House of Lords - Science and Technology

Select Committee on Science and Technology Fifth Report

FIFTH REPORT SESSION 2002-03

by the Select Committee appointed to consider Science and Technology.

Ordered to Report:

SCIENCE & THE RDAs:

SETting the regional agenda

CHAPTER 1: Executive Summary

Overview of the Report

Science, Engineering & Technology in a modern economy

1.1 The success of a modern economy turns crucially on its ability to innovate — to produce goods and services that prosper in increasingly competitive and global markets. Much of that innovation is technological. Either directly or indirectly, it involves the application and exploitation of Science, Engineering and Technology (SET), in which the UK has under-regarded strengths. With only 1% of the world's population, we carry out 4.5% of world science and publish 8% of science papers. Furthermore, UK scientists receive 10% of internationally-recognised science prizes[1].

1.2 The English structures for encouraging innovation as a driver of economic growth were substantially changed four years ago by the introduction of nine Regional Development Agencies (RDAs)[2]. They have public funds of approaching £2 billion a year and mobilise substantial other resources for regional development. A number of their objectives — for example, in relation to innovation and skills — have a direct bearing on the country's SET base, while others (such as regeneration) can benefit from SET input.

Our Inquiry

1.3 Our Inquiry has looked at the way these comparatively young bodies interact with the SET base and the nature of their relationships, on SET-related matters, at both regional and national levels. As our wide-ranging Report and the detailed recommendations (for convenience, repeated below) show, this has proved a fertile area for study.

1.4 These are still early days for the RDAs. Even with the improvements we recommend, the lead-time on SET-related activities means that it will be some years yet before their full potential can be realised. Moreover, the context for their activities is still evolving. We are therefore minded to revisit the whole topic in, say, five years' time to examine the extent to which SET has been properly integrated into the regional agenda.

The main message

1.5 The main message of our Report is the need for coherence, longer term perspectives and reduced bureaucracy. There is a great deal of activity at regional, national and European levels encouraging the exploitation of SET for economic gain. The picture has become more complex with the establishment of the RDAs.

1.6 Our principal finding is the need for a rationalisation of all this activity to facilitate better SET exploitation. That rationalisation is about more than reducing the number of Government initiatives and general bureaucracy. The primary need is for a clear sense of national direction and purpose to create the conditions in which all stakeholders can make their optimal contributions. This will require better understanding of each other's roles, a common set of agreed outcomes and minimum bureaucracy.

1.7 It is for the Government to establish a structure and process by which this coherence can be achieved. Current accountability and targets for RDAs need to be revised to take account of the importance of SET in economic development strategies and to address the long-term nature of these activities.

1.8 Interrelationships with universities generally — and with the SET research base in particular — require a more strategic approach. Particular attention must be paid to applied or industrial research to facilitate the turning of SET discovery into world-class commercial products. This should relate to the business cluster and sector developments which are critical parts of RDAs' Regional Economic Strategies.

1.9 Much can also be done to improve the range and quality of SET-related information and, using modern web technology, simplify access to it. Regional Science and Industry Councils also have an important part to play in national/regional connectivity, and we urge their establishment in all regions.

1.10 The message can be summed up in five Cs — coherence, connectivity, coordination, communication and cooperation. Applying these to the exploitation of SET will improve the growth of regional economies, with consequent benefits for the nation as a whole.

Recommendations

1.11 We make various detailed recommendations (for emphasis, in bold type) at appropriate places throughout this Report. These recommendations are repeated below — for clarity, grouped together under appropriate headings. They appear in a different order from the main text, but each is followed by a note of the source paragraph.

Coherence in SET exploitation

(a) We recommend that, as a priority, the Government should involve relevant national and regional players in devising and implementing — by the end of 2004 — a national policy and strategy for SET exploitation that, with a carefully tailored set of common outcome measures, truly integrates national and regional perspectives. (Paragraph 6.38)

(b) We recommend that the Government should establish a forum for the Office of Science and Technology (including the Research Councils), RDAs and other key players, that meets regularly to address the impact of and synergy between national and regional SET investments and, as far as possible, harmonise them. (Paragraph 5.26)

(c) We recommend that the Government should urgently publish the latest possible information about its R&D spend per region, and keep this up to date as a measure of its performance in supporting regional economies through nationally-provided SET. (Paragraph 5.10)

(d) We recommend that, better to inform future policies on SET exploitation, the Department of Trade and Industry (DTI) should work with business, universities and RDAs to carry out an analysis of the complex issues in the demand for and supply of SET. (Paragraph 2.28)

RDAs' operational framework

Metrics and bureaucracy

(e) We recommend that the Government should work with the RDAs urgently to develop simplified performance measures that take better account of SET's importance in economic development, and accommodate both realistic timescales for results and the differing circumstances of individual regions. (Paragraph 3.28)

(f) We recommend that, in framing the revised performance measures, the Government and RDAs should consider success in attracting others' funding as a valuable indicator. (Paragraph 3.29)

(g) We recommend that the Government should ensure that the revised performance measures contain incentives for cooperative working between RDAs. (Paragraph 3.37)

(h) We recommend that the Government should reduce the bureaucratic load on RDAs and work with them to ensure that its guidance is reduced to the essential minimum and is, in any case, made consistent. (Paragraph 3.33)

Building capacity and confidence

(i) We recommend that all RDAs should review their capabilities to ensure that they have sufficient operational knowledge and expertise to take SET initiatives forward. (Paragraph 3.44)

(j) We recommend that all RDAs should have a regional Science Council or similar body and that RDAs should collaborate in assisting those Councils to network and make good connections with national SET and Innovation bodies and policies. (Paragraph 3.51)

Other framework issues

(k) We recommend that, whatever the future hierarchy of regional responsibilities, the leadership of RDAs should remain with the business community. (Paragraph 3.39)

(l) We recommend that all RDAs should explicitly address the development of SET skills and SET literacy in their FRESAs[3]. (Paragraph 3.17)

Supporting Business

The exploitation gap

(m) We recommend that RDAs should collectively establish a small working party of officials and private sector financial advisers to draw up and propose to HM Treasury and DTI innovative solutions to funding the exploitation gap for early-stage financing of high-tech enterprises. Given the urgency of the needs, we suggest completion of the task by the end of October 2003. (Paragraph 4.23)

(n) We recommend that DTI and RDAs should, in consultation with the providers and users of research, jointly ensure that means are available to identify and address gaps in the provision of applied and industrial research in relation to different SET-dependent sectors and clusters. (Paragraph 4.37)

Making connections

(o) We recommend that RDAs work with the Small Business Service (SBS), Business Links, businesses, universities, Research Councils, charities and other relevant organisations to produce, publicise and keep up to date a web-supported intelligence service on SET support. (Paragraph 4.51)

(p) We recommend that the DTI should re-examine the case for arrangements like the USA's Small Company Set Aside Scheme to help small businesses to access and thus assist public sector procurement. (Paragraph 4.57)

Mobilising Universities' SET resources

(q) We recommend that the Higher Education Funding Council for England (HEFCE) should work with the RDAs, the universities and other interested parties to develop strategic measures to assess the effectiveness of knowledge transfer and other interaction between universities and business, to complement the national quality measures for teaching and research. (Paragraph 5.43)

(r) We recommend that each RDA should work with its regional university association to devise and put in place arrangements for closer strategic working that also minimise the bureaucracy of contracting arrangements. (Paragraph 5.53)

(s) We recommend that RDAs should collaborate with their regional university associations to map the strengths of the universities (in teaching, research and knowledge transfer) in relation to key clusters, aggregating the results into a national resource by making them available on the recommended[4] web-enabled intelligence service. (Paragraph 5.57)

Conduct of the Inquiry

The Sub-Committee

1.12 The Inquiry was conducted by Sub-Committee II, which also prepared this Report. The Sub-Committee membership and declarations on interest relevant to the Inquiry are set out in Appendix 1. Our Specialist Adviser was Dr Marilyn Wedgwood FRSA, Pro-Vice-Chancellor and Director of External Relations at Manchester Metropolitan University[5]. We are grateful for her help in working through the many inter-related strands of this Inquiry.

Evidence

1.13 The Inquiry was formally launched in January 2003 with the Call for Evidence reproduced in Appendix 2. We received evidence from a wide range of sources, listed in Appendix 3. The written evidence was complemented by oral evidence at eight public hearings between late February and early April. The oral and written evidence is published in Volume II of this Report.

1.14 To help understand the way that Development Agencies worked with their regional partners, we made several visits in early 2003 to English RDAs (the focus of our Inquiry) and, for comparison, to their longer-established sister organisations in Scotland and Wales, namely:

Advantage West Midlands in Birmingham on 29 January;

Scottish Enterprise in Glasgow and Edinburgh on 6 and 7 February;

the NorthWest Development Agency in Macclesfield on 11 February;

the Welsh Development Agency in Cardiff and Swansea on 17 February; and

One NorthEast in Newcastle Upon Tyne on 20 March[

6].

Brief reports of these visits are in Appendices 4 to 8. As noted there, many of those we visited also provided formal written and oral evidence.

1.15 We are most grateful to all those who gave evidence, and to our generous hosts and others involved in the various visits, for the contribution of their time and knowledge to our deliberations.

1.16 Volume II, coupled with Appendices 4 to 8 in this Volume, represents a substantially larger body of evidence than we expected when launching the Inquiry. We have benefited enormously from all the material submitted, and would draw particular attention to:

? the helpful material from the longer-established Development Agencies in Scotland (p[7] 312), Wales (p 341) and Northern Ireland (p 288); and

? the valuable perspective (notwithstanding their different traditions and cultures) of other countries' approaches to the same issues, as set out in the submissions from the British Embassies in France, Germany, Canada, the United States of America and Japan (pp 250-266), and in the material from Enterprise Ireland (p 220 and QQ[8] 366-386).

1.17 Keeping this Report to a reasonable length has made it impossible to make the usual full references to all that evidence. With the pointers given in the body of the Report, however, we hope that Volume II will provide a valuable resource for the Government, RDAs and others as they develop their policies and practices in the light of our recommendations.

Complementary Reports

1.18 This Report concerns RDAs' interactions with the SET base. Complementary aspects of RDAs' operations have been or will be reported on by other Select Committees in the light of the following studies:

the impact of RDAs on regional disparities — by the House of Commons ODPM[9] Committee as part of its investigation of the ODPM target to reduce the gap in growth rates between regions, which reported[10] in early July 2003;
the interaction between Higher Education Institutions and RDAs — by the House of Commons Education and Skills Committee as part of its study of the proposals in the White Paper The Future of Higher Education[11], due to report in the second half of 2003; and
RDAs' role in the provision of support to industries and businesses — by the House of Commons Trade and Industry Committee, due to report in Autumn 2003.

Abbreviations

1.19 Abbreviations are generally explained only the first time they are used. For convenience, they are all listed in Appendix 9.

1 Information from Investing in Innovation: a strategy for science, engineering and technology, July 2002 - text available on www.hm-treasury.gov.uk Back

2 As noted in paragraph 2.5, this term is used throughout this Report also to include the separately established London Development Agency. Back

3 Frameworks for Regional Education and Skills Action. Back

4 See paragraphs 1.11(o) and 4.51. Back

5 Fuller details in Appendix 1. Back

6 The Sub-Committee remained in Newcastle on 21 March for one of the public hearings mentioned in paragraph 1.13, see page 159 of Volume II. Back

7 Throughout this Report, p refers to a page number of written evidence in Volume II. Back

8 Throughout this Report, Q refers to a question number of oral evidence in Volume II. Back

9 Office of the Deputy Prime Minister. Back

10 Reducing Regional Disparities in Prosperity, 9th Report Session 2002-03, HC Paper 492. Back