Bridging the valley of death: improving the commercialisation of research - Science and Technology Committee Contents

1  Introduction


1.  Victorian England has been portrayed as a golden age of science and engineering.[1] The nineteenth century saw huge leaps in the application of science and resulted in science-driven industrial and agrarian revolutions. Major cities grew on the back of industrial clusters which traded throughout the British Empire: Glasgow (steam locomotives); Manchester (cotton); Bradford (wool); and Newcastle (ship building).[2]

2.  But it was not all smooth sailing. The financially innovative discount house, Overend and Gurney, collapsed in 1866, triggering a wave of company insolvencies.[3] A decade later Lewis Carroll's 'Snark' had its life threatened by a railway share.[4] Ultimately, the heavily skewed distribution of wealth and the extension of the franchise (the second Reform Act was introduced in 1867) made the system unsustainable.[5]

3.  The material destruction and social turmoil of the first World War was followed by the financial destruction of the 1929 stock market crash and the Committee on Finance and Industry (chaired by Hugh Macmillan but reportedly dominated by John Maynard Keynes) was formed by the government to examine what could be done.[6] Its report noted the problems faced by small companies seeking investment and in 1945, at the end of the second World War, the Industrial and Commercial Finance Corporation (ICFC) was established to finance small businesses.

4.  Since 1945 and the formation of the ICFC, there have been various efforts by Government to build on the UK science base. In the early 1990's renewed attention was paid to the potential use of the research base for economic and social development. The research councils[7] were reorganised and the national technology foresight initiative established, under the aegis of an Office of Science and Technology. This began an on-going dialogue between public and private research establishments and end-users to promote wealth creation and technology transfer. Later in that decade the Regional Development Agencies (RDAs) were created; a key part of their role being to further economic development. The RDAs introduced a variety of programmes and incentives to encourage research commercialisation and dialogue between industry and the research base. More recently we have seen the advent of the TSB and the Innovation centres (Catapults) being established with cross party agreement.

5.  In this report we describe how, in the early years of the 21st century major fiscal incentives were introduced to encourage businesses to increase their expenditure on research and development.[8] We focus particularly on the role of the current Government in maintaining and developing these and other policies intended to encourage the commercialisation of innovation.

6.  The UK has a world class science base but there remains a need to attach world class exploitation mechanisms to leverage that research to gain economic benefits. This report considers the issue of the exploitation of research by looking first at the overall framework for innovation in the UK and some of the broad issues that affect the development of policies in this area, then at how government might further encourage the engagement of business with research activity and finally at how general government spending might be used to deliver wider innovation policy objectives.

The inquiry

7.  We announced our inquiry into Bridging the "valley of death", improving the commercialisation of research on 14 December 2011 and issued a call for evidence based on the following terms of reference:

i.  What are the difficulties of funding the commercialisation of research, and how can they be overcome?

ii.  Are there specific science and engineering sectors where it is particularly difficult to commercialise research? Are there common difficulties and common solutions across sectors?

iii.  What, if any, examples are there of UK-based research having to be transferred outside the UK for commercialisation? Why did this occur?

iv.  What evidence is there that Government and Technology Strategy Board initiatives to date have improved the commercialisation of research?

v.  What impact will the Government's innovation, research and growth strategies have on bridging the valley of death?

vi.  Should the UK seek to encourage more private equity investment (including venture capital and angel investment) into science and engineering sectors and if so, how can this be achieved?

vii.  What other types of investment or support should the Government develop?

8.  We received 94 written submissions and took oral evidence from a range of witnesses and organisations; we are grateful to all those who contributed. In the course of our inquiry, we met a range of academics and industrialists engaged in the business of commercialising research. We visited both the Warwick Manufacturing Group within Warwick University and the Advanced Manufacturing Research Centre in Sheffield where we were able to speak with those involved in meeting business needs and tackling fundamental research challenges. We are extremely grateful to both of these institutions for hosting us and providing an invaluable insight into the business of bringing commercial success from academic research.

1   For example, "Age of Wonder", Richard Holmes, HarperPress, September 2009 Back

2   For example, "The First Industrial Nation: The Economic History of Britain 1700-1914", Peter Mathias, October 2001 Back

3  "The Mystery of Overend & Gurney: A Financial Scandal in Victorian London", Geoffrey Elliott, Methuen Publishing Ltd, June 2007  Back

4 p64 Back

5   For example, "The Penguin Social History of Britain: English Society in the Eighteenth Century", Roy Porter, Penguin, April 1990 Back

6 and "John Maynard Keynes 1883-1946 by Robert Skidelsky 2003 ISBN 0333903129 - pp 419-427 Back

7   The first research council, the Medical Research Council, was established in 1920 following a recommendation of the 1918 Haldane Report. This was followed by the establishment of the Agricultural Research Council in 1931 and the Science Research Council, the Natural Environment Research Council and the Social Science Research Council in 1965.  Back

8   These we describe in the report Back

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Prepared 13 March 2013