3Regional and sectoral differences
36.The Business Secretary, the Rt Hon Greg Clark MP, has emphasised the importance of ‘place-based’ innovation in relation to the Industrial Strategy. In a speech in November 2016 he explained that:
If there is a consistent theme, I think one of them is this: the connection between innovation and place [ … ] Scientific knowledge may be universal, but its development is local [ … ] What is needed in each place is different, and our strategy must reflect that.65
More recently, in its Industrial Strategy Green Paper, the Government has been clear that “regional disparities are now wider in the UK than in other western European nations” and that “the productivity gap within each region is greater than between regions”.66 We therefore examined if there was a ‘place-based’ element to managing IP and technology transfer, including whether a consideration of regional geographies has formed part of Government, business and university technology transfer strategies.
Sharing best practice
37.Professor Trevor McMillan’s report to HEFCE in 2016, University Knowledge Exchange (KE) Framework: good practice in technology transfer, was clear that technology transfer policies are sensitive to the local “entrepreneurial conditions beyond the university”.67 These include the local communications infrastructure, access to venture capital, and business and legal support. His report noted, however, that there had been “relatively little discussion in the UK about [the] spatial dimensions to technology transfer”.68 Professor McMillan also stressed that while a “university’s eco-system should influence its entrepreneurial policies”, so too should the university’s own “characteristics and circumstances”.69
38.The evidence we have received from universities, and from the Government, broadly supported these conclusions. Universities Scotland agreed that university technology transfer strategies should be developed “in the context of research strengths, sector needs and innovation ecosystems in which the institution operates”, thereby making it “important to avoid a one-size-fits-all approach” to technology transfer.70 HEFCE told us that there was still “scope for sharing good practices” without needing a single, ‘generic’ approach.71 We heard differing views, however, on how technology transfer offices should organise themselves to make this possible.
39.At present, the dominant UK model is for each university with significant technology transfer activity to have its own technology transfer office (TTO). Recognising that each TTO is differently staffed and resourced, Dr Daniel Nelki from the Wellcome Trust suggested that some smaller universities did not have “the throughput or capability to deal with technologies [or the] requisite expertise and advice that should be available”.72 He believed that establishing “some regional centres” to advise “local institutions” could prove “hugely advantageous”.73
The SETsquared Partnership was repeatedly highlighted in our evidence as an example of technology transfer resources being effectively pooled across a wide geographical area.74 SETsquared is a collaboration between the universities of Bath, Bristol, Exeter, Southampton and Surrey “on research commercialisation, student enterprise and business incubation”.75 Nick Sturge from the University of Bristol explained that while SETsquared is comprised of “five independent institutions with their own agendas and their own relationships with the local environment” the collaboration benefitted “from a common brand” and worked by “aligning the common bits of different agendas”.76 Dr Raven from Cambridge Enterprise, on the other hand, noted that regional approaches were not always successful and cited the “i10 East of England” collaboration, where the universities were “so disparate that it did not really work despite the branding”.77
40.Imperial Innovations thought that a sectoral, rather than regional, focus might be more beneficial on the grounds that “the approach needed to get a therapeutic drug to market is very different from that required to bootstrap a fast-moving small software business to market”.78 Professor McMillan similarly stressed that “different technology transfer sectors have different exploitation pathways” and recommended that Praxis Unico, the professional association for technology transfer, should be supported to explore “whether more could be done on good practice differentiated by specific technology sector”.79 A sectoral focus on innovation is also apparent in the Industrial Strategy Green Paper.
41.The lack of a ‘one-size-fits-all’ approach to successful technology transfer does not preclude the sharing of best practice. We recommend that UK Research and Innovation (UKRI) should, once it is established, work with Praxis Unico to develop and share best practice in identifying and nurturing opportunities for technology transfer. Guidance should be developed with the needs of smaller technology transfer offices in mind and take account of regional and sectoral differences.
42.We discuss in Chapter 4 the separate issue of best practice in IP valuation and negotiation.
Science and Innovation Audits
43.In 2015, the Government announced funding for Science and Innovation Audits (SIAs) to identify regional strengths in research, innovation and infrastructure. The Minister told us that SIAs are:
a means by which we can map where there is a capacity for excellence in parts of the country that might not immediately spring to mind, so that we can ensure that areas that can be in a position eventually to make the most of public resources get their fair crack at it.80
44.Universities have collaborated with local business groups to produce SIAs. The University of Sheffield described how it had worked with a local consortium comprising the Sheffield City Region and the “Lancaster area” Local Enterprise Partnership (LEP) to focus on the region’s strength in high value manufacturing.81 Similarly, the University of Edinburgh was part of a consortium of local businesses, the City of Edinburgh Council, Scottish Enterprise and Innovation Centres Scotland “working to maximise the opportunities provided by data driven innovation” through its SIA.82
45.The Minister concluded in November 2016 that the SIA process had “brought together business, universities, Local Enterprise Partnerships and other collaborators from across the private and public sectors”.83 Understanding the UK’s research strengths could also be valuable information as the Government launches its Industrial Strategy Challenge Fund which looks “to back technologies at all stages where the UK has the potential to take an industrial lead”.84
46.Dame Ann Dowling, however, cautioned that SIAs should not be “simply looking to see what a local area can do” but that there should be coordination with “other areas that have similar strengths rather than setting up a regional competition”.85 Professor McMillan was concerned that the SIAs were a “little backward-looking”—and were identifying where an area was already strong—”rather than forward-looking”.86 Though the SIAs do feature a ‘gap analysis’, the ‘gaps’ identified tend to relate to existing sectors and rather than addressing the development of new sectors. The need to look more to the future was emphasised by Professor Paul Nightingale from the University of Sussex when he gave evidence on the Government’s Industrial Strategy Green Paper. He explained that:
it is very difficult to predict what will be important in the future; 100 years ago we said steam engines. We need to support not just the incumbents [ … ] We need to be driving innovation and be opening up to disruptive change.87
47.Science and Innovation Audits have focused on mapping the UK’s existing scientific strengths. This is valuable information but the Government also needs to know where the weaknesses lie, and where innovation and technology transfer are being held back. The gap analysis to date has uncovered weaknesses within existing sectors, however, rather than identifying where new sectors need to be developed. The Government should task UK Research and Innovation (UKRI), once established, with identifying where our research and innovation gaps lie, especially where they are holding back technology transfer, and consider how these can be addressed.
Local Enterprise Partnerships
48.Local Enterprise Partnerships (LEPs) are collaborations between businesses and local authorities that have a mandate to promote local innovation and “deliver local growth”.88 There are 39 LEPs in England that have, in total, “been awarded £200 million through [the Government’s] Growth Deals for innovation projects”.89 Some Growth Deals have directly benefitted universities and increased their capacity for technology transfer. The University of Oxford told us that through OxLEP’s the Growth Deal it had “invested £750,000 in university start-ups and spin-outs to leverage £8.9m of private investment and create 45 jobs [ … ] in knowledge intensive firms”.90
49.The Dowling Report found, however, that while LEPs have a remit to support innovation within their area, performance to date had “been patchy” and “highly variable”.91 Though it identified “good examples of local engagement”, it concluded that there was a “need to set a clear national direction and provide stronger support to enable them to fulfil this role”.92
50.The relationship expected between LEPs and universities currently appears ill-defined. The guidance provided by the Government to LEPs when drawing up ‘Strategic Economic Plans’ in 2013 (which were then used to negotiate ‘Growth Deals’) made no reference to collaborating with universities.93 In the written evidence we received, only two universities—Sheffield and Oxford—highlighted collaborations with their LEP.94 The Industrial Strategy Green Paper states that the Government “will work with Local Enterprise Partnerships to review their role in delivering local growth and examine how we can spread best practice and strengthen them”.95
51.It was noticeable, however, that neither the Green Paper, nor the Government’s evidence to this inquiry, referred to the University Enterprise Zones (UEZ), a scheme that aimed to:
encourage universities to strengthen their roles as strategic partners in local growth and stimulate development of incubator and/or grow on space for small businesses.96
UEZs are currently being piloted in Bradford, Nottingham, Bristol and Liverpool, with the Government providing a £15 million capital fund between 2014 and 2017.97 The future of the UEZs once the pilot scheme funding ends in 2017 is unclear. Allan Cook, Vice President of the Royal Academy of Engineering, told us that it was “a mistake that the university enterprise zones [were] not in [the Industrial Strategy Green Paper]” adding that it was an “omission” that needed some reflection.98
52.The 39 Local Enterprise Partnerships in England are potentially well placed to help connect local businesses and universities. It is therefore disappointing that they are currently lacking any firm obligation, or support, to do so. In contrast, the four University Enterprise Zones, established with the explicit aim of increasing interaction between universities and businesses in particular geographic areas, face an uncertain future.
53.The Government should use the opportunity presented by the Industrial Strategy to oblige all LEPs to work with their local universities and build on the strengths of the university enterprise zones or else reassign a proportion of their funding sufficient to roll-out a national university enterprise zones programme.
65 “A place for innovation”, Speech delivered at the Innovate 2016 Conference in Manchester by Rt Hon Greg Clark MP, 3 November 2016
66 HM Government, Building Our Industrial Strategy, Green Paper, January 2017 p 14–15
67 University Knowledge Exchange (KE) Framework: good practice in technology transfer. Report to the UK higher education sector and HEFCE by the McMillan group, Sept 2016, para 6
68 ibid para 51
69 Ibid para 11
72 Q225. Kingston University, for example, told us that it did not have the throughput to justify developing expertise in-house in areas requiring specific legal expertise, such as patenting. See Kingston University (MIP0031).
74 See, for example, Cambridge Enterprise (MIP0029) para 32; Wellcome Trust (MIP0028) para 4; University of Oxford (MIP0025) para 28; Royal Academy of Engineering (MIP0023) para 4.7; Imperial Innovations (MIP0020) para 3.4; Innovate UK (MIP0006) para 20
75 Q10
76 Q10
77 Q13
79 University Knowledge Exchange (KE) Framework: good practice in technology transfer. Report to the UK higher education sector and HEFCE by the McMillan group, September 2016, p 7
80 Q279
83 Department for Business, Energy and Industrial Strategy, Science and Innovation Audits, Wave 1 Summary Report, November 2016, p2
84 HM Government, Building Our Industrial Strategy, Green Paper, January 2017, p 30
85 Q266
86 Q265–266
87 Oral evidence taken on 22 February 2017, HC (2016–17) 991, Q21 [Professor Nightingale]
88 HM Government, Building Our Industrial Strategy, Green Paper, January 2017, p125
91 The Dowling Review of Business-University Research Collaborations, July 2015, p 3 ¶ 144
92 ibid
93 HM Government, Growth Deals, Initial Guidance for Local Enterprise Partnerships, July 2013
95 HM Government, Building Our Industrial Strategy, Green Paper, January 2017, p125
96 Department for Business, Innovation and Skills, University Enterprise Zones Pilot Evaluation, Outline Evaluation Plan and Baseline, Produced for BIS by SQW and Cambridge Econometrics, March 2015, p11
97 Department for Business, Innovation and Skills, University Enterprise Zones Pilot Evaluation, Outline Evaluation Plan and Baseline, Produced for BIS by SQW and Cambridge Econometrics, March 2015
98 Oral evidence taken on 22 February 2017, HC (2016–17) 991, Q60 [Allan Cook]
10 March 2017