Memorandum submitted by the Association
of Independent Research and Technology Organisations (AIRTO)
AIRTO is the largest community of private sector
contract research and technology consulting companies in Europe.
Its turnover, which exceeds £1 billion per year, and its
employment of over 10,000 scientists and engineers, means it is
larger than other European organisations such as the Fraunhofer
Gesellschaft and TNO. AIRTO is situated in the private sector.
Unlike Fraunhofer and TNO it does not receive government grant
nor does it seek such subsidy. The member companies of AIRTO are
exemplars of knowledge traders in a developing knowledge-driven
Attached to this response to consultation are
the following AIRTO documents:
summary of AIRTO Recommendations
for a Science and Innovation Policy;
increasing UK innovation intensity
and the solution to the problem of knowledge transfer to business
AIRTO response to the DTI proposal
for a network of regional centres for manufacturing excellence
AIRTO RESPONSE TO
1. The extent to which the objectives set
out in the 1993 White Paper, "Realising our Potential",
have been delivered.
The objectives have been achieved in part. They
have caused focus by government and academia on issues relevant
to innovation in the UK economy. Thus some topics pursued through
academic research have been re-orientated towards subjects of
greater wealth creating relevance. The impact on changing culture
and attitudes in industry has been minimal. There remain issues
of non-connectivity between government departments and the initiatives
they take to assist industry. A similar situation prevailslack
of connectivitybetween the outputs of the science base
(the universities) and its value-added application in industry.
The fundamental problems continue to be the competence and attitudes
in industry management towards innovation and risk taking combined
with the apparent lack of support by government to creating a
market in value-added knowledge transfer.
2. Whether the objectives and themes of the
1993 White Paper remains appropriate to the development of a strategy
for science, engineering and technology and, if not, what other
themes and objectives would be more beneficial?
The objectives of the original White Paper remain
valid. The only change required is to ensure that a future White
Paper focuses on changing attitudes, behaviour and investment
in innovation in industry. This requires creation of a market
in knowledge trading in the private sector. The attached papers
from AIRTO offer a contribution to solution of this challenge.
3. Whether attempts to deliver the proposals
of the 1993 White Paper have resulted in culture change across,
or in parts of, the science, engineering and technology base,
and if so, what is the nature of this change and how has it been
Some change has been achieved in the science
base (academia). Research programmes undertaken in universities,
supported by Research Councils, have been re-orientated towards
greater relevance to wealth creation and economic activity in
industry. Little change has been achieved in industry attitudes
or behaviour. There remains a lack of coherent policy in developing
a marketplace for value-added knowledge transfer essential to
the development of a knowledge-driven economy. That should now
be the focus of SET policy.
Government policy, and notably that of the DTI,
in urging universities to act as knowledge traders is likely to
weaken unintentionally the science base. In general, universities
are not equipped to act as knowledge traders. Trading with SMEs
is a singularly unhelpful activity to the primary purpose of a
The university "business" structure
is under pressure. This pressure will continue to grow from global
competition to attract students. It is essential for the UK to
maintain a core of high quality universities which are players
in the first rank of global academic research. For this to be
feasible a radical change in funding and objectives, set by public
policy for university management, must be investigated. Present
policy is not contributing to the continuation of high quality
curiosity driven research in UK universities.
Recent fiscal measures have contributed to improving
investment in innovation. However there remains the problem of
early stage funding. The issue is to provide a mechanism with
the competences to understand innovative ideas before they become
a business proposal. The venture capital industry is singularly
lacking in this skill in the UK. AIRTO has taken an initiativewhich
may be attributed to the policy framework set by the original
White Paperto establish a unique organisation to nurture
private investment in innovation. That initiative is E-SYNERGY
Limited. The support provided to this initiative through public
policy is minimal. Yet networking investment initiatives in early
stage funding would boost innovation intensity at little public
cost. It should be a feature of the proposed White Paper.
In this area the implementation of the original
White Paper has failed. Government has introduced an array of
schemes, which confuse recipients by their variety and bureaucracy.
With the development of Regional Development Agencies (RDAs) this
problem is set to become worse. Government should desist from
promotional and advisory schemeswhich are generally perceived
as unhelpful to industryand should focus instead on short-term
fiscal incentives to companies to participate in real knowledge
transfer to upgrade the competencies and competitiveness of their
business. AIRTO has long advocated this change but with little
effect in government policy. The attached documents elaborate
At a time when information and communications
technology (ICT) is growing rapidly, there is undue emphasis on
physical regional networks. Informal knowledge exchange between
senior staff of companies on a regional basis can be a useful
stimulant. The issue is one of balance. The other issue is too
many operators attempting to play in the same area. If Regional
Development Agencies are to be the strategy for the future, they
should be held responsible for implementing regional networks
wherever there is a market demand for such support services. Another
aspect of RDAs is the necessity to ensure they understand the
need for global inputs. "Regional" is otherwise liable
to become synonymous with "parochial". AIRTO has advocated
structures to overcome this problem but as yet has not received
response from the DTI.
This is essential to the future of the UK economy.
Several elements are necessary for this flow to operate effectively.
First, universities must be held accountable to make this their
priority. Second, academic research must feed the quality of teaching
to ensure relevance in attitudes, culture and competences of graduating
students. Relevance of the skills of graduating students can be
significantly improved by activities such as Faraday Partnerships.
The record of support by government (excluding Research Councils
which have been positive) to Faraday Partnerships has been variable
and must be improved. The impact of the RAE on attitudes and relevance
of graduates is questionable, and requires investigation and revision.
The greatest contribution the science base (academia)
can play in the knowledge economy is to produce students appropriate
to future needs. The other role is to develop partnerships with
intermediaries so that outputs from curiosity driven fundamental
research are translated into value-added products which may be
applied to change practice and culture in industry. In present
government policy there is no focus on the need to develop a profitable
and growing knowledge-transfer sector. Without that focus, it
will be impossible to ensure that the proper role of the science
base is contributed, through knowledge-transfer to industry.
4.7 TAKING ADVANTAGE
Globalisation of research requires agents to
network with all sources and to translate the outputs into a product
which may be absorbed in industry. It is the role of intermediaries,
such as AIRTO members. There is no provision in government policy
to nurture this activity. Also, AIRTO has advocated "virtual"
linking of leading universities into global networks for participation
in, and exchange of, global research results. One obvious area
for government to pioneer such change is to create networks of
universities in the EU to replace many of the present activities
and expenditure on Joint Research Centres (JRCs). AIRTO and CVCP
are in harmony on this topic but there is little governmental
policy support to its development.
In general, AIRTO is not engaged in aspects
of public confidence related to research. Nevertheless, it recognises
the necessity for government to manage its relations with the
media in the context of science related issues. In the past, for
example BSE, this management function has not been fulfilled with
5. What do you believe should be the main
features of the modern strategy for science, engineering and technology
The focus for policy on science, engineering
and technology must be wealth creation with social benefit. That
was stated clearly in the original White Paper. It remains the
central objective. Some progress has been made on this objective.
However there remains the tendency for government policy to drift
towards focus only on the academic science base. The critical
issue is to change attitudes and practices in industry and to
create a trading market in knowledge transfer. This requires a
refocusing of policy. Also, because there is manifest market failure,
some degree of short-term intervention will be necessary to change
industry attitudes and practices. The attached AIRTO documents
elaborate on this subject.
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