Conclusions and recommendations
Quantum Technologies and their Applications
1.Quantum technologies offer the potential for significant economic growth and improved capabilities across multiple industry sectors. The first phase of the National Quantum Technologies Programme has placed the UK in a world-leading position. The Government announced £235m of funding for quantum technologies in the 2018 Budget, taking total funding for the next phase of the National Quantum Technologies Programme to £315m. We welcome the Government’s decision to support a second phase of the National Quantum Technologies Programme with this funding, which is broadly commensurate with the Strategic Advisory Board’s estimated requirements. (Paragraph 26)
Continuing the National Programme—Governance
2.Although the first phase of the National Quantum Technologies Programme is widely seen to have been successful, we believe that there is room for improvement in the co-ordination across the Programme as it moves into a second phase, in particular between its more academically-focused and its more commercially-focused activities. (Paragraph 31)
3.The governing body of the second phase of the National Quantum Technologies Programme should engage with, and seek guidance from, academia, industry, regulators, standards bodies and Government bodies overseeing national security and defence. Industry should have a strong collective influence on the decisions of the governing body, in keeping with the increased role and investment expected of industry as quantum technologies achieve market readiness. (Paragraph 35)
4.We have heard strong support from across the UK quantum technologies community for the establishment of a new governance structure for the second phase of the National Quantum Technologies Programme. The Government should establish a new Executive Board to oversee the second phase of the National Quantum Technologies Programme within three months of this Report’s publication. The new Board should have the power to make decisions over the delivery of the second phase of the National Programme, and a corresponding level of control over the funding allocated to the next phase of the National Programme. It should have a clearly defined mission statement and be held accountable for delivering on it. The mission statement should include an overall aim to support the development of a UK quantum technologies industry that delivers the maximum economic, national security and societal benefit for the UK public as a whole. The new Board should comprise representatives from academia, small and medium-sized enterprises, large companies, standards bodies, regulators and the Government, including from national security and defence organisations. (Paragraph 38)
5.The Executive Board should produce a detailed roadmap, or series of roadmaps, for the future potential markets for quantum technologies in the UK, in consultation with appropriate experts from the market sectors identified. The roadmap should assess the likely size and timeframe of each potential market, as well as the technological developments, infrastructure, workforce, supply chains and regulatory measures that are expected to be required to harness each market opportunity. The roadmap should cover the next twenty years and be updated annually. It should be publicly available, with a first iteration completed within one year of this Report’s publication. (Paragraph 42)
6.The Executive Board should use the roadmap(s) of future quantum technology markets to identify potential obstacles to the development and commercialisation of quantum technologies in the UK and to define a strategy to overcome these. The strategy should be published and updated alongside the roadmap and include clear, measurable milestones, to be reviewed annually. (Paragraph 43)
Continuing the National Programme—Innovation Centres
7.We agree with UK Research and Innovation that the establishment of Innovation Centres is a “priority” for the National Programme going forward. The announcements made confirming the extension of the National Quantum Technologies Programme into a second phase did not, however, reference Innovation Centres and proposed something comparable only in the quantum computing domain. Although the new quantum computing centre is welcome, it is worth noting that quantum computing is the quantum technology furthest from market. The drive to advance technologies from the existing Hubs towards greater market readiness—for example, through an Innovation Centre or Innovation Centres—would therefore appear to be most urgent for other quantum technologies. (Paragraph 51)
8.The second phase of the National Quantum Technologies Programme should establish Innovation Centres to provide access to facilities for developing, manufacturing, testing and validating quantum technologies, as well as to act as focal points around which collaboration and supply chains can consolidate. This will require Innovation Centres to exist, at least in part, as physical centres rather than as ‘virtual networks’. Reflecting the need for Innovation Centres to focus on the development of commercial products, Innovation Centres should target specific market sectors rather than reflecting the different types of quantum technologies, although multiple sector-specific Innovation Centres could co-occupy sites where they require the same shared technical facilities. While we support the use of suitable existing infrastructure to house Innovation Centres where it can deliver what is required more quickly and at a reduced cost, this should not dilute the concept of Innovation Centres or weaken the drive to establish them as soon as possible. In its response to this Report, the Government should confirm its intention to set up Innovation Centres and outline how many it intends to establish, which sectors they will cover and what the timeline is for their establishment. The Executive Board must ensure that there is good co-ordination between the new Innovation Centres and the Hubs and ensure that technologies are supported through research, development and commercialisation and to provide strategic oversight so that activities in Innovation Centres and Hubs complement each other. (Paragraph 52)
9.The proposed Innovation Centres bear resemblance to the Catapult Centres that already exist. The Government, UK Research and Innovation, and the new Executive Board of the National Quantum Technologies Programme should ensure that the planning of Innovation Centres incorporates lessons learned from the experience and assessment of the Catapult Centres. The Innovation Centres should have clear purpose statements, measurable objectives and be subject to periodic performance assessment. (Paragraph 54)
10.We welcome the Government’s decision to fund a new national centre for quantum computing. The new national quantum computing centre should focus on the development of software for quantum computers as well as hardware. (Paragraph 56)
Continuing the National Programme—Funding
11.It is right that the Government should look to industry to contribute to funding for technology development, especially as quantum technologies grow closer to commercialisation. However, it is important that matched funding requirements do not prevent important work from going ahead. Other funding rules, such as the 30% limit on project funding awarded to non-commercial organisations, can also restrict the scope of some projects. (Paragraph 66)
12.Innovate UK should ensure that there is flexibility in rules where State Aid rules and other relevant regulations allow it, and design the rules applying to funding calls around the aims of the project rather than designing projects around the standard rules. In particular, the 30% limit on funding that can be awarded to non-commercial organisations should be relaxed where it hampers applications for funding calls or the scope of the projects funded. UK Research and Innovation should monitor the impact of any matched funding requirements and ensure that such conditions do not detriment the development of quantum technologies in the UK. It should take into account ‘in-kind’ contributions (such as time, access to facilities or training) from industry rather than pure investment alone, and continually review the funding environment in the UK compared to other quantum technology programmes internationally, to ensure that the UK remains competitive. The Government should prioritise spending on initiatives or capital that will benefit the development of the wider UK quantum technologies industry alongside those projects that will encourage co-investment from industry. (Paragraph 67)
13.UK Research and Innovation, in co-operation with the new Executive Board, should regularly review the funding available to fundamental research in quantum science. As the Government aims to increase spending on research and development to 2.4% of GDP, and as the National Quantum Technologies Programme develops the application and commercialisation of quantum technologies, the Government should be ready to provide the funding required to ensure fundamental research keeps pace. UK Research and Innovation should additionally ensure that projects of a variety of scale and duration are funded, to ensure that opportunities exist for organisations of all sizes. (Paragraph 68)
14.Awareness across industry of the potential for quantum technologies, in particular in the short-term, needs to be improved. The new Executive Board should engage with businesses and industry bodies that are not yet actively pursuing opportunities presented by quantum technologies, articulating the near-term capabilities expected of such technologies and investigating what specific product requirements and technology demonstrations are needed to drive uptake in different sectors. This activity should aim to raise industrial awareness of quantum technologies and feed into the Executive Board’s roadmap and strategy for developing the UK quantum technologies industry. (Paragraph 73)
15.We commend the Ministry of Defence on its support for quantum technology demonstrator projects. Similar opportunities exist for other Government departments to support the development of quantum technology products that they would benefit from, with the added advantage of assisting the nascent UK quantum industry by demonstrating the value of quantum technologies to other potential end-users. In collaboration with the Chief Scientific Adviser network, the new Executive Board of the National Quantum Technologies Programme should identify opportunities for Government Departments to support quantum technology demonstrator projects and encourage their uptake by assessing the positive impacts that such projects could achieve for the Department and for the UK quantum technologies industry, if successful. (Paragraph 74)
16.We agree with the Connell Review that the Small Business Research Initiative has a “unique and valuable role to play in the innovation and procurement landscape”, supporting UK businesses in developing innovative new products while enabling public sector bodies to source innovative solutions to the challenges they face. However, the Government’s response to the Connell Review so far appears limited. The GovTech Catalyst only supports public bodies in sourcing digital technology solutions and the three-year, £20m GovTech Fund is significantly smaller than the £250m that the Connell Review recommended to be spent per annum through SBRI, or the £200m target the Government had for SBRI spending in 2014–15. We recommend that the Government fully adopts the recommendations of the Connell Review, and establishes a central SBRI fund with a National Board to oversee its delivery as part of the 2019 Spending Review. (Paragraph 78)
17.Quantum technologies promise significant opportunities for UK economic growth as well as improvements to Government departments’ capabilities. Quantum technologies are therefore particularly well-suited to the aims and implementation of the Small Business Research Initiative. We recommend that the Government establishes a QuantumTech Catalyst to drive public sector organisations’ use of the Small Business Research Initiative for quantum technologies, in the same way that the GovTech Catalyst has for digital technologies. The new QuantumTech Catalyst should seek to launch a first round of challenges within six months of this Report’s publication. (Paragraph 79)
Continuing the National Programme—Skills
18.There is significant concern in the quantum technology community that the future development of quantum technologies in the UK could be constrained by the lack of a suitably skilled workforce. This skills shortage is not unique to the UK, and the existing training programmes provided under the National Quantum Technologies Programme are well-regarded, but increasing and improving the training offered must be a priority for the second phase of the National Programme. (Paragraph 88)
19.The Government should continue and expand the National Quantum Technologies Programme’s current training programmes. The new Executive Board, in co-operation with UKRI, should engage with companies working on quantum technologies or closely related fields to help tailor the content of doctoral training programmes to ensure that they provide the balance of skills needed by industry. This will require exposure to commercial practices and requirements, which could be provided through secondments, industry-led projects during the first year of a Centre for Doctoral Training course or industry-proposed and sponsored PhD projects. This should be completed in time for renewal of the Centres for Doctoral Training next year. Furthermore, UKRI should find ways to make the terms on which industry can input into training programmes more flexible, to facilitate increased engagement (for example by enabling input outside of the five-year funding cycles of Centres for Doctoral Training). In exchange, UKRI should seek contributions from industry to fund additional studentships. The Government should be ready to co-invest where industry funding is available. (Paragraph 89)
20.The future workforce required for a successful UK quantum technologies industry will not be composed entirely of PhD-level graduates and above. Although workers at lower qualification levels may not need skills as specifically tailored to quantum technologies as for those with higher qualifications, the growth of a quantum technologies industry will add to the demand for engineering and scientific graduates, technicians and apprentices. In addition to training being required for those entering the workforce, we believe that it is also required for engineers, technicians and others already in the workforce. (Paragraph 94)
21.The second phase of the National Quantum Technologies Programme must ensure that appropriate training is available at undergraduate, technician and apprenticeship level, alongside continued provision at PhD level. It should provide training opportunities for established workers as well as for those entering the workforce, for example through continuing professional development modules or short university-based courses, in a manner that is easy for companies to access. There should also be periodic, sector-specific workshops available to end-users of quantum technologies, with the aim of growing a network of quantum ‘champions’ in sectors where quantum technologies can already start to be applied. These modules, courses and workshops should all be available within three years of the publication of this Report. (Paragraph 95)
22.The new Executive Board should engage with companies to ensure, facilitate and co-ordinate input from quantum technologies enterprises—both large companies and small and medium-sized enterprises—into the Institute for Apprenticeships’ ongoing work on the development of apprenticeship standards and the ‘health and science’ and ‘engineering and manufacturing’ T levels. This endeavour should ensure that these training routes: flag the opportunity of the quantum technologies sector to students; cover the basic skills that enterprises working with quantum and related technologies require; and offer apprenticeships or work placements with enterprises working in the quantum sector. The Executive Board should encourage and support quantum technology enterprises to offer apprenticeship places and work placements. (Paragraph 96)
The societal implications of quantum technologies
23.As with most new technologies, quantum technologies present a variety of potential benefits and risks to society. The future development of quantum computers could undermine the methods currently used to keep sensitive digital information secure. If the encryption methods used to secure communications over the Internet and other systems were to become vulnerable, this would have significant economic and societal impact. Ongoing work, involving quantum communications systems and ‘post-quantum’ cryptography methods, is expected to be able to provide technical solutions to this problem. However, there is a concern that low awareness of the problem could hinder timely implementation of such solutions. The Government should monitor the development of potential solutions to the threat of quantum computers undermining digital security techniques, including the agreement of new security standards. It must ensure that the relevant organisations and businesses are aware of the problem and its solutions, and act to ensure the timely implementation of solutions required to guarantee the continuity of widespread digital security systems. The Government should continue to encourage and participate in international dialogue with like-minded countries to address these issues. (Paragraph 103)
24.Quantum technologies have important implications for national security as well as for economic prosperity. The Government must ensure that the second phase of the National Quantum Technologies Programme gives equal priority to benefitting the UK’s national security and its prosperity. There should be good co-ordination between military and civil aspects of future quantum technologies in all components of the second phase of the National Programme. (Paragraph 107)
25.Public engagement is an important aspect of managing the societal impacts of new technologies, and we commend the National Quantum Technologies Programme for its work on this front. However, potential societal impacts must also be rigorously considered by experts working on the technology. The Networked Quantum Information Technologies Hub is producing white papers on the RRI implications of quantum technologies for different application areas. However, RRI activities in the other Hubs appear to focus almost exclusively on public outreach. Given the significant anticipated applications of quantum technologies, we are concerned to hear that the National Quantum Technologies Programme has not yet identified any potential adverse societal impacts that have had to be addressed. (Paragraph 111)
26.The National Quantum Technologies Programme’s Responsible Research and Innovation (RRI) work should continue into a second phase of the National Programme. All of the National Quantum Hubs should identify an RRI lead responsible for co-ordinating RRI work across the Hub and to act as the primary point of contact for internal and external stakeholders on RRI matters within six months of this Report’s publication. Each Hub should publish a review of the potential societal impacts of quantum technologies in their sector within a year of this Report being published, to be updated annually. These reviews should contain summaries for policymakers, describing potential implications and outlining possible measures to maximise the potential positive impacts and mitigate any negative impacts. The drafting process for these reports should involve researchers at all career stages, and be supported through training, conferences and workshops. (Paragraph 112)
27.Innovation Centres should contribute to the National Quantum Technologies Programme’s responsible research and innovation (RRI) programme of work. Each Innovation Centre should appoint an RRI lead, similar to those to be appointed at the Hubs. The Innovation Centres should be actively engaged in all relevant Hubs’ annual reviews of the potential societal impacts of quantum technologies. (Paragraph 113)
28.Concerns have been raised about the potential threats to national security arising from collaboration between UK researchers and researchers affiliated with foreign militaries. Training in the potential threats arising from collaboration with researchers affiliated with foreign militaries, and the methods that can be used to obscure affiliation, should be included as part of the National Quantum Technology Programme’s responsible research and innovation framework. In its response to this Report, the Government should set out what analysis it has made of the potential threat, what action it is consequently taking, what it expects of universities, businesses and other organisations with regards to managing collaborations with researchers affiliated with foreign militaries, and what support or guidance it is offering to universities to help them counter any potential threat. (Paragraph 115)
29.We agree with the Government that, although foreign investment in the UK is almost always benign and welcome, there is the potential for certain transactions that increase foreign influence over British entities to pose significant threats to national security. We recognise the Government’s desire to avoid placing undue burden on businesses in its new regime for national security and investment. However, we are concerned that a voluntary notification regime leaves the Government unable to guarantee that it will be aware of all potential transactions that could threaten national security. The Government’s consultation on this matter reported only a narrow preference against a mandatory notification regime, and did not appear to incorporate the views of the national security community. The consultation also reported little support for a combined approach, which was felt to involve the costs of the mandatory regime without providing the certainty to businesses of a purely mandatory regime. However, the costs would be limited and greater certainty would be provided if the mandatory notification regime applied to a sufficiently well-defined area of the economy. Following amendments to the Enterprise Act 2002, enterprises that research, develop, produce or supply services involving quantum technologies are already subject to a stricter foreign investment regime than most other enterprises. (Paragraph 121)
30.In addition to the voluntary regime for national security and investment recently proposed by the Government, we recommend that the Government establishes a mandatory notification regime for enterprises researching, developing, producing or supplying services involving quantum technologies, when they are first approached by foreign entities with offers of investment fulfilling the criteria under which the Government can currently intervene under the Enterprise Act 2002. The sanctions for not reporting a relevant merger should include criminal offences, civil financial penalties and ‘director disqualification’. The National Quantum Technologies Programme, through the Hubs, Innovation Centres, new national quantum computing centre and training programmes, should raise awareness of, and provide guidance on, the mandatory notification requirements. The Government should also ensure that there is capacity within the National Programme for the provision of advice to relevant enterprises when specific cases arise. (Paragraph 122)
31.In situations that would be subject to a voluntary notification regime (for example where enterprises do not work with quantum technologies, or where transactions involving enterprises working with quantum technologies fall outside of the merger situations covered under the Enterprise Act 2002), it is possible that the Government will learn of a transaction that threatens national security after the transaction has completed. It is important that the Government is still able to act to protect national security in these cases. A time limit within which the Government could retrospectively intervene once it learns of a transaction would also incentivise enterprises who consider a transaction to be a potential threat to national security to notify the Government of it, without impacting upon enterprises involved in transactions that are clearly of no threat to national security. The Government’s proposed legislation includes such a period of six months—significantly shorter than the duration of equivalent periods in comparable regimes in other countries. The fact that equivalent periods are significantly longer across a diversity of comparable international regimes appears to be an argument for the UK to adopt a longer period, rather than, as the Business and Industry Minister suggested, a reason to not. (Paragraph 124)
32.We recommend that, wherever the proposed voluntary notification regime applies, the Government increases the period in which it can retrospectively intervene in business transactions, as a result of national security concerns, to five years, in line with other countries such as Germany. This would allow the Government a greater window to intervene where it is not notified of relevant transactions. This time limit should be reviewed, and amended if necessary, after five years, to see if it has been used and to see if it has placed burden on business. (Paragraph 125)
Published: 6 December 2018