Technology Innovation Centres

Written evidence submitted by the National Physical Laboratory (NPL) (TIC 11)

Technology Innovation Centres

Summary of our key points

1. We welcome this inquiry and would like to make the following key points:

i. We welcome the recognition from both the Hauser and Dyson reviews of the importance of Applied or Translational Research work, as this area (typically covering Technology Readiness Levels 4 to 6 [1] ) has received little investment in the UK.

ii. The Fraunhofer Institutes have evolved to fulfil a particular role in Germany and we believe it is neither sensible nor affordable to suppose that the concept can be imported directly into the UK. Rather, consideration needs to be given to how the applied research infrastructure that is already in place in the UK might be utilised more fully for Fraunhofer-type purposes.

iii. The UK infrastructure of public sector research establishments (PSREs) and technology centres is not effectively coordinated: each PSRE and technology centre develops a forward strategy in partnership with its parent department or agency, but this is done largely in isolation from other centres. There are inefficiencies, duplication and gaps in the UK system in terms of investment in specialist facilities and expert manpower. This has resulted in inefficient utilisation and inconsistent achievement of economic and scientific impact. A review – to include the purpose and scope of the PSREs and their relationship to the broader community of independent research and technology organisations (RTOs) and technology centres – is long overdue.

iv. The review should consider whether the UK’s existing infrastructure of publicly-funded centres could be condensed into a smaller number of national laboratories, exploiting more fully their unique facilities, expertise and reputations.

v. The UK must make the most of its existing national technology assets which means:

Ø The government considering PSREs and technology centres as part of a collective national infrastructure, requiring strategic management;

Ø This national infrastructure providing industry with access to an essential range of world-leading specialist facilities, expertise, advice and skills training;

Ø That effective collaboration is realised with academia, industry (notably small and medium sized enterprises);

Ø Ensuring that the ring fence around Research Council budgets does not create a barrier to collaboration with and exploitation through other government-sponsored R&D programmes;

Ø PSREs, RTOs and technology centres are incentivised, like the Fraunhofer Institutes, to attract income from industry;

Ø Government working with PSREs, RTOs and technology centres to make it easier for SMEs to access these assets;

Ø PSREs such as NPL, with a horizontally-themed enabling capability (advanced measurement and standards in the case of NPL) funded appropriately to support the new Technology and Innovation Centres.

About NPL

2. The National Physical Laboratory (NPL) is a leading UK research establishment with an annual turnover of £71m and a staff of 620. It is the largest science asset directly owned by BIS and occupies a unique position as the UK's national measurement institute sitting at the intersection between scientific discovery and real world application. Although sponsored by BIS, NPL undertakes work for nearly half the government departments, notably Defra, DECC, MoD, DH. As such its purpose and function have many of the characteristics of the German Fraunhofer model. Its expertise and original research underpin the quality of life, innovation and competitiveness for UK citizens and business:

· NPL provides companies with access to world-leading technical expertise and scientific facilities, inspiring the absolute confidence required to realise competitive advantage from the use of new materials, techniques and technologies;

· NPL expertise and services are crucial in a wide range of social applications - helping to save lives, protect the environment and enable citizens to feel safe and secure. Support in areas such as the development of advanced medical treatments and environmental monitoring helps secure a better quality of life for all;

· NPL develops and maintains the nation’s primary measurement standards, supporting an infrastructure of traceable measurement throughout the UK and the world, to ensure accuracy and consistency;

· NPL has a world-class reputation for the quality of its science and an unparalleled record in demonstrating innovation and industrial relevance (the value of its measurement work to UK GDP has been estimated at £2B pa);

· Whilst a key strategic asset for government, NPL is operated by Serco through a "government-owned, contractor-operated" (GoCo) model. This has realised both significant efficiencies of operation and improved outputs and impact (with non-core revenue secured competitively in commercial markets tripling since 2004).

Question 1. What is the Fraunhofer model and would it be applicable to the UK?

3. The Fraunhofer Institutes are a network of application-oriented research institutes which, in the German science and technology support infrastructure, bridge the development gap between university-based research and industrial exploitation. Their mission is to "promote and undertake applied research in an international context, of direct utility to private and public enterprise and of wide benefit to society as a whole". They "help to reinforce the competitive strength of the economy in their region, throughout Germany and in Europe".

4. Data published on their own website show that there are 59 institutes with 17,000 staff and a €1,600m annual research budget. One-third of this budget is institutional funding from the German federal and Länder governments (not tied to specific research objectives) and the other two-thirds is contract research income from a mix of private and public sector sources.

5. The Fraunhofer Institutes have evolved to fulfil a particular role in Germany and we believe it is neither sensible nor affordable to suppose that the concept can be imported directly into the UK. Rather, consideration needs to be given to how the applied research infrastructure that is already in place in the UK might be utilised more fully for Fraunhofer-type purposes.

Question 2. Are there existing Fraunhofer-type research centres within the UK, and if so, are they effective?

6. In the UK the role of the Fraunhofer Institutes (intermediate, translational research) is fulfilled, in part, by a range of organisations including:

· Public sector research establishments (PSREs) – variously underpinned by funding from government departments, agencies and research councils – and with different statuses including executive agency, trading fund, NDPB and GoCo;

· The broader community of RTOs – underpinned to a greater or lesser extent by government contracts – and with profit-distributing and non-profit (including member-based) statuses;

· Technology centres – founded and underpinned by funding from public sources including, principally, the Regional Development Agencies;

· Centres linked closely with universities and involving a number of industrial partners.

7. These organisations have diverse missions that may include elements of curiosity-led research and large-scale process demonstration and prototype evaluation, as well as intermediate Fraunhofer-type activities. All derive additional income, to some extent, from the private and public sectors through the supply of services and contract research and participation in collaborative R&D.

8. The GoCo model at NPL has been particularly effective at leveraging benefit from government-sponsored R&D programmes into UK business. NPL has seen significant growth in the uptake of knowledge generated from these government programmes evidenced through a tripling of NPL non-core revenue over the last 6 years (from £8M in 2004 to £24M in 2010).

9. What is notable about the UK system is that is uncoordinated: each PSRE and technology centre develops a forward strategy in partnership with its parent department or agency, but this is done largely in isolation from other centres. Furthermore, such core parts of the nation’s technical infrastructure are rarely considered as strategic assets with long management chains between Ministers and the organisation often in place. The only common influence is the Technology Strategy Board through its widely-disseminated strategy documents and its directed Calls for Proposals for collaborative R&D. There are undoubtedly inefficiencies, duplication and gaps in the UK system, in terms of investment in specialist facilities and expert manpower. There has been no strategic review of PSREs since the 1970s when the Rothschild customer-contractor principle was introduced, and such a review – to include the purpose and scope of the PSREs and their relationship to the broader community of RTOs and technology centres – is long overdue.

10. The ring fence around Research Council grants can be a barrier to collaboration with academic research and its exploitation through PRSEs and RTOs. For example it hinders the alignment of the government-sponsored programmes delivered by NPL with those of the Research Councils.

Question 3. What other models are there for research centres oriented toward applications and results?

9. The United States supports a range of "national laboratories" underpinned by funding from federal sources, notably the Departments of Energy and Defense. The National Physical Laboratory’s US counterpart is the National Institute of Standards and Technology (NIST) which is an agency of the Department of Commerce. These national laboratories have broad remits in nuclear technology, renewable energy, health, defence, security, etc., including a major commitment to application-oriented research, and are variously managed by public and private sector consortia or as government agencies. They are networked into universities, companies and government. The US model has its own inefficiencies but, like the Fraunhofer network, recognises the strategic value of institutions with specialised (often nationally unique) facilities and deep expertise, sustained and deployed on long-term programmes on which both government and business can rely.

10. A review of UK PSREs should consider whether the UK’s existing infrastructure of publicly-funded centres could be condensed into a smaller number of national laboratories, exploiting more fully their unique facilities, expertise and reputations.

Question 4. Whose role should it be to coordinate research in a UK-wide network of innovation centres?

11. At the strategic level, the Government Office for Science has a key role to play, in ensuring that the broader needs of government are served as well as the needs of business. The network of Departmental Chief Scientific Advisors under Professor Sir John Beddington’s co-ordination, has been increasingly successful in examining cross-cutting Departmental issues. The Department of Business, Innovation and Skills (BIS) is clearly well placed to oversee the co-ordination of research across the network of innovation centres. However, it is important that these activities are seen at the heart of government. For example, the Director of NPL’s sister institute in the US – NIST – reports directly into the Secretary for Commerce; NPL’s Director reports through six extra layers with its capabilities to meet the needs of government rarely at the forefront of Department’s thinking.

12. The Technology Strategy Board is the only organisation currently positioned to undertake this role, through its links across government and into the devolved administrations, regional development agencies and research councils and as the principal channel of government funding for innovation-related R&D.

Question 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?

12. Currently the government plans to invest £200m over four years in "a network of elite Technology and Innovation Centres to drive growth in the UK’s most high-tech industries" which will "bridge the gap between universities and businesses, helping to commercialise the outputs of Britain’s world-class research base". Our expectation is that there may be a dozen or so (at most) of these centres.

13. Clearly this will not compete with the scale and scope of the Fraunhofer Institutes and there will be a major continuing role for the work of the PSREs, RTOs and other existing centres, especially in application-oriented, translational research. The new centres should not replicate the work of the PSREs and RTOs. There may be a case for recognising some of the work conducted by existing PSREs as Fraunhofer-type institutes. Thus, NPL (along with its academic and industrial partners) is promoting its Centre for Carbon Measurement as a key enabler to support the low carbon economy and the continuation of London as the centre of the global Carbon market (>£100B in 2009 and predicted to be >£1,000B by 2020); such a Centre would build on the world-class applied science, governance and technical infrastructure already in place and is ideally placed to maximise the impact of additional funding as a Technology Innovation Centre.

14. We believe that the UK must make the most of its existing national technology assets which means:

· The government considering PSREs and technology centres as part of a collective national infrastructure, requiring strategic management;

· This national infrastructure providing industry with access to an essential range of world-leading specialist facilities, expertise, advice and skills training;

· PSREs, RTOs and technology centres incentivised, like the Fraunhofer Institutes, to attract income from industry;

· Government working with PSREs, RTOs and technology centres to make it easier for SMEs to access these assets;

· PSREs such as NPL, with their horizontally-themed capability (measurement and standards in the case of NPL) funded to support the new Technology and Innovation Centres;

· Stronger co-ordination and rationalisation of technology centres to achieve significant efficiencies and critical masses of world-leading applied research capabilities.

Declaration of Interest

15. NPL is managed on behalf of the Department of Business, Innovation & Skills (BIS) under the GoCo model by NPL Management Limited, a wholly-owned subsidiary of Serco Group plc. NPL receives approximately two-thirds of its funding through the National Measurement System sponsored by BIS.

Dr Brian R Bowsher

Managing Director

National Physical Laboratory

30 November 2010