Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 30-39)




  30. Mr Coxon, you have been exceptionally patient. I do apologise. We had an unusually substantial programme of work in the private session before we moved on and a vote took place. We have lost over half an hour and I do apologise.
  (Mr Coxon) That is okay; it is good to be here.

  31. We have had the great advantage of your profile and it makes us all the more grateful to you for spending time with us this afternoon. We have really been looking forward to meeting you for some time and thank you for coming. If there is anything you would like to say by way of introduction on the theme we are addressing, then by all means do. You may have certain oversight points you would like to reflect on first and then we will dive into questions.

  A. May I add to what Professor Roos has just said, as I think I can add an extra dimension based on ten years of intrapreneurship within a large corporation. Trying to make elephants dance: how do you get a large organisation to behave like a smaller one and create value from a business which can come out of that? I have been doing that for a number of years, both in the portfolio sense and in creating a world-leading business in a fairly short space of time. The second dimension, which is probably as much related to the sort of things that you are trying to grapple with, is related to the north-east of England, which is where we are trying to build an economy which is based on knowledge, putting universities at the heart of what we are trying to achieve and on that basis develop entrepreneurialism. I have been very actively involved in that both through my membership of the Council of the University of Durham, on the Science and Industry Council for the north and also as chairman of one of the centres of excellence which have been established there. I should like to use the questions you are asking to try to exemplify from both of those points what should actually be done as far as the European Union and the UK are concerned.

  32. Fine. That is one reason we look forward so much to hearing from you. Which of the policies you are associated with do you think contributes most to maintaining the innovative and entrepreneurial capacity?

  A. I would pick out three areas. The first applies both within a big company and in the regions and that is the establishment of clusters, whereby you can have similar organisations, or at least similar attributes trying to be self-supporting and helpful to each other without being necessarily competitive against each other. It can be helpful within a company. What I was able to do, in pulling different parts of ICI into a separate grouping, was to make people believe that we had a mission and the mission was similar to each of them, even though they were in different markets and different businesses. It is very similar in terms of a regional strategy where we are saying the region is choosing which industries it really wants to focus in on and establishing the best it can on the basis of what we already have across the relevant clusters of those particular applications. As an example, one of the clusters I lead is the pharmaceutical and specialty cluster where we have about 100 companies who are working within the area of pharmaceutical and specialties. Sometimes in very different markets, but they all have the same needs and it is that which can then lead to an ability to generate new business and entrepreneurial behaviour. The second, which was touched on previously, is the particular role in this of R&D and universities. In establishing the business, as I did within ICI, we went into a very strong relationship with a number of universities worldwide and the measure of the universities was of a leading edge on a world scale. It was not just a case of tapping into your local universities, it was who has the capability worldwide in this area to be able to help us. That has also applied to the work we are trying to do in the regions. We have five universities in the north-east region, two of which, Newcastle and Durham, are research active with five-star departments in some areas, three of which are not. The key therefore in establishing this knowledge economy within a region such as the north-east is to recognise that some universities can contribute in some way and others can contribute in a different way. That is a critical part of making the whole thing work. At the end of the day, what you are trying to create are businesses which are world competitive. It is no good starting from the point of view of them not being world competitive. The third element I would clearly give a signal on is the one of leadership. It has been absolutely clear from the point of view of the intrapreneurship of ICI and from the ability to regenerate a region, that it is based on individuals who have leadership capability. It really does come down to an individual and their capabilities—it says in the Green Paper just what the attributes are of an entrepreneurial leader and I can recognise all of them, so the paper is correct in that. They are a rare breed and often not welcome within a conventional organisation; they can be the stone in the shoe sometimes, rather than the comfortable slipper. The whole area of leadership and clear vision of what is needed and the determination to make it happen applies both within the private entrepreneur sector and within a region trying to re-develop itself.

Lord Shutt of Greetland

  33. Before I come on to the question, may I ask you to give me your view of this word "cluster"? Does it really mean geographic closeness, or in these days of modern communications does it really mean people who are close to one another in thinking?

  A. It is a misdefined word, as you quite rightly say. There is the whole area of the Michael Porter type work of clusters in the sense that they have to be sustaining and you have to create them and they become something you become world class in. I see it slightly differently. I see it more in the way you described in that it is self-supporting where you have a head start in being able to say you have something to build on to allow you to draw conclusions about what the future should look like. It is the difference between building the cluster to take you there and using the cluster to tell you where to go. The critical thing as far as the regional strategy is concerned is that we are using the clusters in my definition to determine the research priorities of the universities and by having them close to the market, which obviously they are because they are doing business, you can get a combined view which then actually directs the university.

  34. What role has government policy in the UK or the European Union played in developing your activities in maintaining its innovative and entrepreneurial ability?

  A. I would pick out two areas here for the positive elements of government policy. You have heard me say in a positive sense already that one is the determination to decentralise and give more power to the regions. This is a very positive and empowering mechanism of allowing thinking to happen where it really matters. I believe that the whole of the RDA-type policy, and in my particular case One North East should be able to take single pot funding, be able to determine its own priorities, put money into these areas of knowledge economy, universities, clusters, centres of excellence that are appropriate to their particular regional needs, is a government policy which is positive. If you think in EU terms, then the English regions are just a microcosm of the regions of Europe. So the principle does apply and I strongly support more regionalisation. I am not talking about political regional government here, I am talking about the economic value drivers of regionalism in the area which is appropriate to the needs. The second area, which I see as a very positive policy relating to entrepreneurialism, is the strategy for universities and the clear role that we are choosing the universities which are going to be the research leaders in all this. The whole research assessment exercise which gives, five-star departments differential funding, is to my mind a positive move. It allows business to understand where the expertise lies, because the simple rating system gives some clue as to what that might be and it also allows universities to understand realistically where their strengths lie and allows them to put their priorities into that. There is a danger, which is the trend we are potentially going to now, where that goes much too selective. We are now moving potentially to six star universities which could end up with only a few universities in the whole of the UK being of high international research capability. That would be very damaging and it potentially cuts across a lot of the regional strategies which I mentioned before. For example, our regional strategy in the north-east, with the sort of policy which would go down to a few universities, would mean that research universities at the centre of our region disappear and restrict the sort of research active universities.required I would say that what we need is for universities to understand their international research capability but for the UK not be so selective that we end up with too few.

Lord Cavendish of Furness

  35. In which areas have government's attempts to support entrepreneurship been helpful or unhelpful in the context of maintaining innovative and entrepreneurial ability among suppliers and customers?

  A. I always try to look on the positive side, so in answer to your question I will give you the positive side so we do not dwell too much on the negatives. There is a trend which is towards an industry focus, which I find very helpful, both from the point of view of the entrepreneurial activity and bringing suppliers and customers into the whole situation. I cite as an example of this the DTI which has just established the Chemistry Leadership Council, whose aim is to pull together what is the UK strategy for this important area. It will help government define a strategy, it is made up of universities, industry and the public sector as well as the environmental lobby. Pulling that together into one forum is a good mechanism for us in the UK to determine what is best for that particular industry. You might say what has that got to do with entrepreneurship and innovation. For innovation the answer really is that part of the remit is to determine how we get more innovation into the process industries. In this way we will see how the different parts of this important industry, which varies from big companies to quite small companies, are able to become internationally competitive. I therefore see a focus on industry and markets as important to creating innovative thinking. I also see it being helpful in establishing collaborative ventures. We are seeing more and more a requirement of receiving public funding support is that collaboration takes place, so that it does not just go to one party, it goes to several parties working together towards a common target. That tends to bring in both others in the industry, suppliers and customers, to determine what should be this innovation target, whether it be research or the establishment of a particular direction of focus. In all that the government policy, and EU policy to be fair, is to be enabling collaboration to be fostered in that area.

  36. Have you detected ever among advisers to government a feeling that there is an intellectually seductive argument that manufacturing industry is not a priority for Europe and maybe pointing to Germany as the thing which has got them into most trouble?

  A. It sort of feels that way. I do not think anybody would be pinned down to say anything like that, but certainly there is a feeling that it is quite tough if you are in manufacturing. That is an element not just to do with capability, but economic exchange rates and everything else start coming into play. What we are talking about here and certainly what I am talking about in entrepreneurship and economic development is in the knowledge economy rather than just in creating new businesses for the sake of new businesses. Generally—and I speak very generally here—if you own that knowledge you can compete in a quality market, but you can also then capture some of the manufacturing which goes with it, or at least you are in control of the manufacturing that goes with it. Part of the problem we have had in the country is that we have not owned all the technology and then you become a manufacturing arm of somewhere else. That is really what we are trying to reverse at the moment in developing this knowledge economy.

Lord Howie of Troon

  37. May I say first of all how pleased I am to see a chartered engineer at the table and at the head of one of our leading industrial companies? This is refreshing; it is usually an accountant.

  A. Thank you.

  38. I am going to ask a very similar question to the last one but relating not to the British Government but relating to the European Union. Have you been able to evaluate the support which the EU has given to this area we are talking about? Can I tempt you to say which parts were helpful and which were unhelpful?

  A. The example I have chosen, which again is a positive one, is the whole area of Framework 6 in all of this. You can pick holes in it and criticise some of the detail of how you actually get there, but the whole thinking of having themes which have been thought through, themes which are important to the future of the European Union, is an extremely helpful thing to do. By doing it that way you align thinking as to where research priorities should go and then start creating and spawning programmes which are appropriate to that direction and academics and business do tend to be willing to be led in some of these areas, if they see an area which is especially exciting and a lot of these Framework 6 areas are exciting. They are potentially world beating and world changing, if they succeed, so people are bound to be excited. The funding which goes in that sort of direction, and which then aligns with commercial dealings, I would say from my own experience of trying to make submissions is not easy so we need to make that process slicker somehow.

  39. May I nudge you just a little? I know you like to look on the bright side of these things but are there elements united to the European Union's attitude which you find put sand in the gearbox?

  A. The issue is an attitude of one-size-fits-all. It is part of the negative issue of all of this. A lot of what we are talking about here is creating entrepreneurial new businesses with innovation which tend to be quick on their feet and need to be able to create opportunities. Just the sheer slowness and one-size-fits-all of the whole process and of the way they operate is debilitating to an extent and certainly off-putting for anything other than some of the largest institutions. I have met people who believe that they are experts in finding a way through that and it has become an industry in itself. It does not feel very entrepreneurial to me somehow.

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