Science and TechnologyWritten evidence submitted by the United Kingdom Science Park Association

1. The United Kingdom Science Park Association, was created in 1984 and represents some 70 science parks in the UK, and is home to over 3,300 technology based firms, many of which have developed as a result of offering an appropriate innovation environment for the commercialisation of research arising from our Universities, our research institutions and from the private sector.

2. Research demonstrates the value of our members’ science parks in terms of their contribution to the commercialisation of science and technology, and in supporting the formation and growth of high growth, knowledge based firms. In their recent study on the impact of the Knowledge Economy, The Work Foundation made it clear that the Knowledge Economy is crucial to future economic growth whilst Government has recognised the importance of the work taking place on UKSPA Member locations such as Norwich Research Park, Babraham Research Campus, Harwell Oxford and Birmingham Science Park Aston in a number of recent visits and announcements.

3. Most Innovation Centres and Incubators on and off science parks are not set up as primarily profit making enterprises, even when privately funded; but use surplus funds to provide business support to early stage entrepreneurial businesses. The funding is used to support knowledge transfer and to enable SMEs access to venture capital through angel networks. Historically science parks have been leaders in facilitating the flow of IP rich spin outs from universities and other such institutions.

We believe that specialised accommodation, and business and innovation support from science park management is vital to the successful commercialisation process, and we view this as a form of investment in our tenant companies. The current legislation on business rates is simply removing this investment and thus hampering our efforts to commercialise research.

4. Our Association now has serious concerns about the current rating arrangements on our science parks, and the damaging effect these regulations are having on the efficient development of the knowledge economy.

5. The legislation introduced under the last government in relation to void rates has proved to be a significant challenge to science parks at a number of levels. Our Members are now having to bear substantial additional costs, which in turn is making it increasingly difficult to maintain vital innovation support services for our clients.

6. Innovation-Led incubators operated by most science parks are run as single buildings with a single rate assessment, rather than individual units within these incubators being individually rated. Members therefore have to pay full rates on vacant units.

7. Those incubators with individual suites that are rated independently also have to pay full rates after three months, so gain little from this concession. The costs on vacant units both compromise the ability of these centres to fund necessary innovation support services, and also mitigate against science parks keeping some space vacant available in order to provide early stage companies with grow on space at a critical stage of their development.

8. One of the important additional features of science parks is our offering of highly serviced grow on space that offers space to revenue generating companies in a very early stage of development as they emerge from the early phases of knowledge commercialisation. The provision of space generally referred to as “grow on” space, and good post-incubation after-care is often absolutely vital to the success, or failure of these companies. This grow on space by-and-large exceeds the small business rate relief, so provide no help to these critically important companies that are trying to compete on a global stage and build a future for our economy.

9. In the opinion of the members of our Association, there are three issues to address:

(a)The 2007 rating list for many science parks reflect a time in the economic cycle when rents were high and that has translated into high rateable values. This has increased the cost of carrying vacant units up to a point where the original objectives of science parks are being compromised, and our Members will increasingly have to take any company into their centres to avoid financial failure. The prime space for research commercialisation is therefore being eroded, and will continue to be so under the current arrangements.

(b)Science parks are being compromised in a more fundamental way because the demand to pay vacant rates on these relatively fragile centres, which have a wider stated purpose than simply property initiatives, is making them unsustainable.

(c)In relation to business incubators these are usually rated as single buildings, which means the current small business rate relief system does not apply, and for those companies that have grown and moved into larger premises on science parks the level at which current relief comes into effect is too low.

10. With the current rating arrangements there is a very real danger that the profile of companies our Members accept onto their parks will become diluted as the pressure to fill space with any type of company increases. UKSPA Members have contributed enormous value to the commercialisation of research over the last 30 years, but feel that as a result of a generic rating policy, our previously valuable innovation space is being slowly converted into industrial and business parks status, no different to other generic business centres.

11. In a welcome bid to improve the economy, the coalition government decided to bring back a reformed version of enterprise zones. Such zones can benefit by up to a 100% discount on business rates, and we believe some of the fundamental reasons why the government decided to do this are demonstrate in the points above. An obvious extension to this policy should be to offer the same level of relief to quality assured Science and Technology Parks within membership of UKSPA.

12. UKSPA Members are ready, willing and able to make sensible alternative proposals that will make a significant difference to the commercialisation of research for the next 25 years, but to do so Her Majesty’s Government must recognise the value our science parks offer fledgling technology based firms, and be prepared to take action to resolve what could rapidly becoming a crisis in our sector.

January 2012

Prepared 11th March 2013