Spending Review 2010 - HC 618Written evidence submitted by ADS (SR 30)

SCIENCE & RESEARCH BUDGET ALLOCATIONS 2011–12 TO 2014–15

A|D|S is the trade association representing over 2,600 UK companies in the Aerospace, Defence, Security and Space industries. A|D|S has offices in England, Scotland, Northern Ireland, France, the Middle East and India.

The UK is a world leader in the supply of Aerospace, Defence, Security and Space capabilities and services. These high-tech wealth-creating industries make up 23% of UK advanced manufacturing, have an annual turnover of £60 billion and employ over 500,000 people in businesses of all sizes throughout the UK.

These high-value manufacturing and services depend on new technologies being pulled through to market from research, and on the supply of skilled and talented individuals, not only as graduates but also as collaborators in the research work that takes place between universities and business. The catalysts for this “innovation life-cycle” are large scale technology demonstration programmes that draw on research and technology, and integrate and demonstrate them at the systems level, as part of integrated, coherent and collaborative National Strategies such as the National Aerospace Technology Strategy (NATS) and National Space Technology Strategy (NSTS).

A|D|S welcomes this inquiry and the opportunity to make its input into the Science & Technology Select Committee’s call for evidence.

1. Impact of Science & Research

1.1 A|D|S welcomes Government’s commitment to ring-fence Science investment but is ultimately concerned about the impact on our industries of what constitutes a 5–6% cut in real terms over the Comprehensive Spending Review (CSR) period. This is in contrast to the United States where the Administration is seeking an annual budget for the National Science Foundation in 2012 that is 13.0% higher in cash terms than the 2010 figure. This is a very different outlook when compared to the UK science budget which will be 6.7% lower in cash terms in 2012–13 compared with 2010–11, this puts at risk important research programmes.

1.1.1Investment in Science and Research today will ensure that the UK maintains its cutting edge capabilities in Aerospace, Defence, Security and Space in the decades beyond.

1.1.2Investment in Science and Research has made the UK the largest Aerospace sector in Europe and the second largest in the world after the USA. The UK is a world leader in the manufacture of aircraft wings, and has a 35% market share in the sale of engines. Similarly, investment has made the UK Defence industry the largest exporter of Defence and Security products to the United States and the largest global exporter amongst European Union Member States.

1.1.3Science investment needs to be supported as part of the wider growth agenda and to encourage an innovation climate, where research can be efficiently brought to exploitation. This is best done by aligning research with national strategies such as the National Aerospace Technology Strategy, which has been a successful partnership between Government, Industry and Academia, in defining research pathways that lead to the development of competitive products and exports that bring economic growth and sustain jobs in the UK.

1.1.4The impact of Science can only be maximised if other components of the innovation climate, such the Technology Strategy Board (including Technology and Innovation Centres and R&D Tax Credits, are supported at the right levels. Anything less risks the timely and efficient maturation of science into innovation, new solutions and exports, affecting future growth prospects.

1.1.5Cutting science spending and the lack of a Science funding growth plan beyond the CSR period, risks unravelling this innovation lifecycle by cutting the pipeline that feeds these latter processes.

1.1.6Investing in Science can lead to cost reductions greater than the immediate savings. One simple example being that meteorological research saves money in the longer term if it helps to mitigate environmental damage. The point here is that research investment can not only create returns (as is the more obvious point) but can also save having to spend money unnecessarily.

1.2 A|D|S agrees that Research and Funding Councils should focus investment research that supports the growth agenda. The most effective investment is in areas where a market opportunity is clearly defined and where the UK already has a successful base of expertise. Such an approach will prioritise programmes that can be shown to translate into jobs, exports and economic growth for the UK.

1.3 The most efficient starting point to ensure maximum value from research is for Councils to align investment decisions on research with national strategies that are linked to business opportunities. One such example is the National Aerospace Technology Strategy, which defines the technologies that UK companies need to develop for future global programmes worth some $3.6 trillion.

1.4 A|D|S welcomes the commitment by the Government to retain investment in university research clusters and to strengthen engagement between the research base and industry.

1.5 The sectors that A|D|S represents are primarily affected by the changes in the Engineering and Physical Sciences Research Council (EPSRC) budget.

1.6 To ensure the future competitiveness of ADS sectors, A|D|S believes that Science and Research investment has to increase in the long-term, otherwise, our market share is at risk.

1.7 Despite financial pressures, the long-term nature of research necessitates a growth plan that spans multiple Parliaments. The current freeze is in effect a real-term cut at a time when Science spending plans of similarly developed countries is rising. A long-term outlook that shows growth will be attractive to international investors, particularly for the UK to attract new investment.

1.8 A|D|S is also concerned that the existing degree of uncertainty and real-term cuts, that it will be difficult to attract students to Science, Technology, Engineering and Mathematics (STEM) subjects. This could play out as a vicious circle which erodes the science base—making the UK a much less attractive place to invest for global businesses.

2. Engineering and Physical Sciences Research Council (EPSRC)

2.1 The EPSRC’s budget will be cut by 12% in real terms over the CSR period. Its capital expenditure will drop by £25 million. This equates to around half its current budget in this area, with its research grant funding falling by £61 million through to 2015.

2.2 Engineering and laboratory intensive courses employ more university resources than courses in the arts and humanities. This taxes the capital expenditure budget of universities, particularly those that have chosen to maintain or grow their engineering and science offering. Combined, a falling intake and financial constraints would result in the pressures to close engineering facilities that are not economically viable.

2.3 Universities are already taking decisions to close labs and facilities. Most concerning is they are taking them independently of one another. There is a risk of critical facilities being closed under this pattern that will damage UK competitiveness. Industry proposes that a “UK National Strategy for Engineering Infrastructure” is required to identify facilities vital to UK competitiveness, ie, those that are needed to deliver national Strategies such as NATS and support large-scale technology demonstration activity, with a view to insulating them from further erosion.

2.4 EPSRC is conducting a review of facilities, but ADS recommends that a more strategic approach is required, as is greater partnership with industry, so that nascent technologies that are necessary for future technologies are clearly identified.

2.5 Industry notes that as EPSRC creates ring-fenced funding for a particular issue, many universities, understandably, chose to initiate their involvement to secure a slice of the available funding. This approach does however lead to duplication and waste. For example, there are 60 Nanotechnology Centres in the UK, it is questionable as to whether all are needed. Research councils must play a much greater role, with industry engagement to ensure best exploitation, in setting out a strategy for research in high priority areas.

2.6 A|D|S recommends that Government consider increased, stable funding for long-term, large collaborative Centres. This would be an efficient way of using resources and ensure that the relevant parties best come together to collaborate. A good example is the Advanced Simulation Research Centre (ASRC) in the South West that brings together industry and academia around strategically important, exploitation driven, multidisciplinary research, that benefits multiple sectors (eg rail, marine, aerospace, wind energy in the case of ASRC).

2.7 ESPRC has indicated that over 2011–15, it intends to increase its engagement with industry. A|D|S welcomes this, but would caution that the current success rate of grant proposal is around one in six and likely to be even lower with financial pressures. It is difficult for industry to sustain support (eg support to writing proposals, committing data/facilities/expertise). A|D|S proposes that mechanisms are put in place that would only allow quality proposals through and would be happy to propose models to the Department for Business, Innovation and Skills (BIS) and ESPRC.

2.8 A|D|S believes strongly that getting value from research is not just about Government investment levels, although this remains an important feature. One of the features of the advanced engineering sectors A|D|S represents is the very strong interaction between public and private investment. Industrial R&D is made possible and multiplied by public funding research and innovation. Cutting public funding for research lessens the private-sector’s confidence to invest, which will ultimately hurt UK economic growth, exports and jobs.

3. Haldane Principle

3.1 The Haldane Principle means that decisions on individual research proposals are best taken by researchers through peer review. The Government has indicated that it is in support of the Principle, and industry is too.

3.2 Industry supports the Haldane Principle which frequently leads to curiosity-driven research. However, where research claims to be exploitation driven, it should be aligned to National Strategies wherever possible. For example, Aeronautics research that claims to be market-driven, should be demonstrably align to the National Aerospace Technology Strategy, which is a joint strategy between industry and government.

3.3 While A|D|S is supportive, philosophically, of the Haldane principle, it is recommended that it is applied transparently. One way to achieve this is for Government to publish its rationale for its allocations to the various Research Councils. For example, if Government is fully supportive of a manufacturing sector-led economic recovery and re-balancing—a sector that relies heavily on innovation in engineering—one might expect the EPSRC to be supported well as a result.

May 2011

Prepared 7th November 2011