Capital investment in science projects Contents

1Deciding which projects to support

1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business, Innovation & Skills (the Department), Research Councils UK (RCUK) and the Higher Education Funding Council for England (HEFCE) on capital investment in science projects.1 The Government invests in science to support economic growth, improve national productivity and help the UK take the lead in new markets. The Department has overall responsibility for the Government’s spending on science, technology and engineering. It provides funding for a wide range of scientific disciplines and industry sectors with the aim of developing and maintaining the UK’s science and research capability.2

2.Since 2007, the Department has committed around £3.2 billion of capital funding for major science projects. This included expenditure on major national projects such as oceanographic research ships, supercomputers and research institutes, capital funding for large national research facilities such as particle accelerators and the UK’s participation in international programmes such as the European Space Agency. In 2014–15, the Department allocated around £1.1 billion of capital funding to science, including £756 million to its research councils and £287 million to HEFCE, which funds research facilities in universities.3

3.In December 2014, the Department announced plans for a further £5.9 billion of capital expenditure on science between 2016 and 2021. This included £800 million for new projects, more than £1.2 billion for ongoing national and international projects and a £900 million fund to respond to new challenges as they emerge. It also included plans to spend around £3 billion on the underlying laboratory infrastructure in universities or research institutes.4

Prioritising projects

4.When the National Audit Office previously reported on science capital projects in 2007, it found that the research councils used a well-delineated staged approach for identifying priorities for capital investment.5 The 2010 Spending Review resulted in a significant reduction in funding for new science capital projects and, as a consequence, the Research Councils did not, after 2010, continue their well-established exercise to propose projects for funding by the Department.6 When additional funding for science became available between 2011 and 2014, the Department funded projects worth some £1.7 billion.7 Although the Department did not consider that it had lacked a plan for prioritising its capital investment prior to 2014, the House of Lords Science & Technology Select Committee concluded in 2013 that there was no single long-term investment strategy or plan for scientific infrastructure in the UK.8

5.In 2014, the Department used the results of a consultation with the research community to decide how to allocate £5.9 billion of capital funding to major projects and laboratory infrastructure between 2016 and 2021. However, there were gaps in the information used to select projects.9 The Department told us that the projects selected were subject to an initial screening process and business case assessment process but we remain concerned about the rigour and transparency of the project prioritisation process and how we can be confident that the best projects have received investment.10

6.To make well-informed decisions on capital investment, the Department needs sufficient information on the state of the existing science infrastructure.11 The Department told us that it consults RCUK and HEFCE on their infrastructure needs and uses this information to decide the level of funding it wants to allocate to new facilities and to maintain the existing estate.12 We heard from HEFCE about its periodic assessments of the condition of the research estate across universities which inform its bids for funding.13 While RCUK told us that it has good information on the location of its existing infrastructure, it is not clear how the Department uses this information to inform its funding choices.14

7.Bodies other than the Department, the Research Councils and HEFCE may be involved in proposing projects for funding.15 For example, the Department told us that the £20 million Alan Turing Institute for Data Science originated from a 2013 proposal by the Prime Minister’s Council for Science and Technology and was subsequently announced in the Budget in 2014. Both the Department and RCUK told us that there was a wide consensus across the scientific community about the importance of data analytics and the need to invest in big data and algorithms and that, although the project had been announced beforehand, the proposal was still subject to assessment of a full business case.16

8.However, we were not fully convinced that, in cases like the Alan Turing Institute, where a Minister has already made the announcement and taken the strategic decision to invest, the Department would be likely to reverse the decision on the basis of a subsequent business case assessment.17 In a separate submission to us, the Wellcome Trust commented that decisions about science capital should not be affected by “political drivers, short-term budgets or the lure of announcement-friendly investment”. The Academy of Medical Sciences also wrote to us to emphasise the importance of delivering an independent research agenda insulated from “near-term political pressures”.18

Robustness of business cases

9.The Department’s decisions to proceed with capital projects are subject to a satisfactory business case. Between 2011 and 2014, when investments were often announced before business cases had been developed and approved, the Department instructed the research councils to take a ‘lighter touch’ when developing business cases.19 The National Audit Office examined 20 business cases and found that the business cases for projects the Department approved after November 2011 had often lacked key elements.20 For example, the business cases approved after November 2011 were less likely to include an assessment of alternative options, running costs, evaluation of potential demand, sensitivity analysis of costs and benefits, planning for the tracking and assessing of benefits realisation and the estimated return on investment.21

10.For projects approved after 2011, only half of the business cases examined by the National Audit Office included an assessment of alternative options.22 We asked the witnesses to what extent they consider a range of locations, or scope to expand existing infrastructure, when assessing business cases. The Department told us that it first focuses on scientific excellence when making funding decisions but also aims to make the best of connections between regions, universities and centres of innovation. HEFCE told us that it will take account of local collaboration between universities and small and medium-sized enterprises in the current and future rounds of its UK Research Partnership Investment Fund.23 Nevertheless, we were concerned that there has been a tendency to focus science investment around Oxford, Cambridge and Imperial universities and we questioned the Department’s decision to locate the Francis Crick Institute in central London, particularly given the risks associated with its proximity to the proposed Crossrail 2 route.24

11.Less than half of business cases approved after 2011 included an analysis of running costs and details of how running costs would be funded. The Department accepted that it should have done more to assess running costs in business cases.25 It also said that it had estimated that the cost of running all of the projects announced in 2014 would be around £140 million a year, 3% of the resource budget it allocates to the research councils and HEFCE.26 Nevertheless, the costs of running facilities may eat into the remaining budget the research councils have discretion to use for their own priorities. The Department accepted this point.27

12.The information used by HEFCE, to decide how capital science funding to universities should be allocated, is consistently more rigorous than the business cases developed by the Research Councils and approved by the Department. RCUK agreed that it could learn from HEFCE’s systematic approach.28 HEFCE told us that it was not complacent about its performance and had already implemented the NAO’s recommendation that it should seek a range of estimated running costs, not a single figure.29

1 C&AG’s Report, BIS’s capital investment in science projects, Session 2015–16, HC 885, 10 March 2016

2 C&AG’s Report, para 1

3 C&AG’s Report, para 2; Figure 1, para 1.8

4 C&AG’s Report, para 3

5 Q 1; C&AG’s Report, para 2.21; Figure 15

6 Q 1; C&AG’s Report, para 11

7 C&AG’s Report, paras 2.5–2.6 and Figure 8

8 Qq 1, 12; House of Lords Select Committee on Science & Technology, Scientific Infrastructure, Session 2013–14, HL 76, 21 November 2013

9 Q 6; C&AG’s Report, paras 2.8–2.10

11 C&AG’s Report, para 2.2

15 C&AG’s Report; paragraph 2.22

18 Academy of Medical Sciences, (SCS0001), para 4; Wellcome Trust, (SCS0002) para 3

19 Q 7; C&AG’s Report para 2.23

20 C&AG’s Report, para 12, para 2.15, Figure 10

22 Q 3; C&AG’s Report Figure 10

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17 June 2016