Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60-79)



  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 scientific activities.
  (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.[3]

  (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.

Geraint Davies

  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 check it.

  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 the Treasury?
  (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.[4]

  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 the research?
  (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 managers. Back

4   Ref footnote to Q 49; and Ev 24, Appendix 1. Back

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