Examination of Witnesses (Questions 60-79)|
OBE, PROFESSOR SIR
CBE, PROFESSOR JULIA
GOODFELLOW CBE, AND
MONDAY 11 MARCH 2002
60. To manage individual benefit I think somebody
said that we do risk assessment or risk management of this programme
to make sure that the individual is not pursuing a path that will
maximise the payer benefit rather than the acquisition of knowledge
for the public sector. How is that doing?
(Professor Lawton) There are strict codes of practice
that are in the public domain about how people have to behave
and how they are expected to behave. Any decisions that are made
about how much time or resource an individual will spend on their
core research as opposed to the more commercial research has to
be transparent and managed by a line manager. If it is one of
the directors of the laboratory then the decisions on the conflict
of interest would come on to my desk. The whole process is managed
and looked after by a director for partnership and exploitation,
and the finance director when significant sums of money are involved.
It would be a very serious disciplinary offence if people were
to ignore or ride roughshod over these things.
61. Are you happy with those?
(Mr Young) We set them guidance.
62. How do you monitor their arrangements?
(Mr Young) It is part of the regular discussions between
the director general and each of the chief executives. Part of
the chief executive's duty is to have arrangements which control
and manage the process you are asking about.
63. Does your department have any facilities
or staff to check these are in operation?
(Mr Young) We have documentation.
(Dr Taylor) My core staff in OST are engaged in essentially
vetting and validating the annual reports that are made to us.
They also attend each of the councils meetings and they listen
to what the councils audit committees have to say. I think we
have a pretty good, fairly leanly resourced, I have to say, but
a fairly tight, central overview without trying to be centrally
prescriptive. I think we can monitor and audit well.
64. Excellent. Who trains the managers to be
more commercial with regard to intellectual property? Academics
are not really commercial negotiators, who trains them? Who do
you pick? What sort of individual do you pick to do this negotiation?
(Professor Sir George Radda) I think that the commercial
activities in our case are run by a separate company of the MRC.
It is like any company, the board will pick the CEO or the other
various members who are appointed, and they are appointed on the
basis of their professional qualifications for commercialisation
activities, not necessarily their scientific excellence. We want
to take away from the scientists this business, because we do
not want to burden them with having to think about commercialisation.
We want them to get on with their science. We want them to recognise
that their activity can lead to commercial activity and we have
people who know how to bring that about. We do train scientists
regularly, recognising that their work would lead to commercialisation
and we have that training through our MRC technology people largely,
to all of our tenure track scientists and also the new post-docs.
We train something like 150 people a year to recognise the opportunities
that commercialisation can provide while carrying on with their
(Professor Goodfellow) We have a similar system of
experts in our institute. We also have a director of innovation
who has core central staff who sets up seminars, typically we
are doing ten a year with possibly 50 people, so 500 a year. On
our PhD training programme we require they do some awareness training.
(Dr Taylor) We recently set aside £1.5 million
to provide additional academic training and courses for people
in this kind of area because there is likely to be an increasing
demand for these kind of people, we do need to train them.
(Mr Ingram) We try and get interested
in quite different experiments doing these things, plus we appoint
four professional scouts, whose job it will be to seek out the
generic intellectual property that we have as professional people
to be able to do that.
65. The same question, really, risk assessment
of the management of commercial projects, how would you undertake
risk assessment to ensure that, (a) it is commercially viable
and you are happy that it is policed and enforced properly?
(Professor Goodfellow) This is Table 14 on page 35,
which is the generic risk management framework. This is the one
that has come from a large pharmaceutical sector company. Our
trained staff are using these type of procedures. We are employing
trained staff to transfer innovation and to take our scientists
through this process.
(Professor Lawton) We also use professional advisers
on interactions with venture capital and industry, and mentoring
schemes and committee processes help us pick these. We have people
who are well versed in these activities to make sure that we do
not fall over one of those hurdles as you go through that process.
(Professor Goodfellow) We annually run an innovation
competition, where as part of that people in our institute get
training and are taken through the whole business plan process.
66. Mr Young, are you quite happy with the procedures?
(Mr Young) Lest that my colleagues are over-modest,
what you are hearing about and what the report is bringing out
is where there is effective leadership and where people have taken
on board the messages from the Baker Report and the government's
response to it we are seeing a complete shift both in the performance
and the capacity of research councils, some start further up the
learning curve than others. Over the last three or four years
there has been a complete and total shift both in their capacity
and in their willingness to do thing differently.
67. You are quite happy with the way they are
negotiating deals with commercial partners to secure the best
deal for the taxpayer?
(Mr Young) It is a question of managing risks, not
avoiding them altogether. It is our job to ensure they have the
processes and the capabilities within their teams to do the best
they can in this area. In this area, particularly with things
like patent, it is not possible to avoid risk altogether and playing
safe does not always avoid risk here. I am happy they have the
systems and the capabilities in-house and in place to make this
transformation which this Report records.
Mr Jenkins: My time is up.
68. Mr Young, you spend about £500 million
on research and you make about £17.5 million in terms of
private sector returns, across the three areas, 2.7, 12 and 2.45,
something like that?
(Mr Young) I think that is right, I would have to
69. Can I just ask, you keep all of that, is
that right, to put back into research? Is there any evidence that
the block grant is actually taken away with the other hand from
(Mr Young) No, there is not. The important concession
that the Treasury made, after Baker, reported on page 34, was
that they would not reduce it.
70. What is your ambition? If it reached £100
million do you believe that that would reduce the overall grants,
and that actual global net amount of investment would go up and
there would gradually be a claw-back?
(Mr Young) We are in an area of extreme hypothesis
here, the amount of commercialisation will always be limited.
In talking about the current retention agreement it is that research
councils can retain five per cent of commercialisation income
until it reaches five per cent of their spend. After it reaches
five per cent of their spend they have to come back to us to ask
permission to keep it.
71. It is a progressive taxation situation?
(Mr Young) We have not said that. No one has got anywhere
near this yet. The current rule is that 105 per cent spend is
all they are allowed.
72. In terms of marginal income from the private
sector to put into research is there a risk that there will be
pressures on scientists to play ball with the private sector partner,
wherever they are, or else research gets this type of thing?
(Mr Young) We have been very careful for our part
in DTI and OUT not to allow that. We have said on the one hand
of course you must exploit the commercialisation opportunities,
which this report sets out, but we have always said that the core
mission is the core mission is the core mission. That takes precedence.
I think my colleagues will agree they have not had pressure from
us to do something which they regard as contrary to the core mission.
73. In terms of the core mission it is a clarity
of purpose, and you mentioned a whole range of indicators, and
you did not choose, and I do not want you to, to wait and quantify
how they all fit together. There is a whole range, like some sort
of bureaucratic thing, where you think all these good things and
say, we are measuring all of these things. Obviously in the private
sector you only have one indicator, that would basically be the
profit, would it not be a good idea to separate out these ventures
and just focus in on the money?
(Mr Young) It is rather more complicated to have a
core mission, the missions are set out on page 17, and to consider
the extent to which activity which is commercialised goes towards
that core mission or does not. It is rather more complicated.
74. May I turn to Professor Goodfellow to illustrate
a point about possible conflicts between private sector market
interests and the public sector in terms of income? Do we do much
research with PPP in the area of GM foods?
(Professor Goodfellow) We do have interactions with
them and there is a Bio-incubator which is starting at the John
Innes Centre, in which we have money from Syngenta, which is going
into that. If you want a discussion about GM technology you have
to talk about, I think, at least three different levels. GM is
not just one thing. You can do very basic GM in a laboratory,
which is helping in a contained environment, which is helping
you to understand something which is very basis and generic about
plant size. Yes, we do work with these companies.
75. I am not going to lead you into an intellectual
discussion where I will be completely out of my depth. Do you
feel that given that, obviously, Spula have their own commercial
interests in this science, for instance they have an interest
in allowing seeds to be classified as non-GM even though nearly
1 per cent of them are GM and they may not want a tightening up
of that because it will lead to zoning, and all of the rest of
it, and commercial impacts. Do you feel that in terms of constructing
the research their commercial interests can have a tendency to
distort where the research venture goes or where you look to do
(Professor Goodfellow) We have just reviewed all of
our eight institutes with external reviewers, with a mixture of
academics, people through industry and overseas. One of the things
is, are institutes doing the work of their core mission? I have
anecdotal evidence from directors where they say they have turned
down commercial contracts because it does not fit with their core
mission. In terms of GM technology, this is clearly quite an interesting
area at the moment, and one of the things we might well expect
one of our institutes to work on is technology which would allow
you to detect GM crops at the 1 per cent level, which is now possible.
76. Or below that?
(Professor Goodfellow) The problem is detecting it
below. One of the public duties of our institutes would be to
work, possibly with monies from another ministry, from DEFRA,
to look for techniques for looking for GM below 1 per cent.
77. Some of that is just a question of how far
seeds can fly in the wind?
(Professor Lawton) The environmental impact assessments
are something that my research council does partly in collaboration
with BBSRC. That is a classic example of public good science,
that is largely funded by government, and a good example of heading
number 3 in Table 5.
78. In this example, given that the government
are doing farm-scale, commercial
(Professor Goodfellow) They are our institutes
(Professor Lawton) We do the research.
79. In terms of the interest to the industry
and how quickly some of these results come out in terms of detection
rate versus farm scale experiments and whether they have interests
in different bits of experimentation proceeding at different times
in line with decisions by government and that might distort what
you do. You have not found that yet?
(Professor Lawton) The research we do is independent
of both government and those companies. If we chose to do a piece
of research that companies did not like there is nothing they
can do about that.
3 Note by Witness: £1.5m, set aside from
a £120m funding package for knowledge transfer allocated
by OST in October 2001, is intended to fund a range of activities
that include professional development courses for knowledge transfer
Ref footnote to Q 49; and Ev 24, Appendix 1. Back