Third Report of Session 2013-14 - European Scrutiny Committee Contents

17   Horizon 2020 — EU funding for research and innovation




COM(11) 809




+ ADDs 1-2

COM(11) 817




+ ADDs 1-2

COM(11) 822

Draft Regulation establishing Horizon 2020 — The Framework Programme for Research and Innovation (2014-20)

Draft Regulation amending Regulation (EC) No. 294/2008 establishing the European Institute of Innovation and Technology

Draft Decision on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT): the contribution of the EIT to a more innovative Europe

Legal base(a)  Articles 173(3) and 182(1) TFEU; co-decision; QMV and (c) Article 173(3) TFEU; co-decision; QMV
DepartmentBusiness, Innovation and Skills
Basis of considerationMinister's letter of 19 May 2013
Previous Committee ReportsHC 428-xlvii (2010-12), chapters 5-7 (18 January 2012); HC 428-li (2010-12), chapter 3 (22 February 2012); HC 86-iii (2012-13), chapter 5 (23 May 2012); HC 86-xi (2012-13), chapter 4 (5 September 2012) and HC 86-xviii (2012-13), chapter 10 (31 October 2012)
Discussion in CouncilExpected in June
Committee's assessmentPolitically important
Committee's decisionCleared

Background and previous scrutiny

17.1  Horizon 2020 is the umbrella term used to describe a package of measures establishing the legal framework and budget for EU expenditure on research and innovation for the period 2014-20. Document (a) establishes the overarching framework for Horizon 2020 and identifies three priority areas for EU funding — excellence in science, industrial leadership, and societal challenges — which are intended to complement and support the jobs and growth objectives of the Europe 2020 Strategy and to meet the strategic goals on investment in research and innovation set out in the Europe 2020 flagship initiative Innovation Union.[71] Detailed rules on implementation and participation in the Framework Programme are contained in separate EU instruments. The first, a draft Council Decision establishing the Specific Programme Implementing Horizon 2020, remains under scrutiny.[72] The second, a draft Regulation setting out rules for participation in Horizon 2020 programmes and the dissemination of research results, was cleared from scrutiny in October 2012.[73]

17.2  The European Institute of Innovation and Technology (the EIT) brings together industry, academics and researchers within Knowledge and Innovation Communities (KICs) to stimulate innovative research and create the critical mass needed to disseminate and exploit the fruits of research. Document (b) proposes a number of changes to the 2008 Regulation establishing the EIT which are intended to give it a distinctive role in implementing the Horizon 2020 Programme by deepening cooperation between a wide range of stakeholders involved in research and innovation. Document (c) proposes a new Strategic Innovation Agenda for the EIT for the period 2014-20. It envisages further substantial investment in the EIT to enable it to support the three existing KICs and to provide seed money for the launch of additional KICs.

17.3  During the course of 2012, the Council has agreed partial general approaches on most elements of the Horizon 2020 package with the exception of the budget. The Government has supported all of the partial general approaches and is content with the overall framework of the Horizon 2020 Programme. Whilst accepting that EU funding for research and innovation should account for a higher proportion of the EU budget, the Government nevertheless considers that the figure originally proposed by the Commission — €87 billion for the period 2014-20 compared with €53 billion for the EU's current R&D Framework Programme for 2007-13 — is unrealistic. The Government has expressed particular concern at the scale of the increase proposed for the EIT, rising from €309 million for the period 2008-13 to €3.2 billion for 2014-20 to support the development of new KICs, and has indicated that it intends to seek significant reductions.

17.4  Further information on the Horizon 2020 package, and the Government's position, can be found in our previous Reports which are listed in the headnote.

The Minister's letter of 19 May 2013

17.5  The Minister for Science and Universities (Mr David Willetts), informs us that the Presidency is keen to secure a First Reading agreement on most of the elements of the Horizon 2020 package (excluding the Council Decision establishing the Specific Implementing Programme) by the end of June. He says that negotiations have focussed on reconciling the Commission's original proposals, the texts on which the Council agreed partial general approaches (PGAs), and amendments put forward by the European Parliament. He expects negotiations to enter a decisive phase in the coming weeks and invites us to clear documents (a)-(c) from scrutiny so that the Government has sufficient flexibility to secure a satisfactory compromise deal.

17.6  The Minister explains that informal "Trialogue" and technical meetings involving the Council, European Parliament and Commission have revealed a large degree of consensus on the technical content of the package. However, no agreement has yet been reached on a number of amendments proposed by the European Parliament. The most significant are the inclusion of:

  • (a) an additional element in the pillar on Excellence in Science entitled "Spreading Excellence and Widening Participation" — this would include various actions currently placed elsewhere in the proposals which seek to enhance the ability of researchers and institutions in less research intensive areas of Europe to participate in Horizon 2020;
  • (b) a new cross-cutting challenge, "Science with and for Society", in the pillar on Societal Challenges;
  • (c) a dedicated SME Instrument in the pillar on Industrial Leadership which would have a single management structure, and an earmarked budget of 4.5% of Horizon 2020 funding;
  • (d) new activity lines within the pillar on Societal Challenges, as well as changes to the budget distribution proposed by the Commission for the various challenges;
  • (e) a "full cost" model for those participating in Horizon 2020 programmes, rather than the flat rate agreed by the Council in its partial general approach on the draft Regulation establishing the rules of participation, and differentiated funding rates for different categories of participants; and
  • (f) a new instrument in the Horizon 2020 Framework Regulation and Regulation on rules of participation, called Fast Track to Innovation, which would involve open calls, a shorter time to grant, and small consortia.

17.7  The European Parliament has also suggested that the Commission's proposal to establish new KICs in two "waves" should be merged into one at the beginning of the Horizon 2020 Programme, and that the EIT should have a dedicated budget line.

17.8  The Minister sets out the Government's approach to the European Parliament's amendments:

"While respecting as far as possible the PGA text, the Government's view is that Council should be prepared to signal a degree of flexibility towards the European Parliament on the majority of the above amendments, especially where they relate to adjustments to the 'architecture' of the programme rather than its content (points (a) and (b)).

"On point (c), the Government could support a modest increase in the earmarked budget for SMEs. On point (d), the Government would oppose the significant reductions proposed to the health and transport budgets in particular (which are areas of considerable UK strength). On point (e), the Government recognises the case for introducing a 'full cost' option, however we need to balance this with the imperative of securing a much simpler administrative system for participants (which the 'flat rate' model offers). On point (f), the Government remains unconvinced of the need to introduce a new instrument, bearing in mind that the whole Horizon 2020 programme should reduce administrative delays experienced in previous programmes. However, the Government proposes to be open to the possibility of introducing elements of the Parliament's amendments, for example in relation to open calls and shorter time to grant within the SME instrument scheme."

17.9  As regards the EIT, the Minister indicates that it should be possible to accommodate the Parliament's preference for a dedicated budget line but would prefer to adhere to the Council's PGA text on two "waves" of KICs as this would be easier for the EIT to handle administratively.

17.10  The Minister underlines the importance of securing a First Reading agreement so that UK universities, research organisations and businesses can plan their activities without any interruption in their funding, but adds:

"Our agreement to any package would however depend on the legislative texts delivering on our overriding objectives which I have described in my previous letters to the Committee: a programme which focuses on excellence and administrative simplification for participants."

17.11  Turning to the budget for the Horizon 2020 Programme, the Minister notes that any decisions remain subject to an overall settlement on the EU's Multiannual Financial Framework (MFF) for 2014-20 which is satisfactory for the UK. He continues:

"As I have explained previously, the PGAs agreed by the Council on the main Horizon 2020 Regulation did not include any budget elements. The Presidency is suggesting a broadly pro rata reduction to the figures in the original Commission proposal of €80bn, in order to fit within the reduced Horizon 2020 budget of some €70bn which emerged from the MFF settlement at the February European Council (which would still represent a real increase relative to 2013 spend). Negotiations on the budget distribution in Council Working Group have recently begun; our priority is to seek to maintain the overall percentage distribution between the three main pillars of the programme (excellent science, industrial leadership and societal challenges) in line with the Commission proposals, as these reflect well the UK's strong and broad-based research strengths. Within each pillar, the UK will seek to protect budget allocations for individual priority areas, which include the European Research Council, new technologies (including aeronautics, energy) which will be key to future growth and support to SMEs. On the other hand, the Government considers that the scale of the proposed very large budget increase for the EIT is unjustified and will seek to scale this back."

17.12  The Minister notes that the European Parliament has tabled a number of amendments concerning the percentage distribution of funding proposed by the Commission and continues:

"While the Government is open to the proposal to earmark limited budgets for actions aimed at 'widening participation' and 'science for/with society', we oppose the substantial reductions proposed for the Health and Transport challenges in the Societal Challenges pillar."

17.13  Finally, the Minister reiterates his request for scrutiny clearance, adding:

"It is in the UK's national interest that negotiations conclude in a timely manner such that Horizon 2020 may be launched in a timely fashion."


17.14  We thank the Minister for providing a further update on negotiations and note that they are entering into "a decisive phase" with a view to securing a First Reading agreement by the end of the Irish Presidency. We recognise the importance of EU-level research and innovation programmes for industry, academia and research organisations in the UK and accept that an agreement which meets the Government's objectives in terms of excellence, administrative simplification, and a more realistic budget settlement will help to ensure continuity of planning and funding.

17.15  We note that the budget for the Horizon 2020 Programme will depend on the outcome of separate negotiations on the EU's Multiannual Financial Framework for 2014-20, but the indications are that the final figure will be substantially lower than that originally proposed by the Commission while still representing a real terms increase in funding for research and innovation. We accept that the Government will need some flexibility in the coming weeks to agree a compromise deal with the European Parliament on the Horizon 2020 package and consider that the Minister's letter establishes a suitable basis for securing an agreement. We are therefore willing to accede to the Minister's request to clear documents (a)-(c) from scrutiny but ask him to report back to us on the outcome of negotiations and the final agreement reached.

71   See (32042) 14035/10 + ADD 1; HC 428-viii (2010-12), chapter 8 (17 November 2010). Back

72   See (33495) 17935/11: See headnote for references to relevant Report chapters. Back

73   See (33494) 17934/1: See headnote for references to relevant Report chapters. Back

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