Select Committee on Science and Technology Fifth Report


CHAPTER 3: The Role of RDAS

Introduction

3.1  All RDAs recognise the importance of SET for regional economic growth (p 20). The complexity of the demand for and supply of SET, coupled with interface and exploitation issues, creates (as described in Chapter 2) a significant challenge for RDAs in framing and delivering their economic strategies.

3.2  The RDAs, which are relatively young, face the challenges as catalysts for change. They act as facilitators, enablers, brokers and funders — working in partnerships and collaboration with key stakeholders in both the public and private sector to deliver their Regional Economic Strategies. Operating within frameworks set by the Government, they seek the exploitation of SET that makes a difference in their individual regions.

3.3  This Chapter addresses the main issues for RDAs as facilitators. We turn in the following Chapters to the questions affecting RDAs' main partners.

The Role of RDAS

3.4  All regions are different. The mix of companies in their economies have different dependencies on SET as well as varying support needs, all leading to different priorities for action. Even so, all RDAs place emphasis on the importance of SET in their economic strategies (see Box 2).
BOX 2: THE IMPORTANCE OF SET

The importance of SET in economic development is exemplified in the comment from ONE[13] (p 167):

  "The SET base of the North East is a key regional asset, able to generate new products and processes and services in the Region's businesses, and to create an attractive environment for investment, growth and sustainable employment."

SET was "at the heart" of its Regional Economic Strategy[14].

This position was reinforced by comments from the other RDAs:

  • AWM saw SET as "critically important" to the development of the region's economy (p 24);
  • EEDA was seeking to spread the SET-based success of the Cambridge area throughout its region (Q 84);
  • SET was an "integral part" of EMDA's Regional Economic Strategy (p 41);
  • LDA had identified SET as a "regional priority" by (p 94);
  • NWDA's recognition of the importance of SET had led it to establish England's first regional Science Council (p 159);
  • there was a strong recognition by SEEDA of SET's contribution to a healthy economy (p 101);
  • SWRDA regarded SET as "crucial" to the creation of a sustainable economy (p 113); and
  • YF saw the region's SET base as an "important asset for economic development" (p 175).

As summarised in the RDAs' overview submission (p 20):

  "All RDAs recognise the importance of a strong SET base to developing a healthy, dynamic and sustainable economy."

3.5  All RDAs are taking forward developments that support three main areas:

(a)  technological innovation;

(b)  the generation of high-tech and start-up companies; and

(c)  the development of the SET skills base.

Common approaches

3.6  Because of regional diversity, RDAs' initiatives take different forms. However, common patterns can be discerned from the copious evidence we have received. RDAs typically:

(a)  facilitate networks between businesses and between business and Higher Education Institutions (HEIs);

(b)  support the development of centres of excellence that encourage the development of technologies for commercial exploitation;

(c)  encourage enterprise through, for example, incubation facilities, Enterprise Hubs, Regional Venture Capital Funds and training programmes; and

(d)  help provide improved physical infrastructure to support business growth such as broadband provision and energy renewal.

Funding and leverage

3.7  On their establishment at the end of the 1990s, RDAs inherited 11 separate budgets from ongoing programmes and commitments funded by various Government Departments and Agencies, each with specific targets and monitoring procedures. In the 2001 Budget, RDAs were granted increased flexibility to switch resources within their budgets and to transfer funds to a new strategic programme.

3.8  Since the 2002 Budget, the bulk of RDA funding from Whitehall Departments has been combined in a single cross-Departmental budget known as the "Single Pot", amounting to £1.6 billion in 2002-03 and planned to rise to £2 billion in 2005-06. Even so, projects in inherited programmes such as the Single Regeneration Budget continue to pre-empt a portion of the available funding.

3.9  RDAs' 2002-03 budgets are summarised in Box 3. The wide per capita variation reflects in part the inherited regeneration and infrastructure projects (p 20). The Agencies' estimated SET-related spend probably understates the true picture by focusing on identified projects rather than the wider range of RDAs' activities in which SET is, in one form or another, an integral part.
BOX 3: RDA BUDGETS
RDA2002-03 ALLOCATED BUDGET SET-RELATED EXPENDITURE
£m£ per capita £m (estimated)Budget %age
AWM20939 3718
EEDA8215 1012
EMDA10725 98
LDA28639 155
NWDA28340 3914
ONE20880 6029
SEEDA10914 109
SWRDA10021 1010
YF20641 5024
TOTALS159032 24015
Source: Table 1 of RDAs' overview submission (p 20).

3.10  In any case, the impact of the allocated budget can be greatly extended by leveraging funding from other sources, and that is encouraged by the business-led Boards. For investments in SET, there is a normal expectation for leveraging additional funds from the private sector, HEIs and other parts of the public sector, and from Europe. For example, EMDA spent some £9m on SET in its first two years which achieved a leverage of over £60m (p 41).

SET and Business Sectors

3.11  Every RDA has identified key sectors[15] that are important in its Region's economic activity. Some of the sectors are new, some are long-established and growing while some others are declining. Each sector can have different and distinctive dependencies on SET. In-depth assessments by RDAs have identified where SET is a key driver to help provide the focus and priority for their interventions.

3.12  For many RDAs, an important focal point in their required Regional Economic Strategies is the generation of high-tech, high-growth industries — in areas such as biotechnology and optoelectronics, robotics or genomics. RDAs therefore commonly provide incubation facilities to nurture these companies from start-up to about the 2-year stage. Physical proximity with one or more universities was generally seen as crucial in the process of spin-out and incubation, to maintain the connection with the science base.

3.13  The best-studied concentration of small high-tech businesses is that in the Cambridge area. The most recent of a series of studies[16] made since the establishment of the Cambridge Science Park in 1973 shows that, between 1986 and 1998, high-tech employment in the area approximately doubled to 32,000 jobs in over 300 firms, mostly small and medium-sized enterprises (SMEs). Over that period, the proportion of employees working for small firms significantly increased, and the software and biotech areas expanded more rapidly than others. The study concludes that the origin of virtually all the high-tech firms can be related directly or indirectly to the influence of the University.

3.14  Another example is BioCity (p 246), a collaboration between EMDA, the two universities in Nottingham and BASF — a major international SET-based company. In its first three months, it attracted seven bioscience and healthcare companies, with another 12 expressing serious interest. The aim is to create 5,000 jobs in a regeneration area of Nottingham.

SET and the Regional skill base

3.15  The maintenance and expansion of the SET skill base was the principal thrust of the Roberts Report SET for success[17]. That Report's recommendations were accepted by the Government and are now part of the national policy for science described in Investing in Innovation[18]. A number of these have implications for RDAs which have opportunities to take them on board in their required Frameworks for Education and Skills Action (FRESAs). We recommend that all RDAs should explicitly address the development of SET skills and SET literacy in their FRESAs.

Wider Issues

3.16  RDAs' Regional Economic Strategies are all-embracing. They range across, for example, economic inclusion, regeneration, rural development, energy renewal and saving, quality of life and health issues, and tourism. In addition to SET's being an economic driver in its own right, it also has relevance in a number of these agendas. SET therefore has a contribution to make to less obvious parts of Regional Economic Strategies.

3.17  Accordingly, for example, the NWDA had agreed to contribute £30m "towards the merger of UMIST and Manchester University to provide regeneration and development in the city centre as a beacon to draw research related business" (p 159). With an eye to the potential for tourism and education, NWDA was also supporting the upgrading of the Jodrell Bank radio telescope (Appendix 6). SEEDA had made investments in land and in an Enterprise Hub to stimulate the economy in an area where the Gross Domestic Product (GDP) was one of the lowest in the country thus combining social and economic policy through technology growth (Q 208). The Royal Academy of Engineering commended the NWDA for fostering links between the health care industry and the Defence Diversification Agency (p 310).

3.18  The general point was reinforced by English Nature which pointed out the importance of environmental issues on tourism, agriculture, forestry, nature conservation, water resources management and flood management (p 280).

Operating Frameworks

3.19  RDAs deliver their strategies and plans in relation to SET within policy, operational and structural frameworks largely determined by Whitehall. In addition to the accounting arrangements for their expenditure of public funds, they are subject to a range of targets to measure their performance as set out in Box 4.

3.20  Many witnesses expressed significant concerns that these targets and operating frameworks were not conducive to SET developments. While SET is clearly a factor in achieving many of RDAs' targets, it is mentioned only peripherally — in the definition of the final Tier 2 outcome on "innovation" as:

"Make the most of the UK's science, engineering and technology by increasing the level of exploitation of technological knowledge derived from the science and engineering base, as demonstrated by a significant increase of innovating businesses, of whom a growing proportion use the science base amongst other sources of knowledge."

Moreover, the targets take no obvious account of the longer term over which SET delivers its economic impact.

Measuring success

3.21  A significant challenge and problem for RDAs in relation to this Inquiry was captured by Mr Martin Lyes of Enterprise Ireland:

"What gets measured gets done." (Q 373)

The evidence we received clearly indicates that the wrong things are being measured over too short periods.

3.22  SEEDA pointed out that, at Tier 2 level, GDP and productivity indicators are linked in a complex way which is hard to measure (p 136). Similarly, Yorkshire Forward noted that:

"Tier 2 and 3 outputs focus on factors such as numbers of jobs created and the number of new business start-ups. … Many new proposals — and, in particular, SET-based proposals — seem to offer poor value for money in that they often do not result in high numbers of jobs or the meeting of other Tier 3 targets." (p 175)
BOX 4: RDA TARGETS

RDAs' targets are organised in three tiers.

  • Tier 1 consists of high-level objectives (linked to RDAs' statutory purposes), namely:

  a.  to promote economic development and regionally balanced growth;

  b.  to promote social cohesion and sustainable development through integrated local regeneration programmes;

  c.  to help those without a job into work by promoting employment and enhancing the development of skills relevant to employment; and

  d.  to promote enterprise, innovation, increased productivity and competitiveness.

  • Tier 2 consists of regional outcomes that RDAs must work with partners to achieve, covering:

  a.  Sustainable Economic Performance;   g.  Skills;

  b.  Regeneration;   h.  Productivity;

  c.  Urban;   i.  Enterprise;

  d.  Rural;   j.  Investment; and

  e.  Physical development;   k.  Innovation.

  f.  Employment;

  • Tier 3 targets or "milestones" refer to the outputs that RDAs are expected to achieve through their own activities and resource, and which will contribute to the achievement of Tier 2 targets. The five core milestones, applying to all RDAs, are:

  a.  employment opportunities (number of jobs created or safeguarded);

  b.  brownfield land (amount reclaimed or recreated);

  c.  education and skills (number of learning opportunities supported);

  d.  business performance (number of new businesses created); and

  e.  strategic added value (support mobilised for key priorities).

These Tier 3 targets are supplemented by up to 12 milestones for each RDA agreed as part of the corporate planning process.

3.23  EEDA noted that the "Tier 2 targets remain a stumbling block for delivery of complex and strategic activity at regional level" (p 35). A similar point was made by Universities UK (UUK).

"Success is best judged on performance and outcomes but it is vital to bear in mind that, when dealing with SET, the desired outcomes are likely to be a long way downstream. … Benchmarks that assess projects for funding based on high numbers of low-value outputs (jobs created etc.) will not create effective SET development." (p 341)

3.24  On the matter of the time horizon, the RDAs noted that:

"support for innovation, science and technology and entrepreneurship requires a longer view than one year and can lead to positive outcomes not measured by current targets. Yearly targets can lead to short-term projects." (p 20)

The Chairman of ONE summed things up:

"the targetry we have at national level is very much out of kilter with our Regional Economic Strategies." (Q 280)

3.25  We have also been concerned that the performance measures relate to matters (such as regional GDP per capita) over which RDAs have insufficient leverage. It seems to us that the targets may be informed more by the availability of data than their relevance to RDAs' activities. We were also concerned to learn that only now is DTI thinking about longer-term performance measures and, indeed, the baseline data needed to support these (QQ 17-21).

3.26  We were therefore pleased that the Minister said:

"I do take very strongly your point that we need to make certain that we do have the metrics to understand what is happening now and what is happening in the future. We can get some of this from things like the community innovation survey and some we can get from information which already exists, but I would hope, as part of the innovation review[19], we can take a look at that and make certain that we really do have the metrics on a regional basis to measure what changes are taking place." (Q 411)

3.27  The existing performance measurement arrangements do permit some scope for RDAs to develop measures particularly appropriate for their regional circumstances. Our recommendation in the next paragraph proposes that this be taken further and applied to higher level objectives, allowing more appropriate metrics to be developed in partnership with the key regional partners. A number of suggestions were made by our various witnesses — for example, the Royal Academy of Engineering (p 309), Oxford Innovations (p 298) and by the panel of HE knowledge-transfer professionals in oral evidence (QQ 125-170).

3.28  On the basis that what gets measured gets done, we recommend that the Government should work with the RDAs urgently to develop simplified performance measures that take better account of SET's importance in economic development, and accommodate both realistic timescales for results and the differing circumstances of individual regions. (See also our related recommendations in paragraphs 2.28, 3.29 and 3.37.) This may well result in each RDA having its own tailored set of performance measures, to be worked towards in relation to nationally agreed outcomes for SET exploitation, as recommended in paragraph 6.38.

3.29  As noted in paragraph 3.10, RDAs are not just administrators of grants. A significant part of their efforts should be applied to mobilising funds from other sources. Indeed, we recommend that, in framing the revised performance measures recommended in the preceding paragraph, the Government and RDAs should consider success in attracting others' funding as a valuable indicator.

Bureaucracy

3.30  RDAs have, of course, to be accountable for the public money they receive. However, we heard many concerns that the bureaucratic demands to meet this accountability were unnecessarily burdensome and sometimes contradictory.

3.31  SEEDA usefully summarised the position:

"We have to conduct our business in accordance with numerous guidance documents totalling some 1400 pages [which] have been developed at different times, often in isolation from each other and inevitably embody contradictions and ambiguities as they come from several departmental sources. While some of this is useful and necessary to ensure appropriate public accountability, it also demands much effort in planning and reporting systems, some of which serves no useful purpose and strains our relationships with partners who are delivering on our behalf." (p 136)

3.32  This problem was also identified by the Better Regulation Task Force in their July 2002 Report, The Local Delivery of Central Policy[20]. They noted that:

"when we looked at the delivery process from Whitehall to the ground level, we found too many initiatives, confused accountabilities and overly bureaucratic monitoring and reporting systems. We recommend that the centre delivers a programme of reviews focused on local delivery issues which cross departmental boundaries."

Furthermore, they recommended that:

"the agencies charged with the delivery of skills and economic development should be … granted the flexibility to develop local solutions."

3.33  Regardless of developing the stronger bottom up approach to performance measurement recommended in paragraph 3.28, we recommend that the Government should reduce the bureaucratic load on RDAs and work with them to ensure that its guidance is reduced to the essential minimum and is, in any case, made consistent.

Cooperative working between the RDAs

3.34  RDAs have effective networks at a number of levels. The Chairs, Chief Executives, Enterprise Directors, Learning and Skills Directors and Innovation Managers meet regularly. Networking is assisted by each RDA's taking a rotating lead on specific areas. (At the time of our Inquiry, for example, SEEDA led on science and innovation, EEDA on learning and skills and ONE on higher education.) Through the RDA/DTI liaison meeting, RDAs also have regular structured contact with colleagues from Scotland, Wales and Northern Ireland (p 20).

3.35  Apart from their intrinsic value for exchanging good practice, these networks provide a means of both influencing and responding to relevant national policies and directives in relation to SET. The networks also accommodate RDAs' recognition that many high-tech initiatives cross regional boundaries. We were pleased to note that RDAs readily liaise about such matters. The National Microsystems and Nanotechnology project is an example, involving many RDAs (as well as Scottish Enterprise and the Welsh Development Agency), working with the DTI to produce a strategy for developing and coordinating centres of excellence (p 20).

3.36  It is also recognised that cluster boundaries do not coincide with regional boundaries. The chemicals industry, for example, is particularly important in three northern RDAs, whereas the motor sport cluster is important in several regions in the South and East, and the aerospace sector involves several RDA regions and crosses into Wales. Cooperative working is essential to take full advantage of SET.

3.37  We therefore encourage RDAs to continue and deepen their cooperative working. Indeed, we recommend that the Government should, as part of the revision of the performance measures recommended in paragraph 3.28, ensure that the measures contain incentives for cooperative working between RDAs.

RDA Governance

3.38  Each RDA is managed by a Board of which the chairman and a significant proportion of the members are drawn from business. Many members also have significant strengths in SET. This business-led focus is one of the strengths of the RDAs, bringing valuable experience of business (with less risk-aversion[21] than normally found in the public sector) and access to a wide range of contacts and networks. The business lead helps maintain a clear focus on economic development with business as the driver of wealth creation.

3.39  As the Regional Assemblies are formed[22], they will take on responsibility for overseeing the work of RDAs, with a relationship similar to that between LDA and the Mayor and London Assembly. If RDAs are to maintain a tight focus on economic development, we hope that the changed relationship will not result in any dilution of the business lead on RDA Boards (as, indeed, maintained in London) that has done so much to target purposeful activity on economic development. We therefore recommend that, whatever the future hierarchy of regional responsibilities, the leadership of RDAs should remain with the business community.

Regional Capacity Building in SET

3.40  Given the importance of SET in regional economic development, it is crucial that RDAs are well informed about SET. RDAs also need a reasonable level of competence in SET matters if they are to be able to make appropriate judgements in both planning and implementing strategic developments.

SET capability in RDAs

3.41  RDAs can obviously draw on expertise in business and in universities — whether within or outside their regions — to ensure that RDA policies and practices are properly informed by SET. There is also expertise in Whitehall departments, particularly the DTI. However, as the Department noted, none of its scientific or cluster specialists were on secondment to the RDAs at the time of our Inquiry (p 17).

3.42  RDAs have addressed this competency within their own agencies. Yorkshire Forward, for example, pointed out that its employees had in excess of 300 years' experience in managing technology in commercial environments, and its Board members had 100 years' experience in the senior management or directorship of SET-based companies (p 175).

3.43  However, a number of witnesses expressed concerns at the lack of expertise among RDAs' staff. This may be a particular problem in moving from Board-level strategy on SET[23] to the detailed implementation of SET-based projects. For example, the University of Nottingham noted:

"There is the question over the quality of RDA human resource to manage, facilitate and enable the complex environment of SET. From an RDA perspective, the effective management of SET should require a good understanding and knowledge of HEIs' research expertise, capacities and capabilities, whilst simultaneously holding in clear focus a longer term view of scientific exploitation, innovation, higher level skills and economic development. With a few notable exceptions, RDAs do not appear to have appointed key people across the organisations with the necessary credibility, experience, expertise and skills to manage these tasks." (p 334)

3.44  Against that background, we recommend that all RDAs should review their capabilities to ensure that they have sufficient operational knowledge and expertise to take SET initiatives forward. To the extent that there are gaps in RDAs' expertise, we suggest that these might be filled at least in part by secondments and exchanges with the public and private sectors, to mutual advantage.

SET capability in the Regions

3.45  For SET to be effectively exploited and applied for business growth, there has, in each region, to be a shared understanding of what is required (demand) and what is available (supply). As noted in paragraph 5.17, some RDAs have undertaken a mapping exercise to assess regional SET strengths. Additionally, some are working with the DTI to improve business support aspects.

Science Councils

3.46  As the Minister noted (Q 389), DTI has been actively encouraging RDAs to establish Science Councils to help build coordinated regional capacity in SET. Most RDAs have either already established such bodies or are actively planning to do so.

3.47  The first Science Council was set up in the North West in 2001. Its aims were, as Dr Brown of Arthur D Little Ltd noted: to lead the development of a science strategy at a regional level; to help secure commitment and resources for the science base; to act as an advocate for science and its role in the regional economy; and to develop an effective productive relationship between the SET base and Industry (p 268). While, as intended, the Council had a degree of independence from the RDA, the remaining link was important. As the NorthWest Science Council noted, the RDA was in a unique position to bring together the partners, facilitate progress, and channel the necessary resources and commitment into action and results (p 146).

3.48  Close behind the North West, the North East set up a Science and Industry Council in December 2001 (p 139), adding "Industry" to the title to underline the Council's practical purpose. The LDA had an Innovation Steering Group which not only served as a Science Council but also took in the creative industries (Q 251). SEEDA had just established its Science Council (Q 250).

3.49  As we saw during our visits to the North West (Appendix 6) and the North East (Appendix 8), and as reinforced by the Science (and Industry) Councils' written and oral evidence (p 139, p 146 and QQ 261-276), both Councils have made an impressive start. The business involvement and lead have been key in setting them up, but their strength lies in the amalgam of senior representation from business, academia and the public sector (including the NHS).

3.50  A Science Council provides an RDA with a regional mechanism for the in-depth assessment of SET aspects of regional policies. Because the businesses and universities are based in region but, by their nature, also have everyday contact with the national and international scene, such a Council is well-placed to assess SET matters in the light of both regional circumstances and national considerations. It can thus play a key role in advising the RDA on SET generally and on related funding allocations. Moreover, such a Council provides a clear channel to serve current and emerging industry needs in key clusters, as well as a means of connecting with national SET activities and policies such as Foresight.

3.51  We recommend that all RDAs should have a regional Science Council or similar body and that RDAs should collaborate in assisting those Councils to network and make good connections with national SET and Innovation bodies and policies.


13   For the key to RDAs' acronyms, see Box 1 on page 13Back

14   Also evident during our visit to Newcastle on 20 and 21 March 2003, see Appendix 8. Back

15   Some sectors may also have geographically significant "clusters" of inter-related activities, with varying degrees of dependence on SET. The role of clusters in regional economic development is discussed further in paragraphs 4.43 and 5.54. Back

16   The Cambridge Phenomenon Revisited, Segal Quince Wicksteed Ltd, 2000, ISBN 0-9510202-2-6. Back

17   SET for Success: the supply of people with science, technology, engineering and mathematics skills, April 2002 - text available on www.hm-treasury.gov.uk  Back

18   Investing in Innovation: a strategy for science, engineering and technology, July 2003 - text available on www.hm-treasury.gov.uk Back

19   See paragraph 6.7. Back

20   Text available on www.brtf.gov.uk/taskforce/reports/LocalDelivery.pdf  Back

21   This is also assisted by staff being employed on private sector terms. Back

22   Preparations for which would be put in place under the Regional Assemblies (Preparations) Bill being considered in Parliament during the course of our Inquiry. Back

23   Perhaps informed by the Region's Science Council (see paragraphs 3.46-3.51.) Back


 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2003