APPENDIX 3: CORRESPONDENCE BETWEEN
THE CHAIRMAN OF THE EU SELECT COMMITTEE AND THE GOVERNMENT
Letter dated 12 December 2006 from Lord Grenfell
to the Minister for Life-long Learning, Further and Higher Education
at the Department for Education and Skills
Thank you for your Explanatory Memorandum of 22 November.
This was considered by Sub-Committee G at its meeting on 7 December.
We share the general agreement among stakeholders
about the Commission's identification of the European Union's
relative weakness, compared to its main international competitors,
in applying knowledge and research to innovation in order to enhance
business activity and jobs.
However, we are still far from convinced that there
is a need for such a major initiative by the European Commission
in this area. The latest proposal represents a fundamental shift
away from the concept put forward originally—of the European
Institute of Technology (EIT) as a new physical entity in Europe.
This shift is welcome to us because we felt that the earlier concept
would actually be likely to damage the capacity of existing universities
to collaborate with private industry and others in order to help
to secure commercial opportunities from knowledge and research.
The proposal now put forward, however, does look
to us very much like a bureaucratic solution designed, against
the background of criticism of the previous proposal, to keep
the EIT concept alive in some form. Our grave concern is that,
in practice, the model put forward would cost a great deal of
money and would be largely ineffective.
We would be grateful therefore to hear the Government's
views about why an EIT is needed at all and why it should be supported.
Moving on, we would also like to have your views
on how to gain some value, and to minimise the damage, from the
establishment of the EIT, if this becomes inevitable. Our specific
concerns relate to the concept, strategic direction and funding
of the EIT; and to its proposed creation of EIT labelled degrees.
The concept of the EIT
While the move away from a physical entity for the
EIT, towards a more virtual and networked approach is welcome,
we are not convinced that such a resource intensive solution would
be the most effective way of addressing the problem that has been
identified. We would welcome your views as to whether a lighter
touch approach might be more effective—designed to build
on and help the many networks that have already been established
between universities and business for advancing technological
innovation.
The EIT's strategic direction
We share the Government's view that, if an EIT is
set up, it would be important to strike an appropriate balance
between 'top-down' strategic guidance and monitoring undertaken
by the proposed Governing Board and 'bottom-up' flexibility and
autonomy for the KICs. It seems to us, however, that in practice
it might be quite difficult to find an organisational model that
allowed for this under the arrangements set out in the Commission's
proposal. The "lighter touch" approach in which we are
interested would give greater weight to the KIC's priorities.
Please could you let us have your views about whether this would
be in the direction of balance that the Government would favour.
The EIT's awarding of degrees
We are unconvinced that the awarding of EIT degrees
would help to meet the desirable aims that the Commission has
identified; and we have concerns about the quality control arrangements
for such degrees if they were introduced. We therefore share the
Government's view that degree-awarding powers should remain the
preserve of individual institutions and the systems of Member
States, and not under the central control of the EIT or any potential
Governing Board.
Please could you explain though why, and in what
circumstances, the Government would support the notion of encouraging
universities located in different Member States to award joint
degrees. We would also welcome your views on the idea of postponing
consideration of the issue of awarding degrees for a period until
the EIT has had time first to build a critical mass and to establish
its reputation.
The EIT's funding
We share the concerns of the Government about the
large scale of funding envisaged for the EIT by the Commission—€
2.37 billion (c. £1.60 billion) over the period 2007-13.
You state that there is a current lack of justification for the
size of the budget envisaged and that no break down has been provided
of what the funds are likely to be spent on. Moreover, you say
it is unclear where the funding would come from and question:
to what extent Member States would be expected to contribute outside
their EC Budget contributions; how market funding would be attracted;
and what might be the impact on other Community budgetary priorities.
We encourage the Government to pursue these EIT funding
issues vigorously and we ask you to let us know of any clarification
of them which is provided by the Commission. We would also welcome
your views on whether an alternative, much lower cost EIT proposal,
might be as, or more, effective than what is currently proposed.
If so, please would you confirm that the Government will press
the Commission to put forward such an alternative proposal.
Letter dated 1 February from the Minister for
Life-long Learning, Further and Higher Education at the Department
for Education and Skills to Lord Grenfell
Thank you for your letter of 12 December 2006 regarding
the proposal to establish the EIT, and for your Committee's comments.
I apologise for the delay in replying to you.
The Government believes that the EIT could potentially
provide a means of strengthening Europe's competitiveness and
capacity to innovate, part of Europe's ongoing drive in the context
of the Lisbon agenda. If framed in the right way, the EIT could
bring together the three sides of the 'knowledge triangle' (education,
research and innovation) in a manner not accomplished before,
and provide a new, clear focus on innovation and knowledge transfer.
Existing instruments tend to join up two of the three sides, and
so the EIT would be unique in bringing key factors together from
all three communities. The EIT model would be based on a series
of partnerships, and could potentially act as a catalyst in generating
a 'critical mass' of innovation output. It could potentially achieve
a critical mass of innovation output, which would be helpful in
strengthening EU competitiveness.
Though the Government can see the potential for benefit,
any future European Institute of Technology needs to have a clear
focus and purpose. Furthermore, the Government shares broadly
similar concerns to those raised in your letter and in the House
of Commons European Standing Committee debate on this dossier.
My officials continue to engage constructively with counterparts
in the European Commission and in other Member States to ensure
that these issues are considered carefully.
The EIT needs to add clear value in its own right,
and complement the existing range of EU instruments and initiatives
in the field of innovation and research, such as the Seventh Framework
Programme and the European Research Council, without unnecessary
duplication or overlap.
A new initiative of this nature requires a clearly
identifiable role and purpose, which the Government will seek
to clarify in the course of ongoing negotiations.
I agree with you that the EIT needs to be as light-touch
and unbureaucratic as possible, and should function in a bottom-up
manner. The Knowledge and Innovation Communities (KICs) should
be accorded as much autonomy as possible. Furthermore, a combination
of high-level strategic direction for the EIT and a bottom-up
functioning of the KICs would allow them the freedom to achieve
positive results. This should be balanced carefully with appropriate
levels of transparency, quality assurance and accountability for
both KICs and the Governing Board of the EIT.
Education is one of the three sides of what is known
as the 'knowledge triangle', and as such will have a key role
in the EIT's operation. However, it is crucial that the systems
and institutions of the Member States maintain their competences
over the awarding of degrees and qualifications. While degree-awarding
powers should remain the preserve of individual institutions and
the systems of Member States, and not under the central control
of the EIT or its Governing Board, the Government supports the
notion of encouraging different institutions in the same Knowledge
and Innovation Community to award joint degrees, where appropriate.
The question of funding remains the Government's
primary concern. The Commission has given very little justification
for such a large budget and has provided no obvious value-for-money
case. Furthermore, the EIT was not foreseen in the 2007-13 Financial
Perspective negotiations. The Commission proposes to fund the
operational costs of the EIT out of the margin of Budget Heading
1A, which the Government firmly believes goes against the principle
of budget discipline. It is also likely that the EIT would impact
on UK priorities in Heading 1A such as the Seventh R&D Framework
Programme (FP7), as Knowledge and Innovation Communities will
be encouraged to bid competitively for funds from such programmes.
In addition, the Commission envisage that a substantial part of
the financing for the EIT will come from outside the Community
budget, for instance from universities and business, although
stakeholders have so far expressed only limited interest in doing
so.
In view of the above concerns, and because the EIT
model is untested, the Government considers that there is some
merit in your suggestion of a more gradual launch of the EIT with
consequently lower liability for the Community budget during the
period of the current Financial Perspective. I assure you that
we continue to engage proactively to seek further clarification
from the Commission, and to discuss the options open to the EU
in terms of financing this project.
I hope that these points of clarification provide
you and the Committee with the assurances you require at this
time. Negotiations remain at a very early stage, but as discussions
in the Council of Ministers progress, I am confident that the
UK's constructive stance will ensure that our issues are properly
addressed.
I remain hopeful that the final legislative text
will reflect this progress, and that a future European Institute
of Technology will be framed in such a way as to provide the best
possible benefits to the EU and its Member States as we strive
to boost innovation and competitiveness as part of the Lisbon
Agenda.
Finally, I should inform you that Malcolm Wicks,
Minister for Science and Innovation at the DTI, will assume the
Government lead on this dossier from now on, given the focus of
the proposal on innovation, and the decision to formally negotiate
and decide on this dossier at the Competitiveness Council.
Letter dated 8 March from Lord Grenfell to the
Minister for Science and Innovation at the Department of Trade
and Industry
In his letter to me of 1 February 2007, Mr Bill
Rammell MP explains that you have now taken over the Government
lead on the EIT dossier because of the focus of the proposal on
innovation. Mr Rammell's letter and the transcript of his
oral evidence to the House of Commons European Scrutiny Committee
were discussed by Sub-Committee G (Social Policy and Consumer
Affairs) at their meeting on 8 March.
We are alarmed to learn from Mr Rammell's letter
that the need to fund the EIT was not foreseen in the 2007-13
Financial Perspective negotiations, and that to fund it would
be likely to impact negatively on UK priorities such as the Seventh
R&D Framework Programme (FP 7). Nevertheless, we are encouraged
to learn that the Government broadly shares our concerns about
the Commission's proposals. In particular, we welcome the Government's
recognition of the merit of the suggestion we made that the establishment
of the EIT should be on the basis of a lower cost model than that
currently proposed, and that its launch should be more gradual.
As you may be aware, Sub-Committee G took evidence
at its meeting of 22 February 2007 from Baroness Warwick
(CEO) and Mr Chris Hale (Policy Adviser) from the organisation
Universities UK. The key issue that came out of that session was
the need for business involvement and the lack in the current
proposals of any clear incentives for business to wish to become
involved. Mr Rammell makes the point in his letter that it
is envisaged that a substantial part of the financing for the
EIT will come from various sources outside the Community budget.
He cites business as one of those sources although emphasises
that stakeholders have so far expressed only limited interest
in providing finance. Could you expand on the extent to which
the Government has been in discussion with the business community
about their interest in the EIT, and how involved have business
representatives been in making suggestions as to how the Proposal
could be improved to maximise commercial interest?
We note from Mr Rammell's oral evidence to the
House of Commons European Committee that the issue of the degree-awarding
powers of the EIT appears to have been resolved. We would nevertheless
be grateful if you could confirm this to be the case, and if you
could outline how the award of degrees by individual higher education
institutions, carrying the EIT brand, would work in practice.
Finally, Mr Rammell's letter conveys the impression
that the Government is supportive of the concept of the EIT, but
would like to see changes in some of the details. However, when
giving evidence to the House of Commons European Scrutiny Committee
on 30 January, he stated with reference to the Proposal: "We
are opposed to it as it stands now. We have made some progress
in the right direction, and with further detail and clarification
and with more movement it could be worth supporting, not least
because of the knowledge transfer deficit". Please could
you clarify your own overall view of the Commission's Proposals
and the priorities you will have in negotiations for seeking changes
in them?
In the meantime, we will retain this proposal under
scrutiny. We look forward to your responses on the issues raised
in this letter and to an update from you on the negotiations as
they progress.
In view of the Sub-Committee's close interest in
the issues raised by this Commission proposal, I am writing also
to Commissioner Figel raising our concerns. I am copying that
letter to you.
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