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‘Research shouldn’t be traded against innovation’

The Technology Strategy Board is in the process of setting up a network of six Technology Innovation Centres, with three remaining centres to be announced in the autumn. Research Fortnight Today talks to Iain Gray, the TSB chief executive, on their progress.

The TSB’s allocation from BIS—£317 million this year and dropping further in the coming three years—is small. Supporters have said you should get twice as much. Do you think it is enough for you to do your job?

I think the issue that people have picked up on is that, from the overall funding we’ve got, we’ve assigned specific funding for a couple of new initiatives, including the technology innovation centres. And that has reduced our ability to fund other things, like the knowledge transfer partnership scheme. In terms of what funding levels we could or should be operating at, the voice of business is the one I listen to. CBI has talked about the importance of the TSB’s role. It has also talked about the business needs for investment, which was two or three times what we got. But our job is to make sure that the money we’ve actually got is used effectively to promote the exploitation of technology-enabled innovation in the UK.

You mentioned cuts to the knowledge transfer partnerships. What’s the current state of the scheme?

KTPs are an important part of our agenda—probably one of the longest running schemes we have. We’re currently operating somewhere between 1,000 and 1,200 KTPs. But we’re reducing our core funding [for the scheme], which will lead to a reduction in numbers. And we’ve obviously also seen a reduction in [income] linked to other funding bodies and the abolition of the Regional Development Agencies. But, as a positive example, we’re running a KTP competition in parallel and multi-core computing. So we’re using some of our core funding in a thematic area to actually help develop KTPs that are very focused.

Labour peer Kumar Bhattacharyya has said the UK has a mass of badly run, undercapitalised firms with non-existent R&D programmes and that funding could be shifted from the research councils to the Technology Strategy Board as a way to improve the situation. Do you agree?

What I would whole-heartedly agree with him on is that we need to see commitment to the innovation agenda. I think what he is saying about funding for innovation is similar to what organisations like the CBI are saying: it should be increased. We’ve tended to adopt a slightly different tack in terms of whether it is a case of simply trading research and innovation. I personally believe that if you look at other government expenditure—such as the £200 billion per annum spent on procurement—you can avoid trading research against innovation. Instead, it is looking at how we can more intelligently use much bigger sums of expenditure to support the innovation agenda.

What exactly will go on in the TICs; can you describe what we would see if we walked in to one?

The high-value manufacturing one is the most advanced in our discussions. So let me describe that one. It is untypical in that it is a multi-site centre with seven different partner centres involved. But what’s inside these centres is probably very typical of what you’d expect to see in a TIC when you open the door. It’s physical; a big facility—it’s got equipment on an industrial scale. It’s also got a couple of hundred people; we’re talking about the order of a £30m turnover. As you go into these centres you would feel an industrial presence, with business people around. You’d expect to see tests, people working at design terminals, as well as some sort of industrial experimentation going on. The key distinguisher between a TIC and a science lab is scale.

It has been suggested that a formal cap should be placed on the amount of money a TIC can earn from the private sector each year. Do you think you are likely to restrict private-sector funding?

We don’t want a centre to become dominated by short-term private sector needs at the expense of maintaining long-term world-leading capabilities. Equally, we don’t want a centre that is just dependent upon public-sector funding. So we’ve developed this third/third/third funding model as a good balance [of public money, private investment and competitive grants]. If you get out of kilter with that you run the danger that the objectives of the centre will become skewed and move away from the original objective. Should it be a hard cap? I think that is something the TSB will need to review when we’ve got the centres up and running.

But without a hard cap, what’s a permissible level of private funding? Could 35 per cent work? Or even 50 per cent?

Well, the third/third/third funding model is a good starting point. I’m sure if you went to a Fraunhofer centre [on which the TICs are modelled] it might be around 30 or 35 per cent—that sort of order. You wouldn’t get 90 per cent.

Another concern raised by MPs was that the TICs could monopolise the TSB budget.

I think in terms of themes, we have a reasonably balanced portfolio. Some of these areas lend themselves to [being developed in] TICs, but I don’t see that TICs would be the right solution in all of those areas. And that means we can’t allow the TICs to overly dominate the funding. Do I see a risk? TICs are high-priority and high-profile areas—and so they should be since they are new. The way the model is now, we’ve got the balance about right.

When will you make decisions on the remaining three TICs?

We’ve been very clear on the timing of the first three centres. The high-value manufacturing centre is scheduled to go live in October. What we’ve then laid out is a process, where we’ve identified 10 areas. Each of these areas has been assigned a technologist from inside the organisation, who’s been engaging with technologists, businesses and policymakers. We’ll have a status review towards the end of the summer to see what has come out of that. We’ll probably make some sort of decision in the Autumn. You might find hypothetically that one or two of the areas start converging on each other, so it might be that that the 10 areas will naturally drop down.

You are yet to decide on a name for the TICs. What name do you personally prefer: Turing or Maxwell?

I think what is important, from a UK plc point of view, is that we establish a brand behind whatever name we choose. I’m actually not hung up on naming it after an individual.

Do you have a role in the government’s enterprise zones?

Formally not, but we clearly have close connections with business. And many of those businesses are the same businesses that are working through applications and providing advice to enterprise zones. We’ve had a number of discussions with the new Local Enterprise Partnerships, even though we formally don’t have a role.

The enterprise zones have been criticised for boosting areas that are already successful and there’s a similar focus with the TICs. Do you think the government has given up on regional policy, such as regenerating deprived areas?

I don’t think it’s for me, from a TSB view, to provide a comment on that. The TICs are very much about UK economic growth through picking out whether there’s a market and whether the UK can take advantage of that market. Let’s locate it where we can best take advantage of it, where TICs can make a difference. So we’re very much driven by that sort of criteria and will continue to be so.

Why did the government take such an interest in Tech City all of a sudden? As I understand it, it’s been a successful area for technology companies for about a decade.

I think the whole East London Shoreditch and Old Street area has evolved; it’s not that it just suddenly happened over night. There’s a wealth of talent there, with a large number of small and medium-sized companies working in the hi-tech, digital and creative industries. In terms of our own involvement, we have moved our organisation a long way in the last three to four years—it used to be very much around large companies. So we’ve moved a lot in terms of supporting smaller companies. The tech city launchpad competition has allowed us to explore and understand what it is that companies in that sort of areas want, and come up with new ways of supporting them—it’s a new tool for us.