ICYMI innovation policy update: BEIS ministerial portfolios confirmed
This week, I look at: the allocation of responsibilities in BEIS (which we’re now hearing is pronounced ‘bays’); industrial strategy; Ofcom’s plans for Openreach; and the Stern Review on the Research Excellence Framework.
All about that BEIS
As previously covered, Greg Clark has been appointed the Secretary of State BEIS, giving him overall responsibility for both the department and delivering the industrial strategy (more on that later). Due to the closure of DECC, he will also be charged with ensuring the security and affordability of the UK’s energy supplies and take the lead on climate change policy.
Jo Johnson will be Minister of State for Universities and Science, allowing him to continue his work in higher education, research and innovation - most notably the ongoing HE Bill, which has now reached the committee stage. He will also be working on agri-tech industrial strategy and ‘space’.
As Minister of State for Climate Change and Industry, Nick Hurd has adopted the majority of the responsibilities regarding national and global environmental concerns, including carbon budgets, climate science and the Green Investment Bank. Regarding the industry side of his brief, Hurd’s been given advanced manufacturing, materials and automotive policy.
Baroness Neville-Rolfe’s diverse duties as Minister of State for Energy and Intellectual Property include nuclear power, low carbon generation and smart meters, but also the EU single market, which is likely to be a challenging brief in light of the coming negotiations.
Regional and regulatory issues have mostly been allocated to Margot James, now Minister for Small Business, Consumers and Corporate Responsibility.This includes the British Business Bank, competition law, regulatory reform and the national minimum wage. James has also been allocated EU structural funds; an increasingly divisive issue since the referendum, with small regional businesses at risk after the government refused to guarantee continued finance from the JEREMIE funding source (Joint European Resources for Micro to Medium Enterprises).
Finally, Jesse Norman has been appointed Minister for Industry and Energy, who will be supporting Nick Hurd on industrial policy in addition to responsibilities for technology, infrastructure, aerospace, and oil and gas (including shale gas).
BIS Committee launch inquiry into industrial strategy
Following the re-introduction of ‘industrial strategy’ to the government agenda (more on that here), the newly launched inquiry will consider the implications of industrial strategy and and how interventionist the government should be. In light of the recent ARM takeover, the Committee will question whether the government should intervene to prevent the foreign takeover of UK companies, if they feel it is in the public interest.
Also under investigation will be whether a sectoral or regional approach would be beneficial for the strategy, with the Committee perhaps considering connecting the policy with LEPs (Local Enterprise Partnerships). The successes and lessons learnt from previous UK and international industrial strategies are likely to inform any conclusions the Committee produce, with one concern voiced by the Chair the risk of a return to “picking winners”, largely viewed as a negative implication of 1970’s UK industrial strategy.
Regarding regional issues, it is likely that some aims of the industrial strategy correlate with that of the Northern Powerhouse, with the Financial Times suggesting that the new Prime Minister is concerned the current regional approach is too focused on Manchester. Low productivity is a longstanding issue in the UK, particularly outside of London, and the committee will be considering whether industrial strategy should address this too. If industrial strategy does come to encompass productivity and devolution initiatives, it would not be surprising for it to ultimately usurp the Northern Powerhouse project.
Last week, a series of talks were hosted by the Manchester Institute of Innovation Research, as part of the EuroScience Open Forum. Of particular note was a speech by David Willetts, who - as Minister of State for Universities and Science - was the architect of the “eight great technologies” strategy in 2013. Willetts highlighted the UK’s traditional strength in university research, but contrasted it with poor performance in institutions supporting exploitation and both departmental and industrial research and development. He attributed these weaknesses to an excessively high proportion of incentives being in place at one end of the chain, recommending that the government strengthens the ecosystem linking pure science to innovation.
One of the main issues discussed was the flawed venture capital system in the UK, which Willetts suggested was due to business people not knowing enough about science, and scientists not knowing enough about business. Intriguingly, Willetts revealed he will be setting up venture capital fund of his own to support the eight great technologies, a strategy he pioneered as Minister as it is “tactically better to pitch for things rather than funding for institutions” to secure financial backing from the Treasury.
A Stern take on the REF
The Stern Review of the Research Excellence Framework (REF) was published last week; in which Lord Stern considered how university research funding could be better allocated. The REF has been in place since 1986, and informed the allocation of around £1.6 billion of research funding in 2015/16.
The review also addressed the issue of interdisciplinary research under the current framework, generally recognised to be an area requiring improvement. The Call for Evidence that preceded the report revealed concerns that interdisciplinary work was disadvantaged by the current REF due to disciplinary ‘silos’ in the assessment structures, and therefore regarded less favourably than traditional single-discipline research.
“Interdisciplinary approaches and collaboration between institutions and other sectors can enhance both the academic and socioeconomic creativity and impact of research”
One of the original intentions of the REF was to ensure the impact of research would not exclusively focus on commercialisation, and would also consider benefits to the economy, society and public policy. The methodology aimed to assess the contribution of excellent research to economy and society in a similar way to the assessment of research excellence.
However, there are concerns that the current system is failing to capture important areas of the UK’s research base which are impacting on industry and public engagement. There is also an issue of a possible disincentive for universities recruiting individuals from business and other sectors part way through their careers.
“Although many REF2014 impact case studies showed a degree of interdisciplinarity, the need to link back to research outputs may have constrained the submission of case studies where the impacts arose from collaboration across units of assessment, whether between departments in the same institution or between institutions.”
In the course of the Science and Technology Committee inquiry into the future of Innovate UK, Jo Johnson repeatedly emphasised the importance of getting more public impact for the money invested. Lord Stern takes a similar approach, recommending that “impacts on public engagement and understanding are emphasised and that impacts on cultural life be specifically included”. The review also suggests that academic impacts such as research leading to the creation of new disciplines should be included in the framework, with the hope this will encourage long-term, interdisciplinary research endeavours.
Ofcom plan “Openreach that works for everyone”
Following the fairly damning report by the Select Committee for Culture, Media and Sport on broadband connectivity in the UK (discussed in the previous update), Ofcom have announced plans for the reform of Openreach, the subsidiary of BT charged with providing infrastructure to the UK.
Previously announced in February, Ofcom’s plans focus on: a more independent Openreach; greater choice of broadband networks; higher levels of service; and better broadband and mobile coverage.
The current structure of Openreach was introduced by Ofcom in 2005, and it is seen as having improved competition levels. However, concerns remain regarding BT’s perceived influence over decisions and associated conflicts of interest.
As such, Ofcom have proposed that Openreach becomes its own distinct, legally separate company within BT Group, with its own Board and no affiliations to BT Group. Separating the companies in their entirety would incur high levels of cost and disruption, therefore Ofcom have recommended the following structural changes:
- Staff who work for Openreach should be employees of the new company, rather than BT Group, to avoid conflict of interest (whether real or perceived).
- Ownership of the physical network should pass to Openreach, incentivising the Board to invest in and maintain Openreach’s assets. Potential costs in transferring assets or people to Openreach would need to be mitigated.
- Openreach to develop its own strategy and annual operating plans and have control of spending, within an overall budget set by BT Group.
- Openreach should have its own independent brand, not affiliated with BT Group.
If these measures are unsuccessful, Ofcom have threatened the possibility of splitting the two companies entirely, under different ownership.
[Photo: George Evans, Creative Commons Attribution ShareAlike 2.0]