1 Introduction
Background
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 http://etext.virginia.edu/etcbin/toccer-new2?id=CarSnar.sgm&images=images/modeng&data=/texts/english/modeng/parsed&tag=public&part=all
p64 Back
5
For example, "The Penguin Social History of Britain: English
Society in the Eighteenth Century", Roy Porter, Penguin,
April 1990 Back
6
http://www.nationalarchives.gov.uk/cabinetpapers/themes/policy-protectionism-imperial-preference.htm
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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