Business-University Collaboration - Business, Innovation and Skills Committee Contents

2  Innovate UK: Government support for innovation

The work of Innovate UK

6. Innovate UK is "the UK's innovation agency", which "acts as the prime channel through which the Government incentivises business-led technology innovation".[9] Its goal is "to accelerate economic growth by stimulating and supporting business-led innovation".[10] Innovate UK was known as the Technology Strategy Board from its establishment in July 2007 until a re-branding exercise in 2014. Here, we concentrate on two areas of Innovate UK's work: the Catapult programme and the Small Business Research Initiative.


7. According to the Department for Business, Innovation and Skills, one of Innovate UK's "most significant schemes" which support collaboration is the Catapult programme.[11] It was established in 2010 to provide "business led, capital intensive infrastructure" that would complement existing innovation schemes.[12] Catapult centres should therefore act as "connective tissue between the very strong fundamental research base we have in universities [and] industry".[13] This "network of elite technology and innovation centres" currently consists of seven Catapults, the first of which opened in October 2011,[14] with a further two planned.[15] The range of subjects covered by, and locations of, the existing Catapult centres are shown below (Figure 1).[16]

Figure 1: Location of current Catapult centres, taken from

8. During the course of our inquiry, we heard about a range activities currently being performed by the Catapult centres to support businesses. These included:

·  providing "full-scale equipment that SMEs would not necessarily be able to afford and would not necessarily have the expertise to operate"[17] and "access to something that, if they had to buy it, would cost millions";[18]

·  creating "an environment [which is] stimulating business";[19]

·  facilitating "access to data and to standard ways of integrating models";[20]

·  examining "the market for intelligent mobility: the movement of that market, and where the opportunities are";[21] and

·  taking "pure research to market and looking at the impact".[22]

9. A review of Catapult activity, led by Dr Hermann Hauser, was published in November 2014. It focused on the progress which had been made since the centres were established and possible future directions for development of the network. Dr Hauser's report outlined the following ways in which the Catapults are engaging with the research base:

·  "Strategic relationships-formal partnerships with research base stakeholders;

·  Joint programmes and projects with the research base and business;

·  People and skills development including formal training provision (e.g. studentships); people exchange mechanisms (e.g. secondments); and continual professional development (e.g. MSc training); and

·  Shared equipment and facilities".[23]

Dr Hauser concluded that "interactions like these need to be embedded more consistently across the Catapult network".[24] The recommendations of the review are set out in Box 1. Dr Hauser also urged the Government to "acknowledge the importance of building this network".[25] The Minister gave evidence to us before publication of the review. At that time he told us that he was "a big supporter" of the Catapult programme, but did not commit in advance to endorsing the recommendations of Dr Hauser's review.[26]

10. Our inquiry was told that the Catapults "have great potential",[27] but the system was "still very new".[28] As a result they needed "some space to operate"[29] before any attempt to measure value or change policy should be made.[30] The importance of allowing Catapults time to "settle" was stressed to us repeatedly.[31]

11. The Catapult network has made a promising start, with Catapults undertaking a range of activities in a range of fields. To capitalise on this, it is important that best practice is shared across the Catapult community so that existing work can be embedded more consistently across the network, as recommended by the Hauser review.

12. We recommend that the Government commit to acting on the recommendations of the Hauser review, and to securing cross-party agreement for this action. As part of that commitment, we recommend that the Government conduct a light touch review that identifies effective examples of collaboration between universities and industry throughout the Catapult network, and ensures that this information is shared amongst interested parties to encourage and support further interaction. This review should be driven by the National Centre for Universities and Business and Innovate UK, building on the work of the Hauser Review.


13. Government procurement can be an important mechanism for supporting research and development (R&D).[32] Government-awarded contracts help with "developing and pulling businesses through in the very early stage" of technology development, thereby supporting innovation in the private sector.[33] The significance of this mechanism for supporting innovation was explained to us by Professor Alan Hughes, Director of the UK Innovation Research Centre, as follows:

    In relation to small and medium-sized enterprises and institutional design, it is important to recognise that the most successful activity in promoting small businesses has not been venture capital financing; it has been public support through contracts.[34]

14. The Small Business Research Initiative (SBRI), which Innovate UK "champions",[35] is a mechanism to assist innovative companies in competing for government procurement contracts. Innovate UK states that the SBRI gives government departments "access to the ground-breaking organisations that might provide new solutions to help them meet their objectives".[36] Meanwhile, businesses gain a "lead customer" to support development of their product; have a reliable source of early-stage funding for prototype development; have a potential route to market; and establish intellectual property rights and credibility for further investment.[37]

15. In Budget 2013, the Government announced it would award £100 million of contracts via the SBRI process in 2013-14 and over £200 million in 2014-15. However, in his evidence to the Committee, the Minister told us that the £100 million target for 2013-14 had not been met, with only £78.5 million being allocated via the SBRI.[38] Furthermore, he was unable to give information about progress towards the £200 million target for 2014-15.[39] The Minister acknowledged that this was a failing and that Government "can and should do better with this", as it was "one of the big opportunities" for small businesses. He therefore wanted "to see further progress".[40] An evaluation of the SBRI's success is currently underway and expected to report early next year.[41]

16. In its evaluation of the Small Business Research Initiative, the Government should explain why it failed to meet the £100 million target for contracts awarded through the scheme in 2013-14. It should also use this review to assess the assumptions made in setting targets for the scheme, in order to confirm that there is reasonable basis for believing the £200 million target for 2014-15 can be met. If the evaluation demonstrates that the Small Business Research Initiative is not on track to meet its £200 million target, the Government should make clear the corrective steps it will take to address the underperformance. The Government should report back to us with the outcome of this review by the end of January.

Innovate UK's funding

17. The major concern were heard about the operation of Innovate UK related not to its work, but to the resources available for that work. Antony Harper, Head of Research for Jaguar Land Rover, told us that Innovate UK was "very effective" but "underfunded",[42] while Professor Paul Beasley, Head of R&D at Siemens, argued that Innovate UK needed "sustained funding".[43] The CBI also asserted that Innovate UK was "under-resourced to fulfil its mission".[44]

18. Iain Gray, Innovate UK's CEO, explained its current funding situation as follows:

    We are underfunded. In terms of where I think the priorities lie, if you look at our programmes to support the SME community, […] it has got a 25% success rate, capped, simply, by the funding levels that are available to us, so there is a very significant scope for increasing the support of SMEs through increased funding. It is important to recognise in this context that it is not just about funding; it is about providing the backup to that funding through joined-up government access to coaching, mentoring, UKTI, and the Intellectual Property Office.[45]

Subsequent evidence from Innovate UK stated that:

    46% of all proposals we receive warrant funding. However, only 24% of proposals were successful in receiving funding between September 2013 and August 2014, a further 22% were of sufficient quality to have been funded had funds allowed.[46]

19. Although concerns about Innovate UK's resources were widespread, we were urged by Dr Henner Wapenhans, Head of Technology Strategy at Rolls Royce, and Professor Nigel Thrift, Vice Chancellor at the University of Warwick, to treat calls for increased funding with care, as it would not be productive to make further resources for Innovate UK available by transferring resources from other areas of the science and innovation budget.[47] We were also told that Government should not fund Innovate UK "at the expense of underpinning funding for the research councils on the basic research" because this was "as important" as applied research.[48] As Will Hutton, Chair of the Big Innovation Centre, explained:

    Making certain that the top 10 research-based universities in this country carry on being as damn good as they are in 20 years' time is absolutely fundamental; otherwise, we have nothing. The funding that delivers that should be kept.[49]

20. The Secretary of State has previously set out the case for further funding for Innovate UK, arguing that:

    The annual [Innovate UK] budget is approximately 0.03% of GDP, or £500 million. Doubling annual innovation spend could bring its resources closer to £1 billion. It would enable the Catapult network to be deepened and widened and lift some of the crippling barriers to private funding […] a further £500 million of public investment could mean at least a £1 billion more of innovation spend every year across the UK.[50]

The Minister told us that "it would be a greater problem" if there was "a paucity of good ideas for funding" through Innovate UK. [51] In addition:

    Over the Parliament, which has been a difficult Parliament in budgetary terms as we all know, the investment in science has been ring­fenced and the capital has been increased. We have established the Catapults and increased the funding of what is now Innovate UK for those Catapults, so we have made those investments.[52]

21. We recommend that Innovate UK routinely publish the total number of applications, proportion of applications that merit funding, and proportion of applications that receive funding as part of its annual report. We further recommend that Research Councils UK publish comparable data on applications for, and successful securing of funding for, their initiatives that are designed to support and promote business-university collaboration.

22. The Secretary of State has set out the case for doubling Innovate UK's budget. The Autumn Statement and planned Science and Innovation Strategy are opportunities for the Government to give a statement of intent about increasing funding for Innovate UK over the course of the next Spending Review. Investing in innovation brings about demonstrable economic returns. We therefore expect the Minister to be arguing strongly for increasing Innovate UK's funding, in addition to protecting the financial support for science and innovation more broadly, in forthcoming Spending Review negotiations. Any increase in funding for Innovate UK should not be secured by diverting funding away from, or diminishing the remainder of, the science budget.

9   Innovate UK (formerly the Technology Strategy Board) (BUF27) para 1 Back

10   Innovate UK (formerly the Technology Strategy Board) (BUF27) para 4 Back

11   BIS (BUF64) para 11 Back

12   BIS (BUF64) para 12 Back

13   Q48 [Professor Wren] Back

14   Technology Strategy Board, Catapult Programme Progress update 2012-13, 2013, p11 Back

15   Technology Strategy Board, Catapult Programme Progress update 2012-13, 2013, p2 Back

16   Many of these Catapults interact with universities in their areas. The locations of the centres are: the Cell Therapy Catapult (London); High Value Manufacturing Catapult (Strathclyde, Sheffield, Redcar, Coventry, Bristol, Rotherham and Warwick); Offshore Renewable Energy Catapult (Glasgow and Blyth); Satellite Applications Catapult (Harwell); Connected Digital Economy Catapult (London); Transport Systems Catapult (Milton Keynes); and Future Cities Catapult (London).  Back

17   Q11 [Professor Wren] Back

18   Q70 [Professor Veck] Back

19   Q133 [Steve Yianni] Back

20   Q133 [Dr Zanelli] Back

21   Q144 [Dr Zanelli] Back

22   Q192 [John Latham] Back

23   Dr Hermann Hauser, Review of the Catapult network, 2014, p39/40 Back

24   Dr Hermann Hauser, Review of the Catapult network, 2014, p40 Back

25   Dr Hermann Hauser, Review of the Catapult network, 2014, p4 Back

26   Q368 [Greg Clark] Back

27   Q169 [Professor Jones] Back

28   Q39 [Professor O'Nions] Back

29   Q194 [John Latham] Back

30   Q39 [Professor O'Nions] and Q194 [John Latham] Back

31   Q39 [Professor O'Nions and Dr Bradshaw] and Q194 [John Latham] Back

32   See, for example: NESTA, Driving innovation through public procurement, 2007 Back

33   Q11 [Professor Hughes] Back

34   Q11 [Professor Hughes] Back

35   Innovate UK, SBRI Government challenges, ideas from business, innovative solutions, 2013, p3 Back

36   Innovate UK, SBRI Government challenges, ideas from business, innovative solutions, 2013, p2 Back

37   Innovate UK, SBRI Government challenges, ideas from business, innovative solutions, 2013, p3 Back

38   Q376 [Greg Clark] Back

39   Q378 [Greg Clark] Back

40   Q378 [Greg Clark] Back

41   HC Deb, 3 February 2014, c15W [Commons written answer] Back

42   Q223 [Antony Harper] Back

43   Q362 [Professor Beasley] Back

44   CBI, Pulling together: strengthening the UK's supply chains, 2014  Back

45   Q267 [Iain Gray] Back

46   Supplementary written evidence from Innovate UK Back

47   Q338 [Dr Wapenhans] and Q185 [Professor Thrift] Back

48   Q342 [Dr Skingle] Back

49   Q11 [Will Hutton] Back

50   Speech by the Secretary of State, 22 July 2014 Back

51   Q389 [Greg Clark] Back

52   Q387 [Greg Clark] Back

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Prepared 28 December 2014