Oral evidence: Business-University collaboration,HC 249-iTuesday 10 June 2014
Oral evidence, 10 June 2014.
Witnesses
Professor Sir Keith O’Nions, President and Rector, Imperial College, on behalf of the Russell Group, Dr Tim Bradshaw, Head of Policy for Research and Innovation, the Russell Group, Libby Hackett, Chief Executive, University Alliance, and Professor Wendy Purcell, Vice-Chancellor, Plymouth University, on behalf of University Alliance, gave evidence.
Chair
Good morning. Thank you for agreeing to help us with our inquiry. I apologise for our running slightly behind time. I will start with the stricture that, on this occasion, we have an hour and a lot of questions to ask. Please do not feel that you all have to answer every question. Some questions will be person specific and others will be general, but don’t feel that you are obliged to make a contribution if the points that you would have made have been covered by another speaker. It would be helpful if you could introduce yourselves for voice transcription purposes.
Professor Sir Keith O'Nions
I am Keith O’Nions, president and rector of Imperial college.
Dr Bradshaw
I am Tim Bradshaw, head of research and innovation policy at the Russell Group.
Libby Hackett
I am Libby Hackett, chief executive of University Alliance.
Professor Purcell
I am Wendy Purcell, vice-chancellor and president of Plymouth university. I was an expert adviser to the Witty review.
Chair
BIS stated in its evidence to us that: “The Government is showing its commitment to science and research with a ring fence in cash terms throughout a difficult fiscal period.” What has happened to the value of the science research budget in real terms? We know it has gone down, so how have you coped with that?
Professor Sir Keith O'Nions
It has gone down in real terms. Genuinely to the credit of the Government and BIS, the decrease has probably been less than any of us would have anticipated at the beginning of the recession. The fact that it has held up reasonably well is a plus. Looking at it today, however, it has decreased in real terms, which means that we are fighting harder for a smaller slice of the pie. The difficulties appear most readily in capital, which has become much scarcer. Prediction of capital spend is very important for universities. It is a long-term issue: you can put it off, but eventually it catches up. How have we coped? I can talk specifically about one university, but I can generalise, certainly for the Russell Group. We have coped inasmuch as UK universities have competed extremely effectively for EU funding. Although EU funding was an interesting minor addition to total research spending, it is now 10% or greater of research funding in many Russell Group universities. I think we have all put an enormous amount of effort into getting research income from business. I can speak only for Imperial in hard numbers, but research income for Imperial this year will be well over £50 million, and 40% of that is from outside the EU. If you had to summarise that, you would probably say that we have dug in and worked pretty hard. Probably as a result of that, the strong universities have remained very strong and globally competitive.
Chair
Does anybody wish to add or subtract from that?
Dr Bradshaw
If you look at the science and research resource funding, it has been flattish in cash terms since 2010. There have been a few minor ups, most recently in the autumn statement and the Budget, but if you were to take it forward from 2010, correcting for inflation, it should now be about £600 million more than we are currently getting. That is a substantial sum, and it is about the same level that we are getting from Europe, as Sir Keith said. That is where we are trying to find the additional resources.
Libby Hackett
The big issues around under-investment mean that we are not maximising the potential for investment. We know that Government investment in R&D delivers private investment and is good for the economy. The equation is relatively straightforward, so long as you are funding excellent research, the right research and research that interacts with business. We see that most acutely in our universities when we go overseas to other countries where the Government R&D spend is higher. We feel it on that committed basis. I absolutely agree with Russell Group colleagues on the European research income. If you take the European structural funding, too, we have been able to work with other funding streams to increase resource in those wider areas. Alliance universities receive 40% of the European structural investment funding that comes into the UK for research. Those are incredibly important alternative funding streams, but the result is that it is a tougher environment. You need to be more strategic in what you invest in, but it feels like under-investment. It feels like there is more potential and more that could be done with further investment.
Chair
Wendy, do you want to comment?
Professor Purcell
I think Keith’s covered it with diversification of income streams. That is what we have done. There has been a high-level recognition that the science budget is critical and we really welcome that, and there have been some important internal movements of moneys. For example, the increase to the Technology Strategy Board is a significant up in terms of how that cake has been sliced, even though the cake might be slightly smaller. There has been real attention on understanding the leverage that science research investment brings to the broader economy.
Ann McKechin
Libby, in your evidence to the inquiry you stated that change to research council policy “in response to efficiency pressures has meant that…funding streams supporting…business collaboration activities are no longer open to all HE Research Institutions” with the result that excellence has not been recognised, which you have just commented on. Can you give the Committee an example of where that has occurred?
Libby Hackett
Absolutely. There are a couple of clear examples. One would be the impact acceleration accounts, which are—exactly as they sound—for funding to accelerate the impact of good quality research funded by the research councils. Unfortunately when the research councils were given an allocation of money—it was tens of millions—from the Government to distribute for that, they allocated it as a block grant on the scale of historical research rather than with any recognition of excellence in knowledge exchange and business collaboration. It was not an open process in any way; it was done through the rear-view mirror of historical research bids. Another example is the iCASE—industrial CASE—studentships. The research council language is that these are “for PhD studentships where businesses take the lead in arranging projects with an academic partner of their choice.” Unfortunately the research councils have limited these industrial CASE studentships to only 44 higher education institutions that are in receipt of doctoral training grants. In general terms the research councils fund on the basis of excellence. That is the principle of BIS, the principle of our Government and the principle the research councils use. What we are noticing is that around things like doctoral training, and some of the examples, there has been a closed shop, which is unfortunate.
Ann McKechin
Is it your contention that relying on past history is not a good indicator of what people are necessarily going to do in the future?
Libby Hackett
That is exactly my advice to you.
Ann McKechin
Has it been done, in your view, because it is administratively easier to assess?
Libby Hackett
Of course. Research councils are under pressure over their internal budget so of course that is right. But there are other indicators that they could have used. We have HEIF, which is allocated on the basis of the quality of your interaction with business and SMEs. If they wanted a simple metric to use there are other measures aside from just the block grant on historical research material.
Ann McKechin
The Russell Group told us that in the period from 2003 to 2012 “the return on £1 of HEFCE knowledge exchange investment to the most research-intensive universities was £13.30 in gross additional knowledge exchange income”; it was £4.80 and £2.60 for medium and low research-intensive institutions, and £1.50 for specialist arts institutions. Dr Bradshaw, in your opinion does that demonstrate that funding should follow research intensity, or do we need to have a different formula?
Dr Bradshaw
The formula works very well at the moment in terms of following where the research excellence is. You have to be pragmatic. If there is not sufficient funding in the system to support everybody, you have to try to work out where you are going to get the best returns on that investment. You are absolutely right in terms of flagging up the financial returns, but we need to look at some of the wider social and other impacts as well. One of my favourite examples is the use of the wind testing centre down in Southampton university: UK Cycling went down there and learnt how to improve their techniques ahead of the Beijing and London Olympics. That was a fantastic return for the UK economy, not necessarily in pounds, shillings and pence but in terms of other social impacts. Yes, the financial thing is absolutely critical but there are other things that we can get out of collaborations as well.
Ann McKechin
Would that be a view shared by University Alliance?
Professor Purcell
It is a critical question about research excellence. I think everybody would sign up to research excellence wherever it is found. The danger and the fundamental mistake is if you think research excellence is simply coterminous with an institution. You have to look at research excellence in terms of the subject. So, for example, in a couple of weeks’ time a UKTI report is coming out about UK marine. It highlights two of the world-leading institutions for marine: Southampton and Plymouth. Plymouth would not usefully be labelled by the research-intensive label; but it is very important that you see the diversity of excellence against the subjects, rather than just simply look at the institution. So we would, as Libby explained, be locked out of some critical research council funding, which is to leverage that research excellence into the economy, into society; and I think that seems not very sensible.
Ann McKechin
I get from this that you think the range of indicators which are currently used are too narrowly focused on fiscal and past history rather on a wider spectrum and understanding of the particular research it is coming from.
Professor Purcell
And institutional postcode, as opposed to the actual heat map of where research excellence really sits. I think that is a critical point.
Libby Hackett
If you are talking about the pound return on investment, you want to play SMEs into this agenda as well, basically, because you will get a lesser total pound sign return on investment. It is higher intensity and higher-cost engagement, but we know that our innovation sector is driven by SMEs and the vast majority of our recovery and the job creation and wealth creation that has happened over the last five to 10 years has been in the innovation sector, which is graduate-intensive and SME-led. We have to take account of that, rather than just the big medical, big industry, pound sign returns, which are important. It is all part of an ecosystem. Those are absolutely important; but if we emphasise some metrics too much we will remove some critical activity.
Paul Blomfield
I wanted to follow on from that point and explore a little bit further engagement with SMEs. You are right, Libby, to say that it is an incredibly important sector in terms of driving economic growth, yet we know that businesses employing fewer than 250 staff account for only 4% of R&D spend. I think it is fair to say that universities engage more effectively with larger businesses than smaller businesses, and I can see why that would be easier. How do we challenge that cycle, and how do we encourage more effective engagement with SMEs?
Dr Bradshaw
We engage very well with SMEs where we can find ones that have R&D or innovation capabilities and want to link up with universities; but don’t forget that a lot of the SMEs that we can engage with are through the supply and value chains of some of those larger companies. It is not a case of seeing SMEs as a completely separate entity from the rest of the economy. If we are engaging with, say, Jaguar Land Rover or a company like that, they will have a supply chain, many of which will be SMEs, and if we can then link them into the universities, through that supply chain route, that is how we can perhaps get the biggest bang for our buck.
Professor Sir Keith O'Nions
Can I draw a distinction between SMEs and large companies? When you are looking at research income to a university, which is absolutely crucial—significant amounts of R&D—you cannot reasonably expect that to be coming from SMEs. They are hungry for research income. They are usually looking for money. The engagement with the big corporates globally is going to be the source of R&D income, which I said is well in excess of £50 million a year at Imperial. However, that does not mean to say that the system is ineffective in its dealing with SMEs. I would just like to give you a local example. At Imperial—our new campus at Imperial West, which is under development—there are 70 SMEs located in Imperial properties; small businesses. There are 20 companies in incubation on the campus. That is an extraordinary direct engagement with SMEs that feed off the research capability almost free of charge of the university. Over and above that, there is the SME engagement that comes through the various partnership arrangements and impact accelerators and so on; and another key engagement with SMEs for all universities is the recruitment of talent from universities. They are very hungry for key, knowledgeable, well-trained talent. I think all of us have massively upped our game in allowing easy access by SMEs to recruiting talent from universities. The big companies have the big profile—I’m talking about when KPMG, BAE Systems or Airbus comes round—but many more of our students at Imperial take jobs in SMEs than in the big corporates. That’s a fact of the world. I think we have upped our game enormously in enabling SMEs, through online portals, to gain reasonable and better access to trained people. That is a very powerful piece of knowledge transfer and engagement. It is hard to measure, but transfer of knowledge in people is a key thing for extending this.
Chair
Paul, before you go on, can I bring in Nadhim?
Nadhim Zahawi
To take that point a little further in, say, Imperial’s case, and deal with the issue of critical mass and clustering, is there an opportunity similar to Tech City to do something around green tech, for example?
Professor Sir Keith O’Nions
This is very interesting. I do not want to get into the theology of clustering and so on, but there is no question: where small companies are attracted and get great benefit is in clusters and cluster arrangements. It is a worldwide phenomenon. Tech City is the most recent phenomenon in the UK. Quite commonly, they are aggregating around places where there is very research-intensive activity. Probably the best understood example in the UK is the so-called Cambridge phenomenon, where these are not direct spin-outs from the university but have clustered there for access to the greater talent pool and the know-how this develops. I agree with you entirely.
Professor Purcell
May I add to that, particularly in relation to SMEs? An argument has been made that SMEs are somewhere along the food chain and therefore the supply chain is where you get access. I disagree with that, because a number of the SMEs are disruptive in their own right. They are very hungry for innovation and access to research. For example, in the south-west of England, we do not have a lot of large businesses, so what we have done is clustered together, very much as Nadhim has said, 500 different businesses in a growth acceleration investment network, which accounts for somewhere in the region of 32,000 jobs, and provided one digital exchange, one portal, for a large group of SMEs. If you think about the fact that those SMEs are very hungry for HEIF—higher education innovation funding—there is a real opportunity, a great unmet need to make sure that they have access to research and innovation in their own right, not as part of a food chain that they are right at the far end of. Most of those SMEs are disruptive. They are the big businesses of tomorrow if only we can make sure that there is a channel for them to access that kind of innovation and research activities. There are mechanisms that are based absolutely on the cluster theory, and I think our GAIN Innovation Network is a really good example of something that is portable and scalable—that has the size that is really important. It is not right just to position them as somewhere down the food chain.
Chair
I see we have a veritable Mexican wave here! If you can just make it brief, we will be able to move on.
Dr Bradshaw
Wendy, of course, is right as well. There is a very diverse range of SMEs out there. Some are very small and disruptive on their own. Others are part of supply and value chains. We need to look at them all. To come back to Wendy’s example and talk about something from the south-west, Exeter university, working with EADS and, I think, Rolls-Royce, is looking at 3D printing technology and bringing in SMEs to show them how that printing technology could work for them and to raise their awareness of it and make them think about skills and techniques that they might need. You can do disruptive technologies with large companies, with big universities and working with smaller companies in supply and value chains as well.
Libby Hackett
On SMEs, to answer Paul’s original question about the level of university engagement, I think we need to debunk some of these myths. Alliance universities that I work with most closely are anchor institutions in their cities and regions. This would be the case, wouldn’t it? But every single alliance university will work with tens of thousands of SMEs in any one year. That is engagement. I think it is really helpful to make a distinction with a more traditional knowledge transfer model—Tim very eloquently described why it is quite difficult to bring SMEs into quite a traditional knowledge transfer concept of the application of research and technology. You can contrast that with a knowledge exchange approach, which Tim Wilson defined as a revolving door. All universities, but specifically and distinctively alliance universities, will take this knowledge exchange approach, which is about being deeply embedded with these businesses and the city’s economy. The interaction with SMEs is about R&D but it is also about consultancy. It is also about staff, and specialist staff being in and out of those organisations and the universities. It is about student placements, and it is about continuing professional development opportunities in those companies. It is about graduate placements. It is about industry-designed courses. This idea of a revolving door and that level and quality of interaction between the universities and SMEs goes into the tens of thousands. I think we should recognise that in the broader landscape of innovation and research.
Paul Blomfield
I very much take that point, Libby, and I certainly see that at Hallam university and in Sheffield. I was particularly interested in the R&D issue, and the under-contribution of the R&D sector. Taking Wendy’s point that there are highly innovative SMEs, but also Sir Keith’s point that universities have to be driven by where the money is, Witty recommended that HEIF funding formulas should be sharpened up to incentivise universities to work with innovative SMEs. Do you think that is right?
Professor Purcell
I can give you a very short answer. I think yes. I think it is absolutely right that that should be reflected in the formula funding. It is more difficult to work with SMEs, and therefore I think that needs to be reflected. It is also a real sense that the upside for the growth of those SMEs, and their ability to secure and attract gradual talent and grow through their profile, is really critical. Therefore, HEIF, which is a very small part of the formula funding, should reflect the difficulty but also the societal need to work for SMEs.
Professor Sir Keith O'Nions
Just a word on HEIF. I think one needs to keep one’s feet on the ground. It is less than £150 million a year, and there are 100-plus universities in the frame to receive it. The algorithm that is used is seriously capped; a university like Imperial, which gets as much as anybody, gets about £2.8 million per annum, so we are looking at a relatively small amount of money. I think it has been one of the demonstrably most successful uses of public money. I do not think there is any disagreement about that. I think there is a danger of thinking that with this £130 million, you can miraculously spread the jam thinner and thinner and get the same output. There is a very strong case for an increase in HEIF funding in terms of the demonstrable benefits, and there is a case for looking for other types of performance as a result of HEIF funding. What would be an abject failure is really to think that a university that gets no more than £2.8 million is going to do miraculously more than it has already been doing, or to spread the jam thinner and think that it will do just as much with £1.5 million. I agree that the amount of money is very small and I agree with my colleagues. I am concerned about trying to shove more into that box and pretending that you can spread the jam thinner and thinner and get the same result.
Paul Blomfield
I take that point. Of course, Witty also recommended that HEIF be increased to £250 million.
Professor Sir Keith O'Nions
Then you can set different expectations.
Paul Blomfield
The Government declined to follow that recommendation. I take it that you all feel that that is a mistake.
Libby Hackett
Yes.
Dr Bradshaw
I think if it was at £250 million, that would be very interesting. As Keith has suggested, very small amounts of money are going even to the research-intensive universities at the moment, so there is more that we can do with that. I think the key is to make sure that that is additional money on top of what we are getting already rather than trying to raid other parts of budgets.
Rebecca Harris
The Government supported the Witty recommendations that universities should put in place a single point of entry for SMEs. Obviously, for some universities that is already working very well, but I would like you to comment on that. How achievable is it and how does it work in practice?
Professor Purcell
One of the things that we heard very clearly from the business community—big, small and in between—was just how complicated it is to access institutions. At Plymouth university we set up something called Enterprise Solutions: one phone number, one portal and one access. That has been hugely valuable to be able to funnel and channel those requests through. So I think that the call through the Witty review was very much to see how they might replicate that engagement, because we are complicated as organisations. I think that one of the areas where we struggled most in the Witty review was to show those heat maps about exactly what is going on inside universities and making that very visible so that SMEs and large businesses can look at them and say: yes, I want to go and phone that number and access that piece of technology or research, or even indeed that individual who I want to engage with. I think it is the simplicity of one portal being able to manage that and support that. Our portal is supported through high funding, so we use that to ensure that we provide that enterprise solutions portal.
Libby Hackett
We did check with each of our institutions and they all said that they had a single point, and that they already had a single portal. So, yes, that is very much something that they have been doing.
Professor Sir Keith O'Nions
We don’t. That is not to say that I disagree at all with universities having single portals. The reason we haven’t is pragmatic. I have already described that we have nearly 100 companies for which we are the landlord in our properties which have a particular SME relationship with the university. That is growing; it will probably be several hundred in a few years’ time. That is a different sort of relationship. We do have a single point of contact and portal for careers. The majority of our graduates actually get jobs in SMEs and that single point works extremely well there. At other levels, we find it much better to work at the sector level, where you have got very big faculties and departments that know the sectors well. We have a more pragmatic response that suits the institution I am in. That is not to say that I disagree with the recommendation, but it just would not work for us—or it would not add any value.
Dr Bradshaw
Just to reflect that, you have to think about where SMEs have their first engagement with universities. Quite often, it is through things like knowledge transfer partnerships, so having that as a point of contact can be very good. Equally, it might be through an individual researcher if they are picking up a paper and finding that there is a particular piece of technology. All our universities have websites online with phone numbers and e-mail addresses, so if you know that you want to engage with a university, it can be very easy to find somebody relatively quickly, whether it is through a centralised office or technology transfer office or through an individual researcher or academic. So I think that the systems are there. We are seeing a diverse range of approaches and I think that that probably works overall. I know that your next set of witnesses, the National Centre for Universities and Business, are looking at a brokerage platform that can help in particular the SMEs that do not know where to go to take those first steps. I think that once we have got the combination of the portals, the individual access points and that brokerage system together, you might see another step change in this engagement with SMEs.
Libby Hackett
I think what many of us have talked about is a cultural shift in institutions over the last 10 years. If you can achieve a cultural shift in your organisation where staff engaging in both teaching and research understand that they should be seeking to be publicly visible and outward-looking and to engage with outside worlds and outside businesses, then it will happen because of the way in which they engage and present their information. But it is a culture shift that sometimes needs to be achieved that has not quite happened in all corners of all universities.
Rebecca Harris
Is it a cultural shift or is it about how complex and bureaucratic universities can sometimes be? The Big Innovation Centre report recommended that universities needed stronger administrative support for their academics to help them engage with business, because some struggle with the bureaucracy.
Libby Hackett
Well, I am sure that it is both. You need systems to back up people’s good will and intent, but across our universities the culture shift has happened and it does not feel like a big bureaucratic beast is holding anybody back.
Mr Walker
Can I apologise as I will have to leave shortly after asking my questions? I have tabled a question in the main Chamber.
Chair
Could I just explain that parliamentary questions will shortly begin and I know that a number of Committee members have tabled questions? You may see some movement, but do not take that as a reflection of your contributions.
Mr Walker
Moving on to LEPs, the Government has said that it wants to encourage universities to play a strong leadership role in them. Clearly it will be different in different areas of the country, but to what extent do Alliance and Russell Group universities feel that they are being given the space to play that role?
Professor Sir Keith O'Nions
It is a very good question and I am not going to pretend that the answer is straightforward, because LEPs come in very different shapes and sizes across the country, so giving generic answers is quite difficult. But my impression is that many of the LEPs have responded and have put people from universities on their boards and so on. That is certainly the case in the ones that I know, and it is arguably having an effect. The amounts of money that those boards are moving around is a relatively small part of the total budget—10% or so over the next years—and from what I have seen, certainly in London and a little wider, the amounts of money that are being put alongside the capability of universities are relatively small. It is still very early days. Some LEPs are still almost in a formation stage, and I do not think that I would attempt to make any other generic comments beyond that.
Libby Hackett
If you’d like statistics, 35 of the 39 LEPs have a vice-chancellor or equivalent represented on their boards. Our experience, as Keith said, is that it is a very mixed picture, but universities have worked very hard to engage with LEPs and are often involved not only on the main board, but also on the sub-boards that do the business of LEPs, which will often be led by universities. Universities within cities, certainly outside London, are always crucial local agents that have both the scale and local connectedness to lead on civic and local economic leadership issues. They have played and will continue through LEPs to play that role. They are certainly absolutely crucial to driving some LEPs. In others, it is a more mixed picture. I believe that there has been a great deal of progress and movement, and universities are generally playing a—
Professor Purcell
I am on the board of the Heart of the South West LEP, but the university sits as the bridgehead between two LEPs—Cornwall and the Isles of Scilly and Heart of the South West. Our growth acceleration investment network, which I have talked about, is now the growth hub across the two LEPs, so it spans rural and urban and brings to the table not only our skill set around research grants, but also the opportunity to access a network across a whole range of colleges and other universities. We are very much part of the LEP solution in terms of driving economic regeneration.
Mr Walker
That is good to hear. In my neck of the woods, the university of Worcester is certainly very active in the Worcestershire LEP and plays a big role. I take the point about it not necessarily being the major source of funding, but there is certainly a role in terms of integrating with the skills agenda and providing an opportunity to engage with the business community. Is there any policy shift that could strengthen the role of universities within LEPs, or anything that you want to see from the Government to entrench the position that you have all talked about?
Dr Bradshaw
Don’t miss out what Wendy said about the importance of universities helping to knit together across different LEP boundaries, because that is one of the challenges. We have 39 LEPs that are actually quite small, so if you are trying to build up a cluster of excellence or something like that, having a couple of big universities involved that can knit across different LEP boundaries is very useful. They can also knit out to the international and EU links that they have, so that they then become the focus. The LEP can deliver things on the ground, but the universities can be the focal point for bringing in international and EU links and links across LEP boundaries. In terms of what could be done next, as Sir Keith said, the funding at the moment is small, but we are hopeful that a large proportion of the European structural investment funding, which is some £600 million, that will be available to LEPs for spending on innovation and research will go back into links with universities, because that is where the research base is for the local economy. We should use universities as the assets that can drive local economic growth and make as much as we can of that European money. It is a structural and investment fund, so people will always think of capital, but you can spend it on capability building as well. That is critical. We have all spoken about the importance of knowledge exchange and other transfers on LEPs, so if we can spend some of that money on KTPs or other mechanisms to help engage businesses with the research and experience that is in universities, that would be a very useful way of spending the money.
Professor Purcell
I think most LEPs recognise that the universities in their patch are part of the comparative assets of a place, so why wouldn’t you leverage and work with them? I think they all recognise that. But I do think that Tim’s point about networking much more carefully across the whole English LEP structure is critically important.
Professor Sir Keith O'Nions
I agree.
Mr Walker
The European structural funds are clearly one of the opportunities for the LEPs. What proportion of that funding would you expect to come to or through universities specifically, as opposed to being directed by the LEPs to other areas of research investment?
Dr Bradshaw
I guess we would all like to see as much as possible going to universities. But seriously, we have the facilities, skills and expertise to make the most of that. We have already made public investment in the UK; let’s add to that with the European funding and really make the most of it, engaging with businesses.
Mr Bain
Can we now turn to the Catapult centres? There are about seven in operation across the country. How strong would you say the links are between these and universities?
Professor Sir Keith O'Nions
Catapults are still very new. It is an area where policy shifts periodically in Britain—usually before the system you have has settled down and you can really measure its value. With Catapults at the moment, it is quite hard to measure the value. Only one or two are really in full flood, and you can find an annual report that tells you about the performance. Quite a number are still in the establishment phase of setting up companies limited by guarantee and so on. To take one, the Advanced Manufacturing Research Centre Catapult linked a lot of extant units around the country, such as the composites centre in Bristol and the old Boeing centre in Sheffield, and brought those together under the umbrella of a Catapult. I think you can assess how that is working with universities. I would say it is working very well, because there is a lot of legacy—historical working—and it is clear the universities are strongly involved in that. It may well even be at a stage where you can see what added value the £10 million a year, or whatever it is, from TSB through the incubator has contributed. I don’t think there are many others where you can get an answer to your question. I would answer your question by saying that it is probably a system that needs to run a few more years and settle down. Maybe Hermann Hauser will add some insights as he goes around and looks at this, but it is still early days for the system. But where there are facts to be had, the activity looks quite good, and I would draw your attention again to the advanced manufacturing Catapult, where there are many facts to be had. That is probably not exactly the answer you would want, but I am just emphasising that it is still very early days.
Mr Bain
Anyone else want to add something?
Professor Purcell
Yes, I would agree with that, but while it is early days, we should also be encouraging the Catapults very strongly to be collaborative and not to reflect a kind of closed shop in the sense we talked about earlier. Quite necessarily, they started off being quite restricted in terms of membership, but the collaboration—the sense of an innovation ecosystem—is something we really need to encourage them to engage with.
Dr Bradshaw
I would just like to reflect back again on what one of your previous witnesses said. I think it was Alan Hughes who said that technology has evolved with time. One of the really good things we might see in the future with Catapults that are located with universities is that, although they may well have been set up for one particular activity in one type of sector, as their technology and needs evolve over time, they can tap back into the wide range of expertise right across the university and transform themselves. We need to let them settle down, but if you look back at them again in, say, 10 or 20 years’ time, you might find they are doing some very different things from what they are doing now. You will get that when you have those really strong links with the university base.
Mr Bain
It is early days, admittedly, for these centres, but would you say they have a role in enhancing what universities do to drive innovation and growth in the local economic units they serve? In my city of Glasgow, we are going to see great investment in a new life sciences centre. Do these centres have a role in enhancing our science base?
Professor Sir Keith O'Nions
I believe they do, but it is not general across the piece. You have cited one where I think that is correct, but I think there are others where they are enhancing the science base. If I turn to Imperial College, I would say the impact is pretty negligible. What is really enhancing our science base is probably investment in our research from non-UK, non-EU companies—from China, Malaysia, India and so on. The creation of innovation space is a different sort of model. It is a more US-style. I would not use that statement of minimal impact of saying that it is not having beneficial impacts in the UK, but it is not general. It cannot be general. The amounts of money are not very large. Let me put it in context. Yes, it is one of the biggest expenditures of TSB. I think maybe £80 million in their last budget was spent on it, maybe going up to £100 million. That is £100 million in what is a very big country. Turning to Singapore—[Interruption: “Attention. Fire alarms are being tested. There is no need for you to take any action.”] That voice was in response to my mentioning Singapore! In this space where incubators are operating, to compare it with another place—perhaps such comparisons are unreasonable—Singapore is a country of 5 million people. The amount of money it spends in this Fraunhofer type of space exceeds the budget of the TSB. It is over £500 million a year in a country of 5 million. The amounts of money and the expectations we have got for this have to be put in that context. I am very supportive, but it is not a very large amount of money and you cannot expect it to have a general effect across the piece.
Chair
That might be because both the politicians’ and the civil servants’ salaries are geared to the level of economic growth.
Professor Sir Keith O'Nions
I could not possibly be drawn on a question like that. I think I’m in the wrong Committee.
Mr Bain
You mentioned the Fraunhofer institutes, and of course there are differences in governance between those and the Catapult centres. In terms of the bidding processes, do you think they are sufficiently open and transparent for university partners at the moment?
Libby Hackett
I think this goes to Wendy’s point about them needing to become more open. Certainly when they were first established, some of the first ones were closed shops. That was done for particular reasons. There had to be a certain emphasis on particular areas and particular hubs of basic research. We are now at a point where we can recognise that as these develop it will be about their capacity to bring in other expertise and to network and collaborate right across the UK. We are seeing them opening up. There are possibly some question marks about the incentives for universities that were not involved at the first stages to offer freely to get involved, but perhaps we can get around some of those questions. The Catapults are certainly becoming increasingly open. When they were first put in place, there were some question marks. An analogy I heard used was that they were perhaps a bit like making an arrow that did not have a tip, because the expertise around the tip was about how they were going to penetrate into industry and innovation businesses and SMEs, and perhaps they would focus more on the arrow than the tip in putting the groups and the hubs of the people together around basic research. But they are increasingly open, and we will see that. Their success will depend on how well they can network and collaborate more widely.
Dr Bradshaw
In terms of openness, as Sir Keith said, it is actually very small amounts of money involved here, so we need to maximise that. Let us make sure that when new Catapults are being set up, they do not duplicate things that are already happening within the UK. There are centres of excellence for research and technology development throughout the universities in the UK, particularly in the research-intensive universities—but I would say that anyway. Let us make sure that we do not duplicate that effort by trying to set up something in parallel when we have already got some really fantastic centres we can build on.
Mr Bain
In your written evidence, you commented that the open bidding process for the transport Catapult centre seemed to be more transparent than that used for the others. In what way did it differ, and in what way was it more transparent?
Libby Hackett
I will have to come back to you with more information on that, I’m afraid, because I don’t have further detail at this point. But I believe it is part of the fact that we are seeing the process develop, mature and progress that even the initial bidding and set-up stages are developing and becoming more open. The first few that were set up had very tight time scales and all sorts of constraints, which would explain why there was such a closed shop. But I will have to get back to you.
Professor Purcell
Libby will get back to you, but I think the initial understanding was that they established consortia—they were already formed, in a sense—and then the label was overlaid. The ones that are forming now are being formed in real time, and therefore the call is for collaborations to come together. That seems to be the key difference.
Mr Bain
Both the Russell Group and the University Alliance said that greater flexibility in the knowledge transfer partnership scheme would benefit universities and businesses. In what way is the current scheme overly restrictive?
Professor Sir Keith O'Nions
I will preface my response by saying that I think the KTP has been a very successful scheme. Thousands of businesses have engaged with it, and I don’t think anybody should try to make a point here that it is broken and needs fixing. However, you might expect it to evolve with time and look to operate in a more efficient way as the requirements change. We now have impact accelerator things to compare it with, which look for a similar goal and are a lighter-touch administrative approach for us in universities. They do not make us feel negative about KTPs; they are just an alternative. It may well be that if KTPs operate for a shorter period of time, and therefore in larger numbers, we will get a bigger bang for the buck. Some evolution would probably be valuable, but I would not like to give a negative view of something that has been wholly beneficial and very good. I agree with my colleagues: if we can persuade the LEPs to start investing in that sort of space, we may get some good value leading off some of the ESI funds.
Dr Bradshaw
To follow on from what Sir Keith said, the smaller, shorter-period KTPs are very attractive, but there is a level of bureaucracy that goes with the delivery of a KTP. One way you could get around that for some of the shorter-term ones—particularly those with SMEs—is to give the money more directly to the university so it can manage a pot and act quickly when there is an opportunity for it to happen in the space of two or three weeks, rather than three or four months, which is the typical set-up time for a KTP now. I want to emphasise what Sir Keith said. We do not want to give the impression that there is anything wrong with KTPs. They have been fantastic, but there is a lot more we can do with them.
Professor Purcell
I think KTPs have been one of the most successful schemes. They are not about thinking about one-way traffic from a university to a business, but about genuinely thinking about knowledge exchange and two-way traffic, and they have been hugely successful. There are not enough of them, so it is about the demand side. There are some particular issues to address, such as helping SMEs to access KTPs. That might be, as has been described, about developmental funding that sits with the institution, or it might be about shorter time frames, given that their innovation cycle is sometimes shorter. It is a hugely successful national scheme that is much applauded internationally.
Mr Bain
I now turn to the university enterprise zones, which were launched with some fanfare at the end of last year when the Government announced funding for some pilots. The Government said that universities will be expected to support enterprise zones by offering access to relevant experts and facilities, and also by facilitating arrangements between local businesses and investors to raise finance for innovation. Is your understanding that universities in university enterprise zones are able and prepared to offer that kind of support?
Professor Sir Keith O'Nions
I would say universities know on which side their bread is buttered. They inevitably offer support, and they are very realistic. I just want to make a comment about enterprise zones. We have to think what enterprise zones look like in the rest of the world where they have been established. We are part of a global community. Money flows, and people flow, to where the real action is. By world standards of the establishment of enterprise zones, this looks like a pretty weak issue. If you look at the subsidies, tax benefits, start-up costs and capital investments in enterprise zones elsewhere in the world, this is small and a small amount of money. I think we should set our expectations fairly modestly for where this may get to. However, the direct answer to your question is that I think universities will play. I think they are sensible and enthusiastic about these things but, again, this is a tiny amount of money going into these and they do not really bear comparison with things that are called enterprise zones in our competitor nations.
Libby Hackett
We have strongly welcomed the university enterprise zones, but with—exactly as Keith described—the caveat that these were bids for just pilots, and small amounts of money. We would hope that there is not small ambition behind it. Within a month of the announcement of the scheme, there were many excellent project proposals ready for submission to the UEZ pilot proposal across the cities that were asked to submit, so I think this is absolutely heading in the right direction. It is about bringing together the role that universities are playing within cities, within the existing partnerships and the range of partnerships, alongside supporting capital investment in the development of these strong local partnerships, which is important. This is a very early stage. It is a pilot and it is very small at this point, but universities are ready, willing and up for supporting this. We put many proposals forward within a month of the announcement.
Mr Bain
How might the concept be improved? What things are missing from the pilot that would allow you to make the difference in terms of driving forward these links between universities and SMEs?
Professor Purcell
When I saw the university enterprise zones as an announcement, I thought, “Good.” Then I saw the list and saw that there were only eight. I then looked at some of the local regeneration, the city deals and the first wave of cities, then the second wave of cities. It is really just trying to join those dots that is the key thing, for me. I will be interested to see how the pilots work, but I would like to see how they overlay with things like city deals and with the economic development plans of LEPs, and therefore that should be reinforcing—that is what I hope—and I would expect to see more of them. But it is very early yet.
Dr Bradshaw
The scale is £15 million over the eight potential areas where it could be done. One city deal project at the University of Birmingham is building the institute of translational medicine; £24 million was in that. That was one institute, so the impact of this £15 million spread over eight is going to be very small. It is a very, very small pilot. Let’s see how that works and maybe there are opportunities to scale that up. You asked what might be missing. If I was an SME, one thing I would probably be looking for is business rate relief, which is not part of the university enterprise zone package but is a typical thing you would get in other styles of enterprise zone elsewhere.
Chair
Okay. That concludes our questions. You have been commendably succinct in your answers, and we have caught up a bit of time. I thank you very much and reiterate what I said to the previous panel: if you would like to add any supplementary evidence, we would be very happy to receive it. Thank you very much. Examination of Witnesses
Witnesses
Dr David Docherty, CEO, National Centre for Universities and Business, and Professor Graeme Reid, Professor of Science and Research Policy, University College London, on behalf of the National Centre for Universities and Business, gave evidence.
Chair
Good morning and welcome. Thank you for your willingness to contribute to our inquiry. I noticed you sitting at the back, so you have had quite a long session already. Could you introduce yourselves for transcription purposes?
Dr Docherty
I am David Docherty. I am chief executive for the National Centre for Universities and Business.
Professor Reid
I am Graeme Reid from University college London and I am strategic adviser to the National Centre.
Chair
Right, thanks. I will open with a question that you may have heard posed in a different form to the previous panel. The NCUB’s “State of the Relationship” report found that in 2012 more than 50% of UK R&D was funded by companies headquartered outside the country. What risk do you think this poses to our innovation system?
Dr Docherty
That figure came from a two-year study we did, chaired by David Eyton, who is the global head of research and technology at BP, and by Shirley Pearce, who was then the vice-chancellor at Loughborough. It included senior executives from places like Cisco as well as people like David Sainsbury and Hermann Hauser. That is just by way of context. When we discovered that number, I immediately reacted badly to it. I thought that was a negative thing but, actually, business people around the table said that is a positive thing. It shows confidence, from outside the UK, in the UK science and research base. At one level it is scary, in the sense that one decision made in one headquarters in the United States could take £30 million, £40 million or £50 million out of the UK research base. On the other hand, it says that we have to keep a high quality research base. Complete commitment to quality in science and research is central to keeping those companies here. It is a tribute to the openness of the UK but I think we have to make sure that our companies are investing heavily in R&D as well.
Chair
If I can paraphrase, what you are saying is that obviously there is a risk, but the very risk, in effect, is productive insofar as it challenges our research base to stay ahead of the game.
Dr Docherty
Yes. It is simultaneously a tribute and a risk. That is what is so interesting about it.
Professor Reid
Could I just add a couple of thoughts? This is not an alternative to investment from indigenous companies. This is a net addition to that investment. Some of the global corporations that have chosen to invest in the UK have been making those investments over considerable periods of time so they have become embedded in parts of the UK’s industrial R&D landscape. Indeed, we have now reached a stage where people have spent most of their careers working in the laboratories owned by some of those corporations. There is pretty fierce competition for that corporate investment and I think it is a great tribute to the UK research and industrial community that we appear so attractive to those global corporations when they make their decisions.
Chair
I suppose the corollary of this is why private R&D funding within the UK is so low. Do you feel it is low?
Professor Reid
There have been several analyses of this. One analysis is that, taken sector by sector, industrial investment in R&D in the UK is on par with many other nations. Our industrial mix has a heavy emphasis on some industries that are innovative but are not heavy R&D spenders. Service industries, and oil and gas are two examples. That goes some of the way to explaining the pattern in the UK but I do not think it is all of the answer. If you look at estimates of non-R&D innovation spending in those sectors, they still do not bring the UK up to the level of the highest investors.
Chair
Have you any comments, David?
Dr Docherty
Richard Lambert did a rather brilliant review of the different shape of manufacturing in the UK relative to other industrial systems, which throws out why, in part, you see this disparity between private investment elsewhere and private investment from UK companies in the UK. It is the collapse of the national champions, in effect, from the 1980s. I think that actually rebuilding our manufacturing base is part and parcel of rebuilding how the science base will work in a confident way within the UK. Everything I have heard this morning is all about connectivity and connecting the whole system up. The better connected the system is, the more businesses will invest in both innovation and research and development. The whole tone of the conversation from everyone on this platform has been that this is the early stages of a new system that is beginning to emerge. I think for companies in particular, they have to wait for this to emerge and connect to really understand it properly.
Rebecca Harris
It is interesting because a lot of the focus on what we have been discussing so far is what universities need to be doing—the funding and the structures and what have you—and not so much about what is actually happening with business. The report into the “State of the Relationship” talked about how businesses needed to develop more capacity in this regard—I think the expression used was absorptive capacity. What can businesses do in this respect? How can we encourage them to become more receptive to research and innovation in R&D?
Dr Docherty
I can’t say “absorptive capacity” very well so I will say how businesses are taking in research. It is a very interesting set of questions. You can see it in the knowledge transfer partnership project coming out of the TSB where there is a lot of naivety at the beginning from businesses going in and it takes time to understand what the system is and how they can best benefit from it. Businesses have to invest themselves in it to get the best out of it. We are spending a lot of time in the NCUB looking at brokerage platforms and how we can get businesses to have a much deeper understanding of what they can get out of the university system because it is quite a limited knowledge at the moment. If you want to get the best out of the university system, you have to invest yourselves in understanding it. I have been in business my whole career and you can sit there and whinge about the system, but unless you take the step towards it you shouldn’t be allowed the whinge. It is a very opaque system, so the overall innovation system has to become less opaque to smaller companies, but smaller companies have to make the investment. When they do make it—the knowledge transfer partnership project, which we did a consultancy report for the TSB on it, showed a complete bill of health. Companies love it when they understand it. However, if you fall out of it because your project wouldn’t work as a KTP project, you think it is a terrible system—it’s bureaucratic and so on—but it is basically because you haven’t understood it properly. I think there is an educational role for business. I think all of us who are involved in business have got a responsibility to help with that. If you are a business manager you have a got a responsibility yourself to go and try to track this. To get your innovation needs, you have got to do some work. So the short, pithy answer is that people need education and the system has to help with the education, but business managers have to step towards the university system as well.
Professor Reid
I’ll not add to that.
Rebecca Harris
Is your business base looking at getting different types of skills and promoting them among their employers to encourage more innovation?
Dr Docherty
Yes. This phrase “continuous professional development” is a relevant phrase. If you are going to be an innovative business, you have to continually interrogate how you are going to be more successful. In that interrogation you have to develop better skills. One of the things that is emerging all over the place is this concept on interdisciplinarity. If you work in a creative company, you really have to understand the digital infrastructure around it. If you work in a digital company, you have to understand the anthropology of the customer. That is a new skill set, it has never been around properly before. It started in television and music and it is spreading into health care and places like that. That is something you can only learn on the job. The university system is not yet ready to produce people like that, but you have to engage back into the university system to help understand how to develop these skills. I will give you a concrete example. We did a project in Brighton with 3,500 creative and digital companies in Brighton, and the two universities. It proved quite comprehensively that an arts and humanities degree was what was driving economic success in these companies—I get a bit stressed out when people just talk about STEM all the time. Crucially, what they were looking for from the universities were the kind of students who had these interdisciplinary skills, but they themselves had to develop them. That project meant involving not only the community there, but also engaging with Brighton university in developing these interdisciplinary skills. I would say that if you want to be an innovator, you do have a responsibility as a business to make these steps. Universities have to have a role in helping you develop new sets of skills that previously were not in the economy.
Rebecca Harris
Is there a role for other organisations, though, such as business organisations?
Dr Docherty
Yes. Will was talking earlier about intermediary organisations, which are one of the things that I find very powerful. In the case of Brighton, Wired Sussex—the trade association for the creative and digital companies in Brighton—made all the difference, because when I set the project up it was one phone call to one person and not me trying to talk to 3,500 companies. There are organic intermediaries—core trade associations—that are not used sufficiently well in all of this. Again, one of the things we are doing at the national centre is beginning this engagement programme with trade associations to try to bring them into the brokerage mix. Frankly, that is to reduce the noise levels in the system. It is very hard to talk to the small company community properly. Of course, we will be talking to the other big associations—the CBIs of the world—to do the same thing. I would say that Will is right about intermediaries but there are a lot of organic intermediaries already in existence that we should be taking advantage of.
Professor Reid
I detect quite a big difference from sector to sector. I would hold up the life sciences as an example of an industry that has sophisticated interactions between industry and universities, and intermediary organisations that have long since polished their offering to both sides. If every sector lived up to that example, you might not be having this inquiry.
Ann McKechin
Both of you have commented about how we have a very fragmented way of organising business in this country compared with other European or north American equivalents, and the difficulty there is in reaching out to businesses. I was slightly alarmed by Dr Docherty’s assertion that the onus is always on the business side to find out about universities and academia rather than on academia to find out a bit more about the types of businesses. As Professor Reid has commented, the situation in life sciences is very different from the one for someone who might be involved in mechanical engineering. It is about how we reach them and what ways we find to reach them. The Government have said that NCUB has a role in developing the gateway to research that aims to provide a single point of access to publicly funded research. Can you tell me what the level of awareness is among businesses for that facility and whether you have looked at that per sector in terms of engagement?
Dr Docherty
We are very sector focused, because they are so very different. We have representations on our leadership council from everyone from BP to the BBC. What we don’t have are small companies, so we are trying to figure out how we connect to small companies. It is by no means a done deal but at the moment, partly because of my business background in technology and the creative industries, I am trying to figure out whether there are online sources for these things. It would be a bit like an eBay for intellectual property: could you find a way of the whole system coming together to support all the information that is available from universities, and through the research councils and the TSB, on one platform? We have been talking to all of those players for the past 12 months and there is a general agreement that this is a good idea. How we do it technologically is—
Ann McKechin
Best of luck.
Dr Docherty
We live in a networked age and we should be using these networks to figure out how to solve these issues. I am not so keen on the term SME because I have run a company that has 250 people in it and chaired companies of four or five people, and they are different beasts. You pointed that out earlier—these are different kinds of animals. When you are turning over £50 million to £100 million, you have lawyers and accountants, and you have the time and inclination. If you are running a thing with five people you have no time at all. So I am very focused on whether we can get clarity around the M and how those businesses connect to universities—they have the time, money and inclination—and then, separately, on how you work out the set of issues around the S, and particularly those Ss that really want to grow. The challenge I would throw out to any company that wants to grow is, “What are you going to do about it, then?” Our job is to provide the information and the points of contact. Their job is to want to grow. I can say that because I have run a lot of companies and some have succeeded and some have failed. But the common characteristic was, “We want to grow or fail”. There is a real energy around companies who are like that. They are the ones who can get the most value out of the connection.
Ann McKechin
That is where the priority should be in future.
Dr Docherty
I do genuinely think that.
Ann McKechin
How many businesses are currently using the gateway?
Dr Docherty
I don’t know that. It is not my platform. It is the research council’s platform. There will be a lot more once it connects up to our platform.
Ann McKechin
Okay. NCUB is also involved in setting up something collaborative. You mentioned the online platform. How do you think that might work in practice for a company if they are looking for the latest research in a particular area? How could they find out what was currently available in terms of the research already done and how they might develop a product or service if they think they have an idea?
Dr Docherty
I don’t want to speak on behalf of them because these are still all moving parts. If it was just me, I would make sure that all the research was available on a searchable database. I would make sure that it was regionally specific and that there were live contacts behind everything. In other words, once you send an e-mail or make the call, someone will get back to you within a defined time period. I would have star systems and rating systems for success. I would have it in English. I would make sure that there was an algorithm that translated it out of academic language into ordinary language if all those things are technically possible. I would make the search mechanism really easy: I am interested in catalytic converters; well, here are 10 people who know about catalytic converters; here are five who are willing to talk to you; here are their e-mail addresses and they will get back to you within a week. That in an ideal world is how you begin to crack some of these “s” issues—small company issues. The time to transact for a small company is so limited. You need to make it easy. Even Witty’s single point of contact for universities—which is great, by the way, I am not criticising it—but if you are sitting in Cornwall and you need to talk to someone in Aberdeen about some aspect of sea research how do you do that? I think genuinely we should be exploring having a UK asset to do this.
Mr Bain
You’ve talked about the Gateway to Research portal. What other NCUB initiatives do you have that are targeted at improving the ability of businesses to collaborate effectively with universities?
Dr Docherty
To be clear, Gateway to Research is the research councils’ platform. We are trying to bring it together with the TSB’s platform and emerging data from the universities. That is why I was not clear about the usage patterns on Gateway to Research because it is not our platform. We try to understand the problem. Our methodology is to bring together senior business leaders and universities to try to understand the issue. Then what do we do about it? Sometimes we say, “Government, you’ve got to help with it.” For example, the Brighton Fuse project looked at how creative and digital companies can work with universities. We then went off and worked with others to do an £8 million project called London Fusion. It is specifically aimed at getting 1,000 companies in London to get sufficient engagement with universities to grow their own intellectual property. That is a concrete example of how we get in the middle of something and animate it. Fundamentally our role is to do the thinking and the animating. We are not constitutionally set up to go and make the changes ourselves most of the time. Equally, we are looking at the issue of talent into engineering companies, particularly female talent. We launched the national schools engineering prize for girls which will be in 80% of schools next year. That is an explicit example of how we get in the middle of a challenge that is clearly one we all recognise and try to do something about it.
Professor Reid
May I just add something? If we look at where we want things to end up rather than where we want things to start, most of the time we want to end up with a relationship between the people running the small business and people in the academic world who can support and help them. All of those techniques and administrative devices that we are talking about are attempts to make it easier and less expensive to find the right partner. That is what it is all about. At the university end there has been huge progress but there is more ground to cover in making academics into good partners, if they get discovered. In businesses, there has been progress but there is more to do in order to work out what a good partner looks like. It is easy to get lost in all the language about KTPs and gateways and so on, but ultimately they are all attempts to achieve the same thing.
Mr Bain
One of the points from your written evidence on the Government’s response to the Witty review is the need for a slightly different approach to creative industries from those in science and engineering. What evidence can you give the Committee that having a different approach to creative industries innovation from the one that you might adopt towards science and engineering will benefit that sector?
Professor Reid
First, I would return to the distinctive characteristics of industries, and then try to position creative industries on that spectrum. To put a couple of data points into that, the relationship between science and industry in the life sciences has got quite a good volume of protected intellectual property that is then traded between the scientific and industrial sectors. In information technology and computing the relationship is often about the movement of people from one sector to another rather than the sale of IP. Engineering is somewhere else and so on. The creative industries were one of the later ones to get the attention they deserve. They have another characteristic again, which is probably the point at which I should pass to David.
Dr Docherty
Some of this is counterintuitive. What a lot of creative companies need is access to great technologists. I have just finished chairing a task force on the future of innovation in television technology. One of the biggest pushes was that we need more data anthropologists inside television technology companies. I would absolutely say let’s not have a clear, simple dividing line between creative companies and other kinds of companies. Creative companies are now informing health care businesses and technology businesses themselves. None the less, it is equally true that their innovation cycles are very short. If you are going to be in an innovation cycle inside BP, you are talking 20 or 30 years. If you are in an innovation cycle inside the BBC you are probably still clocking maybe one, two or three years. But if you are in an innovation cycle in a small digital agency, you are talking six months, and then someone else has done it. We are learning a lot about this through the Arts and Humanities research council’s work around their creative centres. Universities have to move a lot more quickly. Systems that are set up for BP are completely inappropriate for small creative and digital companies. I think universities know that, and they are speeding up different ways of doing intellectual property agreements. If you are doing an intellectual property agreement for an arts institution it is a very different beast. I am beginning to see a lot of movement and understanding of these different arrangements. As I said earlier, we constantly push sector-specific innovation challenges back out, because we are saying you cannot treat these two as the same thing.
Mr Bain
Are the Government and publicly supported mechanisms for innovation in these sectors flexible enough to account for that difference? As you said, in some small digital companies there is a much shorter period than in the engineering sector.
Professor Reid
You’ve got a portfolio of initiatives that have got no sector specificity, such as KTPs and HEIF, where it is for the industry and academic communities to take the generic initiative and craft it around the needs of individual sectors and academic disciplines. Then you have another portfolio, like the Catapult centres, that are pre-shaped around a sector and then delivered to the community already shaped. My sense is that that is a pretty good mix to have. We could have a debate about whether there is the right balance and the right relationships and so on, but having that two-tier process feels to me like quite a good overall shape.
Dr Docherty
I am on the board of the connected digital economy Catapult, and there is no doubt about it—the focus is on small and mid-sized companies and on providing a platform for them. So, again, it is another moving part in the system, but I think it is moving in the right direction.
Katy Clark
In terms of the creative industries, do you think that the Government’s focus on the eight great technologies offers sufficient support to the creative sector? Do you have anything further that you want to say about that? How can we improve where we are?
Professor Reid
I saw the eight great technologies as a way of putting some colour into what is otherwise a rather abstract discussion about the science base, the absorptive capacity in industry and so on. The way in which UKTI used the eight great technologies to sell the UK was an example of that at work. As a way of putting colour into abstract discussion, they were fantastic. The narrative around them was a really effective way of doing that. You can then have a debate as to whether it was the right eight. Without question, it was eight things that this country is good at, and I am not sure that we always blew our trumpet loudly enough about how good we were at them. There was almost a ninth one, with quantum technologies, and you could probably continue to fine-tune the precise specification of the eight. I confine myself to saying that the idea of us identifying things that we are really good at and then giving them a bit of focus and a bit of highlight strikes me as a pretty effective thing to have done.
Dr Docherty
If I may speak in a personal capacity, outside my National Centre role, I think that there is a public policy debate still to be had about how creative digital industries are emerging and how they should be supported. Government have still not quite articulated how these two forces are coming together. They currently sit between two different parts of Government anyway, BIS and DCMS. With my other hat on, as chairman of Digital TV—everyone is bored stiff about me saying this—I would say, “We are going to have an A-grade technology; let’s build off the back of what we have been brilliant at in this country, which is the connection of creative and digital design, and, frankly, a world-class television industry.” Let us not lose sight of that—I will put my other hat back on now.
Katy Clark
The NCUB has been tasked with creating an advisory hub, which will support LEPs in delivering what the Government have described as a stronger, collaborative proposition. Will you expand on how you think that will work?
Dr Docherty
It is this idea of smart specialisation, which, frankly, we are still trying to understand—what is smart and what is special? Needless to say, you have heard all morning about how the LEPs are not very well resourced. What we are trying to do is to say, “What is the evidence base for something that is both smart and special in this LEP business plan?” We are right in the foothills of this; we have not even hired the first two people into it yet, but when we do I am hoping that we will be a trusted source of information—independent information is, I think, what we are trying to get at here. That is why I agreed to do it. If we are looking at emerging clusters, we need a research base that makes sense of that—what is the speed, what is the intention? That is really what is around in the business mind, and I think our mind, as we try to adjust to understanding what it is. But I am afraid we are not even in the foothills, but in the camp behind.
Katy Clark
As you say, LEPs are not very well resourced, so do you think that they are able and indeed willing to work jointly when it is logical for them to do so? Is that realistic?
Professor Reid
It’s very early to try and answer that question, and I would not claim to be an expert. My impression is that they are certainly willing. To do this in creative industries is a challenge. It is tempting to think that creative industries are just another industry, but they are not. They are a not terribly well defined, diffuse and dynamic population of businesses, some of which are very small. This is a challenge for the LEPs. It would be good if we could allow them the time and space to learn how to tackle what is a far more difficult challenge than some of the other industry relationships, rather than coming back in six months and expecting it all to be solved. I don’t think I can say whether they are able; I don’t really know what able looks like on this one.
Katy Clark
My next question touches on some of the points you made earlier, particularly about business. Evidence submitted jointly to this inquiry by a university and a LEP suggested that “it is time to stop concentrating on the outputs of business-university collaboration and focus more…on building relationships and trust. Most universities have little understanding of the needs of businesses, and businesses themselves have little knowledge and understanding of universities’ capabilities.” From what you said earlier, Dr Docherty, you probably agree with that. Do you both agree with it, and how do we tackle this?
Dr Docherty
I don’t know who it was, but I would say it sounds pretty overstated, to be frank. I have visited 60-plus universities in the past five years, and— certainly at senior management level—they do have an understanding. From the business side—pharma, bioscience, engineering, energy—there is quite a lot of knowledge at the top end of companies about these things. So it is not as simple as “They don’t understand each other.” If you look at global indices—which are, after all, based on interviews with business people and academics—we are No. 2 in terms of innovation, so there is something that connects at the top of the systems, but it does not always work its way down as it might do. The research excellence framework exercise is quite good at bringing out an understanding of how to get an impact in the community around you. I am more optimistic than that quote suggests, but, equally, there is tons of work to do, because it is such a complex space. To quickly go back to this industrial structure theme, if you are sitting in Glasgow as a small technology company, but Imperial College is who you should be talking to, you would not know that. That is where I think the disconnect is. You would not necessarily want to go to Glasgow university. We do have to look at all the available opportunities coming out of the publicly invested innovation system and find ways of demystifying them and getting simple messages out to smaller companies. But, again, I come back to the fact that it is different for different sectors and different for different sized businesses. It is unfair to say that universities and academics are not on this; I think they have moved a huge amount. Even in the five years I have been part of this, there has been a real willingness to change, and I think we should build on that.
Professor Reid
I don’t recognise it as a description of the country now; it sounds to me like a description of the way it was 20 years ago. David refers to the last five years. I would say that, over the last decade or so, there has been a transformation on both sides. To stop focusing on the outcomes would seem odd, but I certainly agree that one of the challenging areas—one of the areas for current focus—is how to get the relationships right.
Katy Clark
In the work the NCUB has done, it has described the devolved Administrations as “Target audience and partners”. How closely are you working with the devolved Administrations to improve business-university collaboration?
Dr Docherty
Our funding on the public sector side comes from the Welsh, Scottish and Northern Ireland funding councils as well. Obviously, we are working with UK-wide organisations—the research councils and the Technology Strategy Board. We are right in the middle of putting together a major programme, starting in Scotland, which we will articulate at some point later in the year. We are doing the same with Wales. So we are very engaged through the funding councils with both countries, and we will be putting together very clear programmes of work.
Katy Clark
It would be useful if you could share that with the Committee and send us something when you are able to.
Dr Docherty
Absolutely.
Professor Reid
That’s fine.
Chair
That concludes our questions. I thank you for your contributions again. I reiterate what I said to the other panels: if you feel you would like to expand on any of the answers you have given, please feel free to submit supplementary evidence to the Committee. Thanks very much. Oral evidence: Business-University collaboration, HC 249-i 21