Science and TechnologyWritten evidence submitted by the Smart Club for the East of England (SCEE) Committee

We are concerned that the current way the Technology Strategy Board (TSB) is administering Smart grants is actually hindering innovation in SMEs.

1. Our prime cause for concern is the length of time it is taking from submission of application to being able to start projects—We have yet to find anyone who has started in under 5.5 months, and a number for whom it has taken six months, including a Proof of Market grant which should be the fastest of all.

2. We believe this reflects the corporate business experience of those in the TSB who have big company backgrounds where six months is often quick for decisions whereas it is completely unacceptable for SMEs whose timelines are always much tighter. Co—funding offers are usually time—limited and six months is generally the maximum allowed.

3. As a result there is a possibility that less than half the £20million budgeted for support to SMEs in this financial year will be claimed indicating a major shortfall in the government’s support for innovation. (Smart has consistently been shown to be the most effective and efficient way of helping British companies innovate).

4. The success rate has steadily fallen from circa 40% to 10%, ie over 90% of applications are going though the assessment process only to be rejected, a considerable waste of resource.

5. The decision to have deadlines for applications “the only way we could control the budget” also puts strain on the TSB, the applicants, and the innovation support industry—peak demands for quotes from subcontractors, for helpers and advisors (the latter resulting in rushed applications). It also appears to have failed its declared objective, see paragraph 3.

6. Again this is wasteful and inefficient, however more importantly perhaps it prevents good practice being instilled into SMEs in terms of good project planning ranging from “have we properly defined the market opportunity and therefore know what the end point will be in terms of product or service”, to detailed planning, cost estimation, proper protection of IPR, better understanding of the challenges/risks etc.

7. Typical Timeline details:

0 weeks

Deadline for applications using TSB “Large Company” form.

5 weeks

Applicants advised by email if they have been successful.

8 weeks

Unsuccessful applicants given “feedback”, most of which is taken directly from the TSB’s advisory notes and does not form constructive feedback—indeed is often complimentary.

10 weeks

Applicants receive 41 page Conditional Offer—this requires more details on project plan, project cashflow, exploitation plan, and company finances/source of matched funding.

12 weeks

Most of the companies we have been in contact with claim to have responded to this within two weeks.

14–16 weeks

Project Mentor appointed—the time taken has varied from applicant to applicant, weeks their understanding appears to vary considerably as does the amount of dialogue back and forth also, hence it appears to be taking another 10 weeks or more to agree a start date and so for projects to commence.

24–26 weeks

Project starts.

A prime reason for this appears to be an arrogance in the TSB that they could abandon the best practice built up by the RDAs (who in turn had to learn after they ignored DTI best practice), and abandon a simple filtering form, going instead for a form that is designed for large businesses and falls between the previous filtering form and full application (thereby requiring further clarification after conditional approval).

At each stage there is extra work and extra delay, costing money at a time when everyone else is having to make cuts.

Recommendations

Short term

1. The TSB should adopt a screening process, accepting applications at any time, ask applicants who appear to meet the criteria to complete a more detailed application form so that if approved the projects can start quickly as there are few outstanding issues.

2. There be no deadlines for full applications and that the approval be done on a monthly basis which ought to spread the load and make it easier to budget.

3. The current allowance of £5,000 for protection of IPR generated during the course of a project should be at least doubled to enable applicants to protect their technology both in the UK and overseas through a PCT; the current figure only enables a single patent to be filed in the UK.

4. The TSB, and other government organisations should stop second guessing the future, any project that meets the criteria (“risky” new technology, a project team with either the appropriate technical and management expertise or access to such, a clear understanding of the market opportunity and how to exploit it), should be supported irrespective of the technology.

5. The plethora of grants etc. should be simplified.

Long term

1. The TSB should be re-absorbed into BIS so that those administering the schemes become fully accountable to elected politicians.

2. The existing “big business” board of Directors should be retained as an advisory body but complimented with a similar body of individuals with experience of technical innovation in SMEs.

Prepared by Richard Moseley, Secretary of the SMART Club for the East of England on behalf of the committee.

February 2012

Prepared 11th March 2013