Business, Innovation and Skills Committee

Oral evidence: Business-University collaboration,
HC 249-i
Tuesday 10 June 2014

Ordered by the House of Commons to be published on 10 June 2014

Witnesses including written evidence where submitted:

At 9.30am:

• Professor Alan Hughes, Director of the UK Innovation Research Centre, University of Cambridge
• Will Hutton, Chair, Big Innovation Centre and Principal of Hertford College, University of Oxford

At 10.30am

• Professor Sir Keith O'Nions, President and Director of Imperial College on behalf of The Russell Group
• Dr Tim Bradshaw, Head of Policy for Research and Innovation, The Russell Group
• Libby Hackett, Chief Executive, University Alliance
• Professor Wendy Purcell, Vice-Chancellor, Plymouth University on behalf of University Alliance

At 11.30am

• Dr David Docherty, CEO, National Centre for Universities and Business
• Professor Graeme Reid, Professor of Science and Research Policy at the University College London on behalf of the National Centre for Universities and Business

Watch the meeting

Members present Members present: Mr Adrian Bailey (Chair); Mr William Bain; Paul Blomfield; Katy Clark; Rebecca Harris; Ann McKechin; Mr Robin Walker; Nadhim Zahawi

Questions 1-67

Witnesses: Professor Alan Hughes, Director of the UK Innovation Research Centre, University of Cambridge, and Will Hutton, Chair, Big Innovation Centre and Principal of Hertford College, University of Oxford, gave evidence. 

Q1 Chair: Good morning and thank you for agreeing to assist us with our inquiries. We know who you are, but would you introduce yourselves for voice-transcription purposes?

              Professor Hughes: I’m Alan Hughes. I’m a professor at the Judge Business School in Cambridge and director of the UK Innovation Research Centre, which is a joint venture between Imperial College and the Centre for Business Research at Cambridge.

              Will Hutton: I’m Will Hutton. I’m chair of the Big Innovation Centre and principal of Hertford College, Oxford.

              Q2 Chair: The 2014 BIS innovation report and the “Insights from international benchmarking of the UK science and innovation system” report are the latest in a long line of reports to mention a pattern of under-investment in R&D and publicly funded innovation. The Department told us that fiscal constraints challenged “the desire to act positively to address this concern”. Do you think the Government are taking this seriously?

              Professor Hughes: May I make a statement about the background to these trends? One of the most important things that happened in science and innovation policy in the past decade was the 2004 announcement of the 10-year science and investment framework. It was particularly important because it set a 10-year framework and committed public sector expenditure on R&D to rise at least as fast as GDP. It was not matched by an equal response from the private sector, so that is a long-running problem. What happened after the financial crisis was that austerity began to cut all sorts of budgets. The 10-year investment framework did lead to ring-fencing of the science budget, but only in cash terms. The result is that we are now experiencing a period of decline in real terms, which potentially is a serious problem. It is difficult to assess and address the problem if you are following a policy of macro-economic austerity, because then you tie the hands of the ability to fund it properly. There is a real danger if you cut real funding over time that you threaten the strength of the science base that has been built up on the basis of this long-running framework.

              Will Hutton: I think it’s important that the Committee holds in mind as it engages in its inquiry over the period ahead that—to add to what Alan said—there are a couple more points that are worth saying. First, there are only two or three substantive sectors where Britain really spends money on R&D in the private sector. We have constructed over the last 30 years a kind of medium-to-low R&D intensity economy. When you are trying to leverage public expenditure, the counter parties for that are harder to find.

              Secondly, there is an enormous amount of uncertainty. We are living in a period of enormous scientific and technical change. I am not a techno-pessimist. The great transformative technologies that really are the driver of growth over a period are likely to accelerate in the decades ahead. There is enormous uncertainty in every business sector about what business model is going to emerge as a result. Everyone knows that there is enormous change ahead. No one knows the answers. To a certain extent officials in the Department of Business look to the private sector to lead them, but people in the private sector are equally in a fog. One of the points I want to make is that this is why this trend to open innovation and iterative relationships between Government, business and universities is fundamentally important. We are living in a period of maximum uncertainty, which makes it difficult. Even if you wanted to spend considerably more money—and I think we should—identifying what you should spend this money on, the conduits through which it should flow and what good would look like at the end of it, is very difficult at this moment in time. Do I think enough energy is expended on this? No, I don’t. Do I think that enough people get it? I certainly don’t. The Government talk a good talk. I think that if you were an apologist for the Government, you would probably say that, within austerity, they have done their level best to protect the science budget. It is something that officials and Ministers in the Department of Business would say that George Osborne does actually get.

              Q3 Chair: The question I was about to ask, which I think Will has at least answered in part, was to do with your comment, Professor Hughes, that public investment was not being matched by the private sector. What is the reason for that? Will has said that it is basically uncertainty—

              Will Hutton: And structures.

              Q4 Chair: Okay, uncertainty and structures. Is there anything else that you would like to add as an explanation?

              Professor Hughes: Yes. I think to build on what Will has been saying, to look at private sector R&D in the UK you have to recognise two very important things. First, it is fantastically concentrated in the hands of a small number of firms. The strategic decisions by those firms are absolutely critical to the matching of any public sector R&D. Secondly, small firms, around which a great deal of policy often seems to hinge, are minor players in this game. The whole of the independent SME sector in the UK accounts for less than 4% of our R&D effort. There is a real order of magnitude problem in thinking that SMEs are going to do something dramatic.

              The other aspect is the internationalisation of our largest R&D spenders. It is not as if they are reducing their R&D expenditures, but the proportion that UK-based multinationals are investing in overseas R&D has risen relative to their domestic R&D. To pick up again on the things that Will has been saying, there is a big issue of can we develop institutional architectures and methods of engaging both domestic and foreign R&D investments in the UK? There are some real issues of institutional design that I hope we can come back to in the course of this morning’s discussions.

              Q5 Chair: Thank you. Just getting on to public sector funding, the Witty review recommended increasing the higher education and innovation fund to £250 million a year from £160 million a year. That was refused. Given the quoted impact of leverage of BIS funding, do you think the Department has got its priorities wrong?

              Professor Hughes: I was involved in at least two of the evaluations of HEIF so I have a vested interest in the returns that they show and I think that they are very robust, but there is a big difference between saying something yields a high rate of return now and that you should necessarily invest more in it because you will get the same rate of return. It could be that you would get less out of it, so you have to look very carefully at what the extra-high funding would have been spent on, and then compare it with other potential expenditures.

              HEIF, as a scheme, works very well and there are some important lessons from it. The first is that it didn’t work well when it was subject to annual competitions. It began to work well when universities had some certainty over a regular stream of income and they had a very decentralised ability to design what they spent it on to fit their national, regional and local strategies. They are important lessons. I don’t think that just because it has been refused, you would say that was wrong. You would need to compare it with what the alternative expenditures were that they were looking at, but HEIF has been a good scheme.

              Q6 Chair: Do you have anything to add, Will?

              Will Hutton: Again, the Committee will to have to make up its mind on this, but we argue at the Big Innovation Centre that there has been a move over the past four or five decades from this university-business kind of relationship being thought of as a science player, a technology player, to acknowledge transfer play and a quite linear way of thinking about the relationship between universities and business. An amount of money is put up. Universities spend it and business uses their ideas; it is quite linear. I know that Alan thinks in these terms too.

              We are moving into a period of such uncertainty, to pick up on my open innovation point, that when you are designing—it could be HEIF, Catapults or the intellectual property regime—you have to think of how you can build into it structures for two-way flows, collaboration, co-creation and iteration as people try to get things right in a kind of ongoing dialogue. I thought some of the suggestions of the Witty review—I did think it was right to say that universities should recognise they have a crucial role in promoting economic growth—about where money should go were intelligent and well directed but I did not think it bought in sufficiently to what I have just said.

              Professor Hughes: May I make one other comment about HEIF, which I think is very important in the overall context of university funding? If you look at the way universities are funded in terms of research, they get research council funding, and quality-related funding—that is the dual system. The third leg is HEIF. Because the quality-related bit from the funding councils and the research council bit are massively concentrated in the top 10 to 15 universities, the amount that other universities get from those two sources is quite small, yet they have to go through the same fantastic turmoil of entering into the research excellence framework and so on. If you look at the amount of money that those universities get from QR—the quality-related bit—and the amount they get from HEIF, they are quite similar. At that level, HEIF is a very interesting incentive mechanism because it could lead to some valuable differentiation in our university system. So, if you are going to look carefully at HEIF, you might think about how HEIF might be redistributed to universities that are perhaps more engaged in problem solving and local activities rather than simply formulating based on raw research.

              Q7 Mr Walker: On the funding issue, along with the funding that comes directly through business, there is a certain amount of European funding available for research, a lot of which is linked to collaboration between different universities. Is that very concentrated in the top 10 universities? Do the same universities tend to access both pots?

              Professor Hughes: Yes, to put it simply.

              Q8 Rebecca Harris: The 2012 report on business-university collaboration called “Growing Value” said: “The absence of an industrial strategy has arguably resulted in…fewer opportunities for local leverage of the research base and a lack of strategic prioritisation of public research funding.” To put it the other way round, in your view, does the Government’s industrial strategy provide that strategic direction for business-university collaboration?

              Professor Hughes: It has to be regarded as a positive thing that there is the possibility of talking about industrial strategy and industrial policy, which were not an allowable part of the political lexicon until quite recently. The structures, in terms of identifying A-grade technologies, 11 sectors and so on are there, but the real issue is about delivery and the capacity effectively to make informed strategic choices.

              Until December, I was a member of the Prime Minister’s Council for Science and Technology and several years ago we were asked by the then Labour Government to choose the technologies we thought should be emphasised in the coming five years. We proposed a method of how you might do this, which we thought would be a good way of guiding strategic decision making. I think some of those precepts have been involved in current strategic thinking, but not all of them. In particular, the sectors and the technologies—then if you add on the dimensions of Catapults—are very diverse. The question is: what is the resource allocation that will go alongside this strategic decision making? The CST took the view that you needed to establish where your comparative scientific technical engineering strands were, whether there was a commercial base that could be raised in the United Kingdom, what the potential market value on a global level would be, what share we could get of that and, most importantly, whether we could appropriate the value from the business models that emerge from these new technologies.

              The greatest weakness of thinking about the sectors and technologies is that you need to think about value chains and business models, as Will said, that are rapidly evolving. That will affect where businesses locate their activities. We need to think very hard about what elements in these value chains will lead firms to want to locate in the UK. For instance, if manufacturing and design are very important to co-locate together—they might be important in advanced materials or drug discovery—we need a strategy that focuses on making the places where that happens attractive. The spirit is moving in the right direction, but the capacity to deliver in a very fine-grained way imposes resource restrictions, which it is difficult to see BIS having in a period of austerity. It is having to cut its ability to staff some of these activities. We have to have a strategy. The moves are in the right direction, but it needs a lot of careful crafting.

              Will Hutton: I think it is worth recognising that we have come an enormously long way. Last September, there was a conference on industrial strategy at the University of Warwick co-chaired by the CBI and Vince Cable. The eight or nine areas where the Government are forming these industrial councils were laid out to enormous enthusiasm from the business audience. At the end of the whole thing, both David Cameron and Nick Clegg gave video speeches to the 500 people who were there saying how much they back the notion of industrial strategy. The foreword to the aerospace industrial strategy by George Osborne could have been written by Tony Benn in the 1960s.

              Mr Walker: I am sure George will be delighted to hear it.

              Will Hutton: I am talking about before Tony Benn moved into his very left phase in the 1970s. The approach is much more intelligent than it was 50 years ago. We have learned lessons about not picking winners. We know that it can quickly become corporate welfare, rather than industrial strategy. If you put this money up, you find that companies love the subsidies, grants and tax breaks, but it becomes a form of corporate welfare and not strategic at all. Everyone is alert to that. There is a recognition that we have got to build.

              When I founded the Big Innovation Centre and began trying to get companies to support in 2009 and 2010—we launched it in 2011—there was this language of creating an innovation ecosystem and understanding the system as a lot of moving parts that had to be thought about and designed and had to interlock. The trick to pull off was to build a layer of intermediate institutions that connected one with another and made the choices pluralistically, rather than from the top down. That kind of language was not in the bloodstream, but has now become quite mainstream. It is in the Department’s documents about how you go forward with an innovation strategy.

              What I welcome is the emergence of a genuine cross-party consensus on this issue. Whoever wins the next election will not abolish Catapults or TSB. Whoever wins the next election will probably act on the recommendations of this Committee and your desire to try to improve university-business linkages. Whoever wins the next election will follow through on the industrial policy set out by the coalition. This is game changing, but is it backed by money? No. Are there these intermediate institutions on the ground with sufficient resource? I share what Alan just said. If 100 is where you want to get to, we have got to 10 or 15, but at least we have got to 10 or 15, and at least everyone is on the same page.

              Q9 Rebecca Harris: Just a question about the 11 sectors and the eight technologies, or whatever it is: might this be too siloed a strategy to lead through to business and university collaboration?

              Professor Hughes: There are a number of things about what innovation policy means in different sectors, which means that the kind of policy solutions you adopt will vary. If you approach things from the technology side, there is a particular issue where you have things that might be regarded as platform technologies or general purpose technologies—advanced materials is a classical example. Their end uses may be in multiple sectors, so what you have to devise is a way of getting the research base into connection with many potential different sectors. That will avoid siloing the technologies. In some, the sectors are much more specifically linked to particular technologies, so that is a kind of technological systems approach. There are good institutional examples in other countries about methods for doing that and some indication that in the UK we are also able to do that.

              If you approach it from the sector side, you begin to ask questions backwards to draw things out of the science and technology base. Of course, this kind of joint, informative co-creation of ideas and identification of problems becomes important. There you might have a different kind of intermediate institution which is particularly focused around a particular sector’s needs and can branch out into lots of different technologies. If you look at the Catapult centres that we have, you will see that they map into some of the growth technologies and some of the sectors, but they vary a lot in what they are intended to do.

              Just to make the point again, the rhetoric and the strategic thinking around technologies and industrial policies is definitely in the right direction, to echo what Will said, but there is a real issue of execution, delivery and institution building, and that is what will make or break these new initiatives. I do not think they will necessarily be siloed activities if you design them properly.

              Will Hutton: Let me just make this point. To any of the leading car manufacturers in 2004, when the first end results of trying to design driverless cars in response to the DARPA Grand Challenge in the Mojave desert all blew up and failed, the idea that, 10 years later, the biggest challenge to established car companies would come from Google would have seemed risible. That is the point I am trying to make. We are living in an era in which the boundaries between sectors, and where the challenges are going to come from, are really tricky. If the future is battery-powered cars, and some say it is, that certainly opens it up. Your competitors may be energy companies.

              When you are designing these institutions to be fit for purpose for the 21st century, you have to build into their DNA that they are going to have to be very agile. A sector that they think they can describe in 2014 may not be the sector in 2030, and they have to be in a constant dialogue with the actors in this transformative drama that is playing itself out. By the way, it is a huge opportunity for us as a country. I think we could do this rather well. A lot of institutions around the world that have been built up have been built for a period that is slipping behind us, but because we are starting almost with a blank piece of paper, we can get this right.

              Q10 Rebecca Harris: In the Government’s innovation strategy, which we are looking forward to having published in the autumn, what would be the three most important things you would want to see in there in terms of ensuring increased business-university collaboration?

              Will Hutton: First, I think that Andrew Witty was going near this, and there are debates in both Oxford and Cambridge about it. One of the preconditions for it is a recognition by universities that although the autonomy of the British university is their joy and one of the reasons why they are intellectually pre-eminent—we have more high-quality universities per head of population than any other country in the world, and that is a phenomenal asset—we have it because we have managed to pull off the trick of their having sufficient autonomy, but also sufficient funding. It is a tradition that you would not want to mess around with, and Oxford, Cambridge, Imperial, UCL and the great civic universities are fantastic, but—here is my “but”—I think that in the decades ahead, universities have to think of themselves as all of that, yes, but also as hubs, and as active co-creators with civil society and business in mapping a way through the phenomenal uncertainties that are coming towards us. There is a debate in universities about whether that is possible at the same time as preserving crucial academic freedoms. Of course, if you kill the academic freedom, you kill the goose that lays the golden egg, so you are walking on eggshells here.

              Within any university, there are people who are enthusiastic about business and their own collaborations, and they have to write pitches and make compromises to get the money, and there are others who say, “You are pulling the university out of shape by so doing.” I think that is very difficult. It is a tightrope. One should be more sympathetic to people in universities who have consecrated their lives to intellectual endeavour and research and the acquisition of knowledge—the Aristotelian ideal of the good life: that we look for knowledge and then use it in the real world, and that is what academics do. If you stop that or knock it, you can kill. So as you design this, you have to think of that.

              Having done that, I think that we should embed in the research excellence framework and the impact assessments—they should be designed to incentivise collaborations. All the big corporates that Alan was talking about are trying to develop outward-facing labs. Everybody in corporate Britain, in the corporate west, knows that they do not know the answers. They are all trying to have research hotels and design labs, and they need high-quality academics in those. There needs to be cross-fertilisation between those and universities, so I would be looking to find ways of developing that.

              Thirdly, in terms of the ways I would spend some money, academic careers, particularly in Oxford, in the great medical division or in MPLS—mathematical, physical and life sciences—are driven by publications and research. That is how you build your reputation, but it may be that there is something that you are involved with and for a period you need to be seconded to one of these labs, without sacrificing your career or your first love, which is being an academic. We do not design academic careers cleverly enough to permit academics not only to be the men and women they want to be, but also to engage in that kind of thing. So I would be doing that.

              Chair: We will deal with that in some future questions.

              Professor Hughes: First, I hope they would not change the fundamental structure of the funding of universities. There is always a danger, when the discussion moves towards commercialisation of activities, that money will be taken away from the dual funding system to fund, say, some kind of translation exercise with the Technology Strategy Board.

              The reason why I think we should stick with the structure of funding we have is that the evidence shows very clearly that our excellence in scientific research crowds in resources from the private sector. It has been established quite well by research that I and others have done that if you spend on public sector R&D in the university sector, the excellence attracts external funding—the willingness of the private sector to pay is high—but the way in which that engagement takes place varies a lot by the objective of the research, so this is the second thing I hope the policy would recognise.

              Colleagues at the UK-IRC—Ammon Salter in particular—have argued that you can think of at least four ways in which businesses can interact with universities, and they vary depending on the time period of the collaboration and whether it is going to be public or private. So you might have one type of funding structure which is designed to have the generation of publicly available free knowledge about tackling some kind of grand challenge, and business will co-invest over a long period of time with universities to help solve that and the information is in the public domain. Another is a long-term collaborative programme which is much more directly concerned with the private concerns of the business, and you can devise a system in which IP is protected but none the less get a collaborative investment. Or you can have various short-term things in which you collaborate around specific contract research to solve a particular pressing short-term problem. You have to have a range of policy options and institutional designs that can encompass each of those.

              Although it is true that the system of innovation is increasingly open, it is always important to bear in mind that when businesses are asked which sources of knowledge are the most important for their innovation and which are the most frequently used, universities are low down the scale. That is not to say that they are not important. They are important for particular parts of the innovation process, but the most important providers of knowledge and insight in the innovation process are the firms’ customers, suppliers and own internal investments. That is why I emphasised the importance of value chains: it is because understanding that set of connections then becomes critical to both the companies and the way you need to frame policy. So: stability in the funding structures; don’t switch away from university research on the grounds that it is basic; and think in a very variegated way about policy.

              The final thing I would say is that although perhaps some like to think that we academics are in ivory towers, when we actually asked academics what they do—we did this with a survey of all academics in all disciplines in all universities in the UK—70% said that their research is motivated by either considerations of use or applications. That is mirrored in evidence from what the research council say they fund and a parallel survey of what businesses said that they thought academics did. So the idea that there is a big, dominant group who are focusing on something called basic research is quite misleading, although there are some people who say that. In that basic research grouping you get very interesting combinations. Mathematicians are more likely to be in that group, but so are modern linguists or philosophers; it is not a science-arts divide.

              Chair: I will bring in Paul. We have touched on some of these issues, but I will leave you to pick up.

              Paul Blomfield: I wanted to follow through on some of the other issues first, if I might.

              Chair: Okay, I will give you a bit of leeway on that.

              Q11 Paul Blomfield: Will, I am very struck by your description of the opportunity that we face and the opportunity to get it right. I am also struck by the emphasis that you both placed on getting the institutional architecture right. You have touched on some of that, but could you develop that a little more? In particular, Alan referred to more successful models in other countries. What can we learn from those?

              Will Hutton: This is a huge subject and everyone has their own priorities, but you usually find the same things on people’s wish list, although I might put things at one or two while others might put them at five, six or seven. On my wish list, what Alan said about universities and the way that they are funded was my opening point. We walk this tightrope, so don’t mess around: making certain that the top 10 research-based universities in this country carry on being as damn good as they are in 20 years’ time is absolutely fundamental; otherwise, we have nothing. The funding that delivers that should be kept.

              To come back to your point, first I do think that there is a problem in the business sector about the incentives. Everyone says this, but I put it higher than a lot of people. Just to give you some numbers, in 2012 companies spent £12 billion buying back their shares, and private sector R&D in the UK is £20 billion or £22 billion or so, so the British corporate sector spends virtually half of what it spends on R&D on buying back its own shares. There was only £5 billion or £6 billion raised from the equity market in initial public offerings and rights issues. That actually was an instruction of the Government to get the banks to have their rights issues. The financial priorities in British business have become more intense over the last 20 years since I wrote “The State We’re In”. There is a very interesting paper by Andrew Haldane and three colleagues at the Bank of England, including Richard Davies, in which they show that the amount of myopia in the British business sector has increased over the last 20 years, which is congruent with the point about share buybacks. Dividend payout ratios are extraordinarily high.

              I always tell this story. It is important, because nuclear is one of the eight or nine industries in which we could have a big comparative advantage. Centrica had to pull out of the partnership with EDF Energy to build Hinkley and Sizewell because they judged the rate of return offered—10.5% over 35 years, which for a utility you would think is pretty bloody good to bank—to be inadequate. They wanted a rate of return of 14%. They needed the contract for difference to be a half higher than it actually was. The £500 million earmarked to build nuclear power stations, the supply chain and the whole value chain was spent on share buybacks.

              If you are going to start talking about university-business linkages, you need to think what the incentives are for the business partners in this relationship. A lot of them are actually looking to offload costs on to the university sector and looking for incredibly short buyback periods for paybacks. If we are going to get this innovation ecosystem right, one of the things we have to do is think seriously about how our executives are paid and incentivised, how our companies are owned and the fact that the average length for which a share is held is now less than six months, and 70% of shares are held for less than a minute in this high-frequency trading. If you are BAE Systems, you have issued a golden share; if you are GlaxoSmithKline or AstraZeneca and your share registry is like that and you know that Pfizer is stalking you, what kind of partner are you going to be to the university of Cambridge?

              If you are thinking about getting this right, you then have to think about system design. On the TSB and the Catapults, I take Alan’s point about SMEs. He is absolutely on the money, but there is a “but”. Some of the fast-growing start-ups—4% or 5% of the total—are the ones that are catalytic. They may end up being taken over by big corporate, and they are the ones which we need to find institutional structures to support. I declare an interest: I am a non-executive director of the Satellite Applications Catapult and have seen it at first hand. The amount of money you have to play with is extraordinarily small. How do you collect a community of SMEs together, and what kind of challenges and ambitious goals can you set for them so that they might think about creating a market for themselves like that? It is almost impossible to get going, because you are so cramped by the tiny amounts of money you have.

              I do think that if you can get the TSB-Catapult relationship right and get the intellectual property regime right, so that the way universities think about intellectual property is much more liberal and open than it currently is, and if we can get some of the incentives in universities and the business community right—by the way, none of that is difficult to do; you could actually do this in one parliamentary term—we would start to have a layer of intermediate institutions which I think could capitalise on this opportunity.

              Chair: We are running a little behind schedule at the moment. If you could focus your remarks very pointedly, that would be helpful.

              Professor Hughes: I will be brief. The point that Will has made about the financial system is very important. Rather than say a lot about it, I did write a paper on short-termism for the Foresight programme on the future of manufacturing which sets out many of the arguments. The system is short-termist. The question of buybacks, however, is not straightforward. If I sell my shares back to a company in a buyback, I can then reinvest the money. The question is, what happens in terms of the holders of the money when the shares are bought back? It is really a question of the investment policies of major financial investment institutions and, in the UK, borrowing institutions, because over 60% of the shares on the UK stock exchange are now held by overseas holders. The question is what they do with the money when they get it.

              In relation to small and medium-sized enterprises and institutional design, it is important to recognise that the most successful activity in promoting small businesses has not been venture capital financing; it has been public support through contracts. The extent to which the US Government funds early-stage, high-risk venture capital activities has been incredibly important. They have mandated 2.5% of all their federally driven R&D to place contracts—not to give money. Coming back to the question about what the investment strategy for innovation should do in the autumn, I would hope that it will re-emphasise the importance of public procurement of R&D in developing and pulling businesses through in the very early stage processes. That is not relying on the capital market; it is relying on the public sector.

              That is a more general argument. If you look at the success of the firms in the Cambridge sub-region, which have been part of Silicon Fen and so on, they depend heavily on either private sector lead customers or public sector lead customers. This is where the institution building becomes important. If you develop an intermediate institution in which private sector lead customers can come and do collaborative research, it can lead to these contractual relationships. That is a very important part of thinking about intermediate structures.

              I will give one final example, which illustrates this. In optoelectronics, one of the most successful international centres is Imec in Belgium. It has 30-year funding from the regional Flemish government, which supplies about 20% of its funding. The rest is built on contract-driven research with all the big global players in optoelectronics. They contract for certain private sector activities, which are driven by their own private needs, but they also contract for bigger, collaborative ventures, in which they share their IP. Firms can come in and play in this space, and they can go away if it does not lead to their private benefit. That kind of structure may be specific to optoelectronics, but you need to think about what is necessary in a particular sector or value chain to get the linkages you need. You do not worry about small businesses or large businesses; what you worry about are the value chains and the systems of which they are a part.

              Q12 Paul Blomfield: I am conscious of time, but this issue of institutional architecture and of structures that you, Will, described as conduits is critical for us. Given that we are running out of time, would you be willing to share your further thoughts in writing?

              Will Hutton: Sure. The Big Innovation Centre has done some work on this. I would be happy to do that.

              Professor Hughes: Yes.

              Q13 Mr Walker: The Big Innovation Centre’s report talked about the fact that Government initiatives such as LEPs and Catapult centres need to take more account of “the role played by individual academics”, and you talked earlier about the career structure. Could you expand on that? Did the centre say that because it felt that not enough attention is paid to the role of individual academics, rather than institutions?

              Will Hutton: It is a complaint that you encounter. I have encountered it a lot. I don’t know whether Alan encounters it at Cambridge, but I certainly encounter it at Oxford. You could be a mid-career academic, leading a group of graduate students who are working for their PhDs on XYZ project; your team complete their PhDs—they have been working on your breakthrough thing—and they all dissipate to the four corners of the earth. Suddenly, you have lost your team. There is no pot of small amounts of money just to permit them to stay for a fourth year. There are hundreds of examples of that at various stages of an academic’s career. In particular, medics, engineers, chemists, chemical engineers and physicists have quite close relationships with companies. I suppose that builds on what I said earlier, but rather than take up time, I will not say more. But, again, the LEPs are an opportunity, although they do not have much money.

              Chair: We have a question lined up on LEPs later.

              Q14 Mr Walker: On this point and it is striking, what you have said is absolutely right in terms of the design of individual projects—that you want to try and make sure you are taking account of the people involved and their progression and so on and so forth. How could it be built into the design of initiatives such as Catapults or LEPs to take account of these things? Isn’t that more a matter for the university or the businesses involved in designing those collaborations?

              Will Hutton: Some of the Catapults are already in conversation with each other about creating that. I will give you my own pet theory and Alan will give his pet theory. I have a pet theory which I think would be rather good to do, which is that  there should be a network of innovation fellowships around the country. I would like to see every university having more than one critical mass: in either a department or an Oxford or Cambridge college, having someone who both does research and actually has a commitment to be the eyes and ears for the industrial sector that funds him or her, and is the person, the brokerage point, between the multiple conversations that take place in a university department and interfacing with the business world—which may change, as I said in answer to earlier question. I would like to see that happen. I hope to pilot something like that in Oxford—in fact, we are piloting something like that in Oxford and we will see how it works out in the next academic year.

              There are lots of ways you could think of how academics might develop their career in the early part of their career, and actually the role of some of the larger companies hiring, when they hire and train graduates. There are multiple ways you could do this. It is all at the frontier.

              Professor Hughes: If I have a pet topic, it is: let’s stop inventing lots of new schemes. That is not necessarily a comment on Will’s scheme, but there are lots and lots of initiatives. When you think of how many reviews there have been on the subject this Committee is concerned with—how many arrow schemes or Catapults there have been. They are endless. There are some very basic things that we know about industry-university interactions that are very important to bear in mind. You do not necessarily need to invent something.

              First, there is this very important boundary spanning function. How does  knowledge get out of the university base into corporate decision taking? Actually, there is a lot of research on how teams in businesses use this kind of knowledge. It turns out that the most critically important conduit for this is the employment of graduates and postgraduates. They come out of the science base, they train, they are in touch with the latest thinking, they are very highly valued in these teams, they act as a link, and then they move on. That is why it is important for businesses to keep recruiting. There is plenty of evidence that shows, for instance, that the returns to an EPSRC collaborative grant and PHD-trained student is higher than others, so they really do add value. So make sure that recruitment process goes on.

              There are already lots of schemes in place to encourage the continuation of projects. The EPSRC piloted these things called impact acceleration grants, so if you have run a project and it has come to an end, you have an impact acceleration account fund, which is quite substantial, that enables you to take on potential impacts. Now, all the research councils are introducing them. Universities will have to learn how to absorb and address that.

              I think there are many ways in which these boundaries are spanned, but the fundamental point—this goes right back to Adam Smith—is that there is some virtue in specialisation. Universities are specialised in doing research and education—public sector objectives—and the business sector is specialised in private sector objectives. That is why you get these fantastically powerful incentive effects that Will has referred to and why it is extremely difficult to get academic careers interrupted, but also extremely difficult to get business careers interrupted. Before I joined CST I was a member of a CST group chaired by Alec Broers which produced a report called “Technology Matters”. It made precisely this point: the career structures make it very difficult to take sideway steps out and go back in again. That is why these institutions that sit across the boundaries are very important. They allow the kind of team that Will is talking about to be transferred to an environment where the issue is all about the delivery of the output rather than the pursuit of research.

              Q15 Mr Walker: Just to follow up on that and to talk about these institutions across the boundaries. We have seen from our evidence a contrast between the Catapult model, which tends to be very much business led with the leadership coming from the business, and the Fraunhofer model, in which each unit is led by a university professor. Is one better than the other or do you need a tension between both to achieve the best results?

              Professor Hughes: Fraunhofers are quite different institutions from the typical Catapult. They are embedded in a national system which is quite different from the UK system and where universities are also different. So it is difficult to—

              Mr Walker: We have a Fraunhofer operating in the UK, of course.

              Professor Hughes: Fraunhofers, like other organisations, are also keen to extend their global reach. There are Fraunhofer franchises, if you like, everywhere. The question is, will they work in different institutional structures? In Germany you have Max Planck institutes, which are heavily focused on basic research. Then you have a university structure, which is less focused and then you have a variety of institutional structures of which the Fraunhofers are one. They have very long-term core funding—maybe 30% of their funding—from state sources. But then they are massively driven by contract and collaborative research and they make a link into the university for that purpose. However, to say that because they are chaired by or led by an academic they are more academically oriented is not my interpretation. They are very much driven by the pursuit of contract research and collaborative research in areas that they define in collaboration with industry, but they locate near and close to campuses to make sure that they have this free interchange.

              Will Hutton: The Big Innovation Centre, to emphasise slightly different things from Alan, has a slightly different perspective. The proportion of public sector funding of Fraunhofers is higher than that for Catapults. A typical Fraunhofer will have more than half its funding coming from the state, some of them as much as 70%. No Catapult has that much; it is about 30%. Embedded in the Catapult model is the fact that you have to find collaborative relationships. That is why it is business led whereas, as Alan says, it is more likely to be led by a professor if you have public money coming in. How you disburse that public money on research and how you then leverage it becomes the question that you are answering.

              I will just float here something that I was thinking about overnight. Most Catapults have academics on their board, but embedding a relationship with universities might be the next phase. We are trying to do something different with the Catapults because so much basic research comes from universities in Britain. It is done in Max Planck institutes and Fraunhofers in Germany. We do it in our top 10 universities. What we don’t have, and which the Fraunhofers have, is the ability to broker relationships between a procurer and the financing of the start-up, to get it off the ground, and to introduce the Mittelstand company to a potential user of the technology that the Fraunhofer and the Mittelstand company are developing. We don’t have that. That is where the Catapults have to go next in my view.

              Professor Hughes: Catapults are very different. There isn’t a Catapult model. The high value manufacturing is multiple centred. I think it is an interesting one for the Committee to look at, because it has some important characteristics; it has some big commercial players with long-terms interests in it and it emphasises in particular the ability to get both academics and research scientists from universities to work together on the kit in these centres, outside their normal environments. However, that kind of activity is completely different from, say, Future Cities, which is addressing a wide range of problems over a huge range of potential technologies.

              The real danger at the moment is that the word “Catapult” gets used for a programme that is actually diverse. Hopefully, one thing that will come out of the review of Catapults is just how rich the different varieties of Catapults are and the lessons that might emerge from the different types that have been set up.

              Q16 Nadhim Zahawi: That brings the conversation nicely on to LEPs. The Government have recently stated in their response to the Witty report that all LEPs that have a university established in their area now must have university board membership. Do you think that is good enough and that that sort of membership of a board would enable universities to play a strategic role within the LEPs?

              Will Hutton: I do not know whether you have spent any time at a LEP board meeting, but you are all sitting in the room and the question is, what are you going to do? How are you going to foster something? Actually, you need some audacious goals. If the country had more audacious goals—we have not got the time, but I could roll out 10 for you. They would all have to happen on the ground, spatially, in different parts of the country. Then, suddenly, it would become crystal clear what the LEP board and the university representation would have to do. They have to build a value chain that will exploit this big, national audacious goal that is happening locally, spatially, and suddenly the whole thing will come alive.

              Unless you are lucky enough to have cluster, or there is wide agreement on which two or three clusters you are going to try and sponsor, it is difficult for them. They do not have any resource and they do not have any particular direction. To use Alan’s congenial language, that is rich in one way: in Newcastle, the LEPs try to sponsor industrial development and in Oxford, the LEPs try to develop a high-innovation ecosystem and they should be free to respond to the different circumstances in the different parts of the country. That is the beauty of them; letting a thousand flowers grow, and all the rest. The disadvantage is that, if you are not lucky enough for it to be blisteringly obvious what to do, you do not do much.

              Professor Hughes: When you think about LEPs, think of all the acronyms that have represented attempts to have various kinds of regional development: TETs, LETs, Business Link, RDAs. There is a constant, almost Maoist, revolution in regional and local government polity.

              What will the LEPs do? To answer your question, I would say that you should not let the structure drive the function; you should let the function drive the structure. If the LEPs objective requires an intimate connection with its local university, by all means have that set of connections. If it does not, it should not matter. What matters is—to pick up on what Will has been saying—is that it depends on the LEP’s function and purpose. Unfortunately, they are poorly resourced and are not easily linked into the variety of schemes that we have at present, and it will be challenging to see how the immense good will there is behind LEPs—one great advantage of them is that they galvanise not local self-help exactly—that sounds rather demeaning—but the idea is that communities can coalesce around certain sets of objectives: that is powerful if it is backed by resource and by a clear place in the innovation system, but it is difficult at present for them to play a key role. It is difficult to say, “Well, the board of a LEP should have this kind of structural pattern.”

              Q17 Ann McKechin: When we took evidence from Fraunhofer UK a bit earlier this year, they were a bit critical of the pay and progression systems of universities. In their opinion, university staff do not have the option of excelling only in basic research or in applied research. Do you agree? Or do you think pay and progression schemes are being correctly calibrated, given the changes that are currently taking place and things they can’t—

              Professor Hughes: I’m not sure I understand the question.

              Ann McKechin: Their view was that university staff do not have the option of excelling only in one area.

              Professor Hughes: If you look at the answers that academics give about what are the most important things for their career advancement, it is research. They say they are judged on research and their appointment is based on research, as opposed to teaching. Administration sometimes counts as more important than teaching, which is a pretty shocking state of affairs. However, within research the focus on what might be called basic research and applied research is much more difficult to define.

              A lot of academic researchers, including the top researchers, actually move in the course of their career, or in the course of a project, between issues of applications and issues of basic research. That is captured in what is now the well known concept of Pasteur’s quadrant. Pasteur was a good example of somebody who did basic research but was frequently driven by considerations of use. You do basic things about the nature of cells in trying to understand fermentation for the wine industry; or you are trying to treat rabies so you understand human biology.

              I don’t think our system drives you particularly into basic as opposed to applied. As I said, 70% of UK academics say they do things that are driven by consideration of useful applications.

              Q18 Ann McKechin: That is very helpful. One submission to the inquiry from the Russell Group expressed concerns that increasing the impact element of the research excellence framework could introduce a bias towards applied research away from basic research, which could be damaging to the research community in the long term. Do you share those fears or do you think they are exaggerated?

              Professor Hughes: I have been involved in various ways in Cambridge’s impact submissions across a lot of different subject areas. I would say that it is going to be very interesting when these impact case studies are assessed to see how frequently what are regarded as applied impacts are linked to what other people might regard as basic underlying research. The proof of this pudding is in the eating. When these impact assessments are published, universities will have to decide then what strategies they are going to follow for the next research excellence framework.

              A lot will depend on what kind of impact case studies are submitted and whether they bear out the idea that they are mostly driven by what is called applied research. My instinct is that I doubt that will be the case. The more challenging issue will be, if it turns out that some universities do exceptionally well because the 20% weighting due to impact is linked to application, that it alters their strategy. Then you would have a potential problem.

              Q19 Nadhim Zahawi: The UK has the world’s highest percentage of R&D coming from foreign subsidiaries. In a recent report it was found that there is a risk that the UK could increasingly be viewed as providing a higher education and research service “at cost” to the world, which would profit other countries’ innovation systems with little follow-on benefit to the UK. How real is that risk?

              Professor Hughes: I think it is very real.

              Will Hutton: I do, too. There is this mantra of being open for business so that in so many sectors now there is not one British representative. We know of the car industry but it is in industrial chemicals, industrial gases, industrial services, building materials, glass; the list is long. Around Oxford I frequently meet engineers and chemists who are very concerned about who will employ the graduates they are teaching and from whom they will get research grants to do what. Is there point essentially in enhancing value outside Britain? We have not been mindful enough. In the open/closed argument, you absolutely must be open. It is a complete imperative. But while being open, we have to be mindful about keeping critical mass within a broad range of sectors of British-owned, or largely British-owned, companies, because ultimately they will have a UK bias or certainly some kind of sense that this is where they operate from and, given that this is where they operate from and where they hire, that there will be at the margins a bias here, even in a multinational, global world. So I think it is a huge concern that we will have an economy—like Wimbledon—where once every 50 years we get a champion, but in the main part, not.

              To finish off, I thought the debate about AstraZeneca was interesting.  It is of course a global company, with huge operations in the United States and Sweden, but none the less the substantive part of it—the $3.6 billion of R&D—is spent in the UK. You knew that if Pfizer took it over, that would necessarily fall. There was proper concern about that. It comes back to my point about how companies are owned. On this point about ecosystem, the business bank and the Green bank are big opportunities, which interface with and are partly the solution to the long-term financing problem that we have had in Britain for SMEs. So, yes, it matters.

              Professor Hughes: May I go back to some of the first answers that we gave to questions about industrial and innovation strategy, which emphasised value chains and the choice of sectors to support, on the grounds that we think it is likely to lead to sticky investments in the UK and associated with value added that would be created in the UK? We need to look at those factors that induce people to invest here and to stay and invest here. That involves a lot of instant questions about what makes cities attractive places to live in and what our transport infrastructure is like—all those things will have a big influence on the likelihood of multinationals continuing to invest here.

              Chair: Thank you. Slightly over time, but—

              Nadhim Zahawi: We pulled it back.

              Chair: Yes, we pulled it back. Thank you very much. I realise that there were a number of issues that we would have liked to explore more fully and you might well have wanted to give more comprehensive answers on. Do, please, feel free to submit any supplementary evidence in response to our questions or, indeed, to questions that we did not ask, but maybe should have asked. Again, we might well feel that there are further questions that we would like to ask you, and we will do so in written form. Thank you very much.

              Will Hutton: I do not know whether the Committee have all seen this “Collaborate to innovate” report that we do at the Big Innovation Centre.

              Chair: Thank you very much.

              Examination of Witnesses

Witnesses: Professor Sir Keith O’Nions, President and Rector, Imperial College, on behalf of the Russell Group, Dr Tim Bradshaw, Head of Policy for Research and Innovation, the Russell Group, Libby Hackett, Chief Executive, University Alliance, and Professor Wendy Purcell, Vice-Chancellor, Plymouth University, on behalf of University Alliance, gave evidence.

Q20 Chair: Good morning. Thank you for agreeing to help us with our inquiry. I apologise for our running slightly behind time. I will start with the stricture that, on this occasion, we have an hour and a lot of questions to ask. Please do not feel that you all have to answer every question. Some questions will be person specific and others will be general, but don’t feel that you are obliged to make a contribution if the points that you would have made have been covered by another speaker.

              It would be helpful if you could introduce yourselves for voice transcription purposes.

              Professor Sir Keith O'Nions: I am Keith O’Nions, president and rector of Imperial college.

              Dr Bradshaw: I am Tim Bradshaw, head of research and innovation policy at the Russell Group.

              Libby Hackett: I am Libby Hackett, chief executive of University Alliance.

              Professor Purcell: I am Wendy Purcell, vice-chancellor and president of Plymouth university. I was an expert adviser to the Witty review.

              Q21 Chair: BIS stated in its evidence to us that: “The Government is showing its commitment to science and research with a ring fence in cash terms throughout a difficult fiscal period.” What has happened to the value of the science research budget in real terms? We know it has gone down, so how have you coped with that?

              Professor Sir Keith O'Nions: It has gone down in real terms. Genuinely to the credit of the Government and BIS, the decrease has probably been less than any of us would have anticipated at the beginning of the recession. The fact that it has held up reasonably well is a plus. Looking at it today, however, it has decreased in real terms, which means that we are fighting harder for a smaller slice of the pie. The difficulties appear most readily in capital, which has become much scarcer. Prediction of capital spend is very important for universities. It is a long-term issue: you can put it off, but eventually it catches up.

              How have we coped? I can talk specifically about one university, but I can generalise, certainly for the Russell Group. We have coped inasmuch as UK universities have competed extremely effectively for EU funding. Although EU funding was an interesting minor addition to total research spending, it is now 10% or greater of research funding in many Russell Group universities. I think we have all put an enormous amount of effort into getting research income from business. I can speak only for Imperial in hard numbers, but research income for Imperial this year will be well over £50 million, and 40% of that is from outside the EU. If you had to summarise that, you would probably say that we have dug in and worked pretty hard. Probably as a result of that, the strong universities have remained very strong and globally competitive.

              Q22 Chair: Does anybody wish to add or subtract from that?

              Dr Bradshaw: If you look at the science and research resource funding, it has been flattish in cash terms since 2010. There have been a few minor ups, most recently in the autumn statement and the Budget, but if you were to take it forward from 2010, correcting for inflation, it should now be about £600 million more than we are currently getting. That is a substantial sum, and it is about the same level that we are getting from Europe, as Sir Keith said. That is where we are trying to find the additional resources.

              Libby Hackett: The big issues around under-investment mean that we are not maximising the potential for investment. We know that Government investment in R&D delivers private investment and is good for the economy. The equation is relatively straightforward, so long as you are funding excellent research, the right research and research that interacts with business. We see that most acutely in our universities when we go overseas to other countries where the Government R&D spend is higher. We feel it on that committed basis. I absolutely agree with Russell Group colleagues on the European research income. If you take the European structural funding, too, we have been able to work with other funding streams to increase resource in those wider areas. Alliance universities receive 40% of the European structural investment funding that comes into the UK for research. Those are incredibly important alternative funding streams, but the result is that it is a tougher environment. You need to be more strategic in what you invest in, but it feels like under-investment. It feels like there is more potential and more that could be done with further investment.

              Chair: Wendy, do you want to comment?

              Professor Purcell: I think Keith’s covered it with diversification of income streams. That is what we have done. There has been a high-level recognition that the science budget is critical and we really welcome that, and there have been some important internal movements of moneys. For example, the increase to the Technology Strategy Board is a significant up in terms of how that cake has been sliced, even though the cake might be slightly smaller. There has been real attention on understanding the leverage that science research investment brings to the broader economy.

              Q23 Ann McKechin: Libby, in your evidence to the inquiry you stated that change to research council policy “in response to efficiency pressures has meant that…funding streams supporting…business collaboration activities are no longer open to all HE Research Institutions” with the result that excellence has not been recognised, which you have just commented on. Can you give the Committee an example of where that has occurred? 

              Libby Hackett: Absolutely. There are a couple of clear examples. One would be the impact acceleration accounts, which are—exactly as they sound—for funding to accelerate the impact of good quality research funded by the research councils. Unfortunately when the research councils were given an allocation of money—it was tens of millions—from the Government to distribute for that, they allocated it as a block grant on the scale of historical research rather than with any recognition of excellence in knowledge exchange and business collaboration. It was not an open process in any way; it was done through the rear-view mirror of historical research bids.

              Another example is the iCASE—industrial CASE—studentships. The research council language is that these are “for PhD studentships where businesses take the lead in arranging projects with an academic partner of their choice.” Unfortunately the research councils have limited these industrial CASE studentships to only 44 higher education institutions that are in receipt of doctoral training grants.

              In general terms the research councils fund on the basis of excellence. That is the principle of BIS, the principle of our Government and the principle the research councils use. What we are noticing is that around things like doctoral training, and some of the examples, there has been a closed shop, which is unfortunate.

              Q24 Ann McKechin: Is it your contention that relying on past history is not a good indicator of what people are necessarily going to do in the future?

              Libby Hackett: That is exactly my advice to you.

              Q25 Ann McKechin: Has it been done, in your view, because it is administratively easier to assess?

              Libby Hackett: Of course. Research councils are under pressure over their internal budget so of course that is right. But there are other indicators that they could have used. We have HEIF, which is allocated on the basis of the quality of your interaction with business and SMEs. If they wanted a simple metric to use there are other measures aside from just the block grant on historical research material.

              Q26 Ann McKechin: The Russell Group told us that in the period from 2003 to 2012 “the return on £1 of HEFCE knowledge exchange investment to the most research-intensive universities was £13.30 in gross additional knowledge exchange income”; it was £4.80 and £2.60 for medium and low research-intensive institutions, and £1.50 for specialist arts institutions. Dr Bradshaw, in your opinion does that demonstrate that funding should follow research intensity, or do we need to have a different formula?

              Dr Bradshaw: The formula works very well at the moment in terms of following where the research excellence is. You have to be pragmatic. If there is not sufficient funding in the system to support everybody, you have to try to work out where you are going to get the best returns on that investment.

              You are absolutely right in terms of flagging up the financial returns, but we need to look at some of the wider social and other impacts as well. One of my favourite examples is the use of the wind testing centre down in Southampton university: UK Cycling went down there and learnt how to improve their techniques ahead of the Beijing and London Olympics. That was a fantastic return for the UK economy, not necessarily in pounds, shillings and pence but in terms of other social impacts. Yes, the financial thing is absolutely critical but there are other things that we can get out of collaborations as well.

              Q27 Ann McKechin: Would that be a view shared by University Alliance?

              Professor Purcell: It is a critical question about research excellence. I think everybody would sign up to research excellence wherever it is found. The danger and the fundamental mistake is if you think research excellence is simply coterminous with an institution. You have to look at research excellence in terms of the subject. So, for example, in a couple of weeks’ time a UKTI report is coming out about UK marine. It highlights two of the world-leading institutions for marine: Southampton and Plymouth. Plymouth would not usefully be labelled by the research-intensive label; but it is very important that you see the diversity of excellence against the subjects, rather than just simply look at the institution. So we would, as Libby explained, be locked out of some critical research council funding, which is to leverage that research excellence into the economy, into society; and I think that seems not very sensible.

              Q28 Ann McKechin: I get from this that you think the range of indicators which are currently used are too narrowly focused on fiscal and past history rather on a wider spectrum and understanding of the particular research it is coming from.

              Professor Purcell: And institutional postcode, as opposed to the actual heat map of where research excellence really sits. I think that is a critical point.

              Libby Hackett: If you are talking about the pound return on investment, you want to play SMEs into this agenda as well, basically, because you will get a lesser total pound sign return on investment. It is higher intensity and higher-cost engagement, but we know that our innovation sector is driven by SMEs and the vast majority of our recovery and the job creation and wealth creation that has happened over the last five to 10 years has been in the innovation sector, which is graduate-intensive and SME-led. We have to take account of that, rather than just the big medical, big industry, pound sign returns, which are important. It is all part of an ecosystem. Those are absolutely important; but if we emphasise some metrics too much we will remove some critical activity.

              Q29 Paul Blomfield: I wanted to follow on from that point and explore a little bit further engagement with SMEs. You are right, Libby, to say that it is an incredibly important sector in terms of driving economic growth, yet we know that businesses employing fewer than 250 staff account for only 4% of R&D spend. I think it is fair to say that universities engage more effectively with larger businesses than smaller businesses, and I can see why that would be easier. How do we challenge that cycle, and how do we encourage more effective engagement with SMEs?

              Dr Bradshaw: We engage very well with SMEs where we can find ones that have R&D or innovation capabilities and want to link up with universities; but don’t forget that a lot of the SMEs that we can engage with are through the supply and value chains of some of those larger companies. It is not a case of seeing SMEs as a completely separate entity from the rest of the economy. If we are engaging with, say, Jaguar Land Rover or a company like that, they will have a supply chain, many of which will be SMEs, and if we can then link them into the universities, through that supply chain route, that is how we can perhaps get the biggest bang for our buck.

              Professor Sir Keith O'Nions: Can I draw a distinction between SMEs and large companies? When you are looking at research income to a university, which is absolutely crucial—significant amounts of R&D—you cannot reasonably expect that to be coming from SMEs. They are hungry for research income. They are usually looking for money. The engagement with the big corporates globally is going to be the source of R&D income, which I said is well in excess of £50 million a year at Imperial. However, that does not mean to say that the system is ineffective in its dealing with SMEs. I would just like to give you a local example. At Imperial—our new campus at Imperial West, which is under development—there are 70 SMEs located in Imperial properties; small businesses. There are 20 companies in incubation on the campus. That is an extraordinary direct engagement with SMEs that feed off the research capability almost free of charge of the university.

              Over and above that, there is the SME engagement that comes through the various partnership arrangements and impact accelerators and so on; and another key engagement with SMEs for all universities is the recruitment of talent from universities. They are very hungry for key, knowledgeable, well-trained talent. I think all of us have massively upped our game in allowing easy access by SMEs to recruiting talent from universities. The big companies have the big profile—I’m talking about when KPMG, BAE Systems or Airbus comes round—but many more of our students at Imperial take jobs in SMEs than in the big corporates. That’s a fact of the world. I think we have upped our game enormously in enabling SMEs, through online portals, to gain reasonable and better access to trained people. That is a very powerful piece of knowledge transfer and engagement. It is hard to measure, but transfer of knowledge in people is a key thing for extending this.

              Chair: Paul, before you go on, can I bring in Nadhim?

              Q30 Nadhim Zahawi: To take that point a little further in, say, Imperial’s case, and deal with the issue of critical mass and clustering, is there an opportunity similar to Tech City to do something around green tech, for example?

              Professor Sir Keith O’Nions: This is very interesting. I do not want to get into the theology of clustering and so on, but there is no question: where small companies are attracted and get great benefit is in clusters and cluster arrangements. It is a worldwide phenomenon. Tech City is the most recent phenomenon in the UK. Quite commonly, they are aggregating around places where there is very research-intensive activity. Probably the best understood example in the UK is the so-called Cambridge phenomenon, where these are not direct spin-outs from the university but have clustered there for access to the greater talent pool and the know-how this develops. I agree with you entirely.

              Professor Purcell: May I add to that, particularly in relation to SMEs? An argument has been made that SMEs are somewhere along the food chain and therefore the supply chain is where you get access. I disagree with that, because a number of the SMEs are disruptive in their own right. They are very hungry for innovation and access to research. For example, in the south-west of England, we do not have a lot of large businesses, so what we have done is clustered together, very much as Nadhim has said, 500 different businesses in a growth acceleration investment network, which accounts for somewhere in the region of 32,000 jobs, and provided one digital exchange, one portal, for a large group of SMEs. If you think about the fact that those SMEs are very hungry for HEIF—higher education innovation funding—there is a real opportunity, a great unmet need to make sure that they have access to research and innovation in their own right, not as part of a food chain that they are right at the far end of. Most of those SMEs are disruptive. They are the big businesses of tomorrow if only we can make sure that there is a channel for them to access that kind of innovation and research activities. There are mechanisms that are based absolutely on the cluster theory, and I think our GAIN Innovation Network is a really good example of something that is portable and scalable—that has the size that is really important. It is not right just to position them as somewhere down the food chain.

              Chair: I see we have a veritable Mexican wave here! If you can just make it brief, we will be able to move on.

              Dr Bradshaw: Wendy, of course, is right as well. There is a very diverse range of SMEs out there. Some are very small and disruptive on their own. Others are part of supply and value chains. We need to look at them all. To come back to Wendy’s example and talk about something from the south-west, Exeter university, working with EADS and, I think, Rolls-Royce, is looking at 3D printing technology and bringing in SMEs to show them how that printing technology could work for them and to raise their awareness of it and make them think about skills and techniques that they might need. You can do disruptive technologies with large companies, with big universities and working with smaller companies in supply and value chains as well.

              Libby Hackett: On SMEs, to answer Paul’s original question about the level of university engagement, I think we need to debunk some of these myths. Alliance universities that I work with most closely are anchor institutions in their cities and regions. This would be the case, wouldn’t it? But every single alliance university will work with tens of thousands of SMEs in any one year. That is engagement. I think it is really helpful to make a distinction with a more traditional knowledge transfer model—Tim very eloquently described why it is quite difficult to bring SMEs into quite a traditional knowledge transfer concept of the application of research and technology. You can contrast that with a knowledge exchange approach, which Tim Wilson defined as a revolving door. All universities, but specifically and distinctively alliance universities, will take this knowledge exchange approach, which is about being deeply embedded with these businesses and the city’s economy.

              The interaction with SMEs is about R&D but it is also about consultancy. It is also about staff, and specialist staff being in and out of those organisations and the universities. It is about student placements, and it is about continuing professional development opportunities in those companies. It is about graduate placements. It is about industry-designed courses. This idea of a revolving door and that level and quality of interaction between the universities and SMEs goes into the tens of thousands. I think we should recognise that in the broader landscape of innovation and research.

              Q31 Paul Blomfield: I very much take that point, Libby, and I certainly see that at Hallam university and in Sheffield. I was particularly interested in the R&D issue, and the under-contribution of the R&D sector. Taking Wendy’s point that there are highly innovative SMEs, but also Sir Keith’s point that universities have to be driven by where the money is, Witty recommended that HEIF funding formulas should be sharpened up to incentivise universities to work with innovative SMEs. Do you think that is right?

              Professor Purcell: I can give you a very short answer. I think yes. I think it is absolutely right that that should be reflected in the formula funding. It is more difficult to work with SMEs, and therefore I think that needs to be reflected. It is also a real sense that the upside for the growth of those SMEs, and their ability to secure and attract gradual talent and grow through their profile, is really critical. Therefore, HEIF, which is a very small part of the formula funding, should reflect the difficulty but also the societal need to work for SMEs.

              Professor Sir Keith O'Nions: Just a word on HEIF. I think one needs to keep one’s feet on the ground. It is less than £150 million a year, and there are 100-plus universities in the frame to receive it. The algorithm that is used is seriously capped; a university like Imperial, which gets as much as anybody, gets about £2.8 million per annum, so we are looking at a relatively small amount of money.

              I think it has been one of the demonstrably most successful uses of public money. I do not think there is any disagreement about that. I think there is a danger of thinking that with this £130 million, you can miraculously spread the jam thinner and thinner and get the same output. There is a very strong case for an increase in HEIF funding in terms of the demonstrable benefits, and there is a case for looking for other types of performance as a result of HEIF funding. What would be an abject failure is really to think that a university that gets no more than £2.8 million is going to do miraculously more than it has already been doing, or to spread the jam thinner and think that it will do just as much with £1.5 million. I agree that the amount of money is very small and I agree with my colleagues. I am concerned about trying to shove more into that box and pretending that you can spread the jam thinner and thinner and get the same result.

              Q32 Paul Blomfield: I take that point. Of course, Witty also recommended that HEIF be increased to £250 million.

              Professor Sir Keith O'Nions: Then you can set different expectations.

              Q33 Paul Blomfield: The Government declined to follow that recommendation. I take it that you all feel that that is a mistake.

              Libby Hackett: Yes.

              Dr Bradshaw: I think if it was at £250 million, that would be very interesting. As Keith has suggested, very small amounts of money are going even to the research-intensive universities at the moment, so there is more that we can do with that. I think the key is to make sure that that is additional money on top of what we are getting already rather than trying to raid other parts of budgets.

              Q34 Rebecca Harris: The Government supported the Witty recommendations that universities should put in place a single point of entry for SMEs. Obviously, for some universities that is already working very well, but I would like you to comment on that. How achievable is it and how does it work in practice?

              Professor Purcell: One of the things that we heard very clearly from the business community—big, small and in between—was just how complicated it is to access institutions. At Plymouth university we set up something called Enterprise Solutions: one phone number, one portal and one access. That has been hugely valuable to be able to funnel and channel those requests through. So I think that the call through the Witty review was very much to see how they might replicate that engagement, because we are complicated as organisations. I think that one of the areas where we struggled most in the Witty review was to show those heat maps about exactly what is going on inside universities and making that very visible so that SMEs and large businesses can look at them and say: yes, I want to go and phone that number and access that piece of technology or research, or even indeed that individual who I want to engage with. I think it is the simplicity of one portal being able to manage that and support that. Our portal is supported through high funding, so we use that to ensure that we provide that enterprise solutions portal.

              Libby Hackett: We did check with each of our institutions and they all said that they had a single point, and that they already had a single portal. So, yes, that is very much something that they have been doing.

              Professor Sir Keith O'Nions: We don’t. That is not to say that I disagree at all with universities having single portals. The reason we haven’t is pragmatic. I have already described that we have nearly 100 companies for which we are the landlord in our properties which have a particular SME relationship with the university. That is growing; it will probably be several hundred in a few years’ time. That is a different sort of relationship.

              We do have a single point of contact and portal for careers. The majority of our graduates actually get jobs in SMEs and that single point works extremely well there. At other levels, we find it much better to work at the sector level, where you have got very big faculties and departments that know the sectors well. We have a more pragmatic response that suits the institution I am in. That is not to say that I disagree with the recommendation, but it just would not work for us—or it would not add any value.

              Dr Bradshaw: Just to reflect that, you have to think about where SMEs have their first engagement with universities. Quite often, it is through things like knowledge transfer partnerships, so having that as a point of contact can be very good. Equally, it might be through an individual researcher if they are picking up a paper and finding that there is a particular piece of technology. All our universities have websites online with phone numbers and e-mail addresses, so if you know that you want to engage with a university, it can be very easy to find somebody relatively quickly, whether it is through a centralised office or technology transfer office or through an individual researcher or academic. So I think that the systems are there.

              We are seeing a diverse range of approaches and I think that that probably works overall. I know that your next set of witnesses, the National Centre for Universities and Business, are looking at a brokerage platform that can help in particular the SMEs that do not know where to go to take those first steps. I think that once we have got the combination of the portals, the individual access points and that brokerage system together, you might see another step change in this engagement with SMEs.

              Libby Hackett: I think what many of us have talked about is a cultural shift in institutions over the last 10 years. If you can achieve a cultural shift in your organisation where staff engaging in both teaching and research understand that they should be seeking to be publicly visible and outward-looking and to engage with outside worlds and outside businesses, then it will happen because of the way in which they engage and present their information. But it is a culture shift that sometimes needs to be achieved that has not quite happened in all corners of all universities.

              Q35 Rebecca Harris: Is it a cultural shift or is it about how complex and bureaucratic universities can sometimes be? The Big Innovation Centre report recommended that universities needed stronger administrative support for their academics to help them engage with business, because some struggle with the bureaucracy.

              Libby Hackett: Well, I am sure that it is both. You need systems to back up people’s good will and intent, but across our universities the culture shift has happened and it does not feel like a big bureaucratic beast is holding anybody back.

              Mr Walker: Can I apologise as I will have to leave shortly after asking my questions? I have tabled a question in the main Chamber.

              Chair: Could I just explain that parliamentary questions will shortly begin and I know that a number of Committee members have tabled questions? You may see some movement, but do not take that as a reflection of your contributions.

              Q36 Mr Walker: Moving on to LEPs, the Government has said that it wants to encourage universities to play a strong leadership role in them. Clearly it will be different in different areas of the country, but to what extent do Alliance and Russell Group universities feel that they are being given the space to play that role?

              Professor Sir Keith O'Nions: It is a very good question and I am not going to pretend that the answer is straightforward, because LEPs come in very different shapes and sizes across the country, so giving generic answers is quite difficult. But my impression is that many of the LEPs have responded and have put people from universities on their boards and so on. That is certainly the case in the ones that I know, and it is arguably having an effect. The amounts of money that those boards are moving around is a relatively small part of the total budget—10% or so over the next years—and from what I have seen, certainly in London and a little wider, the amounts of money that are being put alongside the capability of universities are relatively small. It is still very early days. Some LEPs are still almost in a formation stage, and I do not think that I would attempt to make any other generic comments beyond that.

              Libby Hackett: If you’d like statistics, 35 of the 39 LEPs have a vice-chancellor or equivalent represented on their boards. Our experience, as Keith said, is that it is a very mixed picture, but universities have worked very hard to engage with LEPs and are often involved not only on the main board, but also on the sub-boards that do the business of LEPs, which will often be led by universities. Universities within cities, certainly outside London, are always crucial local agents that have both the scale and local connectedness to lead on civic and local economic leadership issues. They have played and will continue through LEPs to play that role. They are certainly absolutely crucial to driving some LEPs. In others, it is a more mixed picture. I believe that there has been a great deal of progress and movement, and universities are generally playing a—

              Professor Purcell: I am on the board of the Heart of the South West LEP, but the university sits as the bridgehead between two LEPs—Cornwall and the Isles of Scilly and Heart of the South West. Our growth acceleration investment network, which I have talked about, is now the growth hub across the two LEPs, so it spans rural and urban and brings to the table not only our skill set around research grants, but also the opportunity to access a network across a whole range of colleges and other universities. We are very much part of the LEP solution in terms of driving economic regeneration.

              Q37 Mr Walker: That is good to hear. In my neck of the woods, the university of Worcester is certainly very active in the Worcestershire LEP and plays a big role. I take the point about it not necessarily being the major source of funding, but there is certainly a role in terms of integrating with the skills agenda and providing an opportunity to engage with the business community. Is there any policy shift that could strengthen the role of universities within LEPs, or anything that you want to see from the Government to entrench the position that you have all talked about?

              Dr Bradshaw: Don’t miss out what Wendy said about the importance of universities helping to knit together across different LEP boundaries, because that is one of the challenges. We have 39 LEPs that are actually quite small, so if you are trying to build up a cluster of excellence or something like that, having a couple of big universities involved that can knit across different LEP boundaries is very useful. They can also knit out to the international and EU links that they have, so that they then become the focus. The LEP can deliver things on the ground, but the universities can be the focal point for bringing in international and EU links and links across LEP boundaries.

              In terms of what could be done next, as Sir Keith said, the funding at the moment is small, but we are hopeful that a large proportion of the European structural investment funding, which is some £600 million, that will be available to LEPs for spending on innovation and research will go back into links with universities, because that is where the research base is for the local economy. We should use universities as the assets that can drive local economic growth and make as much as we can of that European money. It is a structural and investment fund, so people will always think of capital, but you can spend it on capability building as well. That is critical. We have all spoken about the importance of knowledge exchange and other transfers on LEPs, so if we can spend some of that money on KTPs or other mechanisms to help engage businesses with the research and experience that is in universities, that would be a very useful way of spending the money.

              Professor Purcell: I think most LEPs recognise that the universities in their patch are part of the comparative assets of a place, so why wouldn’t you leverage and work with them? I think they all recognise that. But I do think that Tim’s point about networking much more carefully across the whole English LEP structure is critically important.

              Professor Sir Keith O'Nions: I agree.

              Q38 Mr Walker: The European structural funds are clearly one of the opportunities for the LEPs. What proportion of that funding would you expect to come to or through universities specifically, as opposed to being directed by the LEPs to other areas of research investment?

              Dr Bradshaw: I guess we would all like to see as much as possible going to universities. But seriously, we have the facilities, skills and expertise to make the most of that. We have already made public investment in the UK; let’s add to that with the European funding and really make the most of it, engaging with businesses.

              Q39 Mr Bain: Can we now turn to the Catapult centres? There are about seven in operation across the country. How strong would you say the links are between these and universities?

              Professor Sir Keith O'Nions: Catapults are still very new. It is an area where policy shifts periodically in Britain—usually before the system you have has settled down and you can really measure its value. With Catapults at the moment, it is quite hard to measure the value. Only one or two are really in full flood, and you can find an annual report that tells you about the performance. Quite a number are still in the establishment phase of setting up companies limited by guarantee and so on.

              To take one, the Advanced Manufacturing Research Centre Catapult linked a lot of extant units around the country, such as the composites centre in Bristol and the old Boeing centre in Sheffield, and brought those together under the umbrella of a Catapult. I think you can assess how that is working with universities. I would say it is working  very well, because there is a lot of legacy—historical working—and it is clear the universities are strongly involved in that. It may well even be at a stage where you can see what added value the £10 million a year, or whatever it is, from TSB through the incubator has contributed. I don’t think there are many others where you can get an answer to your question.

              I would answer your question by saying that it is probably a system that needs to run a few more years and settle down. Maybe Hermann Hauser will add some insights as he goes around and looks at this, but it is still early days for the system. But where there are facts to be had, the activity looks quite good, and I would draw your attention again to the advanced manufacturing Catapult, where there are many facts to be had. That is probably not exactly the answer you would want, but I am just emphasising that it is still very early days.

              Mr Bain: Anyone else want to add something?

              Professor Purcell: Yes, I would agree with that, but while it is early days, we should also be encouraging the Catapults very strongly to be collaborative and not to reflect a kind of closed shop in the sense we talked about earlier. Quite necessarily, they started off being quite restricted in terms of membership, but the collaboration—the sense of an innovation ecosystem—is something we really need to encourage them to engage with.

              Dr Bradshaw: I would just like to reflect back again on what one of your previous witnesses said. I think it was Alan Hughes who said that technology has evolved with time. One of the really good things we might see in the future with Catapults that are located with universities is that, although they may well have been set up for one particular activity in one type of sector, as their technology and needs evolve over time, they can tap back into the wide range of expertise right across the university and transform themselves. We need to let them settle down, but if you look back at them again in, say, 10 or 20 years’ time, you might find they are doing some very different things from what they are doing now. You will get that when you have those really strong links with the university base.

              Q40 Mr Bain: It is early days, admittedly, for these centres, but would you say they have a role in enhancing what universities do to drive innovation and growth in the local economic units they serve? In my city of Glasgow, we are going to see great investment in a new life sciences centre. Do these centres have a role in enhancing our science base?

              Professor Sir Keith O'Nions: I believe they do, but it is not general across the piece. You have cited one where I think that is correct, but I think there are others where they are enhancing the science base. If I turn to Imperial College, I would say the impact is pretty negligible. What is really enhancing our science base is probably investment in our research from non-UK, non-EU companies—from China, Malaysia, India and so on. The creation of innovation space is a different sort of model. It is a more US-style. I would not use that statement of minimal impact of saying that it is not having beneficial impacts in the UK, but it is not general. It cannot be general. The amounts of money are not very large. Let me put it in context. Yes, it is one of the biggest expenditures of TSB. I think maybe £80 million in their last budget was spent on it, maybe going up to £100 million. That is £100 million in what is a very big country.

              Turning to Singapore—[Interruption: “Attention. Fire alarms are being tested. There is no need for you to take any action.”] That voice was in response to my mentioning Singapore!

              In this space where incubators are operating, to compare it with another place—perhaps such comparisons are unreasonable—Singapore is a country of 5 million people. The amount of money it spends in this Fraunhofer type of space exceeds the budget of the TSB. It is over £500 million a year in a country of 5 million. The amounts of money and the expectations we have got for this have to be put in that context. I am very supportive, but it is not a very large amount of money and you cannot expect it to have a general effect across the piece.

              Q41 Chair: That might be because both the politicians’ and the civil servants’ salaries are geared to the level of economic growth.

              Professor Sir Keith O'Nions: I could not possibly be drawn on a question like that. I think I’m in the wrong Committee.

              Q42 Mr Bain: You mentioned the Fraunhofer institutes, and of course there are differences in governance between those and the Catapult centres. In terms of the bidding processes, do you think they are sufficiently open and transparent for university partners at the moment?

              Libby Hackett: I think this goes to Wendy’s point about them needing to become more open. Certainly when they were first established, some of the first ones were closed shops. That was done for particular reasons. There had to be a certain emphasis on particular areas and particular hubs of basic research. We are now at a point where we can recognise that as these develop it will be about their capacity to bring in other expertise and to network and collaborate right across the UK. We are seeing them opening up. There are possibly some question marks about the incentives for universities that were not involved at the first stages to offer freely to get involved, but perhaps we can get around some of those questions.

              The Catapults are certainly becoming increasingly open. When they were first put in place, there were some question marks. An analogy I heard used was that they were perhaps a bit like making an arrow that did not have a tip, because the expertise around the tip was about how they were going to penetrate into industry and innovation businesses and SMEs, and perhaps they would focus more on the arrow than the tip in putting the groups and the hubs of the people together around basic research. But they are increasingly open, and we will see that. Their success will depend on how well they can network and collaborate more widely.

              Dr Bradshaw: In terms of openness, as Sir Keith said, it is actually very small amounts of money involved here, so we need to maximise that. Let us make sure that when new Catapults are being set up, they do not duplicate things that are already happening within the UK. There are centres of excellence for research and technology development throughout the universities in the UK, particularly in the research-intensive universities—but I would say that anyway. Let us make sure that we do not duplicate that effort by trying to set up something in parallel when we have already got some really fantastic centres we can build on.

              Q43 Mr Bain: In your written evidence, you commented that the open bidding process for the transport Catapult centre seemed to be more transparent than that used for the others. In what way did it differ, and in what way was it more transparent?

              Libby Hackett: I will have to come back to you with more information on that, I’m afraid, because I don’t have further detail at this point. But I believe it is part of the fact that we are seeing the process develop, mature and progress that even the initial bidding and set-up stages are developing and becoming more open. The first few that were set up had very tight time scales and all sorts of constraints, which would explain why there was such a closed shop. But I will have to get back to you.

              Professor Purcell: Libby will get back to you, but I think the initial understanding was that they established consortia—they were already formed, in a sense—and then the label was overlaid. The ones that are forming now are being formed in real time, and therefore the call is for collaborations to come together. That seems to be the key difference.

              Q44 Mr Bain: Both the Russell Group and the University Alliance said that greater flexibility in the knowledge transfer partnership scheme would benefit universities and businesses. In what way is the current scheme overly restrictive?

              Professor Sir Keith O'Nions: I will preface my response by saying that I think the KTP has been a very successful scheme. Thousands of businesses have engaged with it, and I don’t think anybody should try to make a point here that it is broken and needs fixing. However, you might expect it to evolve with time and look to operate in a more efficient way as the requirements change. We now have impact accelerator things to compare it with, which look for a similar goal and are a lighter-touch administrative approach for us in universities. They do not make us feel negative about KTPs; they are just an alternative. It may well be that if KTPs operate for a shorter period of time, and therefore in larger numbers, we will get a bigger bang for the buck. Some evolution would probably be valuable, but I would not like to give a negative view of something that has been wholly beneficial and very good. I agree with my colleagues: if we can persuade the LEPs to start investing in that sort of space, we may get some good value leading off some of the ESI funds.

              Dr Bradshaw: To follow on from what Sir Keith said, the smaller, shorter-period KTPs are very attractive, but there is a level of bureaucracy that goes with the delivery of a KTP. One way you could get around that for some of the shorter-term ones—particularly those with SMEs—is to give the money more directly to the university so it can manage a pot and act quickly when there is an opportunity for it to happen in the space of two or three weeks, rather than three or four months, which is the typical set-up time for a KTP now.

              I want to emphasise what Sir Keith said. We do not want to give the impression that there is anything wrong with KTPs. They have been fantastic, but there is a lot more we can do with them.

              Professor Purcell: I think KTPs have been one of the most successful schemes. They are not about thinking about one-way traffic from a university to a business, but about genuinely thinking about knowledge exchange and two-way traffic, and they have been hugely successful. There are not enough of them, so it is about the demand side. There are some particular issues to address, such as helping SMEs to access KTPs. That might be, as has been described, about developmental funding that sits with the institution, or it might be about shorter time frames, given that their innovation cycle is sometimes shorter. It is a hugely successful national scheme that is much applauded internationally.

              Q45 Mr Bain: I now turn to the university enterprise zones, which were launched with some fanfare at the end of last year when the Government announced funding for some pilots. The Government said that universities will be expected to support enterprise zones by offering access to relevant experts and facilities, and also by facilitating arrangements between local businesses and investors to raise finance for innovation. Is your understanding that universities in university enterprise zones are able and prepared to offer that kind of support?

              Professor Sir Keith O'Nions: I would say universities know on which side their bread is buttered. They inevitably offer support, and they are very realistic. I just want to make a comment about enterprise zones. We have to think what enterprise zones look like in the rest of the world where they have been established. We are part of a global community. Money flows, and people flow, to where the real action is. By world standards of the establishment of enterprise zones, this looks like a pretty weak issue. If you look at the subsidies, tax benefits, start-up costs and capital investments in enterprise zones elsewhere in the world, this is small and a small amount of money. I think we should set our expectations fairly modestly for where this may get to. However, the direct answer to your question is that I think universities will play. I think they are sensible and enthusiastic about these things but, again, this is a tiny amount of money going into these and they do not really bear comparison with things that are called enterprise zones in our competitor nations.

              Libby Hackett: We have strongly welcomed the university enterprise zones, but with—exactly as Keith described—the caveat that these were bids for just pilots, and small amounts of money. We would hope that there is not small ambition behind it. Within a month of the announcement of the scheme, there were many excellent project proposals ready for submission to the UEZ pilot proposal across the cities that were asked to submit, so I think this is absolutely heading in the right direction. It is about bringing together the role that universities are playing within cities, within the existing partnerships and the range of partnerships, alongside supporting capital investment in the development of these strong local partnerships, which is important. This is a very early stage. It is a pilot and it is very small at this point, but universities are ready, willing and up for supporting this. We put many proposals forward within a month of the announcement.

              Q46 Mr Bain: How might the concept be improved? What things are missing from the pilot that would allow you to make the difference in terms of driving forward these links between universities and SMEs?

              Professor Purcell: When I saw the university enterprise zones as an announcement, I thought, “Good.” Then I saw the list and saw that there were only eight. I then looked at some of the local regeneration, the city deals and the first wave of cities, then the second wave of cities. It is really just trying to join those dots that is the key thing, for me. I will be interested to see how the pilots work, but I would like to see how they overlay with things like city deals and with the economic development plans of LEPs, and therefore that should be reinforcing—that is what I hope—and I would expect to see more of them. But it is very early yet.

              Dr Bradshaw: The scale is £15 million over the eight potential areas where it could be done. One city deal project at the University of Birmingham is building the institute of translational medicine; £24 million was in that. That was one institute, so the impact of this £15 million spread over eight is going to be very small. It is a very, very small pilot. Let’s see how that works and maybe there are opportunities to scale that up.

              You asked what might be missing. If I was an SME, one thing I would probably be looking for is business rate relief, which is not part of the university enterprise zone package but is a typical thing you would get in other styles of enterprise zone elsewhere.

              Chair: Okay. That concludes our questions. You have been commendably succinct in your answers, and we have caught up a bit of time. I thank you very much and reiterate what I said to the previous panel: if you would like to add any supplementary evidence, we would be very happy to receive it. Thank you very much.

              Examination of Witnesses

Witnesses: Dr David Docherty, CEO, National Centre for Universities and Business, and Professor Graeme Reid, Professor of Science and Research Policy, University College London, on behalf of the National Centre for Universities and Business, gave evidence.

              Q47 Chair: Good morning and welcome. Thank you for your willingness to contribute to our inquiry. I noticed you sitting at the back, so you have had quite a long session already. Could you introduce yourselves for transcription purposes?

              Dr Docherty: I am David Docherty. I am chief executive for the National Centre for Universities and Business.

              Professor Reid: I am Graeme Reid from University college London and I am strategic adviser to the National Centre.

              Q48 Chair: Right, thanks. I will open with a question that you may have heard posed in a different form to the previous panel. The NCUB’s “State of the Relationship” report found that in 2012 more than 50% of UK R&D was funded by companies headquartered outside the country. What risk do you think this poses to our innovation system?

              Dr Docherty: That figure came from a two-year study we did, chaired by David Eyton, who is the global head of research and technology at BP, and by Shirley Pearce, who was then the vice-chancellor at Loughborough. It included senior executives from places like Cisco as well as people like David Sainsbury and Hermann Hauser. That is just by way of context.

              When we discovered that number, I immediately reacted badly to it. I thought that was a negative thing but, actually, business people around the table said that is a positive thing. It shows confidence, from outside the UK, in the UK science and research base. At one level it is scary, in the sense that one decision made in one headquarters in the United States could take £30 million, £40 million or £50 million out of the UK research base. On the other hand, it says that we have to keep a high quality research base. Complete commitment to quality in science and research is central to keeping those companies here. It is a tribute to the openness of the UK but I think we have to make sure that our companies are investing heavily in R&D as well.

              Q49 Chair: If I can paraphrase, what you are saying is that obviously there is a risk, but the very risk, in effect, is productive insofar as it challenges our research base to stay ahead of the game.

              Dr Docherty: Yes. It is simultaneously a tribute and a risk. That is what is so interesting about it.

              Professor Reid: Could I just add a couple of thoughts? This is not an alternative to investment from indigenous companies. This is a net addition to that investment. Some of the global corporations that have chosen to invest in the UK have been making those investments over considerable periods of time so they have become embedded in parts of the UK’s industrial R&D landscape. Indeed, we have now reached a stage where people have spent most of their careers working in the laboratories owned by some of those corporations. There is pretty fierce competition for that corporate investment and I think it is a great tribute to the UK research and industrial community that we appear so attractive to those global corporations when they make their decisions. 

              Q50 Chair: I suppose the corollary of this is why private R&D funding within the UK is so low. Do you feel it is low?

              Professor Reid: There have been several analyses of this. One analysis is that, taken sector by sector, industrial investment in R&D in the UK is on par with many other nations. Our industrial mix has a heavy emphasis on some industries that are innovative but are not heavy R&D spenders. Service industries, and oil and gas are two examples. That goes some of the way to explaining the pattern in the UK but I do not think it is all of the answer. If you look at estimates of non-R&D innovation spending in those sectors, they still do not bring the UK up to the level of the highest investors.

              Q51 Chair: Have you any comments, David?

              Dr Docherty: Richard Lambert did a rather brilliant review of the different shape of manufacturing in the UK relative to other industrial systems, which throws out why, in part, you see this disparity between private investment elsewhere and private investment from UK companies in the UK. It is the collapse of the national champions, in effect, from the 1980s. I think that actually rebuilding our manufacturing base is part and parcel of rebuilding how the science base will work in a confident way within the UK. Everything I have heard this morning is all about connectivity and connecting the whole system up. The better connected the system is, the more businesses will invest in both innovation and research and development.

              The whole tone of the conversation from everyone on this platform has been that this is the early stages of a new system that is beginning to emerge. I think for companies in particular, they have to wait for this to emerge and connect to really understand it properly.

              Q52 Rebecca Harris: It is interesting because a lot of the focus on what we have been discussing so far is what universities need to be doing—the funding and the structures and what have you—and not so much about what is actually happening with business. The report into the “State of the Relationship” talked about how businesses needed to develop more capacity in this regard—I think the expression used was absorptive capacity. What can businesses do in this respect? How can we encourage them to become more receptive to research and innovation in R&D?

              Dr Docherty: I can’t say “absorptive capacity” very well so I will say how businesses are taking in research. It is a very interesting set of questions. You can see it in the knowledge transfer partnership project coming out of the TSB where there is a lot of naivety at the beginning from businesses going in and it takes time to understand what the system is and how they can best benefit from it. Businesses have to invest themselves in it to get the best out of it. We are spending a lot of time in the NCUB looking at brokerage platforms and how we can get businesses to have a much deeper understanding of what they can get out of the university system because it is quite a limited knowledge at the moment. If you want to get the best out of the university system, you have to invest yourselves in understanding it. I have been in business my whole career and you can sit there and whinge about the system, but unless you take the step towards it you shouldn’t be allowed the whinge. It is a very opaque system, so the overall innovation system has to become less opaque to smaller companies, but smaller companies have to make the investment. When they do make it—the knowledge transfer partnership project, which we did a consultancy report for the TSB on it, showed a complete bill of health. Companies love it when they understand it. However, if you fall out of it because your project wouldn’t work as a KTP project, you think it is a terrible system—it’s bureaucratic and so on—but it is basically because you haven’t understood it properly.

              I think there is an educational role for business. I think all of us who are involved in business have got a responsibility to help with that. If you are a business manager you have a got a responsibility yourself to go and try to track this. To get your innovation needs, you have got to do some work. So the short, pithy answer is that people need education and the system has to help with the education, but business managers have to step towards the university system as well.

              Professor Reid: I’ll not add to that.

              Q53 Rebecca Harris: Is your business base looking at getting different types of skills and promoting them among their employers to encourage more innovation?

              Dr Docherty: Yes. This phrase “continuous professional development” is a relevant phrase. If you are going to be an innovative business, you have to continually interrogate how you are going to be more successful. In that interrogation you have to develop better skills. One of the things that is emerging all over the place is this concept on interdisciplinarity. If you work in a creative company, you really have to understand the digital infrastructure around it. If you work in a digital company, you have to understand the anthropology of the customer. That is a new skill set, it has never been around properly before. It started in television and music and it is spreading into health care and places like that. That is something you can only learn on the job. The university system is not yet ready to produce people like that, but you have to engage back into the university system to help understand how to develop these skills.

              I will give you a concrete example. We did a project in Brighton with 3,500 creative and digital companies in Brighton, and the two universities. It proved quite comprehensively that an arts and humanities degree was what was driving economic success in these companies—I get a bit stressed out when people just talk about STEM all the time. Crucially, what they were looking for from the universities were the kind of students who had these interdisciplinary skills, but they themselves had to develop them. That project meant involving not only the community there, but also engaging with Brighton university in developing these interdisciplinary skills. I would say that if you want to be an innovator, you do have a responsibility as a business to make these steps. Universities have to have a role in helping you develop new sets of skills that previously were not in the economy.

              Q54 Rebecca Harris: Is there a role for other organisations, though, such as business organisations?

              Dr Docherty: Yes. Will was talking earlier about intermediary organisations, which are one of the things that I find very powerful. In the case of Brighton, Wired Sussex—the trade association for the creative and digital companies in Brighton—made all the difference, because when I set the project up it was one phone call to one person and not me trying to talk to 3,500 companies.

              There are organic intermediaries—core trade associations—that are not used sufficiently well in all of this. Again, one of the things we are doing at the national centre is beginning this engagement programme with trade associations to try to bring them into the brokerage mix. Frankly, that is to reduce the noise levels in the system. It is very hard to talk to the small company community properly. Of course, we will be talking to the other big associations—the CBIs of the world—to do the same thing. I would say that Will is right about intermediaries but there are a lot of organic intermediaries already in existence that we should be taking advantage of.

              Professor Reid: I detect quite a big difference from sector to sector. I would hold up the life sciences as an example of an industry that has sophisticated interactions between industry and universities, and intermediary organisations that have long since polished their offering to both sides. If every sector lived up to that example, you might not be having this inquiry.

              Q55 Ann McKechin: Both of you have commented about how we have a very fragmented way of organising business in this country compared with other European or north American equivalents, and the difficulty there is in reaching out to businesses. I was slightly alarmed by Dr Docherty’s assertion that the onus is always on the business side to find out about universities and academia rather than on academia to find out a bit more about the types of businesses. As Professor Reid has commented, the situation in life sciences is very different from the one for someone who might be involved in mechanical engineering. It is about how we reach them and what ways we find to reach them.

              The Government have said that NCUB has a role in developing the gateway to research that aims to provide a single point of access to publicly funded research. Can you tell me what the level of awareness is among businesses for that facility and whether you have looked at that per sector in terms of engagement?

              Dr Docherty: We are very sector focused, because they are so very different. We have representations on our leadership council from everyone from BP to the BBC. What we don’t have are small companies, so we are trying to figure out how we connect to small companies.

              It is by no means a done deal but at the moment, partly because of my business background in technology and the creative industries, I am trying to figure out whether there are online sources for these things. It would be a bit like an eBay for intellectual property: could you find a way of the whole system coming together to support all the information that is available from universities, and through the research councils and the TSB, on one platform? We have been talking to all of those players for the past 12 months and there is a general agreement that this is a good idea. How we do it technologically is—

              Ann McKechin: Best of luck.

              Dr Docherty: We live in a networked age and we should be using these networks to figure out how to solve these issues.

              I am not so keen on the term SME because I have run a company that has 250 people in it and chaired companies of four or five people, and they are different beasts. You pointed that out earlier—these are different kinds of animals. When you are turning over £50 million to £100 million, you have lawyers and accountants, and you have the time and inclination. If you are running a thing with five people you have no time at all. So I am very focused on whether we can get clarity around the M and how those businesses connect to universities—they have the time, money and inclination—and then, separately, on how you work out the set of issues around the S, and particularly those Ss that really want to grow.

              The challenge I would throw out to any company that wants to grow is, “What are you going to do about it, then?” Our job is to provide the information and the points of contact. Their job is to want to grow. I can say that because I have run a lot of companies and some have succeeded and some have failed. But the common characteristic was, “We want to grow or fail”. There is a real energy around companies who are like that. They are the ones who can get the most value out of the connection.

              Q56 Ann McKechin: That is where the priority should be in future.

              Dr Docherty: I do genuinely think that.

              Q57 Ann McKechin: How many businesses are currently using the gateway?

              Dr Docherty: I don’t know that. It is not my platform. It is the research council’s platform. There will be a lot more once it connects up to our platform.

              Q58 Ann McKechin: Okay. NCUB is also involved in setting up something collaborative. You mentioned the online platform. How do you think that might work in practice for a company if they are looking for the latest research in a particular area? How could they find out what was currently available in terms of the research already done and how they might develop a product or service if they think they have an idea?

              Dr Docherty: I don’t want to speak on behalf of them because these are still all moving parts. If it was just me, I would make sure that all the research was available on a searchable database. I would make sure that it was regionally specific and that there were live contacts behind everything. In other words, once you send an e-mail or make the call, someone will get back to you within a defined time period. I would have star systems and rating systems for success. I would have it in English. I would make sure that there was an algorithm that translated it out of academic language into ordinary language if all those things are technically possible.

              I would make the search mechanism really easy: I am interested in catalytic converters; well, here are 10 people who know about catalytic converters; here are five who are willing to talk to you; here are their e-mail addresses and they will get back to you within a week. That in an ideal world is how you begin to crack some of these “s” issues—small company issues. The time to transact for a small company is so limited. You need to make it easy. Even Witty’s single point of contact for universities—which is great, by the way, I am not criticising it—but if you are sitting in Cornwall and you need to talk to someone in Aberdeen about some aspect of sea research how do you do that? I think genuinely we should be exploring having a UK asset to do this.

              Q59 Mr Bain: You’ve talked about the Gateway to Research portal. What other NCUB initiatives do you have that are targeted at improving the ability of businesses to collaborate effectively with universities?

              Dr Docherty: To be clear, Gateway to Research is the research councils’ platform. We are trying to bring it together with the TSB’s platform and emerging data from the universities. That is why I was not clear about the usage patterns on Gateway to Research because it is not our platform. We try to understand the problem. Our methodology is to bring together senior business leaders and universities to try to understand the issue. Then what do we do about it? Sometimes we say, “Government, you’ve got to help with it.” For example, the Brighton Fuse project looked at how creative and digital companies can work with universities. We then went off and worked with others to do an £8 million project called London Fusion. It is specifically aimed at getting 1,000 companies in London to get sufficient engagement with universities to grow their own intellectual property. That is a concrete example of how we get in the middle of something and animate it. Fundamentally our role is to do the thinking and the animating. We are not constitutionally set up to go and make the changes ourselves most of the time. Equally, we are looking at the issue of talent into engineering companies, particularly female talent. We launched the national schools engineering prize for girls which will be in 80% of schools next year. That is an explicit example of how we get in the middle of a challenge that is clearly one we all recognise and try to do something about it.

              Professor Reid: May I just add something? If we look at where we want things to end up rather than where we want things to start, most of the time we want to end up with a relationship between the people running the small business and people in the academic world who can support and help them. All of those techniques and administrative devices that we are talking about are attempts to make it easier and less expensive to find the right partner. That is what it is all about. At the university end there has been huge progress but there is more ground to cover in making academics into good partners, if they get discovered. In businesses, there has been progress but there is more to do in order to work out what a good partner looks like. It is easy to get lost in all the language about KTPs and gateways and so on, but ultimately they are all attempts to achieve the same thing.

              Q60 Mr Bain: One of the points from your written evidence on the Government’s response to the Witty review is the need for a slightly different approach to creative industries from those in science and engineering. What evidence can you give the Committee that having a different approach to creative industries innovation from the one that you might adopt towards science and engineering will benefit that sector?

              Professor Reid: First, I would return to the distinctive characteristics of industries, and then try to position creative industries on that spectrum. To put a couple of data points into that, the relationship between science and industry in the life sciences has got quite a good volume of protected intellectual property that is then traded between the scientific and industrial sectors.

              In information technology and computing the relationship is often about the movement of people from one sector to another rather than the sale of IP. Engineering is somewhere else and so on. The creative industries were one of the later ones to get the attention they deserve. They have another characteristic again, which is probably the point at which I should pass to David.

              Dr Docherty: Some of this is counterintuitive. What a lot of creative companies need is access to great technologists. I have just finished chairing a task force on the future of innovation in television technology. One of the biggest pushes was that we need more data anthropologists inside television technology companies. I would absolutely say let’s not have a clear, simple dividing line between creative companies and other kinds of companies. Creative companies are now informing health care businesses and technology businesses themselves.

              None the less, it is equally true that their innovation cycles are very short. If you are going to be in an innovation cycle inside BP, you are talking 20 or 30 years. If you are in an innovation cycle inside the BBC you are probably still clocking maybe one, two or three years. But if you are in an innovation cycle in a small digital agency, you are talking six months, and then someone else has done it.

              We are learning a lot about this through the Arts and Humanities research council’s work around their creative centres. Universities have to move a lot more quickly. Systems that are set up for BP are completely inappropriate for small creative and digital companies. I think universities know that, and they are speeding up different ways of doing intellectual property agreements.

              If you are doing an intellectual property agreement for an arts institution it is a very different beast. I am beginning to see a lot of movement and understanding of these different arrangements. As I said earlier, we constantly push sector-specific innovation challenges back out, because we are saying you cannot treat these two as the same thing.

              Q61 Mr Bain: Are the Government and publicly supported mechanisms for innovation in these sectors flexible enough to account for that difference? As you said, in some small digital companies there is a much shorter period than in the engineering sector.

              Professor Reid: You’ve got a portfolio of initiatives that have got no sector specificity, such as KTPs and HEIF, where it is for the industry and academic communities to take the generic initiative and craft it around the needs of individual sectors and academic disciplines. Then you have another portfolio, like the Catapult centres, that are pre-shaped around a sector and then delivered to the community already shaped.

              My sense is that that is a pretty good mix to have. We could have a debate about whether there is the right balance and the right relationships and so on, but having that two-tier process feels to me like quite a good overall shape.

              Dr Docherty: I am on the board of the connected digital economy Catapult, and there is no doubt about it—the focus is on small and mid-sized companies and on providing a platform for them. So, again, it is another moving part in the system, but I think it is moving in the right direction.

              Q62 Katy Clark: In terms of the creative industries, do you think that the Government’s focus on the eight great technologies offers sufficient support to the creative sector? Do you have anything further that you want to say about that? How can we improve where we are?

              Professor Reid: I saw the eight great technologies as a way of putting some colour into what is otherwise a rather abstract discussion about the science base, the absorptive capacity in industry and so on. The way in which UKTI used the eight great technologies to sell the UK was an example of that at work. As a way of putting colour into abstract discussion, they were fantastic. The narrative around them was a really effective way of doing that.

              You can then have a debate as to whether it was the right eight. Without question, it was eight things that this country is good at, and I am not sure that we always blew our trumpet loudly enough about how good we were at them. There was almost a ninth one, with quantum technologies, and you could probably continue to fine-tune the precise specification of the eight. I confine myself to saying that the idea of us identifying things that we are really good at and then giving them a bit of focus and a bit of highlight strikes me as a pretty effective thing to have done.

              Dr Docherty: If I may speak in a personal capacity, outside my National Centre role, I think that there is a public policy debate still to be had about how creative digital industries are emerging and how they should be supported. Government have still not quite articulated how these two forces are coming together. They currently sit between two different parts of Government anyway, BIS and DCMS. With my other hat on, as chairman of Digital TV—everyone is bored stiff about me saying this—I would say, “We are going to have an A-grade technology; let’s build off the back of what we have been brilliant at in this country, which is the connection of creative and digital design, and, frankly, a world-class television industry.” Let us not lose sight of that—I will put my other hat back on now.

              Q63 Katy Clark: The NCUB has been tasked with creating an advisory hub, which will support LEPs in delivering what the Government have described as a stronger, collaborative proposition. Will you expand on how you think that will work?

              Dr Docherty: It is this idea of smart specialisation, which, frankly, we are still trying to understand—what is smart and what is special? Needless to say, you have heard all morning about how the LEPs are not very well resourced. What we are trying to do is to say, “What is the evidence base for something that is both smart and special in this LEP business plan?” We are right in the foothills of this; we have not even hired the first two people into it yet, but when we do I am hoping that we will be a trusted source of information—independent information is, I think, what we are trying to get at here. That is why I agreed to do it. If we are looking at emerging clusters, we need a research base that makes sense of that—what is the speed, what is the intention? That is really what is around in the business mind, and I think our mind, as we try to adjust to understanding what it is. But I am afraid we are not even in the foothills, but in the camp behind.

              Q64 Katy Clark: As you say, LEPs are not very well resourced, so do you think that they are able and indeed willing to work jointly when it is logical for them to do so? Is that realistic?

              Professor Reid: It’s very early to try and answer that question, and I would not claim to be an expert. My impression is that they are certainly willing. To do this in creative industries is a challenge. It is tempting to think that creative industries are just another industry, but they are not. They are a not terribly well defined, diffuse and dynamic population of businesses, some of which are very small. This is a challenge for the LEPs. It would be good if we could allow them the time and space to learn how to tackle what is a far more difficult challenge than some of the other industry relationships, rather than coming back in six months and expecting it all to be solved. I don’t think I can say whether they are able; I don’t really know what able looks like on this one.

              Q65 Katy Clark: My next question touches on some of the points you made earlier, particularly about business. Evidence submitted jointly to this inquiry by a university and a LEP suggested that “it is time to stop concentrating on the outputs of business-university collaboration and focus more…on building relationships and trust. Most universities have little understanding of the needs of businesses, and businesses themselves have little knowledge and understanding of universities’ capabilities.” From what you said earlier, Dr Docherty, you probably agree with that. Do you both agree with it, and how do we tackle this?

              Dr Docherty: I don’t know who it was, but I would say it sounds pretty overstated, to be frank. I have visited 60-plus universities in the past five years, and— certainly at senior management level—they do have an understanding. From the business side—pharma, bioscience, engineering, energy—there is quite a lot of knowledge at the top end of companies about these things. So it is not as simple as “They don’t understand each other.” If you look at global indices—which are, after all, based on interviews with business people and academics—we are No. 2 in terms of innovation, so there is something that connects at the top of the systems, but it does not always work its way down as it might do. The research excellence framework exercise is quite good at bringing out an understanding of how to get an impact in the community around you. I am more optimistic than that quote suggests, but, equally, there is tons of work to do, because it is such a complex space.

              To quickly go back to this industrial structure theme, if you are sitting in Glasgow as a small technology company, but Imperial College is who you should be talking to, you would not know that. That is where I think the disconnect is. You would not necessarily want to go to Glasgow university. We do have to look at all the available opportunities coming out of the publicly invested innovation system and find ways of demystifying them and getting simple messages out to smaller companies.               But, again, I come back to the fact that it is different for different sectors and different for different sized businesses. It is unfair to say that universities and academics are not on this; I think they have moved a huge amount. Even in the five years I have been part of this, there has been a real willingness to change, and I think we should build on that.

              Professor Reid: I don’t recognise it as a description of the country now; it sounds to me like a description of the way it was 20 years ago. David refers to the last five years. I would say that, over the last decade or so, there has been a transformation on both sides. To stop focusing on the outcomes would seem odd, but I certainly agree that one of the challenging areas—one of the areas for current focus—is how to get the relationships right.

              Q66 Katy Clark: In the work the NCUB has done, it has described the devolved Administrations as “Target audience and partners”. How closely are you working with the devolved Administrations to improve business-university collaboration?

              Dr Docherty: Our funding on the public sector side comes from the Welsh, Scottish and Northern Ireland funding councils as well. Obviously, we are working with UK-wide organisations—the research councils and the Technology Strategy Board. We are right in the middle of putting together a major programme, starting in Scotland, which we will articulate at some point later in the year. We are doing the same with Wales. So we are very engaged through the funding councils with both countries, and we will be putting together very clear programmes of work.

              Q67 Katy Clark: It would be useful if you could share that with the Committee and send us something when you are able to.

              Dr Docherty: Absolutely.

              Professor Reid: That’s fine.

              Chair: That concludes our questions. I thank you for your contributions again. I reiterate what I said to the other panels: if you feel you would like to expand on any of the answers you have given, please feel free to submit supplementary evidence to the Committee. Thanks very much.

              Oral evidence: Business-University collaboration, HC 249-i                            21