Technology Innovation Centres

Written evidence submitted by Universities UK- AURIL joint submission (TIC 77)

Technology Innovation Centres

Universities UK (UUK)

Universities UK (UUK) is the representative organisation for the UK’s universities. Founded in 1918, its mission is to be the definitive voice for all universities in the UK, providing high quality leadership and support to its members to promote a successful and diverse higher education sector. With 133 members and offices in London, Cardiff and Edinburgh, it promotes the strength and success of UK universities nationally and internationally.

Association for University Research and Industry Links (AURIL)

Association for University Research and Industry Links (AURIL) is the largest professional association that represents all knowledge transfer practitioners in the UK, working to ensure that the new ideas, technologies and innovations flowing from their organisations are taken up for the benefit of economy and society.

AURIL and UUK have welcomed the opportunity to respond to this inquiry. For both organisations, the main issues are that, whilst there are independent research institutes which work closely with business, the UK currently has nothing that looks like a Fraunhofer system in terms of volume, scale and approach, and the government does not seem to be committed to funding long term projects of this kind. The scale of proposed investment in innovation activities is welcome, provided that it does not ignore the track record and experience that Higher Education Institutions (HEIs) can demonstrate.

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

The Fraunhofer-Gesellschaft model is that of an applied or industry focused research and development centre on an ambitious scale, funded by a blend of government grants and (a majority of) private sector and government contract support. It is an integral part of the German innovation system and has an annual research budget of approximately €1.6 billion. Of this budget, €1.3 billion is generated through contract research (two thirds is derived from contracts with industry and from publicly financed research projects). One third is contributed by the German federal and Länder governments in the form of institutional funding.

1.1. The Fraunhofer platform encompasses more than 80 research units (including 59 Fraunhofer Institutes) at different locations in Germany, although there are research centers and representative offices in Europe, USA, Asia and in the Middle East. The Institutes are closely aligned with Germany’s research active universities and the Max-Planck Institutes (an independent not-for-profit research organisation) who carry out basic research and host large scale research infrastructures.

1.2. In comparison with the UK, Germany therefore hosts a far more differentiated research and innovation ecosystem with defined roles for each group. In contrast with the German HE sector, UK universities have well developed capabilities in knowledge and technology transfer and excellent relationships with industry, and have been supported in developing these via successive rounds of government support (through mechanisms such as HEIF). Any development of Fraunhofer type structures in the UK environment would have to take account of and adapt to these distinctions in order to complement and augment existing R&D and innovation mechanisms.

1.3. Although the Fraunhofer network could be applied to the UK, there are a number of pre-existing structures and boundaries that need to be acknowledged and taken into consideration in the development of the TICs network. Arguably, there is an embryonic Fraunhofer infrastructure emerging in the UK as a result of successive rounds of Government support through mechanisms such as HEIF and focused innovation funding via the Research Councils. For example, the Advanced Manufacturing Technologies for Photonics and Electronics IKC, funded via EPSRC based at University of Cambridge.

1.4. Any development of Fraunhofer type structures in the UK environment would have to take account of, and complement existing R&D and innovation mechanisms and funding should be deployed in a manner which provides additional investment for some existing structures, and pump-priming for others. Therefore, an element of funding should be ring-fenced for competitive allocation. In addition, a threshold of engagement should be agreed e.g. 30-40% income from industrial partners which, if not secured, results in a proportion of the core funding returned for re-deployment. In essence, embed a financial claw-back system.

1.5. The significant scale of the Fraunhofer network in Germany and the level of year-on-year national investment mean that any UK development would initially be a fraction of the size (assuming the £200 million proposed budget). Only a limited number of specific initial investments could be made on this basis and care should be taken to ensure that funding is not spread too thinly within any UK network.

1.6. In the UK context, there are a number of further considerations that need to be bourne in mind:

1.6.1. Any consideration of the value of the Fraunhofer model needs to proceed from a clear understanding of what purpose such Institutes will serve in the UK. The success of Fraunhofer Institutes as elite organisations which provide a business-focused capability that bridges research and technology commercialisation needs to be understood within the broader environment within which they exist in Germany. Any development of a network of similar institutes in the UK needs to be sensitive to the particularities of this context. Effective implementation will require careful consideration of how a network of institutes will map onto and complement the UK’s current innovation ‘culture’ and its existing ‘infrastructure’.

1.6.2. It is worth noting that the most successful and effective existing research centres in the UK have universities at their centre, such as University of Sheffield’s Advanced Manufacturing Centre with Boeing. We would argue strongly that universities have a central role in the new TICs, no least for the research expertise they can bring, but also as a source of highly-trained people with the capability of bringing a multidisciplinary diversity often absent from independent technology centres or research institutes.

1.6.3. We understand that it has been suggested that the new TICs should house capital equipment that individual HEIs may not be able to afford. This would be hugely costly in t erms of capital, revenue and balance sheet (via rapid depreci ation). In light of the levels of investment proposed, w e would argue strongly that the focus of the new institutes should be on people rather than equipment and costly infrastructure. TICs should look to utilise and build on the sharing of existing infrastructure where possible.

1.6.4. It will also be important to give close consideration to the levels of core funding which will be provided to the new TICs. The new centres would require significant, long-term investment to have the capacity for significant outcomes, which would in itself take some time to build and emerge. They would therefore need a sustainable business model which recognises the level of funding required to develop and maintain the capability of the TIC from both public and private sources. On the latter, it is essential that the new centres supplement core public funding by winning additional income from sources such as contract research, commercialisation and subscriptions as reliance on demand from end users is crucial to encouraging innovation and boosting efficiency. To assist with this objective, minimum targets might be set for engagement (e.g. achieving 40% income from industry within a reasonable timeframe). When establishing this approach, it should be borne in mind that experience of similar ventures in other countries suggest that institutes become focused on the short-term and are ultimately unsustainable if they are required to generate too great a percentage of their revenue from commercial sources.

1.6.5. Care should be taken to ensure that the UK’s design thinking research expertise is taken into consideration when formulating TIC components. This would enable a broader range of universities to engage with the innovation agenda which would greater benefit UK Plc . The UK has, in its diverse HE sector, a real and valuable strength which must be reflected in developing the new TICs, not only housing some very strong world-class research intensive universities but also with institutions with excellent records in innovation and knowledge exchange, as well as niche areas of world-class research. It is therefore essential for the UK global research base to be able to access and utilise the pockets of expertise that exist in a diverse range of institutions without dilution of critical mass funding. Similarly, the new centres should be multi-disciplinary in their total offering – a wide range of disciplines are critical in supporting the new knowledge economy which includes, but is by no means limited to, STEM disciplines.

1.6.6. Within the UK, i t is not clear how the Local Enterprise Partnerships (LEPs) will be able to contribute to the TICs in some areas   , especially if, as in the Greater London area, there is a question about the availability of Regional Growth Funding (RGF) to support development. Until the full extent and range of the LEPs and RGF become evident, the TIC funding and leverage assumptions linked to regional development should be acknowledged, but not incorporated into any funding model until the future is clearer. Whilst the Technology Strategy Board (TSB) should lead the co-ordination of the TICs (see paragraph 4.1), i t is essential that there be a joined-u p national and sub-national innovation strategy (for example, through the new LEPs) to avoid a disconnect between the two approaches.

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

2.1. There are a number of existing UK university research infrastructures that are similar to the Fraunhofer business model, that is, large scale interaction with business. For example, the Advanced Manufacturing Research Centre in Sheffield with Boeing and Rolls Royce is a world-leading research centre dedicated to developing innovative technology solutions for advanced materials, cutting-edge technologies and providing practical solutions to manufacturing problems.

2.2. The Eco-design Centre (EDC) University of Wales Institute Cardiff, conducts international best practice research in eco-design and eco-innovation and support knowledge exchange with industry and other key stakeholders (e.g. educators, policy-makers). EDC undertake applied research; participates in UK and international networks and collaborative projects and international best practice scanning. EDC have been working with Fraunhofer on various levels over the last number of years and are starting a new collaborative FP7 project with them in January.

2.3. Similar facilities operated by the University of Liverpool have benefited from having a physical, rather than a virtual, presence. This provides an opportunity for researchers and businesses to work on projects side-by-side. The ability to undertake short-term work in a flexible manner is important as it helps to build relationships and establish trust between partners. This can be achieved through core funding for post doctorate-level staff capable of delivering large, as well as smaller, commercial projects. A second important lesson is that initiatives will only succeed where there is a focus upon a sustainable area of technology in which the barriers for business to undertake projects themselves are too high. There are of course many further research institutes in the UK working to a similar business model as Fraunhofer institutes, involving both universities and businesses, which are too numerous to list here.

2.4. However, what these centres lack is the long term government commitment to core ring-fenced funding which is fundamental to the sustainability of the Fraunhofer model. Without this, such ventures may represent a potential financial risk to their host institutions if appropriate operational frameworks are not adopted.

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

3.1. A more common model observed in the UK is that of major university research centres backed by significant funding won in competitive processes from RCUK and other sources, working in conjunction with KT support from central or devolved university resources. In particular, the highest quality STEM research activities tend to attract industry contract research, collaboration and co-investment which operate alongside, and are complementary to, basic research support from RCUK (e.g. research funding charities, EU Framework Programmes, etc.).

3.2. This is fundamentally different to the Fraunhofer model, yet has advantages in terms of cross-fertilising industry focused activities with the newest and most cutting-edge research concepts and results.

3.3. Previously, the UK innovation system has also included former Government research facilities such as those of MoD/DERA. In that instance, the loss of specific capabilities, capacity and expertise which followed privatisation and the creation of QinetiQ can be viewed as a key example of why ongoing government co-investment is needed in order to maintain R&D resources of national importance.   

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

4.1This coordination activity should fall to the TSB, which is ideally positioned to take advice from its Knowledge Transfer Networks (KTNs). KTN membership is broad based and includes academic, industry and public sector inputs - all of which have useful experience to offer. The views of RCUK are also key if TICs are to be introduced in a manner which enhances the knowledge transfer activities of the university sector.

4.2 By delivering competitive advantage, innovation centres have the potential to anchor knowledge-intensive activities of globally mobile companies and form part of a wider-ranging innovation architecture within given localities. In this respect, it is essential that consideration be given to how any co-ordinating body will engage at local level to ensure that growth opportunities and the benefits to the UK of location in a given area are maximised; there is also a corresponding imperative that localities establish how they wish to engage with any UK network. The new TICS are likely to be a very strong magnet for inward investment, a factor that should be carefully considered when determining TIC location and specialisation.

4.3 Similarly, Universities UK and the Association for University Research and Industry Links (AURIL) have key experience and expertise in a wide range of structures and frameworks for managing innovation activities and would be pleased to act in an advisory capacity.   

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 Government would need to ensure that the Fraunhofer or TIC offering in the UK is distinct and builds on existing capacity, as opposed to duplicating it. There is also a risk associated with diverting scarce government funds from proven, successful research models, with the risk of disrupting and compromising the relationships and linkages enjoyed with business partners (potentially to the considerable detriment of private sector stakeholders).

5.2 Engagement between a UK co-ordinating body and LEPs will be important; the presence of senior HE representation, as well as business leaders on LEP boards, should therefore be viewed positively. The connection between local growth agendas and UK innovation policy suggests that consideration should be given to how TIC funding may be leveraged against the Regional Growth Fund to maximise economic impact and assist the transition towards sustainable private sector-led prosperity.

5.3 The German model tends to be one dimensional and linked to a particular organisation/institution when the PSREs look to bring various organisations – HEIs/companies etc – together to collaborate often on an interdisciplinary basis e.g. the International Space Innovation Centre (ISIC) at Harwell and the Cockcroft Institute at Daresbury at which the partners are Universities of Lancaster, Liverpool, Manchester, and the North West Development Agency).

5.4 The UK’s academic community has a strong entrepreneurial spirit and this could be harnessed if Institutes provide attractive opportunities for development and career progression. A crucial consideration therefore – beyond the relationship between centres – is how academic staff will view their relationship with the Institutes and what opportunities they will provide for career development. The orientation of UK and institutional performance systems can militate against academics engaging in knowledge exchange activities. The establishment of a high-profile UK network will not alleviate this by itself and should therefore be considered within the context of broader UK HE policy.

Universities UK (UUK)

Association for University Research and Industry Links (AURIL)

6 December 2010