A new UK research funding agency Contents

3UK ARPA’s form, function and place in the system

46.This Chapter considers UK ARPA’s form and function, as well as its place in the UK research and innovation landscape. It begins by addressing the matter of whether UK ARPA should have a ‘client’. It then considers what UK ARPA should do, i.e. what it should focus on, and how it should do it, i.e. how it should operate, with particular attention paid to the role of its director. The final part of the Chapter considers UK ARPA’s place in the UK research and innovation system.

What UK ARPA should focus on

Commercial engagement

47.The evidence was clear that UK ARPA’s success would in part depend on whether it can translate and scale its research outputs and innovations. Professor Mazzucato argued that the agency should “aim to leverage procurement and demand-side policies to “pull” technologies and innovation”.106 In the case of US DARPA, the Department of Defense—the military—serves as an end-customer.107 Professor Mazzucato acknowledged this: “the UK does not have a vast defence sector to perform this role as in the US”. As such, she suggested that the UK should “look to where past policies such as ‘Contracts for Difference’ in offshore wind, for example, have shaped demand”.108

48.Whatever UK ARPA focuses on (some potential areas are outlined at paragraphs 65–68), several evidence submissions emphasised the importance of effective engagement with commercial partners. Professor Richard Jones argued that although UK ARPA “should not have a core commercialisation goal or targets, since this would distract from its core strategic missions”, it should seek to engage with “the commercial sector, including small and medium sized companies as well as the larger, research and development focused organisations”.109 This reflects oral evidence which argued that, in the absence of a dedicated customer (like the Department of Defense for DARPA), the UK should—according to former DARPA director and Wellcome Leap CEO Dr Regina Dugan—focus on “commercial and industrial activities that can create these transitions and pull-throughs”.110

49.Similarly, CaSE (the Campaign for Science and Engineering) stressed the importance of a “clearly identified market for the research born from projects in order to pull the technology or innovation through to the market”.111 Adding that: “[i]t is hard to imagine a positive outcome for a new funding agency in the UK without a comprehensive public procurement strategy developed alongside”.112 Professor Sir Mark Walport agreed. He argued that, to be effective, UK ARPA “needs an environment where the products of innovation are sought, procured” and that “there needs to be a long time horizon for doing it”—this is because “[t]he market tends to be quite risk-averse”.113 Lord Johnson made similar comments, stressing the need for UK ARPA to be “different from the nearer-to-market innovation support provided by Innovate UK”.114 BEIS’s written evidence did not provide specific information regarding UK ARPA’s strategy for commercial engagement. It only stated that “the role of any specific ‘customer’ in providing pull-through for technologies […] need[s] to be tailored to the UK’s research and innovation landscape”.115

50.Questions about UK ARPA’s remit, organisation and governance would be made much more straightforward if the agency was established to serve a clear ‘client’—most likely a Government department, as is the case with US DARPA, which serves the Department of Defense. Potential candidates could include the Department of Health and Social Care (for a life sciences-focussed agency), the Department for Business, Energy and Industrial Strategy (for a Clean Energy/Net Zero mission) or the Ministry of Defence.

A clear, well-defined purpose

51.Written and oral evidence submitted to this inquiry stressed the need for the new agency to have a clearly defined purpose. As put by the University of Manchester:

[C]larity over its [UK ARPA’s] aims, core activities and management are essential if it is succeed. There is a risk that ARPA-like funding is seen to serve many different purposes by different players so clarity of purpose and mission is absolutely essential.116

The former Minister of State for Universities, Science, Research and Innovation, Lord Johnson, similarly argued that the Government must “establish a clear purpose for [UK ARPA] that is distinct from what UKRI is already doing or able to do”.117 Failure to do so may result in researchers applying for different pots of public money with identical proposals, running the risk of duplication of efforts.118

52.Professor Richard Jones, Chair in Materials Physics and Innovation Policy at the University of Manchester, agreed, suggesting that UK ARPA should have “a strong and enduring clarity of purpose”.119 Invoking the US Defense Advanced Research Projects Agency (DARPA), he argued that:

Part of [US D]ARPA’s success is complete clarity on both its fundamental purpose and who it is there to serve. Its purpose was, and is, to ensure the technological superiority of the US armed forces.120

Professor Jones went on to say that, although the benefits of DARPA’s innovations have spread beyond the military, i.e. to wider industry, the whole economy, and members of the public, it had—as put by its Deputy Director Dr Peter Highnam—“always had a very clear mission”, which was “to avoid and impose technological surprise” (prompted by the launch of the first artificial satellite, Sputnik, in 1957).121

53.Dr Highnam extolled the virtues of DARPA’s singular focus, arguing that: “to have national security as the mission helps; it frames everything”.122 The Royal Society and Cardiff University agreed, with the latter stating that the new agency should focus on “a small number of missions supporting a clear aim”.123

54.The importance of having a clear purpose was articulated by Dr Regina Dugan, CEO of Wellcome Leap—a recently established £250 million research funding agency backed by the Wellcome Trust—and a former DARPA director (from 2009–12), who argued in oral evidence that UK ARPA’s purpose should take account of where the UK has a “right to win”, i.e. where there is an existing “robust ecosystem”, drawing on the UK’s “good tradition in basic science” and its “commercial and industrial activities that can create transitions and pull-throughs”.124 This is broadly aligned with statements made in the July 2020 UK Research and Development Roadmap: “[t]his new research body [UK ARPA] will target areas where the UK can gain competitive advantage and lead the world in the creation of new technologies”.125

55.The need to define UK ARPA’s purpose was clearly articulated by Professor Sir Mark Walport and Lord Johnson. Both lamented the lack of clarity surrounding it, with Sir Mark stating that:

I found the discussion about ARPA rather curious because I have always been taught that form should follow function, yet we are having a discussion about a form—ARPA—without actually being clear on what its function is, which is critical.126

This reflected the National Audit Office’s evidence, which noted that arms-length bodies require “[c]larity of purpose and an appropriate form a structure to reflect that purpose.”127 Giving evidence to us in October 2020, Lord Johnson referenced the fact that little more information had been provided on UK ARPA since its original announcement in the 2019 Queen’s Speech in October:

We are now well over a year on but are still having some fairly high-level discussions about its exact purpose. That is important […] we seriously need something that resembles a Green Paper or a White Paper from Government, setting out clearly the purpose of a UK ARPA.128

56.Proposals for UK ARPA—outlined in the written evidence submitted by the Department for Business, Energy and Industrial Strategy (BEIS)—only gave an indication of its purpose, putting a lot of emphasis on plans to support “breakthrough technology” over “long time horizons” and “ambitious research”.129 Giving oral evidence, the Science Minister Amanda Solloway MP reiterated this stating that UK ARPA would “explicitly support ambitious, long-term science that cuts bureaucracy.130

57.The Government must, in its response to this Report, clearly define UK ARPA’s purpose. This will, necessarily, be tied to and shaped by a specific client the Government identifies for ARPA.

Mission-based research with transformative potential

58.The evidence submitted to our inquiry generally agreed that the new agency should be driven by ‘missions’ or ‘challenges’. Professor Mariana Mazzucato, Chair in the Economics of Innovation and Public Value at University College London, argued that UK ARPA should take a “challenge-led approach to innovation policy and industrial strategy”, adding that it should start by “picking the problem” it wants to solve, rather than “specifying the technology or solution” first.131 Professor Richard Jones agreed. If UK ARPA wanted the same “longevity and political staying power” as US DARPA, he argued that its purpose must be “closely coupled to the strategic goals of the nation”.132 Indeed, the University of Manchester’s submission to this inquiry highlighted the fact that US DARPA “supports strategic research” as one of its “important” features; it focused on:

research that addresses a specific problem or class of problems (including defined ‘missions’), developing knowledge, insights, methods or technologies that may underpin innovative solutions.133

The emphasis placed on a ‘mission-based’ approach is analogous to the comments from Professor Mazzucato outlined above and reflects written evidence submitted by Universities Scotland, Cardiff University, the University of Oxford, and the Royal Society, which variously recommended that UK ARPA should focus on challenges or ‘missions’ driven by societal and technological need with transformative potential.134 Former Science Minister Lord Johnson agreed that UK ARPA should have a mission-based focus, prioritising the identification of: “a technology that we know we are going to need but does not exist today, and developing the research that will enable us to create those applications in future”.135

59.Science Minister Amanda Solloway MP appeared to endorse this approach and invoked some of US DARPA’s most significant discoveries, e.g. ‘ARPANET’ (a foundation of the Internet), she stated: “[w]hen we think about ARPA, and when we think about what we are aiming to achieve, we probably do not know what it is, because it might not exist yet”.136 In addition to this, proposals for UK ARPA—outlined in written evidence submitted by BEIS—suggested the agency would prioritise strategic, goal-oriented research with UK ARPA tackling: “ambitious technical challenges for a clear purpose, at a scale where succeeding produces transformational change in the economy and wider society”.137

60.UK ARPA can play an important role in the research and innovation system by pursuing goal-oriented research, driven by societal need, with the potential to produce lasting, transformational changes. UK ARPA should focus on ‘mission-based’ or ‘challenge-led’ research’, which has the potential to make transformative changes with implications for the economy and wider society.

Long-term research projects that embrace risk

61.There was agreement in the written and oral evidence that in order to effectively pursue strategic, goal-oriented research with transformative potential, research projects must be carried out over the long-term and embrace risk. Giving oral evidence, US DARPA’s Deputy Director, Dr Peter Highnam,138 its former director Dr Regina Dugan (now CEO of Wellcome Leap),139 and Massachusetts Institute of Technology (MIT) lecturer William Bonvillian,140 cautioned that transformational change can take a long time—a decade or more—and requires a risk-tolerant approach. In line with this, the University of Oxford’s written evidence argued that:

ARPA offers the opportunity to undertake long-term, larger-scale, risky and ambitious projects with the potential to be ‘game-changing’ in a broadly defined area, along with increased flexibility, and a tolerance of the necessary high failure rate that goes with this approach.141

Professor Mazzucato agreed.142

62.The University of Manchester argued that a long-term outlook was as necessary as its appetite for risk:

As important as ARPA’s approach to risk is that its funding is long-term. The funding for UK ARPA should also be of longer duration to allow radical ideas the time to reach a level of maturity without being stifled by premature scepticism.143

Cardiff University made similar recommendations. It advocated “long-termism”, i.e. “10–15 year programmes”, arguing that the agency’s focus should be on “longer-term programmes rather than projects”, the rationale being that: “[l]onger horizons are also conducive to the kind of transformative breakthroughs the agency is looking to support”.144 Giving oral evidence to this inquiry, former Science Minister Lord Johnson agreed with this timescale, suggesting that UK ARPA should “identify a couple of technologies that we know we are going to need as a society in 10 or 15 years’ time”.145 Indeed, several submissions specifically recommended a 10–15 year timescale.146

63.The written evidence submitted by BEIS aligned with the evidence outlined in paragraphs 61 and 62. It explicitly recognised the need to embrace risk, noting that the opportunities UK ARPA will pursue will “bring risks of failure–and some programmes will fail”.147 Further, the submission repeatedly emphasised the Government’s aim for UK ARPA to pursue “long-term research and innovation” projects.148 In addition, referencing the March 2020 Budget, the BEIS evidence stated that £800 million of funding would “support the first years of UK ARPA’s operation”.149 It has been reported that this funding will be guaranteed over five years.150 The longer-term future of UK ARPA is less certain, with the BEIS written evidence stating that: “[f]uture funding decisions can then be made in light of how effectively ARPA has embedded itself in the UK research landscape, and any initial successes from the research projects it has supported”.151 It is therefore unclear if UK ARPA will be able to guarantee funding to research programmes over the 10–15 year timelines that were recommended by the evidence.

64.It is clear that the new funding agency should embrace risk—and be prepared for some of its projects to fail. Further, this should be combined with a long-term outlook, with research programmes spanning 10–15 years. Currently, it appears that funding is only guaranteed for the agency’s first five years, which could limit its scope for making truly transformational breakthroughs. If the Government wants UK ARPA to pursue research programmes with the potential to have transformational effects on society—and its proposals suggest that it does—UK ARPA must, firstly, fund research that would be considered too risky by the existing research and innovation system and be prepared for some programmes to fail. Secondly, the Government must accept that these projects will take a long time, potentially 10–15 years, to ‘bear fruit’. The Government must meet this ambition with long-term funding for the agency and the programmes it will fund.

Potential areas of focus

65.Former DARPA director and current CEO of Wellcome Leap, Dr Regina Dugan, recommended that UK ARPA’s focus should be shaped by the UK’s relative strengths, highlighting the presence of the NHS and the potential for “fluid transition pathways to breakthroughs in health across your health system”.152 The CBI made similar comments:

The Department of Health seems especially well suited to act as the key driver for the new agency and serve as a buyer for future commercialisation. As one of the highest sources of government expenditure as a percentage of GDP in the UK, public health is undoubtedly an area that would benefit from greater innovation.153

Referencing the launch of the Sputnik satellite—widely credited as the impetus for US DARPA—Dr Dugan argued that the coronavirus pandemic “might inspire what we consider to be a health age”.154 Indeed, when asked what UK ARPA should focus on, Professor Richard Jones commented that “[t]here are huge challenges in healthcare”.155 Written evidence from Universities Scotland and Cardiff University also recognised the potential contribution that UK ARPA could make to healthcare generally and post-pandemic recovery specifically.156

66.UKRI’s former CEO Professor Sir Mark Walport argued that understanding the physiology of human cognition is the greatest scientific challenge that faces us”. He continued:

In order to solve that problem, you need to solve a whole series of intermediate problems, such as developing artificial general intelligence, developing an autonomous transport system for a big city, creating a digital plan for the UK, greening the planet—how one could improve photosynthesis, improve food and capture CO2 from the air. Material sciences offer huge possibilities.157

He suggested that “any one” of those challenges “could absorb an ARPA of the size of what is proposed”.158

67.Professor Mariana Mazzucato argued that the new funding agency should look to the 2017 Industrial Strategy’s four ‘Grand Challenges’ (outlined at paragraph 11).159 Several other submissions agreed that UK ARPA should take inspiration from the Grand Challenges.160 Northumbria University, however, disagreed; it argued that UK ARPA’s focus “should be independent of the Government of the day”.161

68.A number of written evidence submissions—as well as oral evidence from Professor Jones—singled-out the Government’s target of achieving ‘Net Zero’ by 2050 as a potential suitable focus.162 Professor Mazzucato also singled-out climate change, arguing that it represented the right type of “very broad challenge” that would suit a UK ARPA.163 In addition, the University of Oxford, the Royal Society and Professor Jones recommended a focus on sovereign capability issues, i.e. cyber security and defence, and threats from hostile state and non-state actors.164

Determining UK ARPA’s focus

69.The evidence was divided on how UK ARPA’s focus should be determined. Professor Richard Jones argued that the organisation should not choose its own remit. Instead, it should be the result of “some long thinking by Government”, but also that it “should be a wider discussion with many people feeding into it”.165 Others, however, including for example Northumbria University, argued that UK ARPA’s focus was not for the Government to decide.166 Indeed, if the Government did decide the agency’s focus, there was a risk—they argued—that it could contravene the Haldane principle, i.e. the principle that decisions on individual research proposals are best taken following an evaluation of the quality and likely impact of the proposals e.g. a peer review process.167 However, the John Innes Centre argued that, with respect to UK ARPA, “the Haldane principle is irrelevant” and that “Ministers should prioritise the initial strategic foci of the agency”.168

70.The Science Minister, Amanda Solloway MP, told us that UK ARPA’s direction would be decided by scientists—not politicians.169 She stated that “it is so important that we have an expert scientist leading ARPA” and, regarding its focus, that “[i]t will be about the scientists defining that”.170 Further, she argued that it was difficult to define UK ARPA’s focus because: “when we think about what we are aiming to achieve, we probably do not know what it is, because it might not exist yet”.171 However, former DARPA director and current Wellcome Leap CEO Dr Dugan stressed the importance of having a clear concept and purpose for UK ARPA before appointing its director. She explained that the “clarity of thought” shown by the Wellcome Trust was “an important part” of why she accepted the offer to become Wellcome Leap’s first CEO. She went on to say that, once the initial focus was decided, it could develop and evolve with its appointed director:

You want it to have a certain area of focus, you want there to be clarity about the mission of the organisation, which is necessary for getting the right talent, and that talent will help you further shape the strategy.172

Budget constraints

71.The majority of the evidence we received argued that UK ARPA’s proposed budget of £800 million over five years would restrict its focus to—as put by former Science Minister Lord Johnson—“a very distinct single or dual mission”.173 Former UKRI CEO Sir Mark Walport and MIT lecturer William Bonvillian agreed.174 Similar points were made by several written evidence submissions, which warned against UK ARPA’s funding being spread too thinly, as this would likely result in it failing to achieve anything.175

72.It is clear that UK ARPA’s proposed budget limits it to pursuing one or two central missions—any more than this would risk spreading its budget too thin, thus undermining its effectiveness. Given the size of UK ARPA’s proposed budget we recommend that the new agency focuses on no more than two strategically important missions. This will increase the agency’s chances of delivering on its stated aims of making breakthroughs with transformative implications for the economy and wider society.

73.The Government must think carefully about what the new agency’s focus might be before recruiting a director. It should consider the potential areas of focus recommended in the written and oral evidence submitted to this inquiry. It could also consider aligning UK ARPA’s focus with other identified priorities and reviews, for example the Industrial Strategy, Net Zero or the Integrated Review of Security, Defence, Development and Foreign Policy. Clarity in this regard will ensure that the agency is led by the best person possible who can, in turn, help to refine and shape the organisation’s focus.

74.The Haldane principle should not apply to how UK ARPA’s overall focus is determined. Ministers should play a role in shaping ARPA’s initial focus.

Organisational structure

75.Written and oral evidence repeatedly referenced US DARPA’s organisational structure, arguing that UK ARPA should seek to replicate it. For example, Professor Mariana Mazzucato highlighted DARPA’s “flat internal structure” as one of its “key characteristics”.176 Former US DARPA director Dr Regina Dugan elaborated on the benefits of its flat structure:

Here you have an organisation that moves extremely fast, and needs to. It is very flat. It takes on the strategic intent, the personality and the style of the individuals inside the organisation. That is a necessary attribute of that kind of speed and agility, that kind of independence.177

Thus, DARPA’s flat, non-hierarchical structure facilitated quick, unilateral decision-making, they argued. Dr Dugan partly attributed this to its lean structure:

DARPA is a $3.5 billion-a-year agency with about 100 programme managers but about 250 full-time staff. That is about $15 million per FTE. That is extremely lean. There is no ability to have a lot of process and bureaucracy in that. There must be speed, it must be highly agile, and it must operate independently.178

76.In line with this, evidence from BEIS and the Science Minister Amanda Solloway MP emphasised the need for UK ARPA to be agile with as limited bureaucracy as possible.179 Further, the evidence from BEIS suggested UK ARPA would be lean: “[t]he organisation itself will be small, with a limited number of specialised directors and programme managers”.180 However, it did not specify whether the new agency would have a flat, non-hierarchical structure, as recommended by the evidence. Correspondence from Minister Solloway stated that the Government would “create a structure that enables the organisation to operate”, but did not elaborate on how it would do this—or what it would look like.181

77.US DARPA and its ‘clones’ have shown the advantages of having a small, lean organisation with limited bureaucracy. Nevertheless, we think that the ultimate form and structure of the organisation should be shaped by and evolve with its appointed director.

Operational independence

78.As noted at paragraph 75, US DARPA’s operational independence was also considered key. Professor Mazzucato pointed out that DARPA is “flexible and independent from branches of Government”.182 University College London’s Institute for Innovation and Public Purpose argued that “[D]ARPA was successful because it was given the space within the American bureaucracy to take risks and to make big bets on technologies.183 Former DARPA Director Dr Dugan agreed. If UK ARPA wanted to make potentially transformative breakthroughs—and the BEIS evidence explicitly stated that it did—she argued that it would be important to recognise that:

in their earliest phases those breakthroughs or the activities associated with creating those breakthroughs can feel quite controversial. Having the independence to make those decisions separate from political influence is an important attribute. The agency must operate independently for its decisions on individual programmes.184

79.Former UKRI CEO Professor Sir Mark Walport argued that, in order for UK ARPA to effectively tackle “ambitious technical challenges”,185 “the critical question” was whether it would “have the freedom to take the risks over the timescales that will enable these challenges to be tackled”:186

It will take the paymasters—Government and the Treasury—to make the body truly arm’s length in a way that it can tackle the challenges over the timescales that are necessary and not micromanage.187

These comments underlined a point made by the University of Manchester, who argued that UK ARPA:

needs to be given sufficient time (at least 10 years) to bed in and prove its effectiveness. Constant chopping and changing of organisational structures, remits and priorities will not work, however well intentioned.188

Other evidence submissions made similar points.189 Former Science Minister Lord Johnson stated that there were “mechanisms that you could try to include” to protect against “ministerial interests du jour chopping and changing and leading to a certain short-termism in how projects are identified”.190

80.Correspondence from Minister Solloway explicitly recognised that “[f]or this new UK funding agency to be successful it must have independence, over both operational and strategic matters”.191 Evidence from the National Audit Office however highlighted that “getting the balance between independence and control right” was “[o]ne of the biggest challenges in setting up any new public body”.192 Its evidence stated that:

Getting the best from arm’s-length bodies means balancing assurance and control with an appropriate degree of independence consistent with an arm’s-length body’s function, for example freedom to form impartial judgements and apply technical or operational expertise. This is, in itself, not an easy balance to strike.193

Further, it warned that “if independence reduces too far, the benefits which arm’s-length bodies are intended to bring might be restricted, and the very point of having an arm’s-length body compromised”.194

81.We welcome the Government’s commitment to give UK ARPA independence over both operational and strategic matters. With that said, there will still be a need for appropriate Government oversight of the organisation’s operations—given that £800 million of public money has been allocated to it—but UK ARPA will require bespoke Government scrutiny arrangements to operate effectively. The Government should set out, drawing on precedents such as scrutiny of the Security Services by the Intelligence and Security Committee, how this oversight will work in practice.

Organisational culture

82.There was agreement in the evidence that getting UK ARPA’s culture right would be central to its success, and that getting it right “at the outset is absolutely critical”, according to MIT lecturer William Bonvillian.195 The University of Oxford stated that the ‘right’ culture for UK ARPA was “a research environment in which innovation is incentivized and rewarded”.196 The evidence was clear that UK ARPA’s leadership would be crucial to establishing the right culture. Witnesses with first-hand experience of US DARPA (i.e. Dr Peter Highnam, Dr Regina Dugan and Mr William Bonvillian) recommended that UK ARPA’s director should ideally be someone with experience of US DARPA itself. Dr Highnam said: “[i]f the goal is to create something that is close to DARPA, I do not see another way of doing it, except having people there who have been through it and believe in it”.197 The Government has stated that UK ARPA would be “broadly modelled” on US DARPA.198 Current UKRI CEO Professor Dame Ottoline Leyser suggested that UK ARPA debates were overly focused on DARPA and that more focus should be on its potential role as a funder of experimental research.199

83.The Government has not stated who will lead UK ARPA. Minister Solloway made clear to us that she wants to appoint an “expert scientist” to lead it.200 Correspondence from the Minister stated that “an exceptional leader” would be appointed “in due course”.201 There was no mention, however, of whether it would be someone with DARPA experience.

84.The pool of potential candidates for director should not necessarily be restricted to expert scientists. The Government should be open minded on who the new agency’s director might be, should not disregard anyone at this early stage, and should be open to appointing an individual with a bold vision, creativity and drive.

Significant freedoms

85.Whoever leads UK ARPA, the evidence was clear that they should play an important role in the recruitment of its personnel. For example, Professor Richard Jones argued that “the major job of the director will be to recruit the programme leaders”. University College London’s Institute for Innovation and Public Purpose told us that UK ARPA’s programme leaders—or managers—should, like the organisation itself, be given “independence of decision-making and program management”.202 Professor Jones agreed. He recognised that UK ARPA’s programmes should be set up with “considerable rigour and scrutiny” but once established: “the programme leaders should have very considerable discretion in assigning and redirecting the funding without further bureaucratic overheads”.203 The current and former UKRI CEOs—Dame Ottoline Leyser and Sir Mark Walport—took the same view. They both stressed the importance of UK ARPA being staffed by “visionary researchers” given the freedom they need to pursue their vision, with the former likening its environment to a ‘skunkworks’ (i.e. an organisation with a high degree of autonomy and limited bureaucracy).204 BEIS’s evidence explicitly recognised the need for UK ARPA to by staffed by “programme managers who are given significant freedoms to manage its R&D activities”.205 This was consistent with the views expressed in the vast majority of written evidence.

86.UK ARPA should have a distinct and flexible organisational structure. The Government should seek to create an environment characterised by a high degree of autonomy and limited bureaucracy. The Government should explain how it intends to establish and foster this culture in the new agency.

87.It is clear that the agency’s director will play a crucial role in defining its culture. The new director must therefore be committed to creating a culture that empowers and emboldens UK ARPA’s employees. Depending on how closely the Government wants UK ARPA to replicate US DARPA, it should consider appointing a director with first-hand experience, or at least a good understanding, of DARPA in the US.

Outstanding talent

88.The evidence we received was clear that UK ARPA’s programme managers must be of the highest calibre. Sir Mark argued that recruiting the “very best” constituted the “real challenge for setting up an ARPA-like organisation”.206 Professor Mazzucato argued that US DARPA did this successfully by “making it an honour for scientists to work towards solving grand challenges”. She argued that “[t]his must be a consideration for UK ARPA”.207 Professor Jones acknowledged that “it will be a hard job to find them” because: “[t]hey will be enormously high-calibre people, and probably enormously successful in academia or industry, or preferably both.”208 Former DARPA director Dr Regina Dugan outlined the scale of the challenge:

They very often are entrepreneurial in their ambitions. They are impact oriented […] They are very much focused on the advancement of the science and engineering but they have CEO-like qualities […] they are the best in class scientists, engineers and CEOs.209

In addition, several submissions suggested that UK ARPA personnel should be ‘disruptors’ with ideas “which are born not only from institutions which have stood for centuries”.210

89.MIT lecturer William Bonvillian argued that the “special kinds of hiring authority” given to US DARPA were essential for getting the best people. The consensus was that UK ARPA would require a similar level of privilege, as Sir Mark Walport argued:

ARPA/DARPA recruited many people from the private sector, and in order to do that they needed two things. First, they needed the freedom to operate. Secondly, they needed a competitive salary.211

90.Former Science Minister, Lord Johnson, made a similar point, stating that “[t]he qualities required are going to be hard to secure, certainly at the normal rates of pay that we are used to.”212 The Government recognised in evidence the need for the agency’s staff to be high-calibre and well-paid: BEIS’s Deputy Director for UKRI Sponsorship and Advanced Research Projects Agency Sarah Hodgetts told us that: “We recognise that remuneration will be key, because attracting the calibre of person the Minister has just described is likely to be outside the normal pay restrictions”.213

91.Government proposals do not specify how many programme managers UK ARPA would employ, though BEIS’s evidence stated it would be a “limited number”.214 MIT lecturer William Bonvillian pointed to the DARPA ‘clone’ Advanced Research Projects Agency–Energy, or ARPA-E, which had a budget “roughly twice the size” of what has been proposed for UK ARPA and employed “about 12 programme managers”.215 He suggested UK ARPA should seek to replicate this. Written evidence largely agreed with this.216

92.UK ARPA’s director should play a key role in the recruitment of its personnel. Programme managers should be ambitious ‘disruptors’, from a range of backgrounds, who are impact oriented, focused on the advancement of science and have CEO-like qualities. Attracting these people will require sufficient remuneration. The Government should explain how UK ARPA’s programme managers can be appointed outside normal pay restrictions in order to ensure that they are sufficiently remunerated.

UK ARPA’s place in the research and innovation system

Should UK ARPA sit inside or outside UKRI?

93.The Department for Business, Energy and Industrial strategy told us that the new UK research funding agency would be: “an addition to the funding landscape that will complement existing funding arrangements provided by UKRI and others”.217 This indicated that UK ARPA might not sit inside the UKRI ‘umbrella’. However, the November 2020 Spending Review stated that the first £50 million of the £800 million earmarked for “high risk, high-payoff” research would be included in the £350 million allocated to UKRI for 2021–22 and there was no mention of a new agency.218 This suggested that UK ARPA might be created inside UKRI. Former Science Minister, Lord Johnson, strongly argued for creating UK ARPA within UKRI: “I do not see any reason why UKRI, as a young organisation, could not quite easily incubate an ARPA-like body in a way that enabled it to do high-risk, high-reward, use-inspired research”.219 Former UKRI CEO, Professor Sir Mark Walport, took a similar view, arguing that UKRI would be “perfectly capable of running APRA-like programmes”.220 Further, Professor Richard Jones argued that there was “no compelling reason why the UK ARPA shouldn’t be set up within UKRI”.221 Bournemouth University and Northumbria University also agreed, while Loughborough University gave qualified support to this argument.222

94.However, the majority of the evidence which offered a view on this issue agreed that UK ARPA should sit outside UKRI.223 For example, CaSE stated that “there is no obvious place for [UK ARPA] to ‘slot in’ to UKRI”.224 Former Minister of State for Universities and Science Lord Willetts has advocated keeping UK ARPA and UKRI as “distinct identities”.225 The current CEO and Chair of UKRI took a similar view: Professor Dame Ottoline Leyser has argued that there is a “strong argument for an independent organisation”, while Sir John Kingman stated that he was “sympathetic” to idea that UK ARPA should sit “outside the UKRI structure”.226

Reasons for and against situating the new agency inside UKRI

95.Arguments in favour of situating the new agency inside UKRI centred on speed. For example, former Science Minister Lord Johnson said it would be “much less disruptive than legislating to create a new standalone quango”, adding that it “could make use of the general functions and legislative arrangements that any new body requires but that are already in place for UKRI”, allowing it to “become rapidly operational and begin disbursing money”.227 Professor Richard Jones, as well as the University of Edinburgh and Professor Jim Watson and Anna Watson, made the same argument.228 Further, Bournemouth University argued that UK ARPA would be “best placed within UKRI” as this would help facilitate collaboration and cross-fertilisation across projects with other parts of the research system. This would reduce the risk of the same application being submitted to several Government agencies.229 Northumbria University took a similar view.230

96.We heard that creating UK ARPA outside of the UKRI ‘umbrella’ would require the use of primary legislation and could take more than a year to establish.231 Situating it inside UKRI, however, would only require secondary legislation and could take around three months, according to Lord Johnson.232 He argued that because more than a year had passed since proposals for the agency were announced (in the October 2019 Queen’s Speech)—without significant progress being made—it was incumbent on the Government to “let UKRI use the powers it has to get this thing going quickly”.233 He recommended that “for the initial period of its existence, it should be incubated in UKRI”, adding that if “it is found that it needs a greater degree of autonomy” it could be “spun out as a standalone organisation”.234

97.As Lord Johnson alluded to, the principal argument for creating a new independent agency was to ensure that UK ARPA had sufficient freedom to operate which—as outlined earlier in paragraphs 78–80—was considered essential for it to be effective. We note National Audit Office guidance on establishing new public bodies which states that there should be “a clear advantage in establishing a new organisation”.235 In line with this, the University of Edinburgh argued that a new independent agency would have a “blank sheet” allowing it to be “innovative in approach, culture and thinking”.236 The University of Birmingham agreed, stating that UK ARPA programmes would need “different structures and mechanisms for selection management and reporting”.237 Similarly, CaSE, Fraunhofer UK Research Ltd and Professor Jim Watson and Anna Watson raised concerns about UK ARPA’s independence and ability to take risks if it were embedded in the UKRI framework.238 The current UKRI CEO and Chair, Dame Ottoline Leyser and Sir John Kingman both agreed. Dame Ottoline stated that “[h]aving some money that is protected to do only things that are novel and contentious is quite a valuable part of the landscape”. While Sir John argued that creating UK ARPA outside UKRI would allow it “the freedom to operate in a more freewheeling way”.239 Even those who argued that the agency should sit inside UKRI acknowledged—for example as Lord Johnson did—that it would require a “far greater degree of autonomy than we are used to”.240

98.Another reason given by CaSE centred on the risk of overcomplicating UKRI’s portfolio whose creation represented “an already significant shift in the UK’s research funding landscape”.241 Indeed, the Minister was clear that the Department for Business, Energy and Industrial Strategy was still “working [its] way through quite a few particular questions”, stressing the importance of listening to stakeholders’ concerns “carefully” and the need to make sure that UK ARPA was “absolutely fit for purpose”.242 Notably, the current UKRI CEO and Chair were clear that, wherever it was located, UK ARPA could work effectively as part of the research and innovation system. Sir John Kingman pointed out that UKRI already worked “very closely with massive funders of research who are not part of UKRI”.243 Dame Ottoline was similarly supportive but stressed that, if UK ARPA is situated inside UKRI, it must be given certain assurances so that it can effectively pursue ‘novel and contentious’ research:

It is absolutely crucial that it has protections in the context of its budget. It needs to be able to make long-term very stable investments. It needs to work very freely and fluidly. If those protections can be delivered inside UKRI, so that it is not being asked endlessly whether something is novel or contentious, it could operate entirely effectively inside UKRI. It could also operate entirely effectively outside UKRI.244

99.We recognise that there could be advantages to establishing the new UK research funding agency inside UKRI: it would be quicker; facilitate its communication and collaboration with the existing research and innovation system; and reduce the risk of threatening the coherence of funding and research brought by UKRI. However, we note concerns that UK ARPA might not be able to operate effectively and with sufficient freedom if it was situated inside UKRI’s framework, for example, being unable to pursue ‘novel and contentious’ activities without case-by-case Ministerial approval. On balance, we agree with these concerns. To be effective, the new UK research funding agency must be able to operate independently and pursue ‘novel and contentious’ research without case-by-case Ministerial approval. If this is not possible within UKRI then there is merit in the Government establishing UK ARPA as a separate entity. Therefore, the Government must clarify whether it intends to establish UK ARPA as a separate body or an agency within UKRI. In doing so, it should be clear about whether this will require primary or secondary legislation and the likely timescales involved.

The new agency’s relationship with existing bodies

100.Former Science Ministers Lord Johnson and Lord Willetts have expressed concerns that UK ARPA will overlap with Innovate UK and the Industrial Strategy Challenge Fund in particular. Lord Willetts has described how UK ARPA will relate to Innovate UK as a “tricky organisational issue” given that the latter has functioned as a means of “strategic horizon scanning on new technologies”, which bears similarities to UK ARPA proposals.245 Similarly, it was pointed out that UK ARPA’s stated aims were not “a million miles away” from the Industrial Strategy Challenge Fund (ISCF).246 Indeed, much of the evidence argued that UK ARPA’s areas of focus should be aligned with those in the Industrial Strategy.247 Lord Johnson argued that the Government must think through how UK ARPA would “relate to Innovate UK” and how it would “differentiate [UK] ARPA’s role from those of the much larger missions within the ISCF in a way that is not confusing and duplicative”.248 Further, he recommended that the legislation used to create the new agency “must ensure” that it has: “the power–and, where appropriate, the duty–to cooperate and share information with UKRI to ensure that the two bodies work together most effectively”.249 Others including Professor Richard Jones, the University of Oxford and the Royal Society made similar points.250

101.The vehicle used to establish UK ARPA (i.e. legislation) must allow for clear lines of communication between it, UKRI and the wider system. This could be established through a memorandum of understanding (MoU) that both parties agree to. It should ensure that UK ARPA has the power—and, where appropriate, the duty—to cooperate and share information with UKRI to ensure that the two bodies work together effectively, and vice versa. What is deemed appropriate in this context must be weighed against UK ARPA’s requirement for operational independence, which will necessitate bespoke oversight arrangements, including possibly less formal co-ordination with existing parts of the system than what is customary.

106 UCL Institute for Innovation and Public Purpose (RFA0085)

108 UCL Institute for Innovation and Public Purpose (RFA0085)

109 Soft Machines, UK ARPA: An experiment in science policy?, accessed 7 January 2021

111 Campaign for Science and Engineering (CaSE) (RFA025)

112 Campaign for Science and Engineering (CaSE) (RFA025)

115 Department for Business, Energy and Industrial Strategy (RFA0052)

116 University of Manchester (RFA0024)

117 Policy Exchange, Visions of Arpa (January 2020), p47

118 University of Manchester (RFA0024); Policy Exchange, Visions of Arpa (January 2020), p47

119 Soft Machines, UK ARPA: An experiment in science policy?, accessed 7 January 2021

120 Soft Machines, UK ARPA: An experiment in science policy?, accessed 7 January 2021

123 The Royal Society (RFA0044); Cardiff University (RFA0018)

125 Department for Business, Energy and Industrial Strategy, Policy Paper: UK Research and Development Roadmap, accessed 7 January 2021

127 National Audit Office (RFA0050)

129 Department for Business, Energy and Industrial Strategy (RFA0052)

131 UCL Institute for Innovation and Public Purpose (RFA0085)

132 Soft Machines, UK ARPA: An experiment in science policy?, accessed 7 January 2021

133 University of Manchester (RFA0024)

134 Universities Scotland (RFA0010); Cardiff University (RFA0018); University of Oxford (RFA0079); The Royal Society (RFA0044).

137 Department for Business, Energy and Industrial Strategy (RFA0052)

141 University of Oxford (RFA0079)

142 UCL Institute for Innovation and Public Purpose (RFA0085)

143 University of Manchester (RFA0024)

144 Cardiff University (RFA0018)

146 Northumbria University (RFA0049); University of the West of Scotland (RFA0096); Norwich Research Park (RFA0099); WMG (RFA0100).

147 Department for Business, Energy and Industrial Strategy (RFA0052)

148 Department for Business, Energy and Industrial Strategy (RFA0052)

149 Department for Business, Energy and Industrial Strategy (RFA0052)

150 Policy Exchange, Visions of Arpa (January 2020), p 23

151 Department for Business, Energy and Industrial Strategy (RFA0052)

153 The Confederation of British Industry (CBI) (RFA0004)

156 Universities Scotland (RFA0010); Cardiff University (RFA0018)

159 UCL Institute for Innovation and Public Purpose (RFA0085)

160 The Royal Society (RFA0044); Universities Scotland (RFA0010); WMG (RFA0100); The Alan Turing Institute (RFA0087); University of Manchester (RFA0024).

161 Northumbria University (RFA0049)

162 Q57; The Royal Society (RFA0044); The Royal Academy of Engineering (RFA0021); Cardiff University (RFA0018)

164 University of Oxford (RFA0079); The Royal Society (RFA0044); Soft Machines, UK ARPA: An experiment in science policy? (30 January 2020), accessed 7 January 2021

166 Northumbria University (RFA0049)

167 Higher Education and Research Act 2017, section 103

168 John Innes Centre (RFA0042)

175 King’s College London (RFA0053); Aston University (RFA0045); Royal Society of Biology (RFA0073); John Innes Centre (RFA0042); Aerospace Technology Institute (RFA0012).

179 Department for Business, Energy and Industrial Strategy (RFA0052); Q163,161

180 Department for Business, Energy and Industrial Strategy (RFA0052)

183 UCL Institute for Innovation and Public Purpose (RFA0085)

185 Department for Business, Energy and Industrial Strategy (RFA0052)

188 University of Manchester (RFA0024)

189 Universities Scotland (RFA0010); Institute for Development Studies (RFA0015); University of Oxford’s Future of Humanity Institute and University of Cambridge’s Centre for the Study of Existential Risk (RFA0061)

192 National Audit Office (RFA0050)

193 National Audit Office (RFA0050)

194 National Audit Office (RFA0050)

196 University of Oxford (RFA0079)

198 Prime Minister’s Office, Queen’s Speech Lobby Pack 2019 (December 2019), p 93

202 UCL Institute for Innovation and Public Purpose (RFA0085)

203 Soft Machines, UK ARPA: An experiment in science policy? (30 January 2020), accessed 7 January 2021

205 Department for Business, Energy and Industrial Strategy (RFA0052)

207 UCL Institute for Innovation and Public Purpose (RFA0085)

210 Northumbria University (RFA0049). See also: Unilever (RFA0069); ORCA Computing (RFA0095); University of Birmingham (RFA0035).

214 Department for Business, Energy and Industrial Strategy (RFA0052)

216 For examples see Universities Scotland (RFA0010) and Royal Society of Chemistry (RFA0017)

217 Department for Business, Energy and Industrial Strategy (RFA0052)

218 HM Treasury, Spending Review 2020, Cm 330, November 2020, p 79

221 Soft Machines, UK ARPA: An experiment in science policy? (30 January 2020), accessed 7 January 2021

222 Bournemouth University (RFA0032); Northumbria University (RFA0049); Loughborough University (RFA0037).

223 For examples see: Royal Society of Biology (RFA0073); University of Edinburgh (RFA0036); Fraunhofer UK Research Ltd (RFA0093); University of Birmingham (RFA0035); Cardiff University (RFA0018); Aston University (RFA0045).

224 Campaign for Science and Engineering (CaSE) (RFA0025)

228 Soft Machines, UK ARPA: An experiment in science policy? (30 January 2020), accessed 7 January 2021; University of Edinburgh (RFA0036); Professor Jim Watson and Anna Watson (RFA0092).

229 Bournemouth University (RFA0032)

230 Northumbria University (RFA0049)

235 National Audit Office (RFA0050)

236 University of Edinburgh (RFA0036)

237 University of Birmingham (RFA0035)

238 Campaign for Science and Engineering (CaSE) (RFA0025); Fraunhofer UK Research Ltd (RFA0093); Professor Jim Watson and Anna Watson (RFA0092).

241 Campaign for Science and Engineering (CaSE) (RFA0025)

247 See paragraph 67 and 68.

250 Soft Machines, UK ARPA: An experiment in science policy? (30 January 2020), accessed 7 January 2021; University of Oxford (RFA0079); Royal Society (RFA0044)

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