Conservative Party Conference: The new economy - the role of higher education and high-growth businesses

Date: 05.10.2011 12:30 - 14:00

Location: The Lecture Room, Manchester Art Gallery, Mosley Street, Manchester, M2 3JL

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NESTA's last event of the political conference season saw us set to discuss the role of Higher Education in promoting economic growth. We were delighted to be joined by the most incredible panel of speakers.  Minister for Universities and Science, David Willetts, Herman Hauser, co-founder, Amadeus Capital and Professor Madeleine Atkins, Vice Chancellor at Coventry University and NESTA Board Member were joined by NESTA Chief Executive, Geoff Mulgan who Chaired the session.

In the spirit of collaborative government, David Willetts praised the previous administration for leaving a decent legacy in terms of investment in the technology and manufacturing sectors but he was clear that there is a gap to be plugged between Higher Education and the commercial application of the products of their expertise.  He felt that co-funding of projects between universities and commercial entities could hold the key to unlocking much potential in the UK

Madeleine Atkins started by saying that, depending on the results sought, creating different environments for innovation may be required.  For example, investing in innovation in some sectors can require a ten plus year wait for results, whereas, if fast increases in employment levels are what is required, then the innovation environment needs to support multiple SMEs hiring 2-3 extra employees each.

She went on to say that the partnership between universities and the commercial world should be a productive one as universities have access to equipment, resources and space in order to provide the rigorous test data which can be required to unlock finance.  However, there are problems to be solved to open up the opportunities for universities and innovative SMEs to work together.  Madeleine drew particular attention to the convening power of universities who have the expertise to manage big projects over long periods of time as well as the 'pull' to bring together a diverse range of partners.

In terms of opportunities, Madeleine was keen to point out that universities have networks and connections that span the globe and that these are waiting to be utilised.  Alumni were also identified as a resource for growth as they provide an investment and support circle for entrepreneurs and innovators of the future.

Herman brought an international comparison to bear on the discussion citing the Fraunhofer Institutes in Germany as an example of a successful model to encourage innovation and entrepreneurship.  One institute per year has been brought online in Germany since 1946 and they now have a €1.3 billion turnover.

Technology Information Centres (TICs) are the UK alternative and Herman believes that industry should invest a third of the funding required to operate them in order to keep them interested in the projects that result.  There are key factors to the success of TICs and to maximising the amount they can contribute to the economy:

• We must be prepared to wait at least 10 years and as many as 30 to see an outcome from them.  Long term political commitment to invest is vital
• They must be selective to be successful
• The size (and potential size) of the markets to be served by the innovation developed must make it worthwhile investing in
• Current position within the sector must be world leading or close to it so that we capitalise on our strengths. We must, he said, build on mountains.
• There must be a strategy in place to exploit the results so that we 'move the needle' for UK Plc.
• Be prepared to 'go global' as keeping the entire value stack in the UK is unrealistic.

Herman made interesting observations on the importance of serial entrepreneurs stating that his Venture Capital fund saw just 17% of applications from serial entrepreneurs 10 years ago and that figure has now risen to 70%.

During the question session, the audience asked the panel if there was a reluctance to accept failure in the UK.  As a whole, the panel agreed.  Herman agreed that initial failure can be a valuable part of sustained success and Geoff described it as a 'deep craft' of learning amongst entrepreneurs who have tried, failed and tried again - often trying several times before becoming successful.  Both Geoff and Herman were keen to point out that we live in a global age where we must encourage those who have tried and failed to stay in the UK, otherwise they may try and succeed elsewhere, taking their skills and knowledge with them to another economy.

Questions about finance and developing incubators were asked and Madeleine was able to give an academic perspective explaining that relationships and finances between SMEs and Universities were mixed and often quite complex.  Universities can take an equity stake in a company it works with (via government funding). However, it was acknowledged that spins outs from institutions' own staff and students were often the simplest relationships as are instances of universities providing supervision to students working on a project for a specific organisation.  New LEPs will look at new funding models to encourage increased joint working and some Universities even have small angel networks.

Herman noted that the most of a university's value lies in its students and not in its innovations or Intellectual Property.  He floated the idea of making IP free for all but the most lucrative items e.g. pharmaceutical developments.

Both Madeleine and Herman raised the issue of talent from the global community.  Madeleine gave the example that many of the key people involved in the Cambridge Clusters were individuals from abroad who came to the UK, studied and stayed which allowed their expertise to remain in the UK and for the UK to get the benefit of their talents.  Alterations to immigration rules make it increasingly difficult to achieve this.

Chair: Geoff Mulgan, Chief Executive, NESTA

Speakers:

• The Rt Hon David Willetts MP, Minister for Science and Universities
• Hermann Hauser, Co-founder, Amadeus Capital Partners
• Professor Madeleing Atkins, Vice-chancelllor, Coventry University