House of Lords - The Effectiveness of EU Research and Innovation Proposals

The Effectiveness of EU Research and Innovation Proposals - European Union Committee Contents

CHAPTER 1: Introduction

1. During 2012, the Committee examined a number of European Commission proposals for projects and strategies which contained a strong emphasis on research and innovation (R&I). These proposals have been wide-ranging. They include: the Smart Cities initiative, an industry-led project aiming to stimulate sustainable growth through innovation in European cities; the Commission's strategy on cloud computing, which proposes using the public sector role as the largest buyer of Information Technology (IT) services to kick-start the cloud computing market in Europe; and the Commission's Communication on A Reinforced European Research Area Partnership for Excellence and Growth, aiming to create a more open labour market for researchers, and to facilitate access to research and knowledge.[1]

2. The Committee's scrutiny of these proposals identified a number of cross-cutting issues, including: concerns about the effectiveness of impact assessments; a lack of information about monitoring and evaluation of projects; and the importance of stakeholder consultation and private sector participation. This report provides a more in-depth analysis of these issues and how they relate to the Commission's R&I strategy, with its stated aim of using innovation as a means of remaining competitive in a world which is becoming increasingly interconnected.

Europe 2020 and the Innovation Union

3. In 2009 the EU institutions, the governments of EU Member States and stakeholders within the R&I sector signed the Lund Declaration to "focus on the grand challenges of our time, moving beyond current rigid thematic approaches".[2] 'Grand challenges' are concerned with important social and/or environmental problems, and dealing with them effectively is seen as key to realising future economic growth. The Declaration laid out a process for identifying these grand challenges and how they should be tackled. Since then, the EU has set up a number of programmes and funding instruments to tackle what it has identified as grand challenges, such as climate change, ageing, and energy and food supply.[3]

4. The Commission is understandably concerned that the EU is at risk of losing its position as a global leader in the field of R&I due to the unprecedented economic crisis and the growing 'competitive threat' from China and South Korea, in addition to the long standing competitive threat from the US. It said in 2012 that the EU is facing an "innovation emergency".[4] It was as a result of this emergency, and to tackle these 'grand challenges', that the Europe 2020 strategy was launched in March 2010 by the EU and its Member States. The strategy identifies areas that have great potential to boost growth and jobs, and targets them through the strategy's seven 'flagship initiatives': youth on the move; an agenda for new skills and jobs; a European platform against poverty; a resource efficient Europe; an industrial policy for the globalisation era; a digital agenda for Europe; and the Innovation Union.[5] Underpinning these seven initiatives are the 'grand challenges', referred to above. Although there is an emphasis on R&I in the other six initiatives, the Innovation Union initiative is the most important in terms of R&I. This will aim to improve conditions in Europe for R&I, and thereby enable innovative ideas to be turned into high-growth products and services. The headline target of this strategy is to increase the amount of the EU's Gross Domestic Product (GDP) spent on research and development from its current level of two per cent to three per cent by 2020.[6] The European Council has proposed to spend approximately eight per cent of its total budget on R&I in the period 2014-2020.

Horizon 2020

5. Horizon 2020 is the financial instrument that will implement the strategies outlined in the Innovation Union initiative.[7] It will replace the current Framework Programme 7 (FP7), which runs from 2007 to 2013, and is structured around three main priorities: excellent science; industrial leadership in innovation; and addressing societal challenges. It will incorporate the innovation component of the current Competitiveness and Innovation Programme (CIP), which aims to support the innovation activities of SMEs,[8] facilitate better access to finance, and deliver business support services in the regions. It will also support the European Institute of Innovation and Technology (EIT, as outlined in Box 2 in Chapter 5).

6. The definition of R&I activities for the purposes of Horizon 2020 is "innovation that results from research and development (R&D) activities."[9] These activities encompass,

"the whole spectrum of activities of research technological development, demonstration and innovation, including the promotion of cooperation with third countries and international organisations, dissemination and optimisation of results and stimulation of the training and mobility of researchers in the Union."[10]

The Commission has elsewhere clarified that, "while innovation is generally understood as the commercial introduction of a new or significantly improved product or service, innovations can also be for non-commercial applications such as for better public services or for addressing social needs".[11]

7. The process leading to the development of Horizon 2020 is outlined in Figure 1.

FIGURE 1

Development of Horizon 2020

Source: Department for Business, Innovation and Skills written evidence

8. This inquiry was conducted against the backdrop of ongoing Member State negotiations on the Multiannual Financial Framework (MFF) for the period 2014-2020. Horizon 2020 is inextricably linked to the MFF, and cannot be fully agreed until the MFF has been finalised. On 7-8 February 2013, the European Council agreed an overall budget of 908.4 billion for the MFF, reducing the Commission's suggested budget for Horizon 2020 by 12 per cent from €80 billion to €70.96 billion. Despite this reduction, the February conclusions on the MFF still represent a significant increase in spending on R&I in comparison to previous financial frameworks.[12] The European Parliament is currently considering the Council's conclusions on the MFF.

9. The Commission has included the multi-annual work programmes (represented in '2' of Figure 1 above) in the legislative calendar to be adopted by the Parliament and the Council by the end of 2013. The Commission has already outlined these work programmes, some of which have come before the Committee for scrutiny in broad terms, but without full details of the costs involved—for example the draft Smart Cities initiative. It is expected that calls for proposals will be launched in early 2014, inviting applicants to submit project proposals (represented in '1' of Figure 2 below) which fall within the remit of the work programmes. Proposals will then be evaluated, ranked, and a decision made on which projects are to be funded.

FIGURE 2

Horizon 2020 Grant Awarding Process

Source: Department for Business, Innovation and Skills written evidence

Objectives of the report

10. In this report we examine how the global economic crisis has impacted on R&I in the EU and its Member States, and the resulting effects on the EU's international competitiveness. We examine how the EU consults with stakeholders in developing proposals and strategies with a strong R&I dimension, and whether there is scope for improvement. We assess the EU's monitoring and evaluation procedures. Finally, we concentrate on the experience of businesses hoping to participate in EU R&I programmes, with particular reference to SMEs, and consider what improvements could be made.

11. This report does not deal in detail with the wider impact of R&I on social issues, or the role of non-scientific forms of innovation in EU R&I projects. We acknowledge briefly the issues of public procurement in innovation, and open access to innovation, referring to the helpful reports by the House of Lords Science and Technology Committee on these issues.[13]

12. The members of the Internal Market, Infrastructure and Employment Sub-Committee, who conducted this inquiry, are listed in Appendix 1. The witnesses who gave evidence are listed in Appendix 2; we are grateful to them all; the evidence they provided is available online.[14] The call for evidence we issued is listed in Appendix 3.

13. We make this report to the House for debate.

1 COM(2012) 4701; COM (2012) 529; COM(2012) 392 final. Our correspondence with the Government on these documents is available on our website: http://www.parliament.uk/hleub Back

2 The Lund Declaration (2009), p 1. Available at:
http://www.se2009.eu/polopoly_fs/1.8460!menu/standard/file/lund_declaration_final_version_9_july.pdf Back

3 European Research Area website: http://ec.europa.eu/research/era/partnership/expert/eriab_en.htm Back

4 Speech by Máire Geoghegan-Quinn, European Commissioner for Research, Innovation and Science, March 2012: http://europa.eu/rapid/press-release_SPEECH-12-226_en.htm?locale=en Back

5 COM(2010) 2020 final Back

6 Europe 2020 indicators listed on the Eurostat website:
http://epp.eurostat.ec.europa.eu/portal/page/portal/europe_2020_indicators/headline_indicators Back

7 COM(2011) 809 Back

8 The EU defines SMEs as businesses with between 10 and 250 employees. Micro-enterprises are defined as those with fewer than 10 employees. Back

9 Horizon 2020 website:
http://ec.europa.eu/research/horizon2020/index_en.cfm?lg=en&pg=faq&sub=results&printfaqs=all Back

10 COM(2011) 809 final Back

11 Horizon 2020 website:
http://ec.europa.eu/research/horizon2020/index_en.cfm?lg=en&pg=faq&sub=details&idfaq=42705 Back