Written evidence submitted by Sheffield Hallam University (BUF32)
Working in partnership and collaboration with business is a fundamental component of the University's strategy and mission, and the University welcomes the opportunity to contribute its experience and knowledge to the inquiry, as well as looking forward to the conclusions and outcomes which will be drawn from a wide selection of businesses and universities.
The strengths and weaknesses of business-university collaboration in the UK and the UK’s performance against international comparators
What are the key strengths and weaknesses of the UK’s innovation system in relation to business-university collaboration?
Strengths
1. Specific concentrations of high value industry sector focussed collaborations; aerospace, chemicals, pharma and others as suggested by the eight great technologies, all supported by world leading UK research, and all of which has come from a strong government policy push over the last twenty years. This is also important because these sectors are reliant on long term and sustained research to underpin technological advances that help maintain UK competitiveness. The continued closure and demise of much corporate research has increasingly resulted in much research being undertaken by universities supporting long term business collaboration.
2. One of the important strengths for the University is the diversity of programmes with business enabled by a combination of HEIF, ERDF and the TSB. Much university and business collaboration takes place in the TRL 3-7 range, 'the valley of death or innovation gap', where risk mitigation to all partners is a critical success factor. The ability of the public sector to reduce risk here is key.
3. Programmes therefore can range from small pump priming initiatives for example SME innovation vouchers, to multinational large scale collaborative projects. Sheffield Hallam University delivers a range of collaborative projects including innovation services for SMEs, Innovation Futures part-funded by ERDF and HEIF which achieved in phase one, 132 businesses assisted (against target of 81) created 24 jobs, safeguarded a further 11, and generated more than £11.6m of Gross Value Added (GVA)
4. In difficult economic times the commitment to HEIF, HEFCE Catalyst Funds, TSB support, the re-launch of some innovation vouchers and the increase in KTPs are all strengths within UK policy terms. This has enabled Sheffield Hallam to create the National Centre of Excellence in Food Engineering through the Catalyst Fund in conjunction with the Food and Drink Federation and other key industry partners. Similarly the National HIPIMS Technology Centre established with eleven core companies from the UK and abroad.
Weaknesses:
5. Despite the maintenance of nominal research and innovation budgets which look healthy within a UK context of public sector cuts, this still represents a steady decline in real terms, and in international terms private sector R & D intensity continues to decline. The lack of industry demand was recognised by Richard Lambert in his review in 2003 and the situation remains. In fact it has worsened with research spend being concentrated in a small number of large companies and around 50% of these overseas firms. This isn't all bad news given the UK's position as an open trading economy and the 'pulling power' of word leading research, however against our leading competitors who are increasing spend on r & d this is a weakness, with a long term detrimental effect.
6. R & D spend by SMEs is estimated at around 3% which is very small; this is a continued weakness in the innovation system. Partly this can be addressed by the TSB being able to improve support through its own programmes and the Government being more ambitious through the SBRI.
7. Problems of “low skills equilibrium” in large tranches of the UK economy; and therefore receptivity for innovation is low; low demand and risk aversion to matters related to innovation is therefore apparent to many companies particularly SMEs.
How competitive is business-university collaboration in the UK against relevant international comparators?
8. TSB data suggests that the UK is competitive; 3rd in the world in the global innovation index 2013 and top for university industry collaboration based on World Economic Forum and BIS statistics. It is difficult to respond to this question as it relies on the availability of external data.
9. UK universities are successful in international consortia, particularly Framework programmes which involve companies throughout Europe. Whether this is sufficient to continue to maintain the position of UK competitively and corporately is open to question however it does evidence the strength of UK universities working collaboratively with business in the international arena, enhancing the sector's reputation.
10. One issue here is to do with the amount of R & D spend by international companies in the UK which accounts for around 50%. On the one hand this is a good in that it reflects the calibre of UK universities but on the other it reflects low r & d spend of UK firms, and the shortage of large UK based tier 1s and supply chain to help drive innovation
Effectiveness of Government initiatives to support innovation through business-university collaboration
What are the strengths and weaknesses of the Catapult Centre model of business-university collaboration? What areas of research should future Catapult Centres focus on?
Strengths
11. The funding model akin to the Fraunhofer model seeks a third, third, third, government, industry and collaboration income to remain viable. . This ensures the research and development is business led whilst recognising that operating in the 'collaboration/innovation space' TRLs 3 -7 requires public sector intervention to help de-risk projects and programmes.
12. Investing for the long term. Projects in the innovation space take time to develop and be market and investor ready, 5-10 years depending on the technology would not be unusual. It has been an inherent weakness of the UK innovation system to establish short term projects and initiatives, Catapult Centres are changing that perception, and long term government support, irrespective of party politics should be a real strength
13. They provide a highly visible and centralised place of innovation where businesses and universities collaborate.
Weaknesses:
14. Whilst the funding model in principle is correct if after the initial set up costs the Centres need to bootstrap themselves, then bottom line considerations will mean they do not devote sufficient time to draw in the best 'commercially applicable' research to the dis- benefit of the UK economy and UK companies.
15. If a university is not a core or founder member of a Catapult then it appears difficult to develop a relationship or partnership. The Centres could do with prospecting outreach programmes to connect with the best university relevant research. There appears to be no 'open way' in which to engage with the Centres or to test potential 'engagement' e.g. open days/trade fairs for universities and businesses
16. According to the Big Innovation Centre report 'Catapult to success' around 50% of Fraunhofer revenues come from SMEs; that is I imagine on a scale that the Catapults could not match as many of their core partners are corporates/larger companies. With UK spend by SMEs around 3% of r & d spend it isn't clear how the Catapults intend to either spread themselves out to engage SMEs, or how TSB funding/programmes might support greater SME involvement through closer alignment
17. This is an issue rather than a weakness. There have been understandable comparisons between the creation, operation and aims of the Catapults and the Fraunhofers in Germany. One difference is their scale the Fraunhofers do have longevity on their side having been established in 1948. Now they have 23,000 staff and over 60 research institutes and units with a wider network and reach than the Catapults. Whilst having a broadly similar funding model they are more specifically related to particular technologies as well as being business led. Can the Catapults start to lay the foundations for a comprehensive national network and not one restricted to a relatively few centres, and one that helps in the rebalancing of the economy, by sector and by geography by enabling a growing number of institutions and companies to be involved? For example at Sheffield Hallam University where the High Power Impulse Magnetron Sputtering (HIPIMS) Technology Centre has a strong research partnership with the Fraunhofer Institute for Surface Engineering and Thin Films,. This has helped the development of the National HIPIMS Technology Centre with 11 UK company partners.
18. In terms of new research areas, there may be a need to think carefully about developing and consolidating existing Catapults and ensuring their pipelines tap into other applicable research excellence with new companies and institutions. That is not to entirely exclude ideas for new Catapults but to ensure the existing suite of centres are being fully developed and utilised.
What steps can be taken to improve the uptake of Knowledge Transfer Partnerships (KTPs), particularly among SMEs?
19. There are a number of possibilities 1) increase the grant rate for first time SMEs 2) increase the overall level of funding 3) review the processes and guidelines that currently 'favour' technology based innovation 4) increase the number of funding rounds 5) improve level of communications and benefits of the scheme and actively work with LEPs in England to do this.
Funding
Recent BIS analysis found that the UK exhibits “a sustained, long-term pattern of under-investment in public and private research and development and publicly funded innovation”. How does this affect business-university collaboration in the UK?
20. Universities have to think more innovatively and strategically about which firms they collaborate with and to what end, The continuing demise of corporate r & d labs has resulted in more opportunities for some universities to develop long term strategic partnerships with those companies, although those companies will be working with universities globally, so this is a very competitive market, and one generally suited to the research intensives.
21. Many SMEs are problematic for universities in the same way that many businesses will criticise universities. However the term 'SME' is not helpful as this covers a huge spectrum of companies. The type of SME that is best placed to work with a university will vary from sector to sector but universities will increasingly aim to work with larger SMEs, the mid-cap sized companies championed by the CBI for example. This is a pertinent question for the Sheffield City Region where the economy is overwhelmingly dominated by SMEs.
22. The question about the Catapult Centres highlights the 'innovation gap' of TRLs 3-7, this is the area where new technologies are developed and start to be brought to market and are usually the focus for university and business collaboration, At the risk of repeating the point, public investment needs to be maintained to support these activities.
23. This also brings into sharp focus the question of whether or not universities are seen as a 'business support agency.' Universities are not and increasingly institutions will become much more careful and targeted in who they want to work with. This is the issue of 'intelligent brokerage' and is one which crops up frequently. NCUB are currently working on this, although it remains to be seen how effective a database can be in brokering relations.
24. Universities will seek as they currently do, other funds to support r & d and university and business partnerships e.g. ERDF, Horizon 2020 and Regional Growth Funds. Whilst RCUK have several types of 'follow on' funds these will benefit those institutions who are able to draw down these funds. The value of continued HEIF is critical as is its ability to act as a leveraged match funder e.g. ERDF. At Sheffield Hallam this has enabled the University to deliver a university wide interdisciplinary collaborative project Innovation Futures, supporting innovation services for SMEs. Part-funded by ERDF and HEIF this achieved in phase one, 132 businesses assisted (against target of 81) created 24 jobs, safeguarded a further 11, and generated more than £11.6m of Gross Value Added (GVA), as well as engaging in innovation 'accelerate' workshops with local SME Gripple and Creative Sheffield of the City Council.
25. Whilst ERDF has been an important stimulant of regional funding especially to support SME engagement, a more competitive and restrictive funding environment, and a smaller geographical territory as defined by the LEPs, does make it less likely that a significant number of SMEs in any one LEP region will necessarily have the capability and capacity to work with universities. Although BIS and DCLG state it will be possible to work across LEP boundaries, those who have experience of working with ERDF will testify to its debilitating administration and bureaucracy that will make cross boundary working highly problematic. .
26. Developing longer term strategic partnerships takes time and effort and does place income generation at some risk in the short term, . However in the medium and longer term it presents opportunities across a range of disciplines as well as for internships, placements, CPD and workforce development alongside R & D.
27. One of the constant pressures on academics is time for industry engagement and being able to 'juggle' this with the demands of teaching and research. In an increasingly competitive market for research and teaching, the reduction of funds that affect university and business collaboration make it likely this will suffer, especially in those parts of the sector that work primarily with SMEs, as academics need to concentrate on the core components of higher education.
28. With less funds there will be a knock on effect on the numbers of post graduate researchers working on collaborative projects with a consequent drop in experience and skills levels in the next generation of scientists and technologists.
29., Getting graduates into companies and SMEs in particular is a key mechanism to lifting the innovative and productive capability of firms. Sheffield Hallam has recently worked with Sheffield City Council, the Institute of Directors, the Sheffield Chamber of Commerce and the University of Sheffield to develop a graduate employment programme with SMEs in the city. This directly addresses the low level of employment of graduates in SMEs; whilst Sheffield produces over 12,000 graduates a year only 18% of Sheffield SMEs currently employ graduates. This project, RISE, was short listed for Guardian HE award in 2014
Will the changes to Higher Education Innovation Funding (HEIF), proposed in the Witty Review, be successful in increasing university engagement with innovative SMEs?
30. For Sheffield Hallam HEIF has been an important ‘pump primer’ to engender new partnerships and relationships. HEIF 4 2008 - 11, supported the development of 287 new partnerships with industry of which, 189 (66%) were with SMEs in South Yorkshire and the wider Yorkshire Region. Witty's observation that the method of determining institutions’ allocations should be reviewed to sharpen the incentive to engage with innovative SMEs is valid and a proposal to 'ring fence' or call for HEIF plans to set out their strategy to engage with SMEs is welcome, but should be treated cautiously and rigorously.
What has been the effect of including commercial ‘impact’ criteria in REF assessments, and should the weighting increase to 25% as suggested in the Witty Review?
31. The focus on impact in REF 2014, has potentially positive outcomes, these include raising an important awareness of the connectivity between research and social and economic challenges. It should be noted however that REF 2014 did not refer commercial impact, only social and economic impact. Impact also created a showcase for industry (and societally) relevant research and began an important process of culture and behaviour change within the academic community linking research to outcomes. There are unknowns and potential risks here, for example the benefits of including impact in REF 2014 are not proven, and the process of formally identifying and describing impact within the constraints of the REF guidance and templates was challenging and required a disproportionate time investment (and cost) compared with the relative weighting of impact. It should also be noted that any benefit to those outside the HE sector, including industry is not yet proven.
32. This would suggest caution in increasing the future REF impact component to 25%, in advance of any detailed analysis including the recently commissioned 'Evaluation of institutional preparations for impact assessments in the REF 2014' being undertaken by RAND Europe, and any planned evaluation of the benefits of the inclusion of impact in the REF process to those in industry.
Will the Government’s focus on the ‘eight great technologies’, as described in the industrial strategy, help to attract inward investment?
33. The experience of The Advanced Manufacturing Park in Rotherham and associated activities has undoubtedly had a significant clustering effect based around collaborative activity with Boeing and Rolls Royce. This has the potential to promote global impact, and potentially attract inward investment. But from experience when companies are looking to inward invest they also have in mind government incentives, for example as provided by Enterprise Zones as part of an inward investment package.
To what extent is this focus compatible with and complementary to the European Strategy for Key Enabling Technologies?
34. The eight great technologies relate to cross disciplinary collaboration and transferable technologies and are entirely consistent with the concept of the key enabling technologies. The main driving force behind innovative developments in many sectors will be dependent on innovation in Key Enabling Technologies (KETs), such as nanotechnology, micro- and nanoelectronics including semiconductors, advanced materials, biotechnology and photonics.
Local Growth Agenda
Are Local Enterprise Partnerships (LEPs) (and their counterparts in the rest of the UK) investing as much as they could in innovation and R&D?
35 LEPs to date have little of their own resources to invest but innovation is part of the current plans for the Sheffield City Region. The plans also reflect differing priorities for different regions in that innovation involving university and business collaboration is one aspect of the portfolio that LEPs believe they need..
36. A big issue for England is that innovation and its delivery is a crowded place. There are the LEPs, Catapult Centres scattered around, the TSB with no regional dimension, and similarly RGF. While some of these can be match funders for ERDF, there is a lack of coordination and cohesion that will hinder the LEPs given their small geographical remit in innovation terms.
How can LEPs, universities and Government encourage greater regional R&D investment?
37. This is a very good question with 39 LEPs made up of variable geographies economic need and populations, finding an action based common ground beyond an 'in principle' agreement that R & D investment is a 'good thing', might be difficult. LEPs are now starting to bed in and settle, and best practice amongst LEPs should be identified and disseminated. SMART specialisation was much heralded but this still seems to be a 'work in progress' for many LEPs.
38. LEPs might rightly respond in different ways as befits their different circumstances but by creating innovation boards this will help create a platform of collaboration and coordination that could develop into a sub-national view of innovation.
How should LEPs direct their allocation of European Structural and Investment Funds in order to maximise increases in R&D output?
39 LEPs need to commission independently undertaken SMART specialisation strategies that aim to invest in areas which have true national or regional competitive advantage. Moreover understanding the differences between R & D and innovation is important as the latter might be based on other factors and not necessarily research.
40 The dilemma for LEPs such as the Sheffield City Region is that the productivity and skills gap is so vast that other interventions need to be undertaken e.g. Skills Bank, general business support, inward interment and export programmes, as well as r & d and innovation. The point of a SMART specialisation strategy would be to pick out the innovation priorities that deserve investment.
To what extent will the new University Enterprise Zones encourage business university collaboration?
41. Impossible to say as the pilot round was only recently launched and the outcomes unknown and it's easier to be critical of what is a good idea, 1) bids restricted to core cities only 2) no business rate relief or support for superfast broadband 3) the basis of £2 leverage is high considering the ESIF is not yet operational and the LEP do not have resources yet, once ESIF plans are operational this could change the situation significantly.
Lloyd Snellgrove
Director of the Research and Innovation Office
23 April 2014