House of Lords - European Union - Twenty-Fifth Report

Select Committee on European Union Twenty-Fifth Report

APPENDIX 2: EVIDENCE FROM THE EUROPEAN COMMISSION

Letter dated 20 June 2007 from the Vice-President of the European Commission to Lord Grenfell's letter of 8 March

Thank you for your opinion on the European Commission's Proposal to establish a European Institute of Technology (EIT) dated 8 March 2007.

In line with the Commission's decision to encourage national parliament to react to its proposals to improve the process of policy formulation, we welcome this opportunity to respond to your comments. I enclose the Commission's response. I hope you will find these a valuable contribution to your own deliberations.

I look forward to developing our policy dialogue further in the future.

Comments of the European Commission on an opinion from the House of Lords

The European Commission would like to thank the Social Policy and Consumer Affairs Sub-Committee of the House of Lords' EU Select Committee for their comments on the proposal to establish the European Institute of Technology (EIT). The interest shown by the House of Lords in the EIT proposal is very welcome. The Commission attaches great importance to the proposal which it sees as an integral part of a broader strategy to harness Europe's currently fragmented innovation potential.

The comments of the House of Lords' EU Select Committee focus on the following issues:

(a) The need to clearly identify the nature of the knowledge transfer problem in Europe and the merits of carrying out a Lambert style review across the EU,

(b) The capacity of the EIT in the form proposed to encourage knowledge transfer within the EU and to provide incentives for the involvement of the business community in the EIT.

(d) The proposed budget of the EIT and the KICs, especially the use of the Structural Fund and the unallocated margins, the incentives for private companies to invest and the impact of the proposal EIT upon 7FP and national and regional budgets.

(e) The proposed administrative structure of the EIT.

(f) The issue of the degree-awarding powers of the EIT.

The Commission wishes to shed some light on these points:

(a) The need to clearly identify the nature of the knowledge transfer problem in Europe and the merits of carrying out a Lambert style review across the EU.

Knowledge is a critical factor for Europe to preserve its international competitive advantage. The European leaders made this explicit at the Hampton Court meeting in October 2005. They undertook to modernise higher education systems and to make them more responsive to global innovation challenges. The underlying vision is to ensure that our education systems regain lost ground and focus on becoming a force for growth and employment.

The challenge of addressing the innovation gap and promoting knowledge transfer in Europe is well documented. In the framework of the Lisbon Strategy for Growth and Jobs, the Commission has taken a comprehensive array of policies and initiatives to make Europe more innovation friendly. In particular, in October 2006 the Commission adopted a broad-based innovation strategy for Europe to translate investments in knowledge into products and services.

The Commission's views on the nature of the innovation and knowledge transfer problem are very much at one with those expressed in Mr. Lambert's report on "Business-University Collaboration". Indeed, the findings of the "Lambert Review" have been a source of inspiration for the Commission's reflection on improving knowledge transfer between the public research base and industry across Europe. Equally, it has influenced the Commission's Communication on how to modernise European universities, its Communication on knowledge transfer and the reflection leading to the establishment of the EIT.

(b) The capacity of the EIT in the form proposed to encourage knowledge transfer within the EU and to provide incentives for the involvement of the business community in the EIT.

The in-depth review the Commission carried out before launching the EIT proposal encompassed consultation on the role of knowledge transfer. From Spring 2005 to Autumn 2006, the Commission carried out a wide-scale consultation process with all EU Member States as well as key stakeholder groupings. A public consultation exercise was conducted where more than 760 organizations and individuals participated. Various rounds of meetings were convened with more than 40 European organizations representing the business, research and innovation communities as well as with representatives form the Member States. More than 50 position papers were prepared, with an active involvement of the UK government and UK universities. The Commission issued two Communications in February and June 2006 which took stock of the feedback from the consultation process. The Commission's proposal has thus extensively drawn from the wide-ranging consultation process. This process led the Commission to adapt and adjust its initial concept for the EIT. The Commission's proposal is therefore not the outcome of Commission's internal reflection, but the result of carefully listening to the interested parties, taking advantage of fresh ideas and addressing the major concerns which were raised during the consultation.

As a result of this extensive consultation with the key stakeholders, the Commission has concluded that the best departure point for the EIT would be a network-building approach, and that this should be developed to lead to an EIT based on truly integrated partnerships. The EIT will provide a new, innovative model of collaboration between business, education and research. It will define long-term strategic priorities and invite the best resources from universities, research centres and businesses to pool their resources, to integrate their work and to meet pressing business and innovation challenges.

The EIT will be a university, a research centre and a centre for developing applied business solutions. It will be based on an enhanced partnership, at the intersection of private and public; of university and business; of education, research and innovation. It is an innovative experiment to encourage innovation through all pertinent forms of knowledge sharing, which could become model for many of tomorrow's ground breaking initiatives.

This innovative initiative is, it is clear from the consultations undertaken, appealing to the business community. The EIT will be an organization where business, research and universities will have an equal voice in setting a strategy and implementing it. Business leaders will be members of the Governing Board; companies will be integral parts of the KICs. In short, business has a unique opportunity to focus the EIT on emerging areas that have a potential of boosting growth and competitiveness. Moreover, the EIT will offer European companies a new relationship with education. It will make business culture and the entrepreneurial mindset part of the day to day educational activities. This has the potential to have a substantial impact on the provision of the skills needed in the knowledge economy.

Community activities for research, development and demonstration are carried out under Title XVIII of the EC Treaty and funded from the Seventh Framework Research Programme (7FP) (Arts Art 163 & 166/EC). 7FP is thus the main funding mechanism at EU level targeted towards research and technological development in Europe. However, this does not prevent other Community funding sources, such as the Structural funds, from being used to finance eligible national or regional activities that relate to research, in the pursuit of other Community objectives. But such finance cannot be cumulative with 7FP funds. Further, EIT funding could not be targeted towards research activities, either in competition with, or in addition to, 7FP funds.

Support for basic research is a matter for the European Research Council (ERC). Clearly the EIT and the ERC have different mission and objectives.

The EIT system (through the KICs) will directly perform education, research and innovation activities. Its mission is to reinforce the innovation capacity of Europe. By integrating the three elements of the knowledge triangle, it will involve, on an equal footing, education, and research and business organisations. The EIT will pull together resources in the framework of integrated partnerships—the KICs. It is thus not targeted on projects but on integrated partnerships. Each KIC will develop a strategic work programme over a relatively long period (7 to 15 years).

The ERC is a funding mechanism within 7FP and it addresses only the research element of the knowledge triangle. It focuses on investigator-driven frontier research, not on innovation and is targeted on individual researchers and teams not on creating integrated partnerships. The Commission has had regular contacts with Professor Kafatos, Chairman of the ERC, to explore the potential for synergies and interaction between the EIT and the ERC.

The Commission's EIT proposal assumes that the activities of the EIT and the (KICs) will be financed from a combination of sources and that the Community contribution should essentially be a mechanism to mobilise external support. The proposal makes available new funding and also invites participants to draw on existing EU funding mechanisms. What matters most is the multiplier effect of the Community contribution—its capacity to draw forth the commitment from other sources—business, public authorities, and research and education institutions—that would not otherwise be available.

The Commission has proposed that a Community subsidy will be directly earmarked for the EIT. As no specific provisions were made for the financing of the EIT in the Multi-Annual Financial Framework for the period 2007-2013, the Commission has therefore proposed that these monies will come from the unallocated margins of sub-heading 1A, up to an amount of € 308 million.

In addition, Community funds from the Structural Funds and from the Community programmes are expected to flow directly—always—in accordance with their normal rules—to the partner organisations which are members of a KIC, and contribute to the funding of some activities.

The Commission has estimated that the main source of Community funding for the KICs or their partners will be the Structural Funds. This is for two reasons: first, because all possible activities to be undertaken by KICs are potentially eligible under the Structural Funds' rules. Second, because the requirement for national and regional authorities to invest Structural Fund contributions in innovation, research and education activities (60% of expenditure for the Convergence objective and 75% of expenditure for the Regional competitiveness and employment objective should be set aside for such activities) constitute an opportunity to foster the territorial interlinkage between the local business community and the local KIC-participant to improve knowledge sharing and cluster development, which is particularly important for SMEs. Any structural fund support for KICs activities would have to be obtained through the normal national or regional multi-annual operational programmes, negotiated with the Commission. So clearly, there is no obligation for national and regional authorities to include in their programming documents the activities developed by the KICs.

The Commission has no intention to take money away from the Community programmes, namely 7FP, the Competitiveness and Innovation Programme or the Lifelong Learning programme, to finance the EIT. Furthermore, there will be no preferential treatment for the EIT within these programmes. The EIT and the KICs will be able to participate in these programmes, in accordance with their specific rules and procedures, with no privileged access.

Financial support from industry will be the test case for success and credibility of the EIT. Contacts will leading industrialists as well as with European organisations (Eurochambres, BusinessEurope) have clearly shown that the business community is very favourable towards the EIT project. Fast access to new business-relevant knowledge and researchers trained in these domains with an entrepreneurial mindset count among the factors attracting business. However, at this point in time, it is difficult to make a robust estimation on the contribution of the private sector. This is understandable as negotiations on the EIT concept and its further development are still on-going within the Community institutions. Industry will only commit in a tangible way to the EIT when the priority domains and operating modalities are known. Furthermore it will be important that the EIT remains as independent, flexible and non-bureaucratic as possible if their interest is to be converted into real participation. In this respect, the proposed participation of business in the Governing Board of the EIT not only provides for business-relevance at the strategic level, yet also sends a clear message of business-relevance to industrialists.

(e) The proposed administrative structure of the EIT

The Commission fully shares the view of the Select Committee that the administrative arrangements for the EIT should be as light as possible. This is why the proposed support structure has been limited to what is deemed strictly necessary for the EIT to effectively fulfil its tasks. The number of staff employed by the EIT is estimated at a maximum of 60, consisting in equal proportions of scientific staff and support staff. Moreover, all the personnel directly employed by the EIT will be under fixed-term contracts.

(f) The issue of the degree-awarding powers of the EIT

The Commission has been attentive to ensure that the proposal respects Member States' competences in the field of education. The degrees will be awarded by universities and other higher education institutions which are members of a KIC, in accordance with national rules and accreditation procedures. Where appropriate, degrees and diplomas should be joint or multiple. This will foster trans-national cooperation between higher education institutions across the Union and promote the mobility of students and researchers. It will contribute to the development of a Higher Education Area as well as to the Bologna process.

These degrees and diplomas should also be clearly identified with the EIT. This will ensure that they have the prestige of clearly identified excellence. It will also help develop the attractiveness of the EIT. The EIT brand will be exclusively borne by new PhD and Master degrees and diplomas awarded in the framework of the KICs. These should be innovative in their content. The brand will not be extended to other degrees and diplomas awarded by the partner universities. Ensuring the high quality of EIT-branded degrees and diplomas and promoting them as a prestige layer of academic achievement will be a task of the Governing Board.