Written evidence submitted by the
Department for Business, Energy and Industrial Strategy (UKR0017)

Background: government’s support for research and innovation

1. The government recognises that research and innovation make a significant contribution to our economy and wellbeing. There is good academic evidence that public spending on UK Research and Development yields a high rate of return for the economy - 20% per annum in perpetuity[1] – and better research and innovation has resulted in improvements across people’s lives, from more fuel-efficient cars[2] to more resilient flood defences[3].

2. That is why the government continues to support research and innovation across the UK. For instance, in last year’s Spending Review the government committed to protect the science and research budget in real terms and protect the funding that flows through Innovate UK in cash terms. The government is investing in our already excellent scientific infrastructure, through backing the development of the Francis Crick and Sir Henry Royce Institutes and a commitment of £6.9 billion capital funding up to 2021. And the government is continuing to support our talent pipeline, by opening applications to a new Masters loan and developing a new Doctoral loan, helping to attract and assist the next generation of researchers.

3. The creation of UK Research and Innovation (UKRI) is another important step to ensure the UK remains a world-leader in research and innovation. UKRI will provide a single and stronger voice for research and innovation on the global stage and a more strategic and agile approach to supporting the best interdisciplinary and cross-cutting research.  

4. In establishing UKRI, the government is taking forward the vision of the Nurse Review, which made clear that, while the UK is excellent at science, by bringing together the seven Research Councils into a single body the collective research endeavour could be much greater than the sum of its parts.

5. By also including Innovate UK – in addition to the England-only research and knowledge exchange functions of the Higher Education Funding Council for England (HEFCE) (through the establishment of Research England) – within UKRI, the government is ensuring business-led innovation and researcher-led science are well placed to work together effectively, helping to translate our world-class knowledge base into world-beating innovations and bringing benefits to businesses, researchers and the UK as a whole. The Government has been clear that Innovate UK has a different mission and culture from the Research Councils and Research England, which must be protected; and that the Research Councils’ and Research England’s focus on fundamental research and funding excellence should continue. However, only by bringing Innovate UK into UKRI can greater joint working between research and business at all levels be fully realised.

6. A significant range of institutions and individuals have welcomed the opportunities and benefits for research and innovation that the creation of UKRI presents, including the Royal Society; British Academy; Royal Academy of Engineering; Academy of Medical Sciences; University Alliance; Universities UK; Russell Group; and Wellcome Trust.

7. More detail on the establishment of UKRI and how the government envisages it will operate follows.

The vision for UK Research and Innovation

8. While the establishment of UKRI and its functions is of course still subject to parliamentary debate, the vision for UKRI is that it will serve as a single, overarching funding body – established through primary legislation – that operates at arm’s length from government, provides a strong voice for the research and innovation community and maximises the opportunities from our national and international research collaborations.

9. UKRI will incorporate the functions of the seven Research Councils, Innovate UK and the research and knowledge exchange functions of HEFCE, while ensuring they retain their autonomy and authority within their areas of expertise. Innovate UK will retain its distinctive business focus and separate budget.

10. The Haldane principle – ensuring decisions about the allocation of funding to research projects are best taken independently of government, by those who have the expertise and experience to know how the money will be spent – continues to be a core principle of the government’s approach to supporting research and will be at the core of the structure of UKRI. Furthermore, the dual support research funding system in England – which is at the heart of much of our research excellence success – is, for the first time, being enshrined in primary legislation.

11. While the precise roles, responsibilities and objectives of UKRI will need to be refined once a Chief Executive and Board are in place, and shaped through further consultation with stakeholders, in principle UKRI will:

• be the unified voice for continued strengthening of the UK research and innovation system, nationally and internationally;
• Lead on the development and delivery of a coherent, evolving national research and innovation strategy which maximises economic and societal impact based on more and better evidence and data;
• Ensure better strategic prioritisation of resources, especially for the best interdisciplinary and cross-cutting research, as well as longer term investment in research infrastructure
• maximise the impact of Innovate UK in supporting business-led innovation;
• Promote stronger commercialisation, business and policy links and wider societal engagement with publicly funded research;
• nurture and improve the talent pipeline for research and innovation;
• deliver a simpler, well-functioning research and innovation ecosystem which is easier to use and helps build collaborative partnerships between end-users, including universities, researchers, charities, businesses, communities, NGOs and international organisations; and
• deliver a step-change in administrative efficiency, including through combining corporate functions.

12. In doing so, UKRI will:

• champion and protect the Haldane principle and the dual support system;
• foster and further strengthen the distinct roles of its nine constituent funding bodies;
• strike a balance between ‘top down’ and ‘bottom up’ (researcher-led) identification of priorities and strategy
• ensure the centre is capable of challenging and integrating work on priorities and common agendas and is as small and focussed as possible, employing outstanding and highly-respected people and avoiding mission creep.

The timetable for establishing UKRI and early priorities for action

13. The legislative framework for the creation of UKRI is currently being debated through the Higher Education and Research Bill. Subject to parliamentary scrutiny and approval, we expect to begin formal operations in the financial year 2018/19. 

14. In addition to supporting the passage of the Higher Education and Research Bill through parliament, the government’s early priorities for establishing UKRI are to appoint strong leadership for UKRI – including a Chief Executive and a governing Board to lead and shape the implementation of UKRI – and to engage stakeholders so that their views on UKRI can be fed into the detailed design process.

15. The role of interim Chair of UKRI spans these three priorities, and is critical to the establishment of UKRI. It was therefore essential to appoint a highly credible interim Chair – and to do so urgently – to lead the work.

Appointment of interim Chair and Chief Executive of UKRI

16. On 27 May 2016 the (then) Minister of State for Universities and Science wrote to the Commons and Lords Science and Technology Select Committees, to set out that Sir John Kingman was appointed as Chair of UKRI on an interim basis.

17. The letters made clear that, as part of his role, Sir John will:

• engage with the sector and key stakeholders to seek views and inform the detailed design of UKRI and the transition of existing bodies into the new organisation;
• advise ministers on the design of UKRI and the implementation process;
• chair the shadow body and support the recruitment of key appointments, including the competition for the permanent Chief Executive.

18. Sir John’s role as interim Chair ends in April 2018.

19. The letters also made clear that, subject to parliament, the government will run a full Office of the Commissioner for Public Appointments (OCPA) process for the permanent Chair and other independent Board members and that, in line with the normal process for public appointments to the Councils of the current Research Councils, the preferred candidates will appear before the Science and Technology Select Committees.  Through all stages of the recruitment processes the government is committed to adhering to the principles of fair and open competition.

20. The first stage of the competition for the role of Chief Executive of UKRI ran from 30 August to 26 September 2016. The government has hired the executive search company Saxton Bampfylde to assist with the recruitment process to help ensure as diverse a selection of candidates as possible applied for the role.

21. As per OCPA guidance, a panel will shortly be constructed, comprising the interim Chair of UKRI, a senior official from the Department for Business, Energy and Industrial Strategy, two independent panel members chosen for their expertise and an independent member recommended by OCPA, to shortlist and ultimately appoint the successful candidate. The aim is to announce the successful candidate around the end of the year.

22. As demonstrated by Sir John’s appointment, it is the government’s priority to appoint the highest calibre candidates to these positions.

Governance of UKRI: on-going work on structure

23. The government is working with Sir John, our existing Partner Organisations and key stakeholders to explore detailed organisation design options within the framework set out by the White Paper and Bill. This will inform the final design which will be refined and agreed in partnership with the UKRI Chief Executive and Board once appointed. Further detail will be set out in guidance including the framework document between BEIS and UKRI, which will be published once agreed, as per good practice with government non-departmental public bodies. What follows is therefore a high level overview of how the government envisages the governance arrangements will work in practice.

Governance of UKRI: Board and senior management team

24. As set out in the White Paper, UKRI’s Board will be a strong and influential voice for research and innovation. It will be responsible for leading on:

• overall strategic direction, including developing a national research and innovation strategy when instructed to do so by the Secretary of State;
• cross-cutting decision-making
• providing advice to the Secretary of State on:
• overall priorities;
• the balance of funding between research disciplines; and
• the balance between UK wide competitive project funding and England-only research funding 
• supporting the management of funds with cross-disciplinary impact and a ‘common research fund’ as proposed by Sir Paul Nurse.

25. The Secretary of State will appoint UKRI Board members in consultation with the Chair, as with current arrangements for the Research Councils, HEFCE and Innovate UK.

26. The Board will consist of a Chair, a Chief Executive Officer (UKRI’s single accounting officer), a Chief Financial Officer, and 9-12 other members. The majority will be non-executives with significant expertise in research or business, ensuring a strategic focus at the head of the organisation that spans research and business-led innovation.

27. As the Board will be responsible for holding the Research Councils, Innovate UK and Research England (hereon collectively referred to as the nine Councils) to account, it must be independent of them. The Board will therefore not comprise the Heads of the Councils (hereon referred to as Executive Chairs, described below).

28. To support the UKRI Board in embedding innovation across the organisation, the Secretary of State will nominate a member of the Board who would lead in promoting and championing innovation and business interests and providing strategic support to the Innovate UK Executive Chair, also sitting on the council of Innovate UK.

29. It will be critical for the Board to work closely with the Executive Chairs and ensure highly effective coordination across UKRI and its key partners. Therefore, the Executive Chairs of the Councils – along with the CEO, CFO and other senior directors of UKRI – will together sit on an Executive Committee, to support engagement with the Board and cross-council working, in line with Sir Paul Nurse’s recommendations.

Governance of UKRI: leadership and autonomy of the nine Councils

30. The current funding bodies’ distinctive focus and remits are protected on the face of the Higher Education and Research Bill by the creation of nine Councils within UKRI, mirroring the functions that are currently set out in the royal charters of the Research Councils and Innovate UK, as well as HEFCE’s research functions under the 1992 Further and Higher Education Act.

31. They will provide strategic oversight in the relevant fields of activity and take delegated decisions on scientific, research and innovation matters within those fields. They will be led by Executive Chairs, high-profile positions appointed by Ministers. The Executive Chairs will each have significant expertise in their particular fields of activity (for example, medical research or innovation).

32. In addition to the Executive Chair, each Council will be made up of from five to nine other experienced independent members drawn from the relevant community. The Council members will be appointed by the UKRI Board on the recommendation of the relevant Executive Chair, with the Secretary of State also having the facility to appoint one of the Council members if he or she wishes.

33. The Secretary of State will set budgets for each of the nine Councils through an annual grant letter, taking advice from UKRI’s board on strategic priorities and on the balance of funding between research disciplines. As currently, the Secretary of State will also set out any funding flexibilities he or she will grant to the Board in respect of the transfer of funding between Councils. The UKRI Board will not be able to transfer funding unless authorised to do so by the Secretary of State, thereby ensuring that the current system of hypothecated budgets is retained. The CEO of UKRI, as its single Accounting Officer, will establish a framework within which the Councils will have delegated authority for their hypothecated budgets, consistent with the standards of financial management expected of public bodies. Each of the financial processes of UKRI will be established in line with the latest guidance and best practice in respect of managing public money.

34. The nine Councils themselves will be responsible for making delegated decisions on scientific, research and innovation matters. Their responsibilities will include:

• developing strategic delivery plans in the relevant areas of activity, consistent with the overarching strategic plan set by the UKRI Board, and submitting these to the Board for approval;
• taking decisions on the prioritisation of their hypothecated budgets within their delegated remits;
• liaison with their community to develop ideas and disseminate strategic outputs; and
• appointing and setting terms and conditions of academic, specialist and research staff in the relevant Council and any associated institutes, within delegated limits. This will ensure that decisions on the employment of specialist staff continue to be made by those with expertise in the relevant discipline areas, in line with the Haldane principle.

Governance of UKRI: working in partnership

35. We would also expect to see arrangements in place to ensure that UKRI, and in particular Research England, retain strong links to the other devolved higher education funding bodies and the Office for Students to enable joint working on areas of shared interest.

36. As above, the government is committed to continuing to work with the incoming leadership of UKRI, current Partner Organisations and other key partners to develop further the detail around the establishment of UKRI and organisation design and governance arrangements.

October 2016