Written evidence submitted by Rolls-Royce (BER0022)
Declaration of Interest
Overview
0.1 We welcome the Government’s commitment to raising R&D investment levels to 2.4% of GDP by 2027 and to 3% thereafter. This is an ambitious and timely goal that must be underpinned by effectiveness, alignment and balance of investments, and support to innovation, with a long-term commitment to investment in research, R&D, innovation support, competitive infrastructure and STEM skills base.
0.2 At a time of significant developments in science & technology, the forthcoming years are going to see further increasing research and technology requirements from industrialists such as Rolls-Royce to lead and continue to create differentiation through technology and the development of new services. To win in a global market companies need to consider a number of factors to decide where to invest and deliver R&D. The UK has one of the best research eco-systems, but competition among countries is also high, and companies will seek governments to provide incentives across the breadth of the research and innovation.
0.3 To support business investment decisions, there is a need for a consistent, long-term approach and commitment by Government that considers 10 years at least. This should go along with a focus onto larger scale topic areas, e.g. via the Industrial Strategy Challenges, and be supported by key research infrastructure such as high performance computing and advanced test facilities for leading technologies such as hybrid-electric propulsion systems for aviation.
0.4 A priority for Rolls-Royce will be on growing its activities in hybrid electric propulsion, for which a suitably-funded Amy Johnson Challenge project would provide an attractive way to create the connection across infrastructure, aircraft and regulators, leveraging key UK strengths and creating the conditions for novel mobility and regional transport models for the UK. Support towards future clean energy solutions would make solutions such as Small Modular Reactors (SMR) commercially viable to launch.
0.5 In aerospace, long-range R&D decisions will also require extended and increased levels of commitments to ATI, and for funding levels to be set and driven by policy objectives (e.g. based on additional GVA objectives and indexed to inflation), over a significant period of time (e.g. 10 years) for the benefits to be felt. We support the ATI as a success and would recommend policy to follow the examples of other countries:
a) In Germany long-term and steadily increasing programme budgets in LuFo are clear and predictable, supported by further regional funding initiatives that are aligned and coordinated, and supported by research infrastructure, innovation, skills and capital investment.
b) Such coordination and coherence is also a feature in Singapore’s approach where investment commitments for funding are directly linked to policy objectives of increasing productivity and growth in priority sectors.
0.6 In recent years, with the formation of UKRI, the UK has improved the coordination between research councils and more industry-facing technology investments. But R&D levels needed to adopt and implement technology into actual products and services are very high, and more needs to be done to incentivise companies in the UK to take greater risks and unlock additional investment to undertake R&D. Pockets of excellent practice exist, e.g. ‘Sharing in Growth’ which has improved competitiveness for SMEs in the supply chain.
0.7 It is necessary to establish a coherent regional economic development environment to support the above (currently there is a mix of are 39 LEPs, some mayoral authorities, some combined authorities and some multi-tier authorities).
0.8 Uncertainty over the position of the UK on research collaboration with Europe will also affect our investment outlook and where we choose to invest. The EU Horizon 2020 programme and Clean Sky have provided significant levels of funding towards large-scale demonstration and enabled Rolls-Royce to lead propulsion research in Europe, and engage on integration issues with the regulators and with partners.
1.1 UK research is recognised as among the best in the world, and through collaborations between industry, higher education and research institutions the UK has a leading S&T research eco-system. We would welcome if the increase in government R&D intensity is directed towards continuing to improve the effectiveness of the research eco-system in the UK, as other countries are also investing into their own eco-systems, and industry has more choice than ever before on where to develop technology.
1.2 There is also a need to ensure effectiveness through support of university research, skills and capital investment into infrastructure, getting the balance and alignment right for academic research to be directed both towards industry-driven requirements and towards curiosity-driven requirements to benefit the UK.
1.3 The UK has a good track record for university-business collaboration, and Rolls-Royce has over decades developed a strong University Technology Centre (UTC) network and has played a lead role in creating the High Value Manufacturing Catapult Centre network – both models have proven to be mutually beneficial. These types of collaboration models should be further encouraged and fostered as a key element of the successful eco-system. Further, distribution of funding across a broader range of universities than those in the ‘golden triangle’ would support broader participation in applied research and its adoption in the mid to high TRL space. Many of Rolls-Royce’s 19 UTCs in the UK sit outside of the golden triangle.
1.4 We welcome the formation of the UKRI which brings under one umbrella the research council and the industry-driven research and therefore can provide coherence of approach and ensure the right balance of investment into curiosity-driven academic research and industry-driven technology. There is no doubt that the strength of the UK research eco-system relies on sustained investment into curiosity driven research. Nonetheless, success should continue to be measured in terms of the impact of research beyond academic metrics to its contribution to value-creation for the UK, and the investment balance should be struck accordingly.
1.5 We welcome the Government’s focus on an industrial strategy to ensure greatest impact of R&D investments.
a) The sector focus which includes aerospace is proving successful: the Government-industry funded Aerospace Technology Institute has impacted the technology investment decisions that we and our supply chain have made in the UK. This model should be extended to provide long-term certainty and for the volume level of funding to be further increased to keep the UK a leading aerospace nation at a time of significant change.
b) We are also encouraged by the calls for proposals to address the four Industrial Strategy Grand Challenges. We note that it has generated a high degree of interest and has resulted in significant over-subscription to the Industrial Strategy Challenge Fund (ISCF). We hope to see a suitable concentration of funding in areas in which the UK is strong or has significant potential to play a lead role, e.g. in electric aviation/mobility with the Amy Johnson Challenge, in AI, and in clean energy with support to Small Modular Reactor (SMR) technology. Simplicity, clarity and predictability of the necessary scale of funding to enable success are important to business. We also note that by the very compelling nature of the proposals, a real risk exists that if they are not sufficiently supported, industry may seek out R&D eco-systems outside of the UK or may not pursue these opportunities at all if the risks are too high.
2.1 There are a number of areas where alignment and balance will be key to delivering greatest impact from an increased R&D commitment:
a) Greater cross-disciplinary research will emerge as recognised by the four Industrial Strategy Grand Challenges.
b) Greater integration/seamlessness of research across fundamental and applied science as exemplified by the Alan Turing Institute creating the eco-system that connects AI science with industry use cases.
c) Cross-boundary research helps create necessary scale and achieve demonstration in large global markets in collaboration with key industry partners and regulators. UK leadership on the EU Horizon 2020 programme for Clean Sky (and subsequent Clean Sky 2) has proven successful to build momentum behind novel energy and transport concepts, and underscores the attraction of continued engagement with EU research and Clean Sky 3.
d) Involving cross-cutting disciplines such as electrical and digital with sector specific research should be stimulated. We hope that the formation of UKRI will assist in achieving alignment between funded activities in the individual research disciplines and the needs of UK industry at greater pace. Catapults will also play a key role in helping ‘productionisation’ of this cross-cutting research and adoption by industry – this should be a key focus for them.
2.2 A recent example of positive alignment across science disciplines has been the EPSRC Prosperity Partnership programme which has created strong UK teams for system level research topics that would be too big for any individual university, and we would welcome further strengthening of the programme. Further improvements are also necessary, as the latest doctoral training centres are not yet achieving alignment between excellence in research, industry demand and excellence in training to support a pipeline of new skills into industry in new, high-in-demand areas.
2.3 In aerospace the formation of ATI has provided focus and resulted in better balance of funding allocation between the research base and applied research, and it has further built confidence in the value of an aerospace sector strategy. As stated above, continued long-term commitment and suitable scale of investment needed for this leading sector will serve to further increase the attractiveness of aerospace R&D in the UK.
2.4 Investments in test facilities and digital infrastructure will be important as the technology and competitive landscapes change, e.g. to equip the UK with leading test facilities to support electrification of transport and specifically hybrid electric system level integration, or to enable digital applications in R&D areas as high-value design (HVD) with investments in Tier1 and Tier2 high performance computers (HPCs) as well as early investment in quantum computers. These cross-cutting technologies are a vital foundation for the UK to remain attractive for business to carry out research and R&D.
2.5 Insufficient attention is paid in the UK to aiding and supporting the product development to adopt new technologies. Catapults have proven effective for markets and environments where a strong market pull for products exists. Measures to aid the successful adoption of new technologies by industry into new product opportunities and concepts should form a stronger element of the UK research and innovation programme. Measures could include product investment incentives and government procurement including through defence investments into dual-use technologies.
2.6 Alignment of defence R&D programmes could yield greater value to the UK. This is a model that is well known in the USA. We welcome defence-led platform programmes such as Tempest, and would encourage creating further pull through additional initiatives similar to programmes of the Department of Defence (DoD) and Department of Energy (DoE) in the USA. Links between digital and the defence research in tools such as AI and security, we believe, would deliver greater impact from R&D investment in the UK.
3.1 We summarise that the goal of higher R&D in the UK is welcome, and we would encourage an ambitious agenda and timescales to deliver it. Key considerations to include:
a) A greater focus should to be placed on ensuring a greater pull and creating the right conditions for new opportunities to emerge from the UK. Proposals for the ISCF offer a range of opportunities that can be supported by a coherent approach supported by government policies and investment (e.g. in world leading infrastructure). Further, there is opportunity for cross-governmental demand creation in particular through defence programmes.
b) The industrial strategy for sectors is proving successful and needs to continue to play a prominent role. Consistent long-term commitments and scale of co-funding are vital, in particular at a time of rapid technological change.
c) Government support for a strong eco-system through the UKRI will greatly increase the attractiveness of the UK for R&D investment. The UK has the unique potential to leverage strong universities research in conjunction with industry and supported by advanced research infrastructure. STEM skills are a critical foundation to this.
d) International collaborations remain vital to connect the UK’s strengths into global markets and with global partners.
[1] https://www.rolls-royce.com/media/our-stories/electrification.aspx#evtols
[2] https://www.rolls-royce.com/products-and-services/nuclear/small-modular-reactors.aspx#/