Science, Innovation and Technology Committee 

Oral evidence: The work of Innovate UK and the Regulatory Innovation Office, HC 554

Tuesday 14 July 2026

Ordered by the House of Commons to be published on 14 July 2026.

Watch the meeting

Members present: Dame Chi Onwurah (Chair); Tom Collins; Emily Darlington; George Freeman; Dr Allison Gardner; Kit Malthouse; Martin Wrigley; Daniel Zeichner.

Questions 1-146

Witnesses

I: Tom Adeyoola, Executive Chair, Innovate UK.

II: Lord Willetts, Chair, Regulatory Innovation Office.

Examination of witness

Witness: Tom Adeyoola.

Q1                Chair: Welcome to today’s meeting of the Science, Innovation and Technology Select Committee. I want to thank our witnesses, and indeed our members and staff, for being here in London in the high summer temperature today. If there is a need for a temperature break, please let me know.

This is the final session of this parliamentary term and we are discussing a topic that is a real priority for the Committee. It is something that has come up repeatedly through multiple inquiries. That is how the UK can encourage the emergence, diffusion and absorption of innovation across the UK economy. We are really delighted to welcome two witnesses at the forefront of delivering the Government’s ambitions in this area. Tom Adeyoola is the executive chair of Innovate UK. Later this morning we will be talking to Lord Willetts, chair of the Regulatory Innovation Office.

I want to start by welcoming Tom, who came just over a year ago for his pre-appointment session. Tom, when you came then you were very definitely a man with a plan. I know you said you were going to spend your first month getting under the skin of the organisation, the second month clarifying and simplifying its purpose and the third month getting the structure to deliver on that purpose. How has the plan gone? What have been your main achievements in your first year?

Tom Adeyoola: If I go back to that first 100-day plan that I had, with reference to trying to understand the organisation, simplify and clarify the purpose, and then write the plan in terms of the forward strategy in time for Ian Chapman’s arrival at the end of August, in the first six weeks I visited all the catapults around the country. I did over 20 visits in that first six weeks to understand where Innovate UK money was spent, so the catapults being a third of the annual budget. I really got under the skin of understanding the organisation, meeting all the different departments and divisions of Innovate, and then worked on that simplifying part of the purpose.

It was an extremely complicated organisation to understand from the outside and I wanted to make sure that we could clarify and simplify to get the organisation pointing all in the same direction. A bit of a reflection I had coming in was that it was a great organisation with lots of personally motivated people, who are all motivated in the right way in terms of improving the lives and lot of the UK economy and its citizens. It also felt like an organisation of cats, doing their interpretation of what they thought Innovate was there to achieve. Simplifying that purpose was key, so doing that and then writing out a plan to take the organisation forward, simplifying the purpose to be about shifting from funding projects to supporting companies.

Our role is to accelerate innovation for the benefit of the nation and create a UK where breakthrough ideas can become industry giants, so pulling through breakthrough ideas where we have the research base, the industrial strength and the talent pipeline that gives us a right to win. In particular, given that the industrial strategy had been launched, we were focusing in on aligning ourselves with the industrial strategy sectors so that we had a sense of focus and clarity of areas that the Government have told us to zero in on. We can then start to look with reference to how we could improve our relationships at both ends of that funnel.

With research coming in, I certainly believe that we have, pound for pound, the best research base in the world. At the other end, we have the second biggest private capital market in the world. At the moment, and certainly from my experience running my own start-up, there is a disconnect between deep tech and the private capital markets. I felt that, if we could clarify and simplify that purpose and create pathways from beginning to end, we could bridge that knowledge gap and create a means by which we could catalyse more private capital into the innovation ecosystem. That was the basis of the plan and vision that I had set up.

Q2                Chair: What are you particularly proud of having achieved?

Tom Adeyoola: I got the strategic plan agreed at UKRI level, cross-department; launched the new strategy in March, which was well received by the ecosystem; and reorganised the whole organisation. I reset my entire senior leadership team and reset the organisation to be in place for 1 April, so the beginning of the new spending review period. I wanted to ensure that the organisation was in a position to turn the words of the strategy into action from the beginning of our new funding period.

Q3                Chair: That is a great summary and we will be going in more detail into metrics and performance in a moment. I want to focus on what you said about reorienting. In March, Innovate UK launched its vision for itself as a tech due diligence engine for the UK’s deep tech ecosystem. There is a prioritisation on deep tech, which you reflected there. Prioritisation is very essential, you said, so that the organisation had focus. By prioritising deep tech, what are you not doing?

Tom Adeyoola: Going back to the focus, the focus is very much in the industrial strategy sectors. Outside of that, we are not going to be focusing in areas that are not within that. In particular, we are taking an 80:20 approach, so 80% focus on the industrial strategy sectors, where we believe that we have the right to win, because we have the research base, talent pipeline and industrial strength.

In particular, for example, we have chosen six of the eight sectors. Financial and professional business services, we believe, are well catered for by the market. Where deep tech takes us into those sectors, so AI and quantum, we will support those companies through into those sectors. We are taking quite a focused approach in areas where we believe there is a pathway for success for companies.

Q4                Chair: If I understand you, you are saying that a consequence of the industrial strategy is focusing on deep tech. What is not deep tech? I am trying to understand. With prioritisation, there are always winners and losers. Who are the losers here?

Tom Adeyoola: It is straightforward business model service orientation-type businesses, rather than businesses that are based on some form of research innovation, be it an innovation of technology or an innovation in methodology about doing something, which has a research-based route and provides a point of differentiation. That means that, in a global market, there is something that gives a UK company an edge.

Q5                Chair: It is a focus on technology, but it is not a particular kind of technology, such as engineering-focused technology, which we might call hard tech. One of the sectors is the creative industries. Can you give me an example of deep tech in the creative industries?

Tom Adeyoola: With reference to the creative industries, we have gone around and tried to speak to a lot of the organisations in that sector. We have spoken to over 150 over the course of the last year. We are trying to work out, in a sector that is quite long tail in its structure, with lots of small businesses, what intervention we can make that can meaningfully change the trajectory, for either the sector or some of the companies within it.

Having a conversation with the likes of the BBC, it is quite interesting where you end up. In a conversation with the BBC, you end up with the fact that the technology it is interested in is satellite applications, so being able to understand what is in an image that it might see of what is happening in different places in the world. It is AI, with reference to how it can compete with the new EPGs—electronic programme guides—being generated by the likes of Google now. They are, in essence, disintermediating the ability to go into TV channels, because they are serving the customer directly on TVs. It is quantum, with reference to being able to serve content and know that the content is being delivered to endpoints at the right and simultaneous time. In that conversation, you end up with a position where you say, “There are common challenges that exist across the broadcasters, where differentiating deep technology can potentially increase margin of ability to allow more creativity to flourish”.

Q6                Chair: I would not have thought of electronic programme guides as deep tech. They have been around a long time.

Tom Adeyoola: Yes, but the AI element of that is the bit that is the core focus. It is taking deep tech and AI. Our current platforms in media do not have the type of capacity to invest in deep tech against their competitors. How can we create the pathways for deep tech to help those businesses flourish?

Q7                Chair: You are saying that you are not prioritising areas where tech is not a really important part of their business model or supply chain. It is not particular technologies you are not looking at, but it is the way in which it works in the businesses.

Tom Adeyoola: In the creative sector, when you get the arts and technology that converge, that provides the opportunity for new business areas and the ability to expand the margin. The aim in the creative industries, through the likes of CreaTech, is to create pathways for new companies to emerge to give the UK a potential internationally competitive position. Especially in an era where there is dominance from demand aggregators, we have to help UK companies understand how they can use technology to compete against global significant businesses.

Q8                George Freeman: Morning, Tom. To follow that up, the industrial strategy, which I chaired, is very high level. You could argue that it covers most of the economy, so creative industries or financial services. Successive Governments have in the past tried to identify technologies. I have seen at least four attempts. David Willetts and I had the eight great technologies. Greg Clark had seven. In the science and tech framework of 2021 we had five.

I am not clear, and I do not think the Chair or the Committee are clear, what the technologies are, unless it is basically AI and quantum applied in all the others. What are we doing on agri-tech to feed the world, on space tech for defence or on those other key technology sectors? Around the world, people wonder whether we are still backing them.

Tom Adeyoola: I believe that the frontier technologies that we have are key technologies where we have the research base, which has developed core strength. In particular, in quantum, as you mentioned, there has been a commitment for another £2.5 billion in that space. We at Innovate have launched ProQure, which is an important part of a development pathway through to procurement for Government of quantum compute. The quantum space and the sector is the model coming into Innovate that I am keen to replicate in the other areas.

As you mentioned, the industrial strategy is broad. The challenge I have set our growth sector leads in each of the industrial sectors is to narrow in on spaces and areas where we have the research base and industrial strength that gives us the right to win. That ends up being narrower than our core headline position.

Q9                George Freeman: I understand. That is a very internal metric. As a trade envoy selling the UK in a global race for investment, people are asking what the UK is doing in hot sectors, such as space, agri-tech, engineering biology and the non-AI pieces. There will be an AI element of them. Does Innovate UK have a clear strategy that I, as a trade envoy, can sell, or is it now, “No, we have taken the Government’s industrial strategy sectors and we are pushing deep tech into them. That is it”?

Tom Adeyoola: By the end of September, we will have completed our delivery plans for each of the industrial strategy sectors, which will be very detailed with reference to what we are doing in each of those sector spaces.

Q10            George Freeman: Let me take an example. Agri-tech is a particular passion of mine and I chair the all-party group for it. There is no mention of it in the industrial strategy. Where would it fit into the creative industries or financial services? I do not see how we are going to have an agri-tech strategy in that.

Tom Adeyoola: At UKRI level, there is an agri-tech programme board.

Q11            George Freeman: But not at Innovate UK.

Tom Adeyoola: The SRO for agri-tech is Anne Ferguson-Smith, who is the executive chair of BBSRC. We have our own growth sector leads within agri-tech who are running the agri-tech programme on the bucket 3 element of it, which is the scaling companies element. From the UKRI position, there is a programme now in each of the industrial strategy sectors. Innovate UK is the deputy in each of those programmes, apart from advanced manufacturing, where I am the senior responsible officer.

Q12            George Freeman: Again, that is a very clear internal answer. We have had the agri-tech people in here and they have said that we are not sending a clear enough global signal. I’ll put that down.

Let me turn to the key metrics. You will have seen that we have published “Flying Blind”, arguing that this is all great strategic stuff, but what is the key metric? How do you drive it across Government? Everyone has said the same thing, from the Secretary of State down. The key metric is turning public money into private investment into growth. Can you tell us now, a year on, what your return on investment targets are and how you allocate them across the organisation in terms of answering that metric point? How do you do it internally?

Tom Adeyoola: The key thing that I have been trying to do over the course of this year is get to a baseline on the metric. With reference to coming into Innovate, there are three different data sources for companies that we have worked with. In May, I managed to reduce the three data sources down to one. As of the end of last month, we finally have a single-company view in terms of the companies we work with, which we can use across the organisation. We now have a starting position upon which we can start to overlay and increase the data on the companies that we work with.

Q13            George Freeman: It is a year on. Can you give us a few numbers? Yes, list them: “We invest X. For our current private sector co-investment, we are taking as our baseline Y. We intend to increase Y by 20% over the CSR”. Do you have any clear targets or metrics for delivering that return on investment?

Tom Adeyoola: Within the different industrial strategy sectors, there are different positions with reference to increasing—

Q14            George Freeman: Could you share them with us?

Tom Adeyoola: I would be able to send that to you after this. I would be able to send you the details sector by sector if that is useful.

Q15            George Freeman: Let us take a high-level one. Fintech is a key sector. Financial services and tech must be in your strategy. From your point of view, what are the headlines? What is the plan? I have no idea what we are investing currently in fintech R&D or what we are getting in private. Do you?

Tom Adeyoola: As I mentioned, fintech is not one of our focus areas for Innovate UK. It is not one of the sectors that we are focusing on.

Q16            George Freeman: Can you give me an example of one where you have set a clear metric that we could take reassurance from today?

Tom Adeyoola: The current focus and target for all the programmes is to deliver 3:1 leverage. My view is that, from our position at Innovate UK, we need to do better than that. The focus in terms of our OKRs, which I have now set as of this month, is around how we scale our companies faster, so that they are moving through the levels at a quicker rate and raising more investment from private markets.

Q17            George Freeman: How do we compare to our competitors? If you look at Government to private funding ratios, you will see that in the USA 30% public secures 70% private in R&D. In Japan, 20% secures 80% private. In Germany, 30% secures 70% private. In France, 40% secures 60%. In South Korea, 60% public secures 51%. Where are we?

Tom Adeyoola: One of those OKRs that I have set as of this month is around understanding our international rankings, baselining them and improving them over the course of this year.

Q18            George Freeman: Is that a nice way of saying, “We do not know yet”?

Tom Adeyoola: We do not know yet.

Q19            George Freeman: Do you know when we might know what this number is? It is really important if we are going to deliver the Secretary of State’s mission to turn public money into growth.

Tom Adeyoola: Yes, absolutely. As I said, we have set the OKRs as of this month. Over the course of the next couple of months, we will have those and be monitoring them on a monthly basis.

Q20            George Freeman: You said over the course of the next couple of months. Does that mean end of August?

Tom Adeyoola: By September we will have them.

Q21            Dr Gardner: I want to talk a little about diversity in types of the applicants but also the topics that are focused on. I noticed in here that some of the data we have is that 86% of applicants did not have a particular health condition or disability. We had 60% male and 32% female; 7% did not want to say. We had a resounding 70% who were white. The next nearest category was that 11% were Asian, so the diversity of applicants is still poor. How will your new operating model support improving the diversity of applicants?

Tom Adeyoola: The key part in how I want to ensure that we operate going forward is to design in inclusiveness from the get-go. We have what we call the innovation fundamentals, which is trying to understand and design for regionality and diversity from the beginning of the process, and understand, in terms of the data that comes out, what our data is showing and what the right interventions are to move the needle at the beginning of the funnel.

I am always keen to do systemic work in terms of moving the numbers over and above side projects. That is key to the work that we are doing. We still have Women in Innovation, which has helped to raise the issue. In terms of those numbers, they were as low at the start of that competition as one in seven. It has now moved to one in three. There is still a lot of work to go to improve those numbers further.

Q22            Dr Gardner: It is good to hear that you are working on that one. I would also raise that there is a lack of diversity in the topics chosen to fund. It is perfectly possible to have white males, but they are focusing on female-specific issues. I am keen that you have a look at topics as well, so where research into endometriosis, adenomyosis or chronic UTIs has the same level of investment as we would have in male-centric illnesses. It is not just diversity of successful applicants, but the diversity of where you are choosing to put your funding and on what topics. Are you looking at that?

Tom Adeyoola: Remember though, if you are talking about research, the research is upstream of us. We are focused on the scaling companies part, so we are pulling through what is coming through from the research base. Therefore, in some respects, we are downstream of that initial decision.

Q23            Dr Gardner: You can influence. You can say, “Hang on a minute. When are we going to get a little more diversity in what you are researching in, please, because we are seeing a bias here?”

Tom Adeyoola: Yes, we can influence and do that feedback loop. That links back to the part that I mentioned earlier, which is that we are the end point. By the numbers that come through, in terms of the companies that come through and the areas, we can point back to the research base to say, “There seems to be a mismatch here in terms of the outputs and the outcomes versus what is coming in at the beginning of the funnel”.

I agree with you that getting that feedback loop working is the key part of what I want to achieve and deliver through that shift to supporting companies and understanding the cohorts of companies that are coming through. That data was quite hidden when we were focusing on projects. By only seeing projects, we were not understanding what is turning into impact and outcomes, which are the actual companies that are succeeding and following through, and why that is.

Dr Gardner: I would be very interested in seeing the analysis with a diversity lens on those outputs at some point.

Q24            Chair: Tom, could you clarify there? You referenced geographic diversity or regionality, but I do not think that you have published geographic diversity data as part of the data that we have. We have by gender, ethnicity, education and socioeconomic background, but not by geographic.

Tom Adeyoola: In terms of the projects that we support, we know where those projects have been around the country. I can tell you that 62% of funding last year was outside of the greater south-east, 8% was in the north-east and 7% in the east midlands. We have that information and data.

Q25            Chair: Can you say that you will publish geographic diversity data in the future?

Tom Adeyoola: I see no reason why we would not or do not, or why it cannot be picked up from the publicly available data that we provide.

Q26            Daniel Zeichner: Good morning, Tom. I am going to start by saying how much I enjoyed your launch event at Old Street. There was a real buzz there. I want to explore the relationship that you have with UKRI and DSIT. When you were before the Committee before, you stressed the importance of that relationship. Can you tell us a bit about how that practically works?

Tom Adeyoola: Lord Patrick Vallance is my ministerial boss, if you like, and then Ian Chapman as head of UKRI. I met with both Patrick and Ian before taking on this role. It was important to me at that time that we had an alignment in thinking in terms of strategic choices and driving economic growth for the UK. I meet quite regularly with Patrick. In fact, I met with him yesterday morning. I feel that I have good clarity on his priorities and focus.

Likewise, I have a very strong relationship with Ian. There is that point around aligning with industrial strategy sectors and clarity of what Innovate is there to do. With reference to the fact that he has reset the UKRI mission around advancing knowledge, improving lives, and driving growth, Innovate is very much in that driving growth element. We have aligned ourselves in terms of structure to match the programmes coming through. We have someone that matches up against each of the research programmes. Now, in having those regular conversations at a UKRI level, we are already making strategic changes that connect some of the research that is happening out of the research councils with the work that we are doing.

In advanced manufacturing, just from the programme boards I have had, there have been slight changes in EPSRC and competition focus, and, at our end, to ensure that there are not any orphan projects that do not have a pull through from Innovate based on what might come out of the research-based calls. That is hugely important. There is a much closer connection in working through with my exec chair colleagues across the group. With the new programme boards, there is much stronger matrix working across the piece. In advanced manufacturing, I have colleagues from ESRC who are working on business intelligence around the advanced manufacturing sector, and likewise with BBSRC, working on their inputs into what we are trying to do, and STFC on the space agenda that was mentioned previously by George.

Q27            Daniel Zeichner: What have been the key points of difference over the 18 months? There must have been differences of opinion.

Tom Adeyoola: We are very different to the rest of UKRI. UKRI is pointed at the research base and the university sector, and we are pointing out towards the business world and investor community in terms of that pull-through. We have to bridge to the research base and the university sector, and we have to utilise the rest of UKRI.

I genuinely think that that connection is a core competitive advantage for the UK. We need to get that bridge working correctly as we are entering what is an important era for the UK, because it is a deep tech-focused one. The dominant, emergent and exponentially growing technologies are around AI, quantum, engineering biology and so on. Those are areas where we have a genuine research strength in the UK and hence we do not have an excuse for not being much more joined up and connected. If we use that correctly, that can genuinely be a point of difference that can bring private capital much more quickly into what we are doing.

Already, in some of the conversations I have been having with pension funds, there has been a sense of the cogs turning and the understanding of, “What is this UKRI thing? We did not know we had it before. We did not know there was an Innovate UK. We do not really know what our research strengths are”. Now we can understand the amount of money that is being injected by Government into the research base, how that is de-risking whole new sectors where we have strength and the potential to win, and how we could use that and co-invest in a meaningful way that aligns with our goals and risk appetite.

Q28            Daniel Zeichner: You are hearing from people that they were not really aware that some of those opportunities are available. I find that quite shocking in some ways. You also said to the Committee before that you would not be afraid to speak truth to power. Minister Vallance is a fairly plain-speaking person. What have you had to tell him that he might not have welcomed?

Tom Adeyoola: I have had lots of good conversations with him, and I love plain-speaking conversations. As somebody who has come from the private sector and the start-up sector, coming in to work adjacent to Government, the pace of change is challenging. Processes and systems are difficult. Where we reach treacle-based inertia in different areas of the types of change I want to deliver, that is where Patrick Vallance can be helpful in giving clarity of focus to the machine.

Q29            Daniel Zeichner: Have you seen it make a difference?

Tom Adeyoola: Yes, I definitely think so. Innovate UK is an organisation that has grown quite considerably over the years. It would have been very easy to come in and say, “I am going to focus in this direction and leave the machine by itself. I am just going to create this new thing on top, get my own people and do bits that do not affect the underlying machine and the rump of the machine”. Fundamentally, I believe that you have to fix a machine and ensure that machinery is working efficiently to deliver value.

For me, that has meant doing a lot more under-the-bonnet work than I was potentially anticipating, in part because, going back to objectives and metrics, there is not a clear cascade of objectives and metrics through the organisation. That has been harder and taken longer than I would have expected to push through the layers. Similarly, business intelligence has not flowed up and down in the way that I would have expected for an organisation of this size. That is what creates the inertia through the layers. Once you go a couple of layers down, people work to policy and doing the best at their job based on the policy terms and conditions that they have for doing that job, rather than “What is the objective we are trying to achieve for the organisation as a whole?”

I am trying to tilt that over this coming year. The first year was about resetting the strategy. This year is about operationalising the strategy so that, by the end of this year, next April, all our programmes and competitions will be strategically aligned. The competitions launching now were designed eight or nine months ago, so it takes a while for that to flow through the process. If we can do that, the whole organisation can start to move more quickly. It still is the case that, if you go a couple of layers down in the organisation, down into DSIT or other parts of the machinery, you have to explain things all the way from scratch again. You need the power of a Minister to help you and help people understand what the core objectives are. You need that reinforcement and top cover.

Q30            Kit Malthouse: Before I start, could I make a declaration of interest in relation to my entry in the register for this meeting? Also, I was so eager to question the Secretary of State last week I forgot to make the declaration last week, so could I correct the register for that as well? I am an unpaid chairman of a company that develops software and technology. Last week, we had a rather inelegant discussion with the Secretary of State about this buckets thing. Within the buckets, do you have any idea what your budget is?

Tom Adeyoola: Innovate UK is wholly in bucket 3, so scaling companies. The allocations were published and agreed at the end of last year. My spending review budget is £4.4 billion.

Q31            Kit Malthouse: That is within bucket 3.

Tom Adeyoola: Yes. I am £4.4 billion of the £7.3 billion.

Q32            Kit Malthouse: You know now what your budget is across the spending review.

Tom Adeyoola: Yes. That is the budget.

Q33            Kit Malthouse: You are unlikely to get squeezed by other organisations within bucket 3. My impression was that the buckets were meant to be fluid.

Tom Adeyoola: There is an element of—

Chair: Sorry—fluid buckets?

Kit Malthouse: That is presumably why they are called buckets. They are meant to contain fluid.

Tom Adeyoola: With reference to the spending review period, at UKRI level, the allocations were made in December over the four years. In terms of the profiling of how we will build programmes over the period, the profiling might not exactly match how the spending has been set year by year. I know that, for example, in a couple of the areas we have more of a hockey stick spending profile than a straight-line profile.

Q34            Kit Malthouse: There is a number against which we, as a Committee, can hold you to account.

Tom Adeyoola: Absolutely, yes.

Q35            Kit Malthouse: Did I read that HEIF is transferring into you at some point? Is that right?

Tom Adeyoola: I do not think so.

Q36            Kit Malthouse: I thought that HEIF was switching across. It is not. That may be news to me. Can I explore further George’s point about the KPIs? Bucket 2 has a 3:1 leverage ambition on it. Is that a KPI that you would recognise and can hit?

Tom Adeyoola: Yes.

Q37            Kit Malthouse: Right, but I thought you said to George that you did not have any targets that were—

Tom Adeyoola: No, I said that we should be doing much better than the 3:1. The 3:1 is what has been set across the different programmes. Given that we are at the commercial end of that, we should be doing better than three.

Q38            Kit Malthouse: Right, so 3:1 is a minimum. What would be your aspiration as a better maximum?

Tom Adeyoola: I think that what I said when I came to my pre-appointment hearing was 10.

George Freeman: Yes, that is what you said.

Kit Malthouse: We can hold you to 10.

Q39            George Freeman: Can I follow up? On your point about the £4.4 billion over four years, how does that break down in years 1, 2, 3 and 4? I know from experience that Treasury often front or backloads. Do you know?

Tom Adeyoola: Yes.

Q40            George Freeman: Can you give us the numbers each year for your budget?

Tom Adeyoola: It grows very—

Q41            George Freeman: Sure, but do you know the numbers for your budget?

Tom Adeyoola: I will send you the exact numbers.

Q42            George Freeman: What about roughly?

Tom Adeyoola: Effectively, it is just over £1 billion per year.

Q43            George Freeman: It is an equal spread.

Tom Adeyoola: There is growth of a few per cent.

Q44            George Freeman: Quite often they are very ramped. It is basically £1 billion a year. We are currently running a 3:1 ratio, so £3 billion private, and you want to get it up to £10 billion. That is great. Do you have a plan for that?

Tom Adeyoola: Yes.

Q45            George Freeman: Do you have a proper plan? A vision, yes, but do you have a plan? In quantum and AI—the ones you have highlighted—it is currently at £2 billion a year and we want to get that number up to £8 billion. Do you have any of those numbers?

Tom Adeyoola: As I mentioned, we should have the delivery plans in place for the different programmes by the end of September. That will give clarity about the plans that we have in each of those areas for what we are intending to do.

Q46            Kit Malthouse: But with specific measures therein to stimulate this leverage?

Tom Adeyoola: Yes.

Q47            Kit Malthouse: All you have is the power to spend money in a way that you think might stimulate that investment, but there are other barriers to that investment that you might recognise.

Tom Adeyoola: From my perspective, a key part of our strategy is enabling others to understand our position in the ecosystem and how to work with us. Off the back of launching the strategy so far, I have started to have much more interesting conversations with other parts of the ecosystem, and in particular the banking and private capital sector, with reference to them understanding how they will work with us and to the point of that tech due diligence piece. Already we are, for example, having quite an interesting conversation about potential new financial instruments that could be generated off the back of the work that we are doing.

Q48            Kit Malthouse: Another question that occurred to me as well was how you measure additionality and know you are not funding things that would have happened anyway. I think that the NAO has been critical in the past of UKRI’s measures of additionality. Everybody is focused on value for money. You are getting four and a bit billion quid to spend on this stuff. How do you measure that?

Tom Adeyoola: That is a core challenge that I have set all the growth sector leads. As we are looking at the sectors and interventions that we are trying to make, they have to be interventions where we are well placed and are going to be adding value to each of those sectors. Hence, as I mentioned earlier, financial and professional business services is well served by the market. It is difficult to see our position in that. Our position will come through from the frontier technologies, so AI, quantum and advanced connective technologies. That will be the means by which we have something to add that potentially might hit those sectors, but that is in a passive type way.

It is core on the additionality point, and something that is often missed here, that we have to ensure that the companies that we work with generate the right type of momentum to generate value and keep going. With reference to the companies that we work with, ultimately there is the post-project evaluation, which Innovate does a lot of, but which takes too long. You are talking about two years before you understand, at a deep economic level, the additionality point. There is the in-year monitoring that we need to do to understand where we are having impact and be able to move accordingly. With that, with reference to the high-potential businesses that we intend to work with, it is understanding whether, from our intervention, companies that we work with are converting at better rates stage to stage and moving more quickly through the stage gate funnels than if we were not part of that process.

Q49            Kit Malthouse: I have a final question. The UKRI overall share of R&D funding has fallen as money is ploughed into other organisations, such as ARIA and what have you, and yet it does not seem to be spending all its allocation. Do you think there would be a case for shifting, or being a bit more fluid, shall we say, with money that is unspent? Could you do more with more?

Tom Adeyoola: The key thing that we have to do is to make sure that we are showing the value of the work that we are doing and that we are having impact. The key thing I said when I came here was that I felt that Innovate was too input-focused and not enough outcome and impact-focused. If we show the outcome and the impact, we state the case for how money should be allocated to us. We have to do our job. We have to present the case, show our impact and make it a straightforward decision for our Government stakeholders as to where to allocate money based on their priorities. As long as we are doing that job well, we help Government make their decisions.

Q50            Chair: To follow up on that, UKRI says it is spending £7.4 billion on innovative companies over the spending review. Of that, £4.4 billion is going to you, so to Innovate UK. There is £3 billion on supporting innovative companies that does not come through you. You said in discussion with Daniel that you were in agreement with UKRI, so you are happy with that split.

Tom Adeyoola: It is a big sum of money. We have to spend it well. If we spend it well, we prove our case. Ultimately, that is what we need to do and need to show.

Q51            Chair: Yes, you are going to prove your case. In terms of the existing split, the knowledge exchange, translation and support for local innovation is not coming through you. You are happy with that split. We heard from Ian Chapman, in correspondence with us, that there is effectively—it is not entirely clear—a 1% levy going to be asked of other research councils because of STFC’s financial planning mistakes and the cuts that have to be made. Is Innovate UK going to be asked to pay that 1% top slice, as far as you know?

Tom Adeyoola: Obviously STFC is not my area, but, as an organisation, we have sat down and looked through the situation, with reference to the right thing to do. We have taken a consensual view to defer some of our activity to support the needs of STFC in this moment. 

Q52            Chair: You are going to be providing that.

Tom Adeyoola: Yes.

Q53            George Freeman: Could I shift the lens on to the regional clusters of R&D? That is something we asked you about a year ago. With the new Prime Minister arriving, with a strong theme of Manchesterism and clusterism, I think that this is going to become more important. You have been pretty clear that the focus is on deep tech, which you have defined as AI, quantum and the deep digital and transformational technologies. What does that mean for those clusters around the country, such as the south coast marine technology cluster, the Exeter defence cluster, the south Wales semi cluster, the Liverpool tropical disease cluster, the Glasgow space cluster, the Newcastle and Edinburgh data cluster? It sounds very Shoreditch or London.

Tom Adeyoola: To be clear, when I talk about deep tech, I include hard tech and all research-based technologies, so space is absolutely deep tech.

Q54            George Freeman: I appreciate that, but there is no money and no numbers that anyone can read and take reassurance from. We have just established that. For anyone who is looking at, say, the tech space, you said that in September, which will be just over two years since the Government took over, there will be some delivery plans. At the moment there is no clear signal—we heard this from the sector—of what the Government are doing to support agri-tech coming out of Norwich, Lincoln, Aberystwyth and other areas all around the country. I want to ask about clusters. Where are you on reassuring people that this £4 billion is going to be invested by Innovate in the clusters round the country? You saw our “Flying Blind” report, which was highlighted.

Tom Adeyoola: With reference to agri-tech, I do not want to pre-empt or pre-judge what is coming out. I know the work that we are doing with reference—

Q55            George Freeman: Do you have a number?

Tom Adeyoola: I am not going to pre-judge the release of that.

Q56            George Freeman: You do not have a number. That sounds clear. Here we are trying to sell UK agri-tech and the CEO of Innovate cannot tell us how much we are investing in agri-tech over the next four years.

Tom Adeyoola: I know how much we will be investing in agri-tech, but, as I said, I am not leading the agri-tech programme.

Q57            George Freeman: I understand, but you are the head of Innovate UK. If we are going to send a signal that the UK is backing agri-innovation, the CEO of Innovate UK needs to know the number that we are investing in agri-R&D and in agri-innovate support.

Tom Adeyoola: I am not going to go ahead and release—

Q58            George Freeman: We will have it in September.

Tom Adeyoola: Yes.

Q59            George Freeman: That is understood. Can I ask about the strategy of Innovate for clusters? It sounds quite focused—and I understand this—on going big on quantum AI. In that, I hear Shoreditch, London, maybe Cambridge, Oxford and Edinburgh. Does Innovate have a strategy to support regional R&D that is driving those mini-Manchesters all around the country?

Tom Adeyoola: Absolutely, yes. I have done over 70 visits across the country in the last year.

Q60            George Freeman: I know you have done visits. Can you summarise the strategy?

Tom Adeyoola: With reference to our strategy, our focus is on the key industrial strategies, as I mentioned, which are our research base and industrial strength. The quality of our research up and down the country is pretty consistent. The commercial opportunity and access to capital is not. If you are going to look at a UK-wide model in terms of driving value in economic growth, the golden triangle is not enough. It is not enough. There is not enough deal flow.

Q61            George Freeman: We accept that. Sorry to push you, but do you have any specific plan reassurance that, as you allocate the £4 billion, you have an allocation model where you will identify places, or clusters, that are punching above their weight in which you could help support more private sector investment? We get the thesis, but do you have a plan for it?

Tom Adeyoola: Yes, absolutely. Advanced manufacturing is not London, for example.

Q62            George Freeman: Can you name a cluster that will benefit from this that you are looking at?

Tom Adeyoola: In advanced manufacturing, we have the midlands base in terms of all the work that is being done there around mobility and the work that is being done on aero. As we think about different spaces, even when you are talking about quantum and AI, the AI hardware plan is not a London-based plan. AI fabless chip design and the work that is being done there is not a London-focused initiative.

Q63            George Freeman: To take advanced manufacturing, Sheffield would be on your list.

Tom Adeyoola: Yes, absolutely.

Q64            George Freeman: Glasgow is Europe’s No. 1 satellite manufacturing city. I get west midlands, but do you have a kind of, “In advanced manufacturing, these are the three, four or five clusters we are supporting”?

Tom Adeyoola: We are focused in terms of our programmes. We are focused on programme first, in terms of what the sector areas are. That is our organising structure. From there, we understand, “Which are the clusters of strength?”

Q65            George Freeman: That is understood. Can I change tack? Have you done any mapping of R&D clusters, not within your particular programmes, but as entities that are driving the UK innovation economy, to map which ones are punching above their weight, with small R&D public but attracting a lot of private, and which ones really need your support?

Tom Adeyoola: A lot of the work done in the local innovation partnerships fund has been trying to understand, around the country, the different clusters in the different areas and map that to investment funding through that partnership fund. In particular, that is working in co-creation with the regions around what they believe are the cluster strengths and what we see and can understand from the mapping of what the cluster strengths are.

Q66            George Freeman: Did you support our recommendation in our report that we wanted to see performance indicators and a better digital tracking of these clusters?

Tom Adeyoola: Understanding where we have strengths and tracking those strengths is a key thing that we need to evaluate on an ongoing basis. Especially as we start to support cohorts of companies coming through the system, we need to understand that they match what we believe our strengths are around the country. If, for example, in the north-east, there is a view that we have advanced manufacturing strength, but we are not seeing representation in the cohorts of companies coming through our programmes, that shows that there is a mismatch with what we think is right.

Q67            George Freeman: I understand the theory. I am wondering where you are in terms of actually mapping or having an Innovate UK view of, “There is a cluster here that is driving key regional growth opportunities, innovation and investment, which needs a bit of our attention. It needs us to support it”, or, “Here is one that we are over-supporting, because it is not doing very well, and here is one we are under-supporting”. I am not hearing that you have a framework for that.

Tom Adeyoola: That work is going to come through our relationship with the regions.

Q68            George Freeman: When will that work come?

Tom Adeyoola: As I mentioned earlier, that work has been happening through the local innovation partnerships fund.

Q69            George Freeman: Is there anywhere this Committee can go and see how you are allocating the £4 billion to clusters?

Tom Adeyoola: As I mentioned, we are doing that allocation on a programme basis.

Q70            George Freeman: When will that be published? Is that September delivery plans as well?

Tom Adeyoola: In terms of then seeing how that relates back to clusters, the clusters bit is going to be a second-order outcome.

Q71            George Freeman: To be clear, you say second order, but for those clusters it is first order. As a trade envoy, selling our clusters as investment opportunities requires us to be able to say, “Take the Edinburgh quantum cluster. It is receiving this funding from Government as part of its quantum strategy. That creates a really interesting co-investment opportunity”. Without being able to point people to those maps and allocations, it is just theory. That is why I am pushing on when we might be able to get a map of where, through your processes internally, you have allocated money to these clusters.

Tom Adeyoola: As I mentioned, our focus is going to be on supporting companies. It is companies first, based in the programmes that we have.

Q72            Chair: We need to move on and look at catapults. I share George’s concern. Focus on companies, yes, but companies are part of local ecosystems. Driving those local ecosystems to deliver more companies and more growth requires, as our report said, a better understanding of regional data. Are you committing to the Committee that you will get that better understanding of regional data and share it with us?

Tom Adeyoola: Yes.

Q73            Chair: The timeframe for that will be autumn this year.

Tom Adeyoola: We will look to provide something in the autumn.

Q74            George Freeman: Will it be in the delivery plans?

Tom Adeyoola: I will check and come back to you, but it should be.

Chair: It is regional data.

Q75            Tom Collins: Maybe you could start by letting us know what your broad view is on the effectiveness of catapults at the moment, as you are now comfortably in post.

Tom Adeyoola: My starting position with the catapults and the challenge I set the catapults coming in was to show how they aligned with the industrial strategy and our mission in terms of scaling companies. Those were the two core strategic challenges I set them, and providing evidence around that. I visited all the catapults. The work that we are doing now is ensuring that that alignment is crystal clear and that we can do a stronger job on the scaling companies relationship. That is the work that is happening with all of the catapults as we are going through and ensuring that we have the right mix of catapults to match up with our industrial strategy needs.

Previously, all the catapults were measured against each other with metrics that did not make sense, because all the catapults are very different and are operating in different sectors. Now the catapults sit within the programmes in the industrial strategy sectors, which tensions them in a much better and stronger way with reference to the types of activity and interventions you are doing in that space. The High Value Manufacturing Catapult is sitting within advanced manufacturing and is tensioned against the different initiatives and interventions to support the manufacturing industry. That has given it much more clear focus in terms of the work and outcomes that we need from the catapults to deliver for the UK’s underlying objectives.

Q76            Tom Collins: That is how they orient against each other, against our core missions and looking across those different sectors. Looking at the catapults and how they work with businesses and other local actors themselves, we know that the UK’s position is patchy across different sectors. We know that, even within sectors, it is very patchy and diverse. There are some businesses with high innovation activity and others that probably are very disengaged and lower, but there are opportunities there. How do you feel the catapults are working in dealing with that very diverse and patchy reality on the ground?

Tom Adeyoola: It is different in different places. My reflection was that, with some of our catapults, there is strong work with primes, for example, and then access projects working at this level, but the bit in the middle is a struggle. That is the part around scaling companies, which I talked about. We need to do much stronger work to get higher utilisation rates on the national assets that we have around the country and a much stronger pathway in a sense of delivery value for companies that are trying to scale, where working with the catapult therefore moves their trajectory and meaningfully accelerates those companies. That is the bit where I feel that the work that we are doing now with the catapults is really targeted on delivering in that element.

Q77            Tom Collins: Do you see a part of industry where they are not these really large operators that have big transformation plans; they are not these small, emerging start-ups that are growing into the new spaces; but they sit somewhere in the middle, embedded across towns and cities as well as the big areas? They need to transform, adapt and change. How do you see catapults meeting their needs in helping us move our whole system in these key sectors?

Tom Adeyoola: That is a big challenge and there is something around the connectivity between those businesses and the catapults that is not quite happening in the right way. The centres are not the obvious choice for those companies looking for transformation, but also a lot of those companies are not understanding the need for transformation. There is still quite a lot of work to be done. It is unclear to me, certainly in terms of that Mittelstand, which we do not really have in the UK, and that driving force of nature. The bit that we are trying to focus on at Innovate is the companies that really want to scale, understand and can have that transformational bit.

There are some projects that we run for other Government Departments that are focused on the adoption element of innovation, but, as Innovate, our core needs to be on pushing the companies that can have a meaningful shift on the economy and can really accelerate. We need to join those two.

The bit that we are working on at the moment is, “What does the shape of some of those programmes need to look like to bring those companies in and take them through that journey?”

Q78            Tom Collins: How do you see the shape of those programmes changing at the moment?

Tom Adeyoola: We have done some work already. I have had conversations with one of the catapults that has brought in a new innovation accelerator programme in particular to look at some of those companies, drive their awareness, bring in corporates to be the demand pool axis and try to get a much closer connection between the start-ups and the demand pool with asset and infrastructure in place.

There is a sense of, “I am coming here because I have the demand, I have capability that can help me, and I have access to kit”. If we can get that as a virtuous cycle, that can improve things. We now have a couple of pilots working in that space to see whether that activity can really kick-start those businesses.

Q79            Tom Collins: As you have described it to me, that sounds like it is reinforcing the existing position where small start-ups are getting the benefit and the big, large and highly engaged incumbents are getting the benefit, but those who are currently disengaged and fairly invisible may well remain disengaged and fairly invisible.

Tom Adeyoola: The goal of that outreach needs to be to bring some of those companies into thinking about basically taking part in some of this. Coming back to that point, close activity with the regions is going to help us bring some of the companies that can have that potential into the funnel.

Q80            Tom Collins: What do you mean by “regions”?

Tom Adeyoola: I mean local areas.

Q81            Tom Collins: Who in local areas would that be? Who would you engage with?

Tom Adeyoola: In order to bring businesses into the funnel, we need to have outreach. We have Business Connect, which convenes local stakeholders, businesses, innovators and investors to pull parts of the ecosystem together and drive awareness of the programmes that we are delivering. That is within our gift. We can do that.

We also have Business Growth, which has people on the ground who work with businesses at a local level. We have those people all around the country. In terms of the regions, one delivery partner is Greater Manchester, for example.

Q82            Tom Collins: There is the word “regions” again. Not everywhere in the UK has a strategic authority. Are they going to miss out?

Tom Adeyoola: We have people all around the country. We have local networks in different parts of the country. I would say our reach into local ecosystems is pretty good in terms of spread and coverage.

Q83            Chair: Can we just clarify? When you say we have people, do you mean Innovate UK or Business Connect?

Tom Adeyoola: Business Connect is wholly owned by Innovate UK.

Q84            Chair: You mean Innovate UK people.

Tom Adeyoola: Yes. We have delivery partners through Business Growth as well. They are people who are distributed all around the country.

Q85            Tom Collins: I understand that the Government initiated a review ahead of the next funding round on the Catapult Network. Do you know when that is likely to be completed and when we will have findings from it?

Tom Adeyoola: The next funding review period starts from 2028. We are now in that process where it is the beginning of the review of the previous funding period and we are lining up to be ready for the next funding period. Over the next year, that process will have flowed through.

Q86            Tom Collins: If we have you this time next year, we may have a review of the Catapult Network.

Tom Adeyoola: We can have that discussion at this point next year.

Q87            Emily Darlington: Tom, I just want to narrow you down and bring together a bunch of these ideas. We have talked about the importance of clusters in different regions. You know this Committee is focused on regional economic growth. We have talked about your review of the catapults. We have talked about access to finance and access to customers. Do you envisage that some of the catapults may move their locations in order to support cluster development?

I am thinking in particular of the digital one sitting in Kings Cross. Shoreditch has one roundabout, Silicon roundabout. Milton Keynes has many and just as many tech start-ups—I am just using a specific example—but it gets no support really from Digital Catapult. There are other examples of other places across the country, not just Milton Keynes, that have huge start-ups and an access to finance problem but are not being supported by the catapults, which are based in London or other places.

Are you envisaging some of this work moving catapults and moving their work into the places that need it, in the clusters that you are developing?

Tom Adeyoola: The Digital Catapult has several places around the country that it operates from, including Northern Ireland and Newcastle. With reference to catapults and where they are located, our focus currently in the review is, “Do we have the right mix of catapults as a starting position?” The next part after that is, “Are they doing co-activity where it needs to happen? How does that infrastructure work around the country?”

We have catapults in some really inspiring places. We have AMRC in Sheffield, where we are developing new energy on top of what was old energy in terms of the site of Orgreave. We have Newport, which has now been renamed the semiconductor catapult, which is generating new technology through AI. We have the Offshore Renewable Energy Catapult in Blyth on the site of the old docks. In terms of Innovate UK, we are supporting Hartree in terms of the development of AI super-compute in Daresbury.

Over the course of the catapults’ history, we have made deliberate and specific choices around where those elements are and how they support sectors.

Q88            Emily Darlington: Reading between your very calm presentation—this Committee would agree that the catapults are of varying quality and delivery—you are open to being quite radical in closing some down, opening up new ones in new areas and making sure that it works.

I want to push you on this. Is part of your evaluation of catapults their access to finance on a regional spread and the extent to which they are creating investment opportunities? How do you link that to Government procurement projects and their access into Government procurement?

Tom Adeyoola: If we take the access to finance bit first, access to finance is a role that is not currently done very well across the piece. As a national body, that should be one of Innovate UK’s core functions: to generate the ability to access national and international finance through our ability to bring companies together from around the country.

Q89            Emily Darlington: Can we focus on the catapults?

Tom Adeyoola: At the moment, being a source of access to finance is not really one of the catapults’ core functions. Catapults presenting and bringing in cohorts of companies will open up the door for access to finance to be able to emerge. At a regional level, for example, the thing that we are doing is closing the gap between us and the British Business Bank by generating a pipeline of companies that are due-diligenced for the British Business Bank to be able to—

Q90            Chair: Sorry, once again, is that regarding catapults?

Tom Adeyoola: Yes. What I am saying is that, from the catapults’ perspective, the catapults are a delivery mechanism of Innovate UK. A company story might be from research through to getting a grant through to working with a catapult. These are all elements that tick the box in terms of tech due diligence, which then leads to potential access to finance. The velocity piece that we are generating as Innovate UK will enable the company then to get a connection to access to finance.

Q91            Emily Darlington: What I hear you saying is that catapults are not very good at doing that now, but it is one of the elements of the review.

Tom Adeyoola: It is one of the elements, but it is likely to happen more through our ability to highlight and spotlight the finance piece.

Q92            Emily Darlington: What about access to customers? As you said, the Government are a huge customer. What about opening access into Government procurement for those companies as well and ensuring that they have the first grounding of a Government contract in order to raise capital themselves?

Tom Adeyoola: One of the key things that I have been trying to do while I have been here is to understand the friction points around procurement and how that can be opened up. Again, this speaks to the tech due diligence piece. If we can do that role properly, we can hopefully kite mark and jump companies that pass through the system.

Chair: Tom, we understand that. I think your question is, “What are the catapults doing?”

Emily Darlington: Yes. Let me give you a specific example.

Tom Adeyoola: What I am saying specifically is that catapults are a delivery mechanism of the Innovate UK—

Q93            Emily Darlington: Your transport catapult is working with HS2. This is an area where it is doing that. I want to put it to you that not all catapults do this. The transport catapult is working with the HS2 contracts. It is pulling new and innovative ways of measuring bridge and infrastructure vulnerabilities and all those sorts of things. That one is linked to Government procurement and Government contracts. Part of the catapult is working very closely with that. That is the only example that I know of where a catapult is working with a big Government procurement project to ensure that we are getting the most innovative companies in there. Is that something all catapults should be doing? Is that something that you are looking at in the review?

Chair: We have to move on. Can you just answer Emily’s question?

Tom Adeyoola: In a couple of key areas, yes. Cell and gene therapy also does quite a lot of work with reference to market demand and working with the NHS.

Q94            Chair: Is it a role for the catapults?

Tom Adeyoola: It is a role for Innovate UK and the system.

Chair: We are not clear whether the catapults—

Tom Adeyoola: I am saying that is the answer.

Chair: It seems to be on an ad hoc basis.

Q95            Emily Darlington: Should it be a role for the catapults? Yes or no would be great.

Tom Adeyoola: No, it should not in particular because then you are effectively creating multiple duplications of effort all the way along the system. In key areas, in particular around procurement, the centralised potential to push through companies and cohorts of companies that might come from across different catapults into Government as a funnel needs to be done in a way that has the right level of scale, connectivity, expertise and relationship building. Otherwise, we will create a position that is too fragmented.

Q96            Martin Wrigley: It is quite a jump going from the start-up private world into a policy-bound organisation that sounds like it is reluctant to change to your vision. You have discussed operationalising strategy and changing working to policy into working to mission in the second year. You have expressed quite a lot of frustration, I feel, in some of the topics that we are looking at. What are you going to do in your second year?

Tom Adeyoola: I am in my second year now. The key thing for me is that we have to turn the words into actions. Fundamental, for me, is developing the relationships with the ecosystem at both ends so that we are getting the funnel working in terms of breakthrough ideas into the Innovate UK stream, and then building the relationships with all the other parts of the ecosystem and telling that story and that narrative to bring to life the tech due diligence piece. It is about having the relationships with all the investors, private capital, markets, policymakers, regulators and procurement in particular to be ready to start to catch the companies that are coming through.

Again, looking at quantum, which is the market segment where we have done a good job of being quite connected as a system, we went from spotting interesting research in the labs to funding that research, Innovate UK creating the petri dish for companies to emerge and Government, with NSSIF, investing in some of the strategically important companies coming through. That pathway got to a point, but then, a couple of months after joining, Oxford Ionics got bought by IonQ, an American company. I spoke to both CEOs the day after that happened, and I asked Chris Ballance quite bluntly, “Why did you take this deal from Niccolo?” He took it for the right business reasons, but there was no UK alternative.

From my perspective, we have done all this hard work to get to that point in developing the sector—there were at least about four companies raising over £100 million at that time—but we had not laid the groundwork for what comes next in terms of preparing UK domiciled money, potential procurement and commercial pathways.

The risk is the potential of fundamentally subsidising R&D for the US economy, which I do not want to do. In the current year, therefore, the focus is preparing that groundwork for what comes next. A year on, Oxford Quantum Circuits was funded to the tune of £260 million co-led by UK institutions. There was a UK alternative for that business, and we now also have a procurement pathway for quantum compute. We also have US companies looking to basically base themselves here in the UK.

Q97            Martin Wrigley: Sorry, we are running out of time. I really want to know, apart from the one example that you were talking about there, across the rest of the areas, when we are going to know whether your new approach is working. When are we going to see results? What are you going to tell us this time next year that you have achieved and done as opposed to seen, explored or understood?

Tom Adeyoola: My expectation is that we will have plenty more examples alongside what is happening in quantum in terms of that market shift.

Q98            Martin Wrigley: That is our expectation as well, but when?

Tom Adeyoola: By the end of this coming year, all our programmes will be strategy aligned. We will have clear metrics about what is happening in each of those spaces alongside our objectives and key results. We will have a clear look book of all the companies passing through and how they are performing based on work that they have done with us. I will be in a clear position to present the perception of Innovate UK from a market perspective, our position in the rankings and the performance of companies that have had a relationship with and support from us, both financial and non-financial.

Q99            Martin Wrigley: It sounds like it will be on the runway, ready to take off. It will be after then that we will start to see proper results.

Tom Adeyoola: In terms of my expectation of my time here, year one is developing the strategy; year two is operationalising it; year three is the beginnings of that starting to have a meaningful impact; and year four is the year when we really start to see the organisation fly.

Chair: Thank you very much. We appreciate that. We have run over time quite significantly. Thank you, Tom, for your comprehensive answers. We have a clear understanding of your longer-term strategy and we have great admiration for much of the work that has been done. We are looking for more in terms of metrics and deliverables. We expect to see that in the delivery plans that you are going to be publishing.

For the moment, let me thank you greatly for your contribution. You can see how interested the entire Committee has been in your work. It is a key part of our work as well, commercialising Britain’s great research base. We look forward to seeing more of that in the future. Thank you very much.

Examination of witness

Witness: Lord Willetts.

Chair: Welcome to the second panel in today’s evidence session of the Science, Innovation and Technology Select Committee. It is a little bit delayed, but we are very pleased to welcome Lord Willetts to us as we look at the work of the Regulatory Innovation Office in driving the commercialisation of the UK’s fantastic science base in order to increase growth, prosperity and security. I am now going to ask George to open the questions.

Q100       George Freeman: Morning, David. There is huge interest on this Committee—and you know my personal interest—in regulatory leadership. It is great news that we have created the Regulatory Innovation Office with you, if I may say, as a Whitehall warrior, a veteran of navigating the corridors, to drive it through. We have heard in a lot of our sessions from industry and investors that the UK does have an opportunity to set some agile, digital and fast regulatory leadership through sandboxes and testbeds in the global race, and that is a compelling USP. As a trade envoy, I should declare an interest: I am keen to sell that internationally.

I wanted to ask firstly about RIO as an organisation and where it sits in the ecosystem. As a distinguished former Minister, you know that ecosystem well. Perhaps we can start there, but there are particular questions that the Committee has around its structure. It is a directorate within DSIT, not a freestanding statutory body. I am keen to get your take on how you see it working.

Lord Willetts: Thank you very much for the invitation to answer questions from this Committee. We sit in DSIT. Our task is pretty simple, really. As set out in the Labour manifesto, which is where there was a pledge to create RIO, it is to remove regulatory barriers to innovation and new technologies while, of course, ensuring that they are properly regulated and safe. We are in DSIT because that is where the Government expertise on new technologies lies. The overall lead in Government on regulation is DBT and we work closely in partnership with DBT.

We have a real focus on particular technologies set as priorities by Ministers, including drones, engineering, biology and a few others. I personally work closely with regulators on the case for moving forward rapidly with those technologies. There are about 30 officials in RIO. You are right. We are a unit within DSIT. I report to Ministers, particularly, on a day-to-day basis, to Baroness Liz Lloyd.

We find that it is an effective model. I can only operate because there is very clear ministerial support for this going right up to the top of Government. I do find that you can really make progress working almost case-by-case with the regulators that are particularly involved in new technologies.

Q101       George Freeman: That is great. Colleagues have particular questions on particular sectors. Dropping down a level, I want to ask about how you have structured RIO’s aims and ambitions. We talked earlier about how, when you were a Minister, you had eight great technologies. Greg Clark had seven. I had five in the science and technology framework. We have been pushing for clarity from the Government on which ones are the technologies where we are trying. We have heard a lot about quantum and AI. Do you say, “Look, I work to ministerial diktat. These are the three, four or five technologies”? Do you have any aims or ambitions for those? Is it that industry says, “This is the best regulator in the world” or is it investment? How do you measure whether you are succeeding?

Lord Willetts: When we were set up in October 2024—of course, I joined as chair in April 2025—Patrick Vallance set out four initial priorities, which were drones, AI in healthcare, engineering biology and space launch. We did a lot of work on those in the first year, and we keep a watching brief.

We have two new priority areas, which are robotics and the civil-defence interface, which could be a lot. We were asked, first of all, to find some particular areas there. To narrow that down and make it viable and useful, we are essentially looking at uncrewed systems in air, on land and on the sea, where there is a real overlap between civil regulation and military regulation. Those are our new two priorities.

As we go into the autumn, we will be consulting Ministers. We will have some suggestions, and Ministers will set for us, I expect, some other areas that they want us to work on as a priority. We do not completely exclude a really tricky problem in some other area, but we have to have priorities, and those four and the new two are what they are.

Q102       George Freeman: My last question is about the Regulatory Horizons Council. When I was Minister, I described it as a sort of reconnaissance unit, sapping and looking at where technology is throwing up new challenges. How does the RHC fit into your landscape? I should just declare an interest. As a UK trade envoy, I am selling our sandboxes hard. I am advising a quantum fund and a space debris charity that are looking at UK leadership in that sector.

Lord Willetts: It is a very important part companion to what we do. I think of it as the think tank. What we add in the RIO team is the more operational stuff.

The RHC does excellent work. As an example, just recently, literally in the last week, it published a report on in vitro gametogenesis, which is basically how embryology is advancing. It opens up an incredibly fraught ethical debate because of technological advances in embryology. How might the Human Fertilisation and Embryology Authority and the Act be updated? It absolutely does not tell people what has to happen. It identifies some really tricky areas. That thought leadership can be very important and valuable.

George Freeman: I am conscious we are short of time, so I will hand it over to colleagues.

Q103       Chair: Thanks very much, George, and thanks very much for your patience, David. I do need to declare two interests. First, I worked on the development of the Regulatory Innovation Office in opposition. It is great to see it come to life. Secondly, I worked for six years for Ofcom, a leading regulator. I have some experience of regulation. My first question is a yes or no question. I will give you a sentence to answer with. Is regulation good or bad for innovation?

Lord Willetts: It is good. You cannot have a zero‑regulation environment. You need to get the balance right, but you could not operate without it.

Q104       Chair: That is a good answer. Secondly, what metrics do you use to assess the Regulatory Innovation Office’s impact and performance?

Lord Willetts: If you look at the latest progress report, the regulation action plan, which also came out earlier this month, you will find a set of cross-Government measures of performance, which we at RIO contribute to. Our task and what we track is how we are doing on process and real business impact. To give the Committee an example from engineering biology, take novel foods. We are working with the FSA on process improvements, such as speeding up approval times. We are aiming to halve the approval time for new foods.

Q105       Chair: Thank you. We are really short of time. Do you have specific metrics that you use?

Lord Willetts: We have no published metrics other than those set out in the regulation action plan for the regulatory regime as a whole.

Q106       Chair: That can make it challenging to measure your performance as an organisation.

Lord Willetts: As I was saying, when we work with individual regulators on individual problems, we do track our performance. In the example that I was giving, it is the FSA and us. It is not us on our own. In partnership with the FSA, we are saying that we will halve the approval time for new foods. We then track what that means in the business environment. We want to see more businesses entering. There has been a near doubling of businesses applying to bring new foods into the British environment since we announced that we were working with FSA in halving approval times.

Q107       Chair: For particular programmes or particular work, you have targets. Is there somewhere that the Committee can see all these targets in one place for all your programmes?

Lord Willetts: I will happily send you examples of how, in drones and other areas, we have set ourselves particular benchmarks for performance.

Q108       Chair: Okay, please do that. We would like to see those metrics. The RIO does not have a set budget, as far as we have been able to discern. Can you confirm whether or not you have a budget?

Lord Willetts: We have the normal costs of officials and operating within DSIT. We do have two funds, which we operate. We have the regulators’ pioneer fund, which this year has a budget of about £8 million, and the AI capability fund, which has a budget of about £4 million. Patrick Vallance has announced a £70 million fund for us to deploy over the period of the CSR. That will probably go on expanded operations, using those two funds.

Q109       Chair: You have some up-front money, but you are looking at a wide landscape with multiple regulators. How do you tell the FSA, Ofcom or any other regulator what to do, given that you have very little money and you have no cross-governmental remit?

Lord Willetts: We are not a super-regulator with the power to give instructions to regulators. We work with them with strong ministerial backing. I think it was a former Chief Whip who, asked whether he used a carrot or a stick, said, “You would be surprised how much you can achieve with a sharpened carrot”.

Chair: You are the wielder of the sharpened carrot.

Lord Willetts: I would say we can deploy a sharpened carrot.

Chair: I appreciate that response, David. It is great to hear that you have a sharpened carrot, but we need metrics to understand how well you are wielding it because cross-governmental influence can be challenging and there is inertia, as I am sure you are aware. I want to go to questions on engineering biology, but I am going to go to Emily now.

Q110       Emily Darlington: Both regulation and standards can drive innovation. How much are you working with BSI and, in particular, IPO in terms of making sure that we are protecting our intellectual property? How does that link to soft power and the UK being a country that people look to for regulation and standards, particularly in new technology?

Lord Willetts: Yes. You are absolutely right. We do work with the BSI and other Government bodies, such as NPL, on standard setting. In fact, my personal view is that the longer we allow standards to develop before going to the formal stage of regulation, the better for many of these new technologies. In my conversations with BSI and NPL, I absolutely urge them—they know that they have to do this—to participate actively in international standard-setting bodies. They do that, and it is absolutely a key role where we can take an international lead.

If I can give you one particular example that was influenced by the RHC, one crucial insight is that nuclear fusion is not nuclear fission. We should not approach it by taking the regulations from fission and applying them to fusion. It is areas like that where we have an international thought leadership role.

Q111       Chair: Thank you very much. Looking at what the RIO has achieved and has done, you come across an awful lot of sandboxes. Could you just say a word about how you use sandboxes? I am thinking, in particular, of the engineering biology sandbox fund, which works with the Food Standards Agency. What is a sandbox and how do you use it to remove regulatory barriers? That is your key objective.

Lord Willetts: That is a good example. Again, incidentally, it is also an example of how we can use our funds to raise attention. FSA has been so busy post Brexit on working up a regime for the regulation of foods. It was at capacity. We have helped by putting in some money. We funded a sandbox, which has got the FSA focused on novel foods.

Q112       Chair: What is a sandbox?

Lord Willetts: In a sandbox, you suspend some regulations and companies work in partnership with the regulator on case studies and how their particular product or service fits into the regulatory regime. Where possible, the regulator will suspend some regulations. However, there are significant constraints on the regulations that they can suspend. Of course, the Bill announced in the King’s Speech is going to give regulators greater power to suspend regulations temporarily so that the sandboxes can try out a wider range of new technologies.

Q113       Chair: The sandbox enables you to try out technologies without existing regulation applying. You have an engineering biology sandbox. Engineering biology is a huge area. It is an enabling technology that can transform everything from what we eat to how we deliver treatments or how we build new materials for building houses. It is a huge area. I remember being very concerned to see that engineering biology is looking at E. coli as a delivery mechanism for certain novel treatments. It is great science, but there are obvious regulatory concerns. How does your engineering biology sandbox address the regulation of the engineering biology sector to support and enable what can be transformative new applications?

Lord Willetts: The truth is that, for sandboxes to be effective and indeed for RIO to be effective, they have to have a particular focus. This one with the FSA is on novel foods. It is not more widely.

I co-chair an engineering biology fund, though I am now not allowed, quite rightly, to be involved in any of its decisions. The trouble with engineering biology is that it is a general purpose technology, as you say. If you regulate by application, there is a host of different regulators involved. Following a recommendation from the House of Lords Science and Technology Committee, if I may refer to that body, we have brought the regulators together in a single co-ordination group with a “no wrong door” approach.

Q114       Chair: What is a “no wrong door” approach?

Lord Willetts: That means, if you are an engineering biology company and you approach FSA or MHRA but the problem that you face turns out to be with HSE, you will be able to be pointed in the right direction. That is a real example, actually. We had a company that was trying to use drones to deliver slug pellets. That ended up with HSE. We have a co-ordination function. If you have an engineering biology product, a group of the relevant regulators will get together and you will be pointed in the right direction.

Q115       Chair: That is reassuring, David. I am still not clear how we get principles-based regulation. It seems like, as you say, you need to be specific for your sandboxes, but I feel quite strongly that a lot of the regulation that we have seen is a bit whack-a-mole. “What is the issue? We will regulate for that issue”. How are we going to get principles-based regulation for new and emerging technologies?

Lord Willetts: Whack-a-mole is one of the things we do. It is not the only thing. I do not mind whacking the occasional mole. If there is a really exciting British start-up that has a particular problem, we should bloody well be available to help.

You are right, though. We have to have a general approach. You do find that it is things such as getting together groups of regulators in one area and trying to agree speeding up processes.

Q116       Chair: Is it part of your role to enable principles-based regulation, which is easier for businesses to understand and engage with than lots and lots of minute detail?

Lord Willetts: Yes. Of course, DBT has overall responsibility. Let me give you an example to bring this to light. One of our new priorities is robotics. The HSE has an important role, particularly in the use of robotic systems in factory environments. The HSE starts with the philosophy that you set out. “If you are a company, prove to us that you are safe, and then it is fine”.

There is a belief out there in the company sector that HSE requires that you put your robot in a cage to protect humans from working alongside the robot. In reality, there is no such HSE requirement, but, in the absence of guidance and with the HSE just saying, “Come to us and prove that it is safe”, a sort of folk wisdom develops about what you should or should not say to get HSE approval. People think you have to have a cage.

One of the projects that we have currently is working with the HSE to see whether we can flesh it out in some way and give some guidance that goes a bit beyond the pure doctrine of, “We are after safety. Show us that you are safe”, so that companies do not waste time and effort thinking that they have to construct a cage when in certain circumstances they may not need to. There is this balance between practical advice and sitting back and letting the companies come to you.

Q117       Chair: That was not quite what my question was. It was an excellent answer. Do you have a role in developing principles-based regulation? A principles-based regulation for engineering biology might be, “You cannot use vectors that may be dangerous”. Maybe that is not the right word, but do you have a role in developing principles-based regulation for these emerging areas? You seem reluctant to answer that question.

Lord Willetts: Lead responsibility is with the specific regulators.

Q118       Chair: There might not be regulators for new areas. That is the whole point.

Lord Willetts: Yes. That is a bit more of a vivid issue with robotics, where HSE is mainly in the lead, than engineering biology. If we think there is a gap where some new regulatory function is required, we will identify it.

Sticking with your example of engineering biology, we tend to find that our biggest role is helping companies understand principles already set out in legislation. For engineering biology, we have contained use versus deliberate release. That is what the legislation says. We are not there to change the legislation. We sit down with actual companies and real regulators saying, “What exactly does ‘contained use’ mean? What does ‘deliberate release’ mean? If your organism will die in contact with the atmosphere, does that constitute contained use?” It is things like that. We try to apply principles often set out by Parliament.

Q119       Chair: I am still not quite clear, but maybe if we look at specific areas it will become clearer. You said that HSE was the main regulator for—

Lord Willetts: HSE is the main regulator for robots.

Q120       Chair: It is HSE for robots, not for engineering biology. For engineering biology, who would you say it was?

Lord Willetts: It is FSA; it is MHRA.

Chair: It is a regulatory potpourri, as it were.

Lord Willetts: It is.

Q121       Tom Collins: I was very much enjoying that, Chair. The philosophy of how you identify and control risks is all over that. I will move on to space, if I may. You have supported the Civil Aviation Authority in its planning and support for the UK space sector. The wording was developing “a more flexible regulatory framework by early 2027”. As the starting question, do you know whether it is on track for that and how you support it in implementing those plans?

Lord Willetts: I was involved in space as one of our priorities. After ceasing to be chair of the UK Space Agency, I have become chair of SaxaVord, the UK space launch facility. As it in turn is affected by space launch regulations, I am no longer involved in RIO’s space regulation work, which I think is the right thing in the circumstances.

Q122       Tom Collins: I am looking forward to no earlier than 10 August myself. That is brilliant. Taking that out to perhaps a more abstract level, as we look across Government at that specialisation technologically, what support are you aiming to give or have you given to other parts of the Department to help them increase their competence in specialising for these key sectors?

Lord Willetts: We are fortunate because in just about every area that we work in DSIT has some kind of technology team. Our issue is that sometimes, individual regulators do not. They say to us, “We are so busy with the day job. How can you expect us to be thinking about new technologies as well?”

I gave a good example in my answer to your earlier question about how we function. We can use our relatively small discretionary pots of money where we think there is a genuine capability problem to boost capacity. Through our partnership with DBT and the Treasury, we can use things such as ministerial steer letters, which are an underused and really powerful tool. We can put stuff about new technologies and the importance of getting the regulatory regime for them right into the ministerial steer letter. Indeed, you will find in the Department for Transport ministerial letter to the CAA, which came out a couple of months back, a much stronger statement than ever before about the role of the CAA and its importance both in drones and in space launch.

That is a good example of the sharpened carrot, a bit of money and clear pressure in the steer letter.

Q123       Tom Collins: Is that approach proving effective?

Lord Willetts: Overall, yes. I know there is this debate—perhaps you were hinting at it earlier—of whether there should be a sort of N+1 super-regulator that tells all the other regulators what to do. That would be very high risk. You could end up with all the powers in one super-regulator and an incredibly complicated system.

I find that by and large—sometimes it takes longer than others—you can build up a constructive relationship with regulators. If you press them consistently and bring them evidence, including introducing them to real-life British technology start-ups and going through the regulatory barriers that they face, along with steer letters, you can make progress.

Q124       Dr Gardner: I was interested in your concerns about a super-regulator. We have the ICO, which is a horizontal regulator that seems to be doing reasonably good work. They do exist and can work.

I want to talk about AI in healthcare. I need to say that I used to work for the AI and Digital Regulations Service. I was based in NICE, but I liaised with MHRA, CQC, HRA and NHS England. I noticed that you are doing an awful lot of work with MHRA, such as regulatory sandboxes, and looking at how to fund MHRA to explore new AI-enabled methods, but I believe there is a gap.

These systems are all very good up until we agree to procure. Post deployment, these systems live within a healthcare setting. We have clinical safety standards, such as DCB0160, which is for healthcare organisations to ensure that these systems remain safe and effective in day-to-day use. I know MHRA talks about post-market surveillance, but I can tell you now that it is very ad hoc.

I used to work a lot on real-world monitoring. A clinician will tell you that liability sits with them because they have a duty of care to make sure that the systems that are deployed are safe and effective for patients. What work are you doing with CQC, which does have a role in ensuring that clinicians use technology effectively and safely? Are you working as closely with CQC to clarify its role as you are with MHRA?

Lord Willetts: That is a very good question. From memory, oddly enough, we have one specific partnership with CQC, which is about the use of AI to help in its inspections of care homes. That is about collecting and interpreting data for the work that it does. That is one specific thing.

More widely, we have our AI in healthcare commission, Alastair Denniston’s work, which is due to report very soon. Although that is mainly targeting and giving advice to MHRA on things such as ambient AI, so scribes in GPs’ offices and things like that, there is also some CQC work there. I would accept that we have been much more MHRA-focused than CQC-focused.

Q125       Dr Gardner: I would strongly recommend that you do that because these systems drift and the environment in which they are deployed changes, which impacts on outcomes, as well as how clinicians use and interact with them. Of course, we are dealing with updates as well, which I know MHRA is doing some work on. There is a significant gap there, where safety can be a real issue. We need to prevent that. I would look at auditing and so forth.

Another question that raises concerns for people is the privacy of patient data. Of course, there has been a lot of commentary about the role of Palantir within the NHS. I can give you one use case not to do with Palantir. Following an update, personal data was displayed on a screen. The radiologist was going, “Why has that information suddenly appeared?” Do these people have access to personal data that they should not have?

You have supported the use of AI-assisted tools in healthcare settings, which is good. What advice have you given about the need to balance innovation with technical protections to safeguard patients’ data, preserve their privacy and ensure it stays with the NHS?

Lord Willetts: Yes, that is a responsibility of bodies such as ICO and MHRA. We strongly support that principle. We have been funding research on synthetic data, which is another way of protecting patients. If you can generate, through AI, artificial data for clinical trial design, individual patient records are not necessary. We are funding an experiment to see whether you can use AI-generated synthetic data to do some of these clinical trials.

Q126       Dr Gardner: It is useful for development and for piloting. I have real issues with synthetic data because it is often too clean and does not have the dirtiness of real data, but these systems are being used and updated using real patient data. What safety and security methods are you advising with regards to post-deployment?

Lord Willetts: Through our AI Airlock, we have funded specific case studies on the use of AI.

Q127       Chair: You have an AI Airlock.

Dr Gardner: It is an MHRA project.

Lord Willetts: Yes, that is a project that is trying to investigate ways in which AI can be used. It is a good example of practical use. To take one example, the classic use of AI is radiology and how AI can assist radiologists. All those AI Airlock projects were absolutely informed by the principles, set by and applied by the other regulators, of patient privacy and protection.

Q128       Dr Gardner: What work does RIO have planned to ensure that regulators’ models for assigning funding or taking regulatory decisions are set up to ensure that patients feel the benefits of scientific innovation? Again, I would push that this is not just an MHRA role; it should be a CQC role as well.

Lord Willetts: That is a very important angle. It is very helpful and useful to have your line of questioning. As Ministers set us our future priorities and as we do further work on AI in healthcare, we will absolutely take account of the points that you are making.

Q129       Chair: I just have a quick follow-up question. Do you have guidance or requirements about how AI models are trained when they are used in the NHS?

Lord Willetts: At RIO, we have not done general guidance. Lord Vallance announced, during London Tech Week—this will be a first—that we will be running an AI exercise trying to see how you can use AI models to predict drug safety. Again, in some ways, this is to try to displace or reduce the need for actual patient trials. It is looking at the extent to which you can use AI to predict the consequences of new drugs. We will be doing a sandbox on that.

Q130       Chair: You gave Allison reassurances about the use of private personal data when AI was being deployed, but those AI models will have been trained on data. Do you know whether that was British personal data, American data or public data?

Lord Willetts: I do not know the answer to that question and I do not believe that RIO has been directly involved in that issue. I will happily check and, if we have been, I will report back to you.

Chair: Yes, that would seem to be a basic area of regulation for deployment or at least guidance for deployment.

Q131       Daniel Zeichner: You have touched on drones already a number of times. What has been your experience with the different regulators that you have had to deal with in trying to unlock some of the opportunities?

Lord Willetts: The main regulator is the CAA. We work with the CAA with the aim of raising the priority of the use of drones. We have made progress on things such as the atypical air environment. To some extent, HSE is involved as well when it comes to using drones in certain circumstances.

I regard this as one of our successes, working in partnership with CAA. We now have, for example, an excellent company that is using drones to inspect pylons and check the state of their physical security. It is a very good example of how we at RIO can work because one of the main causes of industrial accidents is falls from a height. There is no reason why the CAA, with its focus on airspace, should not factor into its decisions that one of the most dangerous activities for working people is climbing up and inspecting tall structures. If you use drones rather than expect people with ladders and climbing equipment to inspect pylons, there is a significant gain to the overall safety of British citizens.

One of the ways that we can operate is to talk to regulators and say, “Do not over-regulate the use of drones to inspect pylons because this is a net gain in the safety for British citizens, if we can use them”. They are now being used very successfully.

Q132       Daniel Zeichner: Given the extraordinary pace of change in these technologies, are you satisfied with the pace of change that you have been able to achieve through RIO to allow us to get the potential benefits?

Lord Willetts: We now have drone delivery of blood samples by Apian, which began in London. To be frank with this Committee, I have been frustrated that it has not been able to roll out more widely across the NHS. We are trying to help speed it up. It is one of the painful lessons that you learn. Once you get Apian working at Guy’s and St Thomas’, you discover that it has to go through another clearance process to do basically the same thing in a different health authority, which is why we need the NHS innovator passport.

The answer is that we could go faster, but we now have drones doing that. We now have drones operating out of Darlington for Amazon doing consumer delivery. We have beyond visual line of sight operations for pylons. For the first time, we have managed to get beyond the one operator per drone rule to get a one operator for four drones model. We are making progress, but we need to go further and faster.

Q133       Daniel Zeichner: Finally, do you see this being more about the commercial development of delivery or central public service delivery?

Lord Willetts: That is a very fair challenge. Across these areas, not just in drones, there are massive opportunities for public service to be of higher quality and more efficient. As I say, by the time you have looked at blood and the state of the national grid, you absolutely find that these innovations help public services.

Q134       Kit Malthouse: I want to ask you a little bit about robotics, David, but, before we get there, I also wanted to ask you about your initial statement that regulation is good for innovation. Regulation is by its very nature restraint. That is what it is there to do: to restrain. Presumably, your very existence as an organisation is a recognition that, while you can get regulation right, current UK regulation is not great for innovation. Is that right?

Lord Willetts: The balance of regulation has been and is too restrictive in innovation and new technologies. That is why RIO exists. In fact, robotics is a good example. There is this distinction between new technologies: some of them are born free and some of them are born in captivity. Some of these technologies enter an environment that is already heavily regulated, such as the MHRA, but you can always get it better. For others, such as some applications of robots, there is no regulatory regime that applies for some humanoid robots.

There you find that what the innovators and the technology start-ups want is some kind of basic guidance.

Chair: Certainty.

Lord Willetts: If all you are left with, which is sometimes what happens in America, is civil liability down the track—something goes wrong and you will be sued—that is a massive barrier to entry, because that just means that deep tech companies with very deep pockets that already have billions can say, “We will operate, and then, if there is a lawsuit and we are found guilty, we will write a cheque for a few billion and move on”. Leaving British start-ups exposed like that does not help them, so what they all say to us is, “There needs to be something, but please can we help shape it, so that it is sensible and proportionate, and not panicky?”

Q135       Kit Malthouse: Presumably, part of your mission at the moment is a recognition that we do not have the balance right in the UK.

Lord Willetts: Yes. We have made use of drones and pavement robots as delivery systems. You find everything from a risk-averse culture within a regulator through to, sometimes, just a primary legislative barrier. I think it is the Highway Act 1835 that forbids carriages on pavements, and nobody quite knows whether a robot delivery system is a carriage. Our job is to promote new technologies and regulation.

Q136       Kit Malthouse: On robotics specifically, this is a technology that is rapidly advancing. As you said, it is moving towards a kind of humanoid form. Do you have any kind of regulatory aspiration? For example, could you see us being pared back to Asimov’s three rules of robotics? Is that where we need to be, or is there a case for wider regulation?

Lord Willetts: That would be a good example of properly principle-based regulation. In reality, what you find is that regulators do get involved. As I said, we have been set robotics in the last few months. We are now working with the HSE on robots in factory environments, partly because of this issue that I was touching on earlier. Companies would find it quite helpful to get some guidance rather than the HSE just saying, “Prove that it is safe”. We are working on home robots with the OPSS to try to work out what future rules there could be there.

There are regulatory issues down the track. A real-life example is care robots, where countries with the biggest demographic challenges, such as Japan, Korea and Italy, are ahead of us. Little old ladies are rapidly becoming psychologically dependent on a care robot, with whom they build up a relationship, because it is not time-constrained. It will just keep on exchanging with them.

What about the Financial Conduct Authority, if you programme your home care robot to sell particular financial products to the little old lady? To what extent can human care quality regulation apply to a home care robot? This is where organisations such as the RHC can help. I am absolutely not asking for lots of detailed regulations, but it is better to start thinking about them than not.

Q137       Tom Collins: You just said, “better to start thinking about them than not”. Like you said, standards come first. What is your mechanism for accelerating standards development in these areas that you see in your horizon scanning?

Lord Willetts: We have real-life companies either approaching us directly or brought to our attention, especially through key representative bodies such as techUK. If we think that there is an issue that needs to be tackled, we will approach the relevant regulators, but we also have a fantastic convening power, because of ministerial support, and would absolutely invite NPL or BSI, or whoever, to join those discussions.

Q138       Martin Wrigley: It is nice that you appear to be enjoying your role, and it sounds like a very fascinating job and an opportunity to do some great things.

Moving on to defence and the defence investment plan, we are talking about the fastest innovating military in NATO. We now have the UK Defence Innovation agency. Where is your main role going to be? Is it going to be taking innovation out of defence and putting it into the civilian world, or is it going to be helping defence innovate?

Lord Willetts: I do not think it will be taken entirely out of defence and into the civilian world. We are focusing on, essentially, autonomous systems, in particular drones in the air, robotics on the ground, and marine autonomous systems and submersibles. There, we are encountering, first of all, the classic issues, where there is a civil and a military regulator, for companies developing a dual-use drone or submersible. We may well carry on having two regulatory systems—and I am not taking a view on that—but it can be better aligned and easier to move between the two. That is one thing that we are looking at.

We find that some of the lessons already learned from civil regulation of autonomous systems apply in the military. If someone has an unmanned small boat or submersible, the safety rules are still written as if there are humans there, requiring things such as a fire-safe enclosed space. As soon as you just come with it, you find that, oddly enough, some of these regulations that are being applied, including in the military, are written assuming there still is a human there when there is not.

There are some other examples that we are absolutely wrestling with, including the capacity to test military systems more in the UK. You sometimes have to go to the Baltic states to test some of these, and we bloody well should have a regulatory regime that permits you, for example, to crash one drone into another, which all the regulations hate, but, let us face it, is quite an important military function. It is quite hard currently to get regulatory permission to do testing involving that. We are trying to help make that kind of regime more pro-innovation.

Q139       Martin Wrigley: That has been a constant frustration that I have heard as I have been doing armed forces parliamentary schemes and visits to Navy sites, so that will be really helpful. How much are you working with the UK Defence Innovation agency?

Lord Willetts: We have had, I think, our first meeting with it. This task was set for us about eight or 10 weeks ago, and I had a first round of meetings. As I say, we started identifying some specific issues brought to us by companies, but there is a lot more to do.

Q140       Chair: As Martin said, it is clear that you are enjoying your role. It is also clear that it is a wide role. The regulatory environment is absolutely huge, together with so many of the new, emerging technologies and the entire defence space as well. In terms of final questions, what are your priorities for this coming year?

Lord Willetts: I would like internationally mobile high-tech companies to think that part of Britain’s comparative advantage and what makes us special is that we have a regulatory regime that understands the value of new technologies and will promote them and enable them to operate, serving British public services and in a commercial environment.

Q141       Chair: Was that your priority last year as well? You can see nodding around the Committee, and that is a great aim and objective, but do you have a priority for this coming year?

Lord Willetts: We report to Ministers. They have just set us two new priorities: robotics and the military. They will set us further priorities in the autumn, I expect, and we will work with them. It will ultimately be their decision. I do think that the wider issue of autonomous systems and AI, where human agency is and is not required, is a very important topic. At the moment, to be honest, the legislation and the regulatory regime seem to have human decision taking rather randomly distributed. Some kind of rigorous thinking about where autonomy is okay and where there has to be a human decider would be a really important topic, but Ministers will tell us what to do.

Q142       George Freeman: Following that question on priorities, as trade envoy, selling our regulatory leadership agility sandbox is a key plus. When I went to Israel, it was the only thing that they really needed from us. Could I ask that you gently point out to the UK Office for Investment that there is a sales offer here and that we should be selling this work?

Could I ask about Europe? There is a debate running in the corridors that we need to be lessening our regulatory freedoms. You have excited the Committee by setting out some areas where we are using our agility to help European defence and technology. Could I invite you to comment on whether it is possible to have our freedoms and eat them, as it were, or to have our cake and eat it?

Lord Willetts: There is a lot of high-level politics in this, because dynamic alignment is an understandable priority for the Government. However, we do not want dynamic alignment to eliminate all our advantages in innovation and technology. In fact, for me, as a shameless old remainer, one of the few benefits that I can see from Brexit is that we can regulate a bit more sensibly.

What we can say to the EU is that it is in its interest, with 27 members, for Britain to be its R&D, tech regulation and innovation test bed. If it allows and encourages us to carry on doing some of this stuff before the elaborate process of an EU regulation being framed, that would help it get its regulations better.

Q143       Chair: That is a really important point with regard to the EU, which has a lot of regulation in AI, in life sciences and so on. Again, you have a big job that you are undertaking. You said that your priorities for this year were in two or three very interesting technological areas, but do you have priorities in terms of RIO’s organisation and resources? How many people work for RIO?

Lord Willetts: We have slightly more than 30 people, and they work very hard and effectively. What we can do is to aim to work more closely with DBT, which has overall responsibility. Ministerial steer letters are, for me personally, another area I would like to see us prioritise, so that they are as pro-innovation and pro-new tech as possible. The DBT is the overall custodian of policy in those letters. We work with them already.

Q144       Chair: Ministerial steer letters to regulators.

Lord Willetts: This is when individual sponsor Ministers write to regulators. Sometimes, under successive Governments, they can be long lists of nice things with absolutely no prioritisation and no sense of drive. We want to get more about innovation and new tech into them. We can work with DBT to make that happen.

Q145       Chair: Thanks very much for that. I have two final questions. If I am a start-up in an area such as engineering or biology, and I have a regulatory blockage, I come to RIO.

Lord Willetts: Yes.

Q146       Chair: That is great. We now have a new Prime Minister, or will have very shortly—we do not yet; I am not announcing that on the Select Committee—who has said that his target is to make the UK the world’s leading innovation nation, which is something that this Committee supports very much. In a few words, what advice would you give to Andy Burnham to achieve that?

Lord Willetts: Further reinforce and energise our efforts to get a pro-innovation regulatory regime, working with RIO, as set out in the Labour manifesto, and more widely, in partnership with DBT and the regulators.

Chair: Thank you very much, David. It has been really interesting hearing about the work of RIO, and some of the blocks and some of the achievements. We look forward to seeing more metrics—we always want to see more metrics—but thank you very much for joining us today.