1Introduction
The case for science and innovation
1.The United Kingdom is a science superpower. In terms of both quality and productivity, our research base “punches above its weight”,1 setting a worldwide benchmark for excellence. Numerous witnessfes in our inquiry provided evidence of this, including Innovate UK:
The strength of our globally respected research base is an unparalleled strategic asset for the UK and we must continue to invest in it. With 0.9% of the world’s population, and 3.2% of its R&D spend, we produce 15.9% of its most important research output. The UK is home to 4 of the top 6 Universities in the world. The output of this engine of new knowledge discovery is a constant source of potential commercial advantage.2
2.The UK has much to boast about. UK research is cited in 10.9% of all patent applications worldwide, we rank 2nd globally for the quality of our scientific research institutions, we come 2nd in the Global Innovation Index (which compares 143 countries on 81 indicators) and are 4th for university-industry collaboration.3
3.This is an excellence driven science and innovation ecosystem that has produced 80 Nobel Prize winners but also some extraordinary improvements in our way of life, as the Campaign for Science and Engineering illustrated:
- Global research efforts have led to cancer treatments and interventions delivering health gains equivalent to £124 billion for UK patients between 1991 and 2010 through prevention, early identification, and improved survival.
- One million more properties were protected in the floods of 2013–14 compared to similar floods in 2007 as a result of government-funded research. This saved £2.6 billion of lost working days in London alone and £2 billion in fewer and less expensive insurance pay- outs.
- R&D has improved aircraft fuel efficiency by 30% since 1990, saving over 400 million tonnes of CO2 per year, and is expected to improve efficiency by a further 38% between 2010 and 2050.4
4.It is important to remember that these achievements rest on a long established principle, recognised by successive governments, that excellent research, translated into innovation, not only brings huge societal benefits — widespread electrification, better healthcare, mass production of food, better transport links — but is also a precondition for productivity growth. Indeed the Government’s Productivity Plan opens its chapter on Science with the following:
The creation and application of new ideas is critical for long-run productivity growth. There is clear and robust evidence of a link between R&D spending and national productivity.5
In our increasingly knowledge-based economy, the pursuit of excellence in research and innovation breeds competitiveness and high-value jobs growth, and UK researchers play a critical role in addressing major national and global challenges.
5.It is notable that even in difficult financial times this is an argument the public ‘get’. A BIS/Ipsos Mori Public Attitudes to Science survey in 2014 showed that 76% thought that scientific research made a direct contribution to economic growth, 79% agreed that even if it brought no immediate benefits scientific research that advances knowledge should be funded by the Government, and that 65% disagreed that such funding should be cut because it might be better spent elsewhere.6
6.If the economic and social case for investing in science has been won with both government and the public, our science and innovation ecosystem should be fully invested and operating at peak capacity. The Chancellor has certainly been a consistent champion for science, protecting the science ring-fence in cash terms throughout the last Parliament and reversing damaging cuts to capital spending at a time of significant cuts to other areas of government spending. Nevertheless, the instability in capital spending and the real terms loss in spending power has had its consequences, as we discuss below.
7.Furthermore, while our excellence in research is world leading and unquestioned, numerous witnesses made the case that our success in exploiting this research, though improving, remains suboptimal. The Centre for Process Innovation Limited, a founder partner of the High Value Manufacturing Catapult, working at the intersection of university-industry collaboration, concluded that although the catapult network and Technology Transfer Offices are beginning to make a difference: “most UK universities [still] have limited ability to convert research findings into commercial products and services”.7 The Institution of Engineering and Technology was emphatic about the need for improvement in commercialisation support, currently funded through the innovation budget:
The UK has consistently failed to exploit fully the results of its research outputs. There are many reasons for this including short-termism, risk aversion and an academic bias against industry and commerce. This is against a backdrop of rapid technical advances and industrial expansion in Asia and elsewhere and thus solving the issue is becoming increasingly urgent.8
8.The Government will make a decision on science and innovation funding as part of its Spending Review, to be published on 25 November. Simultaneously, the findings of the Dowling Report into strengthening university-industry collaborations, the Nurse Review into the structure of the Research Councils and the McKinsey Review into the structure of the Department for Business, Innovation and Skills are also being considered and will inevitably shape decisions about spending allocations. As these decisions are taken we must remember that we hold a position of great responsibility in the global scientific community.
9.We face a century filled with complex societal challenges — ageing, chronic and complex illnesses, climate change, and sustainably feeding nine billion people. Our scientists and innovators across academia and industry will be at the forefront of the discoveries that will not only underpin the productivity of our economy but will ensure the sustainability of our way of life.
10.We have a duty to take care that our spending and structural decisions in this area do more than merely maintain the status quo. If we get our spending priorities, our policies, regulatory frameworks or our immigration policy wrong, we will be on the wrong side of history.
Our inquiry
11.We decided to undertake an inquiry into the Science Budget, and to report ahead of the Spending Review. We began by taking oral evidence in July from Jo Johnson MP, the Minister for Universities and Science. We invited written submissions on the following issues:
- The extent to which the current ring-fence arrangements, and the separate arrangements for determining ‘resource’ and ‘capital’ allocations, have produced coherent UK science and research investment;
- The extent to which science and research expenditure in Government departments (outside the science budget) complements or competes with the science budget;
- The need for and rationale for any adjustment to the trajectory of future Government expenditure on science and research, and what would be gained from an increase (or lost from a reduction) compared with current expenditure levels;
- Whether the current distributions of the budget between particular types of expenditure and between different organisations is appropriate for future requirements, and achieves an appropriate balance between pure and applied research;
- What level of Government expenditure on science and research is needed:
- to significantly drive the overall level of such expenditure in the economy, through synergies between government and private sector investment (including overseas investment); and
- to optimally balance its benefits against the opportunity cost of government expenditure foregone on other public services.
- Whether the Government’s expenditures on aspects of science and research are consistent with other government policies, including the Industrial Strategies and the Eight Great Technologies and fiscal incentive policies for research investment; and
- The extent to which any increase or reduction in Government expenditure on science and research will have an impact on the UK’s relative position among competitor states.
12.We received 78 written submissions from a wide variety of sources: from academies to businesses, from charities to campaigners, from learned societies to individuals. We completed our oral evidence sessions, including a second meeting with the Minister, in October. We are grateful to all those who contributed evidence.
3 Royal Society, Building a Stronger Future (Feb 2015)
5 HM Treasury, Fixing the foundations: Creating a more prosperous nation (July 2015), p 37
6 Ipsos Mori, Public attitudes to science 2014 (March 2014); University of Oxford (TSB0068), para 19
© Parliamentary copyright 2015
Prepared 5 November 2015