Science and Innovation Strategy

Institute of Physics response to the

Department for Innovation, Universities and Skills consultation on the UK’s Science and Innovation Strategy

A full list of the Institute’s responses and submissions to consultations can be found at

14 February 2008

Dr David Evans,
Director of Innovation,
Department for Innovation, Universities and Skills,
Kingsgate House,
66-74 Victoria Street,
London, SW1E 6SW

Dear Dr Evans,

Science and Innovation Strategy

The Institute of Physics is a scientific membership organisation devoted to increasing the understanding and application of physics. It has an extensive worldwide membership and is a leading communicator of physics with all audiences from specialists through government to the general public. Its publishing company, IOP Publishing, is a world leader in scientific publishing and the electronic dissemination of physics.

The Institute welcomes the opportunity to respond to the Department for Innovation, Universities and Skills consultation on the UK’s Science and Innovation Strategy. The Institute’s answers to the consultation questions and additional comments can be found in the attached annex.

If you need any further information on the points raised below, please do not hesitate to contact me.

Yours sincerely

John BrindleyDirector, Membership and Business

Science and Innovation Strategy

Innovation will be one of the key drivers of our prosperity in years and decades to come, but it can also help us tackle emerging global challenges such as globalisation, an ageing population; climate change; rapid technological change, and global security.

How do you think that Innovation can help us tackle these major challenges?

Innovation underpinned by scientific progress has the potential to raise the quality of life of people in this century, just as it did in the last. Technologies produced will be the direct results of scientific research being conducted today, but some of them will also have direct roots in blue skies research undertaken several decades ago. Innovations such as the World Wide Web and the global positioning system (GPS) are at the core of modern technologies. Both of these examples were the results of unintended consequences of blue skies scientific research. The web was devised by particle physicists working in CERN as a means to store and search the data generated by particle physics research. GPS technologies rely on research which resulted in the ultra-precise atomic clocks, and also on developments in space science and satellite technology[1].

Future technologies will address future challenges. Technological solutions to adapt to the consequences of climate change are currently being developed, fuelled by developments in scientific research. For example, there is currently work into the development of low cost, low energy water purification units for use in areas hit by flooding. The devices involve efficient light emitting diodes (LEDs) operating in the UV region, underpinning a new technology to kill bacteria in water.

The major challenges of this century are interdisciplinary, encompassing aspects of chemistry, engineering and biology – for example, the development of clean coal technologies to reduce carbon dioxide emissions where research into molecular physics is providing an understanding of the chemistry of carbon capture. The challenges of supporting an ageing population are being met through assisted living technologies, innovations based in medical science but which could not exist without physics research and expertise. For example, ‘telecare’ systems, where the health and activity of a patient can be monitored through sensor technologies within their own homes by trained professionals working remotely.

Finally, it should be noted that innovation within the service sectors is often built on the products of physics research and physics-trained people. The computers and high-speed communications systems that drive the electronic trading floors of the stock market are a result of technological progress enabled by physics research.

What is the government’s role in meeting these challenges?

The role of the government is to create an environment where science and innovation can flourish. The government has a primary role in doing the things that the commercial sector cannot do such as supporting large scientific facilities, which provide benefits to companies and research across the scientific spectrum, and fundamental research.

A scientifically engaged population is a key element in meeting the challenges of the next century and the government has a role to play in developing this through highlighting the results of scientific research and innovation. One approach to accomplishing this would be to include information about the science underlying the operation of high-technology devices within the packaging of the products. Through making the connection between products in the home and scientific research conducted both in universities and industry, consumers can be made more aware of the importance of science and innovation to their daily lives.

The government procurement strategy has a role in promoting innovation within industry. We endorse the recommendation of the Sainsbury review The Race to the Top of an enhanced small business research initiative (SBRI) programme, which, if properly implemented has the potential to have a great influence on the R&D spending in both large and small companies within the UK. The government can provide a strong lead market for innovative solutions to government procurement through its ability to mitigate the financial risks associated with innovation. Previous implementations of the SBRI programme did not produce the desired results, and a change in culture within government departments is needed for it to be a success.

We are interested in Government’s role in promoting business innovation in all sectors of the economy, from those that have a technological product or service focus to those which are not technology-based.

Hitherto, much of Government’s effort has been aimed at

a. enablers and incentives for increased R&D investment in business and

b. stimulating and focusing the demand from employers for better skilled workers and helping remove the barriers to achieving higher skill levels in firms.

How can government focus on building innovative capacity and on creating the right conditions for companies to innovate?

Procurement can be an important driver of innovation, and innovative capability. The proposed revamp of the SBRI programme has the potential to be a huge influence on the innovative activities of science-based businesses in the UK. Selecting solutions to procurement requirements on the basis of short-term costs can disadvantage novel and innovative solutions to problems, and may not result in the most cost-effective long-term policy. Supporting innovative technologies or products produced by high-technology high value-added industries provide both primary products for procurement problems and also secondary economic benefits to the industries involved. Historically, the government has not been a good lead market for innovative goods, as the previous implementations of the SBRI has demonstrated, and the programme must be carefully implemented with an appreciation of the conditions within which innovative companies work.

Large central purchases of new technology have the potential both to be enormously beneficial to innovative companies, but also to hinder innovation through consistently favouring established solutions. One option to circumvent this would be to standardise the functions or interfaces of the required solution but then allow local managers to commission and buy their own product, this would make it much easier for new ideas to get established.

Government regulation has a role to play in encouraging innovation and industrial R&D, however, it can work both ways: driving or deterring innovation. For example, the nuclear industry is regarded as over-regulated and this in turn tends to lead to a culture of conservatism amongst clients of companies who work in this area – which then means that it is often difficult to persuade them to innovate. However, in some circumstances it can be new regulations that force business to innovate to meet the new requirements. In either case, the government must appreciate that it has a long-term responsibility to business: the innovative process within industries will typically take around 10 years and can take much longer. During this time, a substantial investment in equipment and people is needed with very little financial return. These factors need to be understood by regulators and funding schemes. We welcome the recent increases in the budget for the R&D tax credits, but note that recent research by the Institute has shown that the level of R&D spending in the physics-based sectors of the economy fell from £3.8 bn in 2001 to £3.3 bn in 2004[2]. While there are some industries displaying growth in R&D spend in the physics-based sectors, most notably in the field of aerospace, the overall decline is a concern if the UK is to meet its targets for R&D spending.

Additionally, there is a need for training and research to help understand and assist the innovative process. This could be accomplished through the Business Link network. The IOP’s submission to the BERR consultation Simplifying Business Support[3] noted, “high-technology and science-based companies are often disadvantaged by the narrow categorisations involved in the accessing of business support”. Current business support programmes offered by the government draw the distinction between sources of finance too early in the process. Smaller science-based businesses and spin-outs, in particular, are often managed by people with limited business experience. These companies are typically more in need of guidance in where to locate sources of money than of direct financial support and government support schemes could assist in this. Specialised support for businesses could be given through a mentoring scheme for leaders of small high-technology start-up companies. Such a scheme would provide targeted personal guidance for less experienced managers from those who have overcome similar challenges.

How can we maximise the scope for interaction between different innovative activities, concepts and people?

Knowledge transfer between universities and businesses is a complicated process; however, a strong research base, comprising both pure and more applied science is necessary to create the ecosystem which will result in knowledge being exchanged between academia and industry. This is essential for the UK economy; physics-based industries which depend on physics knowledge and expertise employ more than one million people in the UK and contribute more than £70 bn to the UK economy in gross value added2.

We support the further development of science parks that are closely integrated with universities. Academics within university departments often have little time for business engagement in within the research staff of universities. Technology transfer offices within universities have a role to play as brokers but they are not involved in the research itself. Science parks provide opportunities for interaction between staff in university departments and start-ups and more established companies and have shown great successes. Essential to this process of interaction are active research collaborations between university departments and outside partners such as scientific industries.

In promoting knowledge transfer, the government should enable models that work –

for example, easing the way for 'technology innovators' (who demonstrate the feasibility of a technology and then sell on) which is a growing model (but less job-creating than full start-ups). The government should do more to reinforce the support for businesses that can see the need for new solutions, i.e. a market-led approach.

Access to venture capital is a problem for science-based businesses engaged in the transfer of knowledge from academia to the marketplace, possibly due to problems in the advertising or with fair access to the limited funds available. Research by the Engineering and Technology Board[4] has suggested that the problem is possibly due to them finding it hard to break into the close-knit network of venture capitalists and support providers. The Business Link programme could play a role in this process, providing a directory of venture capital funding and operating networking events to facilitate contact between companies and investors.

Additionally, universities and smaller science-based companies find it difficult to find the significant funds needed to defend their Intellectual Property Rights (IPR). This funding issue is not easy resolved within the restrictions of state aid. A way to address the problem would be to introduce more robust protection for IPR. This would remove the need for the patent holder to go through the legal system so early in the process. Without this, spin-out companies will not be confident that their innovations will remain profitable.

The UK has many examples of world-class public services – the challenge we face is to replicate good practice, learning from what works well or less well, and to create a culture within public sector organisations that allows the space for innovation.

How can Government help public sector employees, managers and leaders create a more innovative culture?

The appointments of more Scientific Advisers to government departments has been a welcome development, as is the overarching role of DIUS in monitoring innovation across the government.

What else should Government do to promote more innovation in service delivery or in policy development?

The appointments of more Scientific Advisers to government departments has been a welcome development, as is the overarching role of DIUS in monitoring innovation across government, however the problems with funding between ministries remain to be solved (e.g., who pays for apprentice training: Education, or Science).

The places in which Government policies have effect are increasingly important factors in determining how these policies are targeted and delivered, recognising that places and communities are different and a one-size-fits-all approach is not appropriate.

For policies promoting innovation, initiatives such as Science Cities have given visibility to a more place-focused approach and Local Authorities and RDAs invest significant amounts in promoting innovation in particular places.

How do you think Government’s innovation policies should develop in the context of the recent Sub-National Review of Economic Development and Regeneration?

We agree with the review that science research is not regional, or even national in the case of large-scale projects. As such, funding for research should remain at a national or even international level.

Regional aid as a means to generate innovation is more effective if factors and infrastructure for an entrepreneurial and innovative atmosphere already exist. This is particularly the case in the North West, where the NWDA has been very successful in engaging with businesses and with the Daresbury Laboratory. The Daresbury campus is provides a substantial economic benefit to the surrounding area. This is an indirect consequence of previous investment in large science facilities and in fundamental scientific research.

The level of support for innovative and science-based businesses varies dramatically between different regional development agencies (RDAs) and we look to the new leadership role of the Technology Strategy Board (TSB) to alleviate some of these inconsistencies – it is not tenable that eight of the nine RDAs have stated aims of being world leaders in biotechnology. In the support of science-based business, economies of scale can be achieved by working on a regional (RDA) level, rather than a sub-regional level. Smaller units can result in high levels of bureaucracy and sub-critical levels of funding for companies. Additionally, such complexity can be a problem for small businesses that find it difficult to find the time to understand the funding structures.

The ability of a society and the organisations within it to innovate rests on the skills and motivation of people. For Government to help in creating a more innovative society, its policies will need to stimulate the supply of, and the demand for, more skilled and motivated people. The Leitch review identified priorities for the UK in terms of the levels of skills necessary to meet the long term challenges we face.

Specifically for innovation, what types of skills should Government be encouraging and what levers or incentives can Government apply to achieve this?

Physics degrees provide graduates with a wide-ranging set of transferable skills as determined by the Quality Assurance Agency benchmark statements[5], including the problem solving and critical reasoning skills ideal for innovative activities. However, the teaching of physics, along with the other experimental sciences, is expensive within universities both financially and in terms of teaching time and requires proper resourcing. This is an issue which needs to continue to be monitored.

People as users of products and services, whether as direct consumers or as customers within other organisations, are key drivers of innovation. In some areas, consumers are developing a strong pro-innovation culture, for example iPods, Broadband, mobile phones and online shopping/booking. There is increasing interest in products that can help combat climate change or improve the environment. Increasingly, companies are using their supply chains to help them innovate and, in “open innovation” mode, are out-sourcing some of the ideas generation process to others.

What should Government do to encourage a society that is comfortable with and drives innovation?

The government should work towards highlighting the connection between the products in the home and scientific research conducted both in universities and industry. Through this, the public can be made more aware of the scientific innovation that underpins progress in technology and gives rise to increasingly advanced and user-friendly products.

The IOP has a strong background in operating programmes aimed at increasing the public’s engagement with science and technological innovation. One project currently being considered by the IOP is an initiative to help increase the public’s awareness of the science underpinning everyday gadgets. By including information about the science underlying the operation of high-technology devices within the product’s packaging, consumers can be made more aware of the importance of science and innovation to their daily lives. Everything from washing machines to vacuum cleaners and from DVD players to digital watches has their basis in scientific research and innovation and this could be highlighted through supplying educational material on the science inside such devices with the product.