Written evidence submitted by the University of Nottingham (BER0052)

 

 

About the University of Nottingham

Ranked in the top 75 universities worldwide and with campuses in the UK, China and Malaysia, the University of Nottingham is a truly global institution, providing innovative and engaging education and producing world-leading research. The University’s foundations lie in University College Nottingham, a constituent college of the University of London established 1881, which was then granted its own Royal Charter in 1948. It was the first British university to establish a campus in Malaysia, in 2000, and the first foreign university to open a campus in China, in 2004. It has more than 8,000 staff and 45,000 students, including 11,500 at our international campuses. The University of Nottingham conducts wide-reaching, world-class research across and between disciplines. In the most recent assessment of research quality in UK universities 32% of the university’s research was rated world-leading, and a further 49% rated internationally excellent.

 

Question 1: The effectiveness of public spending on R&D, including through mechanisms such as the Industrial Strategy Challenge Fund

 

  1. Public spending on R&D is of vital importance in supporting new, blue skies research which wouldn’t be funded elsewhere. Industry doesn’t have the capability or capacity to fund or undertake longer term, more speculative, or risky research of the kind that yields genuine step changes. Whilst InnovateUK has proved highly effective in supporting applied research there is continued downward pressure on the funding for blue skies, high-risk, fundamental research at lower technology readiness levels (TRLs). Such research takes place over much longer timescales and is often speculative, with limited immediate impact but high potential for long term disruptive change. We need mechanisms to support disruptive activities. Effective R&D mechanisms must also provide for research support not just development and application. 

 

  1. The future success of the UK economy is dependent on public funding, underpinning not only research and innovation project activity but also the underpinning cutting-edge infrastructure and leading research and technical staff which enable world-leading research. Public funding for innovation activities also plays a de-risking role in the innovation landscape, enabling new technologies to bridge the “valley of death”. University of Nottingham spinout company Monica Healthcare, recently sold to GE Healthcare, was supported by public funding on a number of occasions to enable our scientists to conduct early research and proof of concept work which enabled their products to be developed for commercial sale.  Current sales of Monica’s foetal monitors confidential to GE but in the year prior to acquisition by GE the monitors were used at over 1,000 sites across Europe, Asia and North America, with more than 100,000 patients benefitting from the technology. Public funding also plays a vital role as a catalyst for pre-competitive collaboration – both between academic institutions, between industry partners, and between academia and industry. Public funding also plays a vital role in leveraging private investment in research and development.

 

  1. The science budget resource was “ring-fenced” in 2010, with “flat cash” (£4.6b/year) with no inflationary increase.  This has been regarded as representing 6% decrease in real terms as a result of inflation; this cannot be maintained long-term otherwise opportunities to develop new science, train new scientists, and exploit new technologies with industry will be missed.  Whilst the additional investment in R&D through the Industrial Strategy Challenge Fund (ISCF) is to be welcomed, the ISCF is also leading to a shift in the balance of the R&D landscape. The ISCF is leading to a drive for very heavily industry-focussed programmes of research, a change in emphasis which runs the risk of reducing or undermining the funding available for blue skies, high-impact research. Whilst ISCF is encouraging and increasing industry engagement with the research base there is confusion from industry partners about the opportunities available and how to engage with them. This is not helped by the fact that the process for accessing different ISCF funding streams is not clear and changes within and between waves are not clearly signposted. There is also a need for continuation and expansion of the funding available to universities through the dual support system which enables the leverage of co-funding from industry.

 

  1. Furthermore, the drive from government for fast delivery of ISCF programmes has led to increasing numbers of very focussed calls which limit overall engagement and possibilities for research. The short turn-around time frame of calls in the past year, has frequently hindered the generation of high quality proposals and may limit the formation of effective industry networks (due to the time frame) which may ultimately limit impact. Much of the ISCF spend requires significant industrial collaboration and a large existing critical mass of activity which reduces the number of entry points for new academics and also for institutions (both research organisations and industry) that wish to grow a new initiative. This may be a barrier to growth preventing early career academics from growing their portfolio and experience. Overall, this method of funding needs careful management if it is to enable new ideas and new people to enable skills and talent coming through.

 

 

Question 2: The rationale needed for deciding on the balance of public R&D funding between:

a) Individual research disciplines, research councils and cross-disciplinary schemes

 

  1. The University of Nottingham invests heavily in multi-disciplinary research however we would argue that exciting transdisciplinary research cannot arise without strong research disciplines. Support for these research disciplines is provided not only by research councils but also directly by universities, many of whom directly invest the QR funding they receive to develop discipline-based research, particularly in areas such as the arts where there is less public funding available for research.

 

  1. The individual research councils play a vital role in both underpinning the health of individual research disciplines and in bringing together disciplinary communities both within and across research councils. The formation of UKRI provides an unprecedented landscape for facilitating exciting and truly multi-disciplinary research. However, this should not mean that funding for individual research disciplines or individual research councils should be neglected. We cannot predict where the next new breakthroughs that will have major economic and societal impact are going to come from.

 

  1. The research councils undertake an important role in prioritising areas and highlight topics where training and research activity is required. Quality of research must remain a key driver for funding but for the future health of UK science it is important to ensure that public funding remains available to support a diverse range of subject areas to ensure support for science base and infrastructure. Disciplinary and Research Council level activity also plays an important role in identifying areas where the UK is facing a skills shortage or a skills development need that, if unmet, would undermine the UK’s future international competitiveness.  In addition, long term stability of funding is crucial to enable long term investment in national capabilities. The dual support system with the unhypothecated funding it provides through the QR funding stream is also essential in maintaining the strong disciplinary base of UK research and in allowing universities to make long term strategic investments in important and emerging areas of research.

 

b) The two research funding streams of the ‘dual support’ system

  1. Current support for Research comes from project funding (provided by Research Councils) and unrestricted core grant funding to Universities provided by the Funding Council (now Research England).

 

  1. The combination of restricted and unrestricted funding is intended to allow both the pursuit of targeted research aligned to specific themes and support Universities to allow academics time to develop their research outside the confines of a specific project grant. Unrestricted funding is also used to allow Universities to develop and maintain infrastructure to support research that cannot be attributed to specific projects and therefore cannot be paid for from project funding. Unrestricted funding is also provided to supplement research funded by Charities and Industry.

 

  1. Over time, the balance has shifted towards project funding([1] [2] [3]) with ‘QR’ funding being largely flat over time – increasing by around 5% between 2003/4 and 2017/18.  This contrasts with significant increases in funding provided for research by research councils. The arguments for different balances between project funding and unrestricted funding have been rehearsed before and are largely unchanged. The balance is difficult to strike and, in many respects, different disciplines need to be treated differently in order to provide the right level of support across the breadth of academic activity. The current model allows individual universities to determine allocations at below institutional level.
  2. At Institutional level, a shift towards project funding would have the effect of reducing the time and money available to support research activity that was not directly related to specific project activity. On many occasions, excellent research starts with the sort of ‘thinking time’ that is facilitated by unrestricted funding that is used to support research activity outside specific projects. There is a risk that if unrestricted funding is too small, the time and infrastructure to support basic and early stage research will be lost. A shift away from specific projects would have the opposite effect – increasing the support for Universities to engage in early stage research and provide more robust infrastructure to underpin research efforts.

 

  1. However, the reality for many universities is that a ‘triple support’ system has been in place for many years. TRAC Returns show that Research is subsidised by the other activities in the vast majority of universities. In the case of the University of Nottingham, Publicly Funded Teaching income largely covers its costs and provides a small margin for investment. Research income only covers around 80% of its full cost, relying on surpluses generated by overseas student fees and the University’s wider commercial activities for support. The position is similar in many other research-intensive universities where research makes up a significant proportion of activity (and therefore income/expenditure). The current position carries significant risk and can only be sustainable if Universities are able to continue successfully to recruit overseas students at relatively high fee levels and if publicly funded teaching continues to be sustainable in its own right. Competition between universities for students (overseas and domestic), uncertainty over future domestic tuition fee levels, uncertainty caused by Brexit and the inclusion of students within immigration targets individually represent significant risks to this position. Taken together, the system is fragile at best.

 

  1. Our leading universities are large, broad-based and diverse institutions. Their size offers them an opportunity to manage the financial challenges whilst still pursuing their three missions of Teaching, Research and Knowledge Exchange. However, the current funding model relies on Universities having a certain freedom to operate – allowing cross subsidies between different activities and flexibility to alter the size and shape of the organisation (e.g. overseas student numbers) as required to achieve overall financial sustainability that work because they are large enough to manage. If constraints are applied to Universities, it is likely that research will suffer because on its own, it is not financially sustainable. Sustaining the UKs research position in such a scenario would require higher levels of public funding.

 

2c) Research and innovation

 

  1. We welcome the commitment of an additional £4.7 billion for science and innovation over this parliament. The Government should use these funds to maintain development of investment in fundamental research by continuing to support ‘Quality-related’ research funding (QR) alongside new mechanisms to fund translational research such as the Industrial Strategy Challenge Fund. It is also important that the additional investment made by UK Government is not undermined by the loss of significant EU funding for research. Steps should be taken to ensure overall levels of investment are not impacted and international collaboration mechanisms are maintained and enhanced.

 

  1. Investment in University research has broad economic benefits with Russell Group research finding that on average £1 invested in UK University research projects returns £100 of economic benefit.

 

  1. In fundamental research the continuation of QR is critical to maintaining the excellence of UK research base. QR meets approximately half the difference between income for specific research projects and the full economic cost of those projects, so the current level of project activity would not be sustainable without QR. The discretion HEIs have over expenditure means QR can be aligned with institutional priorities and can contribute to developing and sustaining research capabilities. This could not be achieved through a system of 100% project funding.

 

d) Pure and applied research

 

  1. In all disciplines it is vital to strike a balance between pure and applied research in order to deliver a pipeline of innovation. In order to maintain the UK’s strengths in research and to build a strong future economy it is necessary to maintain a significant spend for pure research. This will be the applied research of the future, enabling peer review and selection of topic areas based on science quality is essential. It is also important for the future health of the UK economy to prioritise areas and highlight topics where training and research activity is required, both within and across disciplines. Research priorities should be informed by strategic dialogue with the academic community, business and other users of and partners in research, including government departments. It is also important to ensure that the outputs and impact of research are considered in their broadest sense when making decisions about the balance of funding and not constrained by the artificial definitions and time constraints of the Research Excellence Framework.

 

e) Block funding, responsive mode funding and directed funding for the Industrial Strategy

 

  1. The new challenge led programmes delivered through the Industrial Strategy are to be welcomed and provide excellent mechanism for academia and industry to partner on major research programmes.
  2. In developing these challenge-led schemes consideration should be given to ensuring they support broad range of fundamental and translational activity and sufficient seed corn funding to provide, small amounts of funding in emerging areas as well as schemes that offer researchers mobility and encourage collaborations which have a bigger impact than monetary values might suggest.

 

  1. QR funding remains critical to this. At Nottingham QR support has been critical in encouraging, enabling and pump-priming interdisciplinary research activities. We have established research priority areas which are using these pump-priming funds to build bridges between disciplines and internationally, with many of these research priority areas drawing on industrial links. We have also used QR to drive research excellence in several ways including supporting fellowship schemes and supporting research capacity through investments by our strategic development fund.

 

  1. The availability of QR funding has contributed to our ability to investment in our new Research Vision. The investment will help transform the University’s impact: even more world-class facilities and equipment will support the capture and delivery of discoveries with real impact. It will also accelerate a commitment to attracting the brightest and best minds through the recruitment of 100 Research Fellows, while creating and strengthening high-performance teams of researchers from across the University.

 

  1. The University is funding six Beacons of Excellence — multi-disciplinary research groups focused on finding solutions to a global challenge. Together they contribute to all 17 of the United Nation’s Sustainable Development Goals

 

  1. The Beacons will champion our field-leading responses to global challenges. They will drive significant inward investment in to our internationally renowned research areas, and support our ambitious vision by increasing collaboration, strengthening networks and partnerships, attracting diverse funding, and raising the reputation of our world-changing research.

 

  1. Powerful, transdisciplinary discoveries can only be achieved as part of a vibrant research ecosystem of which block funding such as QR is a key element.

 

f) The ‘golden triangle’ of London, Oxford and Cambridge, and the rest of the UK

 

  1. Public investment in R&D is a reliable driver of private investment. R&D investment is also a key driver of economic performance of a region. There is an opportunity to seek to use a better distribution of public R&D spending to drive local economic growth. Areas like the Midlands have a lower ratio of public R&D spend to private R&D spend than other parts of the UK, in particular London and the South East. London is one of the few areas where public investment in R&D is higher than private sector R&D. By investing more public R&D in areas where industry is also investing the government can help to rebalance the UK economy.[4] 

 

  1. Although better geographic distribution is desirable there is a need to ensure the funding mechanisms maintain a focus on excellence. Government should recognise and support the contribution of research intensive universities outside of London and the South East. These institutions are ideally positioned to address the challenge of combining research excellence with the expansion of investment in the rest of the UK. Bodies such as Midlands Innovation can deliver a critical mass of research excellence linked to local industrial demand and address key national challenges. The six Midlands Innovation Universities, according to HESA figures, account for around 90% of all research activity in Midlands HE with collective income of over £400m per annum including around £45m directly funded by industry.

 

  1. As an example, the D2N2 Science and Innovation Audits identifies key innovation needs in a number of sectors such as Advanced Manufacturing, Food, Energy and Transport, that could be supported by investment in local innovation ecosystem with institutions such as University of Nottingham at their centre.

 

g) Global challenges and other strategic/national priorities

 

  1. We value the types of project funded through GCRF – their size, scale and focus on challenge-led social and economic priority areas.  We think that there is value in exporting more of this rationale and design (scale, scope, challenge-led) to strategic and national priorities.  We appreciate that this happens to a degree through the ISCF, but the foci are quite narrowly related to productivity, rather than to the wider social challenges addressed through ODA-funded research, some of which the UK shares (poverty; gender inequality; differential access to education; wealth inequality; unequal access to decent housing; differential health outcomes based on socio-economic status etc.). We believe that using the findings and wider learning outcomes of ODA-funded research more explicitly in the UK national context would allay some of the existing public concerns about the justification of ODA spend on research.

 

  1. There should also be more funding available for ‘translating’ outcomes and findings from GCRF-type activity to national challenges, and conversely, the outcomes and findings of national and strategic challenges to international ODA contexts.  This would be funding focused on ‘testing’ and ‘scale-up’, optimising the efficiency of the original investment by providing opportunity to deploy research findings in different contexts.


 

Question 3: The effectiveness of and balance between the different available UKRI/Government levers for encouraging innovation, including: R&D tax credits, the Small Business Research Initiative (SBRI), Innovate UK loans and grants, measures proposed in the ‘patient capital’ review, and other initiatives

 

  1. In considering the future of these schemes the committee should consider the need to provide schemes that ensure effective Knowledge Exchange and encourage University collaboration with industry. For example, KTPs are a long standing and valuable programme which should continue to be resourced.
  2. Unintended rules that restrict ability if Universities to partner with industry on schemes such as CR&D should be avoided and consideration to how multiple universities can support a single programme with industry within the current funding rules. The recent clarification that Universities can be partners in numerous bids in a single call is welcome as it reinforces the industry partner as the organisation best placed to identify which partners it needs.

 

  1. In addition, these schemes should focus on building the demand for university knowledge and IP within the UK business community.  For example, three of the last four University of Nottingham spin out exits saw the businesses acquired by non-UK businesses reflecting a lack of demand and ambition from UK industry.

 

  1. The Patient Capital is welcome and this along with other initiatives should focus on building the ecosystem to encourage support high tech start-ups and spin outs and ensure that once they are established they prosper in the UK

 

  1. In addition, consideration should be given to how the capacity building activity delivered through ERDF funding can be replaced. Programmes such as Enabling Innovation have reached thousands of SMEs and helped then understand the potential value of working with their local university and consider how they achieve this. In many cases they have supported wider development of a local innovation ecosystem; in Nottingham the manufacturing ERDF support, combined with investment in new research facilities and an emerging local business organisation in the Nottingham Manufacturing network have laid the foundation for development of a high-quality cluster of advanced manufacturing firms which will provide critical support the areas OEMs.

 

Question 4: The most appropriate phasing of the increase in R&D spending by UKRI over the next few years, in order to meet the Government’s 2.4%/3.0% of GDP targets, and what if any changes will be needed in the forthcoming 2019 Spending Review to deliver these targets

 

  1. Increased investment by UKRI is strongly welcomed however the approach taken in distributing this investment so far has been incredibly short-term and requires a very rapid turnaround from initial call to research projects beginning. Some calls also have very defined spend profiles which further limit flexibility and reduce engagement with new competitions both from researchers and industry partners. In order to use this investment wisely we would like to see much less short-term and/or very rapid turnaround funding streams. This would enable both universities and industry to engage more constructively with UKRI in the development of calls for funding, ensuring better planned and higher quality proposals in response, and ultimately ensure much higher quality research and development activity.

 

 

Question 5: Assumptions about the public/private mix in delivering the 2.4%/3.0% of GDP targets, the extent past patterns will be replicated in future and the levers that can be used to increase private sector spend on R&D

 

  1. It should be clearly acknowledged that the majority of the increase will need to come from private sources.  While this will undoubtedly lead to view that government funding should be targeted at schemes that include industry investment it should not be forgotten that investment in the academic research base has a key role to play in supporting the growth of private R&D investment. For example, the companies in the University of Nottingham’s spin-out portfolio have raised over £150 million in venture capital investment, leveraged by £5.8 million cash investment by the University. In order to build on this it might be that the Government would want to look at ways in which they could encourage and reward universities who take a longer-term, strategic approach in their research planning, perhaps though an enhanced QR funding component predicated on how an institution’s research strategy contributes to the agenda of increasing R&D investment by 2.4%/3.0% of GDP.

 

  1. In addition, in order to grow R&D as a percentage of GDP there is also an essential need for public funding to grow the talent pipeline of researchers into the wider economy. Again, this is an area where strategic public investment can leverage significant private investment as has been demonstrated by the success of the Knowledge Transfer Partnerships scheme, which provides public funding which must be matched by private investment, in order to train the R&D leaders of the future. The EPSRC Centres for Doctoral Training programme has also had significant success in leverage private investment to support doctoral-level training.

 

  1. Inward Investment will be a key source of growth in private sector R&D spend. In addition to the role they can universities can play in local economic development and spin-out/start-up businesses their potential role in inward investment should be recognised. Critically they provide the skilled graduates that attract FDI but also a world leading knowledge base that encourages investment in R&D in the UK. Consideration should be given to how this role can be supported and encouraged. Current proposals, as part of the Midlands Engine International Trade Strategy, are exploring how Universities can be resourced and supported to exploit their international connections to attract additional private R&D investment to the UK.

 

 

September 2018

[1] https://www.hepi.ac.uk/wp-content/uploads/2014/02/6-Dual-Support.doc

[2] http://webarchive.nationalarchives.gov.uk/+/http:/www.bis.gov.uk/files/file16771.pdf

[3] http://www.hefce.ac.uk/rsrch/funding/mainstream/

[4]https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/researchanddevelopmentexpenditure/datasets/ukgrossdomesticexpenditureonresearchanddevelopmentregionaltables