Select Committee on European Union Twenty-Fifth Report

CHAPTER 3: Our views on the proposal for the EIT

12.  While we regret that the approach we outline in chapter 2 was not taken in drawing up the text of the proposed EIT Regulation, we accept the reality that the final Regulation will be along the lines set out in the text which was discussed at the Competitiveness Council meeting held on 25 June 2007[4]. In fact, Malcolm Wicks MP told us that a general approach on this text was secured by the Presidency at that meeting (Appendix 3, page 21). We feel, however, that this concept is so far from being an educational and research institution, that the title "European Institute of Technology" is inappropriate. A more apposite title might be the "Centre for the encouragement of business-university collaboration".

13.  We recognise that some improvements had been made to the latest text of the draft EIT Regulation, but we have a number of remaining concerns that we would wish to be taken into consideration before the EIT Regulation is finalised.

Budgetary provision for the EIT

14.  Malcolm Wicks MP told us that it is now envisaged that the EIT will have a gradual launch with only two or three Knowledge and Innovation Communities (KICs) in the first period to 2013, rather than the original proposal of up to six KICs. (Appendix 3, page 20). However, the proposal still retains the same budgetary figure of €308.7 million, for the 6 years from 1 January 2008, as that put forward when a larger scale operation was envisaged from the outset.

15.  We cannot understand why this should be the case and we would have expected a much smaller sum to have been suggested. In particular, we find persuasive the comment made to us by the Minister when we met him that "something more like €100 million at the outset, in the early phase, would be appropriate". (Q 9)

16.  Even if such a smaller sum is agreed, we see it as most unsatisfactory that no distinct budgetary provision has been made for this, and that the source of funding is envisaged by the Commission to be the unallocated margins of Heading 1A of the Community budget. Such a source is intended for emergencies and unforeseen expenditure, and it seems to us extremely bad financial management practice to raid it in this way. This concern was exacerbated by the information given to us Mr Chris North, DTI's Deputy Director of EU and international innovation policy, that "there are already massive pressures building up on the reserve. For example the Galileo programme is often mentioned in this context". (Q 12)

17.  While we were preparing this report, we heard that the European Parliament's budgets committee was also most unhappy about the idea of funding the EIT from the unallocated margins of Heading 1A of the Community budget. The Chair of that committee—Mr Reimer Böge MEP—was quoted as saying that it was "against the rules to reduce the margins"[5].

18.  We recommend that EU funding for the EIT should be reduced to a level commensurate with the gradual phased approach which is now envisaged for its implementation; and that the year by year profile of the total budget should properly reflect that phased approach.

19.  We recommend, further, that the practice of funding such a major project as the EIT from a reserve budgetary source (from the margins of Heading 1A of the Community budget in the case of the EIT) should not be regarded as acceptable except in the most pressing emergencies or other unforeseen circumstances.

The EIT's support staff

20.  Mr North told us that the profile for the build up of EIT staff was now envisaged by the Commission, at working level, to be 20 in the first year, possibly moving to 40 in years two and three, and that the build up to 60 staff would occur only by the end of year 6. (Q 12) We accept that this phased build up of staff would correspond with the phased build up of the EIT's activities. Our concern is that this has not yet been reflected in the budgetary figures put forward (see paragraphs 14 and 15 above).

Composition of the EIT Governing Board

21.  The Commission proposes that the EIT would have a Governing Board composed of high level members experienced in innovation, business, research and higher education. Our view is that there must be a high proportion of business representatives among the Board's membership, as well as leading academics, in order to ensure that its activities are focussed on technological developments which are commercially viable, as well as innovative.

22.  We recommend that the EIT Governing Board should include an appropriate representation of members with business experience so that it can ensure that the EIT's activities are focussed on technological developments which are commercially viable, as well as innovative.

The EIT's priorities

23.  We understand that there is a suggestion that the initial KICs to be set up might focus on issues related to renewable energy and climate change. While these may be appropriate areas for technological innovation, it is a concern for us that it should be a properly constituted EIT Board, with the appropriate business representation that we advocate above, that should drive priorities, not the European Commission.

24.  On this issue, the DTI told us their view that "While the Government would not rule out the possibility of Council and Parliament giving a broad political steer to potential priority areas which the EIT could support, such as a climate change or energy-related theme, it will be the role of the Governing Board to draw up strategy and specify fields of activity in which applications will be invited from partner organisations to form a Knowledge and Innovation Community" (Q 32)

25.  The organisation Universities UK expressed their view in somewhat stronger terms than the Government as follows "Whilst these appear to be sensible areas for the EIT to focus on in the first instance, this does raise the question of how this decision was reached and who made it (this is currently not clear), and whether the EIT Governing Board itself should be deciding the key priority areas rather than the Commission (the deciding of EIT priorities was intended to be a key role for the Governing Board)". (Appendix 1, page 12).

26.  The DTI also emphasised the need for the KICs to be able to have a good degree of operational freedom "Once they are designated, it is important that the KICs operate with a substantial degree of autonomy. In particular, we need to avoid micro-management by the Governing Board or Community institutions". (Q 32)

27.  We recommend that references to suggested topics for EIT work, such as renewable energy and climate change, should not be included in the final text of the EIT Regulation, since this could be interpreted to imply that the Governing Board will have an insufficient degree of autonomy in setting the EIT's priorities.

Monitoring the effectiveness of the EIT

28.  Our view is that the only way to assess effectively whether or not the EIT is successfully achieving the objectives for which it is intended will be to look closely at the business impact of its activities at local level.

29.  While we welcome the revised proposal to introduce the EIT on a phased basis, we have only limited confidence that a sufficiently rigorous evaluation will be carried out of the effectiveness of its work before it is expanded. Universities UK made the following comment to us on this issue "It is important that the review of the first phase is independently carried out and is conducted after a period of time that would allow any impact to be effectively measured. Safeguards should be built into the review process to ensure that the move to a second phase is not regarded as a foregone conclusion and to ensure that any lessons learned can be truly taken on board and built into the Strategic Innovation Agenda (SIA) before it is submitted and the second phase rolled out". (Appendix 1, page 12).

30.  We believe also that a regular process of locally focussed evaluation and assessment of the impact of the EIT's work should become a permanent feature. The Commission envisage that annual reports shall be made by the EIT each year and that an independent external evaluation of the EIT should be carried out at regular intervals after the date of adoption of the EIT Regulation. We welcome this form of monitoring, but believe that a key feature of the annual reports and external evaluations which are made should be an assessment, in commercially relevant terms, of the impact at local level of each of the KIC's activities.

31.  We recommend that there should be a firmly based commitment in the EIT Regulation to a process which ensures that a rigorous evaluation, focussed on the business impact of the work of the KICs at local level, must be carried out and assessed in Council before the initial scale of the EIT can be significantly expanded.

32.  We recommend that the key element of the EIT's annual reports and external evaluations should be an assessment, in commercially relevant terms, of the success of each KIC's activities at local level.

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4   op. cit. Back

5   European Voice 7-13 June 2007 page 2: "MEPs insist on new money for EU technology institute" Back