs to be given to
the desired outcome of the TICs, i.e. whether it is direct generation
of assets/products, or provision of technical capabilities and
services which enhance the global competitiveness of UK business.
If it is both then an appropriate balance of those activities
needs to be identified.
6.3 Detailed metrics to provide evidence of successful
economic outcomes must be determined.
6.4 A business model for long-term sustainability
needs to be developed. This must include an assessment of the
proportion of UK government funding likely to be required to sustain
the centres. A model leading to the prospect of a high degree
of financial independence is highly desirable. It should be recognized
that some level of financial support from government funding may
need to be maintained throughout the lifetime of the TICs.
6.5 Careful consideration needs to be given to
the structure of governance of the national network. It needs
to be sufficiently robust to ensure adherance to the core aims
of the national network and to reinforce benefits of the brand.
However, it must also ensure that the TICs have institutional
autonomy and encourage the emergence of new TICs and the closure
of unsuccessful/redundant TICs.
6.6. Careful consideration needs to be given
to the balance of activities including: service provision, contract
research, education and training. Assessment of how the TICs will
more effectively deliver those outcomes by comparison with existing
or alternative mechanisms needs to be undertaken.
6.7. The extent to which staff in TICs enter
into competitive bidding processes to win research funding from
public bodies needs to be carefully assessed, as there is a possibility
of significant inefficiency if this becomes a key goal for the
TIC staff.
6.8 There should be an international dimension
for the UK National Network of TICs. Ideally this would involve
a small number satellite TICs operating overseas as in the Fraunhofer
model. As a step towards this the TICs should have an international
programme for inward secondment of overseas science/technologists
into UK TICs.
6.9 There is considerable merit in developing
TIC clusters or hubs which are co-located and which take advantage
of research excellence. They should have the opportunity to provide
space and resources for new businesses to be located. Examples
include the Olympic Park, Bioscience Park at Stevenage and the
Advanced Manufacturing Park along with several others.
6.10 With the funds available it will not be
possible to replicate the Fraunhofer model on the same scale.
There is merit on focusing on a small number of TIC hubs including:
advanced manufacturing; health; cultural and creative sectors;
energy and environment; and security. These hubs should contain
one or more TICs and should provide a focal point for technology
development (TRL 4-6) and be national centres which coordinate
affiliate TICs - working at earlier phases of TRL (2-4). These
affiliate TICs should be supported as centres via research council
initiatives (eg EPSRC IMRCs, IKCs etc).
6.11 The development of TICs should be integrated
into a wider Comprehensive Innovation Review for the next 10 years
as promoted by the Work Foundation (http://www.theworkfoundation.com/Assets/Docs/Publications/CSR%20Submission%20FINAL%2030-9-2010.pdf)
7. DECLARATION
OF INTERESTS
University College London has a wide range of research
interests and is committed to the commercialization of the knowledge
base through technology transfer. Therefore the organization has
a profound interest in the development of technology centres and
would be interested in significant involvement and leadership
many of the possible areas of TIC development, including manufacturing,
medicine and health, digital technologies, creative industries,
energy and environment, security and many others.
Professor Steve Caddick
Vice-Provost (Enterprise)
UCL
1 December 2010
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