Written evidence submitted by One North
East (TIC 63)
INTRODUCTION
1. One North East is the Regional Development
Agency for the North East of England. Since our inception we have
been implementing a strategy based on the region's unique strengths
and economic make up by enabling the generation of growth in new
markets to build on the strengths in our traditional industries.
To do this we have been working with public and private sector
partners to enable the transformation of industry through investment
in innovation and technology infrastructure.
2. Innovation is key to economic growth, retaining
competitive advantage and accessing new markets. We believe that
exploiting the indigenous strengths of the North East in innovation,
enterprise and skills has driven local and UK economic growth.
Continued investment in this agenda where the UK has competitive
advantage will enable the UK to continue to compete with the best
in the world, become the location for new sustainable industries
and deliver substantial private sector job creation.
3. One North East therefore welcomes the proposal
for a network of Technology Innovation Centres (TICs) in the UK
but cautions that economic growth cannot be achieved through investment
in technology alone. Technology is only one component of an innovation
system be it at a local, UK or global level.
4. Declaration of interests: One North East set
up CPI and Narec as Section 5 companies; has invested Single Programme
in their development since their inception; and takes a place
as an Observer on each of their Boards.
What is the Fraunhofer model and would it be applicable
to the UK?
5. The key gap in UK innovation infrastructure
is facilities, finance and expertise to support the translation
of research and development into commercial products and processes;
through programmes to prototype, demonstrate and scale up. This
requires investment in facilities and people that can work with
businesses particularly SMEs, and the knowledge base. This is
particularly important for certain types of industry and for the
North East economy.
6. One North East has been implementing a £200m
innovation and technology programme since 2002 under the umbrella
of the Strategy for Success. One North East's role has been to
provide leadership and work with others to deliver sustainable
economic growth in North East England and as such has invested
heavily in the region's capability to achieve industrial transformational
change.
7. We have been pursuing a sustainable green
economy in the North East and have growth programmes based on
industrial and technological strength in the following areas:
energy and the environment; greening the process industry; healthcare
and health science. In addition design, digital and software have
been key enabling industries. These priorities have been subject
to refinement into niche areas of unique expertise eg electric
and low carbon vehicles, industrial biotechnology, offshore wind
and printable electronics.
8. One North East welcomes the plan to develop
a national model and sees this capacity building across the UK
as an opportunity to enable the UK to compete in high value and
growth global markets.
9. In order to deliver this the UK needs a strategy
and funding programme over a sustained period that spans individual
CSRs. This is essential to enable true economic impact and institutional
change.
10. As the innovation gap indicates these centres
need to sit in the close to market, pre-commercialisation translation
stage. They need to operate at scale and their location needs
to be close to industry.
11. The investment required to take a product
to market is significant and generally led by the private sector.
In our experience of refining our priorities and interventions
it is clear that technology and innovation centres are more important
for some technologies and industries than others.
12. There are market failures in many new and
emerging markets and technology platforms. Where these capabilities
are important, often the principal requirement is for large scale
open access facilities eg process plant, blade testing. This requires
significant and sustained capital investment that SMEs and the
private sector alone will not provide. A point recognised in the
funding model of the Fraunhofers.
Are there existing Fraunhofer-type research centres
within the UK, and if so, are they effective?
13. One North East has been implementing a programme
of investment in Centres of Excellence since 2002. The Strategy
for Success set the framework for these interventions. It was
industry led and informed by a review of industrial and academic
strengths conducted by Arthur D Little Ltd and a review of UK
and international technology and research institutes.
14. It set out North East strategic priorities
for new institutional arrangements to overcome barriers to growth.
To deliver this agenda we have needed to work in partnership with
a number of public and private sector organisations across the
whole of the North East; by aligning strategic priorities and
investment programmes and working nationally and internationally.
15. The core components of the Strategy were
as follows:
- (a) Priorities in areas of North East strength
in academic research excellence, the technology base and industry
- (b) A Science and Industry Council to lead
this agenda in and for the NE
- (c) Centres of Excellence to be created to
be the bridge between research and technology expertise and industry
- (d) A venture capital fund to seed new business
- NStar (now North East Finance)
16. Over the period the region has continued
to prioritise and refine the programme to reflect changes in the
economy, industry, technology and national priorities. The North
East now has two core centres, CPI and Narec, which align both
the North East and UK strengths. They are Companies Limited by
Guarantee set up by One North East under Section 5 of the RDA
Act.
17. CPI and Narec were set up to provide capacity
in the North East to support businesses to develop new products
and processes; to bridge the gap between research and industry;
to address multi-disciplinary issues; and to work with businesses
in the region and attracting others. They were set up because
the North East had a market failure in this space that Centres
of Excellence could address and become national assets located
in the region but with international standing.
18. CPI
is an industrial research centre for the process industries, located
with international companies in one of the largest private sector
research sites in the UK - the Wilton Centre on Teesside. This
centre is central to a network of leading academic research, sustainable
processing (including industrial biotechnology) and high value
manufacturing in Teesside and other chemical industry centres
across the UK and beyond. Printable
electronics is a global market forecast to be worth $120billion
by 2020. The Printable Electronics Technology Centre (Petec) at
CPI is the UK national printable electronics prototyping centre,
aimed at bringing new printable electronics products to market
quickly by working with industry eg DTF and Thorn Lighting.
19. Narec, based in Blyth, is dedicated to advancing
the development, demonstration, deployment and grid integration
of renewable energy and low carbon generation technologies. Narec's
primary focus is on supporting the development of technologies
for the new industries in offshore wind and marine renewables
but they also provide national capability on microgeneration,
high voltage and smart grids. The Centre is located in the North
East in order to be alongside major existing offshore engineering
and subsea industries and leading academic centres including the
UK's largest marine engineering school at Newcastle University.
20. Identifying the location for these Centres
was crucial. The considerations for each were different as they
depended on the individual characteristics of the technology and
industry. Both needed to be located close to industry clusters
and existing research facilities.
21. The initial capacity building phase has taken
us to 2010 and has involved setting up the Centres including governance
structures and the provision of core costs to set up and run their
organisation. It was very important that the Centres understood
their technology, industry and market to invest in the appropriate
capital asset base and attracting specialist and respected individuals
to work at the centre.
22. The role of the Centres was to bridge the
gap between university R&D and innovation in business in the
region; to address the intermediate technology gap. They are also
now doing this for the UK and international markets and are working
in partnership with international centres where there are opportunities
for collaboration eg Narec with NREL and CPI with Fraunhofer.
23. The Centres now have a diverse funding base
and source their income from a range of UK, European and international
bodies. Their financial and business models differ but generally
involve a balance of public funded research, commercial or contract
research and consultancy, and government support (primarily national
and regional). This approach provides a level of sustainability
and flexibility as the centre is not overly dependant on one funder.
This diversity of income streams has taken time to develop from
the start up of the centres, for example commercial income only
can be generated with marketable expertise and services.
24. We have been working in partnership with
national policy makers and delivery bodies such as the Technology
Strategy Board to ensure our programme was set in a national context
and could deliver benefits to the UK; and with other RDAs to ensure
best value from each others investments where activities align.
25. Recognition of the Centres as national assets
was further validated in 2009 when they were named by policy makers,
national industrial boards and strategies as key to the delivery
of technology support to UK industry eg Industrial Biotechnology
(IB) Demo facility at CPI for IB IGT; PETEC at CPI for the National
Printable Electronics Strategy; and the Marine Test Facility at
Narec for the Low Carbon Industrial Strategy.
26. National Government allocated over £60m
SIF funding since 2009 to increase the capability of the Centres
to support the expansion of the asset base and technology offer
by these Centres aligned to national priorities.
27. Centres are a key part of the economic future
of the UK and will underpin the future competitiveness of some
key sectors. This will be achieved through partnership between
business and academia securing R&D programmes at centres;
scaling up of high value activity in small business; and then
securing the UK as the preferred location of the scaling up of
advanced manufacturing business.
28. As a result of this work the North East has
under gone a remarkable transformation as a result of the long
term plan, focus on outcomes and emphasis on the role of innovation
and technology in achieving economic growth. A new economic structure
has emerged, new partnerships formed and new institutions leading
in their respective fields. For example the North East has secured
the manufacture of the Leaf vehicle by Nissan and is rapidly developing
an offshore wind industry with inward investment by the likes
of Clipper Wind and indigenous company growth eg JDR Cables and
CTC Marine.
29. In 2010 the British Library used its data
on patents, trademarks and design rights to research new product
development across the UK. The North East between 2000 and 2009
was ranked at the top of the innovation index, generating more
per person per pound invested in R&D, than any other region.
Businesses in the North East invest an average of £127,982
in R&D per patent, trademark or design right. The research
highlighted as an example the Proctor and Gamble Technical Centre,
based in the North East since in 1957, which employ's 300 scientists
and engineers and produces 50 patents per year for products on
sale all over the world.
30. Challenges remain in sustaining this success
as the North East was moving out of the capacity building phase
of centres into intensive innovation and business development
in particular through supporting the development of new clusters
and supply chains. Government must ensure the UK capitalises on
the significant capital investments made to date, embeds the benefits
in local economies and UK supply chains, and supports flexibilities
in education and skills provision to address the new requirements
emerging from industry.
What other models are there for research centres
oriented toward applications and results?
31. There are a number of international models
to consider in a UK context such as those mentioned in the Hauser
Review, which include Carnots in France, ITRI and ETRI in Taiwan
and Korea respectively and the GTS network in Demark.
32. There are others, such as the VTT in Finland,
which focuses on contract research for businesses, providing specialist
capacity for businesses and using its international network to
supplement its own knowledge base. The TNO organisation located
in the Netherlands, also provides another model, as an independent
organisation that is focused upon providing results focused research
to businesses and government, focused on particular areas of research
expertise.
33. As we have developed and refined the North
East strategy we have reviewed many models to identify characteristics
that can be applied to a new model in the North East. The models
we reviewed included the Fraunhofer, Sophia Antipolis in France,
Cambridge UK, MIT in the US and VTT in Finland. We have also reviewed
international centres in specific markets relative to the North
East eg renewable energy.
34. No one model was applied and no single model
can be transposed to the UK innovation system. Instead the key
characteristics and good practice should be identified and applied
in the context of UK needs and conditions.
35. It is also important for Centres to be international.
They need to be able to compete with their international counterparts,
work with them where opportunities arise and be international
leaders in their fields.
36. There are also research centres in the UK.
In the North East we have supported Centres of Excellence, universities
and their research centres to work together to create a stream
of support for innovation and technology development, from basic
research through to commercial application. For example One North
East has funded some industrial liaison activity at the Biopharmaceutical
Bioprocessing Technology Centre (BBTC) at Newcastle University
and the Durham Energy Institute (DEI) at the University of Durham.
37. It is our view that university led research
centres are an important part of the UK research and technology
offer but are not best placed to lead. TICs should operate closer
to market, operate at scale, be located amongst industry and have
a deep understanding of the industry it serves.
Whose role should it be to coordinate research
in a UK-wide network of innovation centres?
38. The Government has clearly stated that the
Technology Strategy Board (TSB) will lead the delivery of innovation
and technology development activity in the UK, and specifically
the TIC network. One North East believes it is right that a body
independent of Government sets the technology priorities for the
UK and that the TSB is well placed to do this.
39. The UK needs a national framework. This must
recognise the specific nature of each technology, related industry
and its location, the market opportunities and the transformational
impact on the way companies and their supply chains do business.
Not all technologies will need a Centre and from our experience
there is greatest need in capital intensive industries.
40. It is crucial that the co-ordinating body
recognises the location of core technology companies and their
supply chains and the spatial concentrations of the technology
offer. The North East has been doing this in the field of printable
electronics, new and renewable energy and industrial biotechnology;
and has been working with the rest of the North and Technology
Strategy Board to invest in programmes that support the development
of supply chains across regional boundaries.
41. The co-ordinating body will need to structure
itself and its programmes to build capacity and capability in
the UK. It needs to build a critical mass of activity by integrating
their investment programmes and interventions to create transformational
impact. This is essential if the UK is to compete as a nation
in the global market place and to make the most of limited public
funding relative to their international competitors.
42. A UK framework needs to recognise that the
economic benefit of technology will not be derived from investment
in technology alone. Our experience has shown that support is
often bespoke and certainly industry and technology specific.
43. A successful intervention by a centre will
lead to businesses scaling up their activities and creating jobs
within their business. The co-ordinating body must ensure that
their organisation has the capacity to work in partnership with
specific local institutions and organisations to secure these
companies and future private sector investment in the UK. This
partnership is important because to embed the benefits of technologies
and centres the local business environment needs to understand
the growth potential and changing needs of the industry to be
able to provide the support to companies eg high technology premises,
incubation facilities, planning regulations, access to finance,
bespoke training.
44. The co-ordinating body will need to build
on the significant experience in the UK in doing this, in managing
the performance management of Centres and ensuring best value
from the significant public investments in capital to date.
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?
45. A strategic view of the UK research landscape
and how it relates to industry is needed and should recognise
differences in technology, industry and geography.
46. It is suggested that for TICs to maximise
their potential; they must work with appropriate research centres
in universities and other bodies (including Research and Technology
Organisations) and business networks, to integrate the UK offer
with industry need. Business networks will be a very important
part of the new landscape and will include cluster and sector
bodies, examples include NEPIC and NOF Energy in the North East.
47. TICs will need to be closer to market and
more industry driven than Public Sector Research Establishments.
They will need to develop a route to market through all Technology
Readiness Levels that integrates facilities and centres.
Ian Williams
Director of Business and Industry
Lynne Davies
Innovation and Business Development Manager
One North East
2 December 2010
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